Monday, March 17, 2003

Just how bad are finances at the EU?

Brussels oversees spending worth some £66 billion a year, money mainly extracted from EU taxpayers. It presumes to sit in judgment over fiscal housekeeping within the eurozone, powers that it is seeking to expand. Yet it keeps the dirtiest house in the Western world. The Brussels accounts are an unfathomable black hole, into which billions of euros disappear each year literally without trace. This is not for lack of accountants (Brussels employs 4,000), fraud squads or internal auditors. It is because its accounting systems are so scandalously short of all accepted standards, even mandatory double-entry bookkeeping, that records can be altered at whim, all but undetectably.
Figures are unlikely to add up because the whole system, in the words of the exasperated European Court of Auditors, is “not designed to produce a complete record”. For the past eight years, the Court has had to refuse to issue the required “statement of assurance” that money has been properly spent. Every year the Commission says airily that the defects uncovered lie in the past.

In 1999 even the European Parliament could no longer ignore the stench of scandal. The Santer Commission was sent packing. The Prodi Commission, promising a clean sweep, handed Neil Kinnock the broom. He has used it to beat up whistleblowers within the Commission — including Marta Andreasen, the chief accountant he suspended after she refused to sign off on the 2001 accounts because they had no supporting documentation. Mr Kinnock had drawn up a “whistleblower’s charter”; but when Ms Andreasen went public with the complaint that the Commission’s financial controls were “worse than Enron’s”, he made her candour grounds for dismissal.

The Court, which has questioned all but a miserable 5 per cent of the EU’s 2001 accounts, agrees with Ms Andreasen. So did Jules Muis, the internal auditor, who told Mr Kinnock that she had hit the nail on the head, that she was working flat out in a culture hostile to transparency , and that to dismiss her “would be a serious blow to reform”. Not only did Mr Kinnock ignore this advice; he hid it and continued to insist that her criticisms were “unsubstantiated”.

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