By Martin Banks - 9th November 2010
It seems that this year we have taken two steps forward and one step back
Ryszard Czarnecki
The European Court of Auditors (ECA) has refused to give EU spending a full clean bill of health for the 16th successive year.
As last year, the ECA said that the annual accounts for 2009 represent an accurate picture of how the EU spent its funds.
However, the auditors found that "payments from the budget continue to be materially affected by error" except in two areas, cohesion and agricultural funds.
The report was presented to parliament's budgetary control committee on Tuesday.
In the report, ECA president Vitor Manuel da Silva Caldeira said that payments in the two biggest spending areas, agriculture and regional spending, as well as in research, energy and transport, external aid, development and enlargement and education and citizenship are all "materially affected by error".
He said the court has therefore refused to sign them off.
The committee heard that the estimate of the likely error in cohesion spending for 2009 was significantly lower than in previous years, contributing to an overall fall in the estimated error in EU payments.
However, there was still material error in payments in the cohesion budget.
He said that "weaknesses" in the accounting systems of some DGs of the commission "still need to be resolved".
Economic and financial affairs and administrative payments were given the green light as 'legal and regular' but the court said that in the area of agriculture the situation had deteriorated on last year's report.
For the third year running the accounts were seen as "true and fair".
However, the court said errors affected up to 40 per cent of payments in some policy areas, while the cost across the whole budget was up to over €7bn.
Polish MEP Ryszard Czarnecki, ECR spokesman on budgetary control, said, "The report shows that while the EU has taken steps forward in improving financial management, there are still far too many areas of material error.
"It seems that this year we have taken two steps forward and one step back.
"The overall reduction in errors in EU payments is welcome but for some areas to go backwards is unacceptable and questions must be asked about how that could happen.
"This is the 16th year that the auditors have not given the accounts a full clean bill of health. Rather than a sense of urgency there is a sense of inertia, particularly in the 27 national governments that actually execute the vast majority of EU spending."
Further comment came from Ukip MEP Marta Andreasen, a former chief accountant of the EU who was sacked for blowing the whistle on fraud and slack accounting in the EU, said, "Just two weeks ago, David Cameron was claiming the increase in Britain's payments to the EU as a victory.
"Now it appears that this increase will simply cover the cost of fraud in the EU budget: in the middle of a recession, taxpayers are paying for other people to cheat the system."
Andreasen said, "It is unbelievable that after 16 years, taxpayers are pouring ever increasing amounts of money into propping up a system riddled with fraud and errors.
EPP deputy Inge Grassle said, ""The commission should 'name and shame' those member states who do not keep to the EU rules on spending, and must table detailed proposals to improve their control system.
"In the interest of the taxpayer, the commission has to do some straight talking to the states concerned. So far the commission is far too cautious".
"Member states lack the will to recuperate EU money spent wrongly, while the commission was not firm enough to enforce such action. Only a tiny amount of misspent EU funds is coming back to Brussels. And even then, it often takes more than four years to recuperate the money."
She added, "The administration of the EU's agricultural funds has worsened in particular. If sports clubs receive EU money for their lawns, as happened in Bulgaria, then there is something wrong with the system. Of 20 national authorities authorising the EU's agricultural spending, 12 were only 'partially effective' while seven were identified by the court to have 'significant weaknesses."
More reaction came from German ALDE deputy Jorgo Chatzimarkakis who said, "We cannot escape the impression that the commission has made only little substantial progress. This is because political will is partially lacking. The sanctions, provided for sloppy financial management, are still not being applied to the member states.
Speaking at a news conference in parliament, he said, "The commission has to speed up its efforts to correct repeated illicit behaviour and has to immediate suspense funds. As far as the agricultural sector is concerned, this is already possible. The fact that there were no sanctions imposed on a member state such as Greece over a period of over ten years, even though it was not implementing EU monitoring provisions, speaks for itself. Here the taxpayer is literally fooled."
Meanwhile, Stephen Booth, of the UK-based think tank Open Europe, was also critical. "This is a hugely embarrassing annual tradition and it remains absolutely unacceptable that the EU budget cannot be signed off by its own auditors," he said.
"This year we have seen improvements in some areas, which should be welcomed, but also worrying steps backwards."
"The sheer size and complexity of the EU budget means that it remains vulnerable to waste and mismanagement. Until member states and the commission resolve the inherent flaws in the EU's spending there should be no talk whatsoever of budget increases."
