THE EU’S official auditor complained of a succession of material spending “errors” by the European Commission in its annual report on the expenditure of some €120 billion by the union’s executive branch.
The annual report of the European Court of Auditors comes as member enter crunch talks with MEPs tomorrow on the EU budget for 2011, a difficult negotiation given the European Parliament’s demand for a significantly higher increase than governments are willing to concede.
Saying irregularities were uncovered in five policy areas during 2009, court president Vitor Manuel de Silva Caldeira said only two policy areas were found to have kept within official spending rules. In addition, accounting and control systems were found to be only “partially effective” in preventing and detecting overstated and ineligible costs.
The report highlighted one case in which municipal land in an unnamed member state, widely held to be Bulgaria, was artificially declared to be eligible for EU agricultural payments. Payment of some €30,000 was “not justified” because the state company in question carried out no agricultural activity.
Greece was found to “systematically calculate” certain agricultural payments incorrectly and similar problems were observed in Malta. In Italy, some sheep were double-counted for two farmers to meet minimum requirements for payments.
The Irish member of the court, Eoin O’Shea, said none of the “negative spending references” or examples of “inappropriate” spending related to Ireland.
However, the report pointed to weaknesses in the Government’s systems for preparing reports on customs duties payable to the EU and for selecting targets for customs audits. Mr O’Shea said Dublin had indicated that it was introducing new computer systems to address such problems.
Ireland was also listed as having the highest number of “VAT reservations” in the EU at the end of 2009, a reference to differences between the European and Irish authorities on the application of VAT rules. Six of these cases have been resolved since the start of the year.
The court’s 2009 report is just the third annual review to say the EU’s accounts were free from material misstatements. It found payments underlying the accounts in agriculture, cohesion, research, external aid and education “are materially affected by error”, with the agricultural breaches rising while cohesion fell.
These five policy areas comprise 92 per cent of all EU expenditure. A material breach occurs in cases where the total value of breach is greater than 2 per cent of expenditure.
Critics seized on the findings, saying the court had refused to sign off on the accounts, but Mr O’Shea said that was an “absolute myth”. The finding that the accounts gave a true and fair view was accepted in Irish business circles as signing off on the books, he said.
An accountant and a barrister, Mr O’Shea succeeded Maire Geoghegan-Quinn this year when the Government nominated her to the European Commission.
He told reporters in Brussels yesterday that the possibility of a role for the court in auditing the rescue fund for distressed euro countries was under examination
“The court is available should it be called upon, but the extent of that role has yet to be discussed in significant detail,” he said.
Budget talks beginning tomorrow centre on parliament’s demand for a 5.9 per cent increase in the EU budget for 2011, a claim more than twice as large as the 2.9 per cent increase member states are willing to grant.
A legal deadline for a deal falls next Monday. If there is no deal, the 2010 budget would be rolled over into 2011. In that event, there would be little funding for the new EU diplomatic corps.