Internal Report Damns Kinnock's EU Anti-corruption Drive

Aid to the Middle East is not the only area where EU funding has been misdirected. Various reports indicate that only 10% of current spending has been fully verified, and even that figure is considered an improvement. The following article explains the extent of the problem. It details how the responsibility of looking after taxpayers’ money is being fudged, at least until a new set of politicians are elected in the summer.

Jack Grimston

A leaked internal report has painted a damning picture of the three-year attempt by Neil Kinnock, one of Britain's European Union commissioners, to turn around the organisation's reputation for waste and corruption. The confidential review of the commission's financial practices finds it has failed to introduce proper controls over how taxpayers' money is spent, despite a series of damaging scandals.

The failure to keep proper records, claims the report by the commission's watchdog, leaves the EU "vulnerable to irregularities and fraud". It adds that Brussels officials still try to overstate how good their book-keeping is, creating "a serious reputational and credibility risk".

Chris Heaton-Harris, a Conservative member of the European parliament's budget control committee, this weekend called on Kinnock to resign from his post as vice-president for administrative reform because change had been so slow and patchy.

"Kinnock's job is to bring forward reform . . . It was all meant to be delivered by the end of this commission's mandate, but it's going to massively overshoot," said Heaton-Harris. "We still have this culture in the European commission where our money is being wasted through fraud and mismanagement."

After the previous commission was forced to resign in 1999 amid corruption allegations, Kinnock, the former Labour leader, was appointed to stamp out financial irregularities in Brussels.

Although critics acknowledge he has made progress, an estimated £4.5 billion of the EU's annual £63 billion budget still goes missing. Much of this goes in falsely claimed agricultural subsidies.

The leaked report was prepared last year by the EU's Internal Audit Service (IAS), which was established in 2000. Completed in April 2003, the report says that despite improvements "the commission is inadequately equipped to fully meet its accounting responsibilities".

It finds that a lack of qualified staff, inadequate training and the absence of a proper computer system have led to an "immature" attitude to financial record keeping. It also asserts that financial reports are "incomplete and contain significant errors".

In addition, the commission's accounting system fails to record adequately when payments are made. The IAS warns: "Non-recorded assets can bypass internal control and are thus more vulnerable to irregularities and fraud."

The commission has set a deadline of next January to complete reforms.

Marta Andreasen, the commission's former chief accounting officer, who was suspended on full pay 18 months ago after criticising spending controls in Brussels, said 2005 had been picked deliberately.

"They will try to leave the burden for the new commissioners, and they will take six to eight months even to find out what is going on," she said.

Brian Gray, the commission's chief accounting officer, said this weekend that many of the problems identified in the IAS report had been addressed since it was completed almost a year ago and reform was "more or less spot on schedule".

He insisted that the specific shortcomings described as leaving the commission open to fraud were being improved, adding: "By January 2005 we should be whiter than white there."

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