Hunting down errors at the EU

Debacles come and go at the European Commission, but none, since the resignation of nearly all the commissioners in 1999, has been as protracted as the mess over the EU’s accounts and fraud in one of its key secretariats.

The accounts and accounting system have been subject to constant attack, counter attack and the odd public explosion of anger.

And while that has been going on, the fuss over the possibility of fraud in the EC’s statistical department, Eurostat, looks as if it is beginning to reach something close to fever pitch.

Last week both issues appeared to reach some sort of climax. And the man pitched into the middle of all this? Yes, an auditor. No less than the EU’s chief auditor Jules Muis – and this time an auditor is in the news for good reasons.

Since declaring his intention to leave the service of the EU, Muis has been stirring up trouble with his public pronouncements on the state of EU accounts, but in the time he has remaining, it also appears that he, and his powers of investigation, are being used as a threat to commissioners to get their departments in financial order. ‘Do it or face the wrath of Muis’, appears to be the order of the day.

Never, it seems, has an auditor created so much consternation and fear in a public body as Muis right now.

Of course it really should be no surprise that the Dutchman is comfortable being so controversial, especially when his work means checking over a budget of €96.6bn (£68.4bn). But he recently gave away his philosophy when speaking to Accountancy Age.

Muis said company auditors should speak publicly about the state of the accounts they check more often. Never one to ignore his own advice, that is exactly what he’s recently been doing. Then again, given that he is due to leave in April next year, what has he got to lose? Here’s some recent history to illustrate the point: Neil Kinnock, EU commissioner for internal administration – the man appointed to clean up fraud and accounting after the 1999 meltdown – has been recently grappling with revelations made by whistleblower Marta Andreasen. She made certain allegations that the EU’s accounting systems could not cope. Andreasen was suspended from her job, but her claims were almost entirely vindicated – by who? Jules Muis. He told the European Parliament they were ‘factually substantive and correct’. That was body blow number one for Kinnock. It was accompanied by revelations in a leaked internal memo – written by Muis, that the EU has been ‘overstating its assets’ and had given a false picture of its 2001 accounts. The memo raised the prospect of the commission being ‘held in contempt’ as a result. This was, of course, a further blow for Kinnock, but also had implications for Pedro Sobes, commissioner in charge of the Eurostat office where fraud allegations were rife, and Michaele Schreyer, the commissioner who handles the EU budget. But the Muis effect did not stop there. Much of the criticism that followed the Andreasen claims was countered by the commission with commitments that all would be well by 2005 when a new accounting system – a switch to accruals based accounting – would come on line. Schreyer says the system is up-and-running and that the commission is ‘well on track for compliance’. Muis says not. In fact, he wrote to commissioners on 2 July saying the timetable was ‘not achievable’. And then two weeks ago, he appeared before the budgetary control committee of the European parliament to issue a further warning that having the accounting transformation handled by just one commissioner, instead of the four directly affected, was ‘dangerous’. You could almost hear the collective silent wish from commissioners that he would just go away. But perhaps not. Perhaps Muis will play a role in a final act. The Eurostat problems have prompted Kinnock to order the head of every commission department to give a personal guarantee that all the contracts and amounts under their control comply with the EU’s financial rules. Kinnock hopes to flush out whether the Eurostat issues are more widespread in this way. But newspapers have begun to report that Kinnock is threatening to set Muis loose on the Eurostat case if the commission’s own fraud investigation arm, OLAF, doesn’t speed up its work. Has the outspoken auditor become the ultimate sanction against financial wrongdoing in the commission? And if he has, what hope is there of financial rectitude once he has gone? It’s becoming clearer day by day that his departure will be a great loss to the citizens of the EU who expect some financial integrity. In surprise news, Accountancy Age last week reported that Marta Andreasen was keen to get his job. It is unlikely to happen. Muis is too hard an act to follow. – For news updates, go to europa.eu.int or www.accountancyage.com.