The much-heralded financial reforms carried out by the European Commission will not be fully realised for at least another five years, possibly longer, according to Jules Muis, the commission’s former chief internal auditor.
‘Although progress has been made, the commission has a long way to go before it can present an image of being a world-class administrative machine,’ he tells Accountancy Age during a brief return to Brussels. ‘A lot more work has to be done.’
Faced with embarrassing accounting revelations, what has happened in the commission is typical of the public sector when dealing with a difficulty, says Muis. The commission claims to have made progress, but at the same time it admits that it still has to beat the problem.
Romano Prodi, the outgoing commission president together with Neil Kinnock, also soon departing and the man responsible for the ‘reform programme’, grossly underestimated the difficulties change would bring, even though the reform white paper was an ‘excellent document’ says the former auditor.
‘The next commission faces a major challenge if it is to finish the reforms as currently envisaged – not least because the present executive body has not helped itself by not coming up with proper balance sheets and there has been no discharge for nine consecutive years.’ Not, then, a good end-of-term report – in the Muis view of things – nor will one be achieved until long after Prodi and Kinnock are forgotten in this context.
He quotes Napoleon’s obiter dicta to the effect that all politicians are to be regarded as ‘dealers in hope’.
Muis, 60, stepped down from his post at the beginning of April after three years. He is now based in Washington DC, and is enjoying a sabbatical that includes not only Europe and the US, but Australia and New Zealand.
Looking at the problems he has left behind, he says they are not just about technical systems but staff, vested interests, political will and what he diplomatically calls a mature concept of governance – some might say ossified.
The pervasive difficulties he encountered on joining the commission, a body he insists should be better managed, still exist. It has a totally ‘top-down’ structure, plus a culture in which there is no distinction between what he characterises as ‘bean makers and bean counters’.
Moreover, the whole organisation is weak in terms of checks and balances. In other words, the commission still has systematic problems to face.
Such are the assessments of a forensic expert. Muis left the commission on good terms and is satisfied that some of the points he made – and continues to make – about the institution’s governance seem to have been taken on board.
To what extent is, however, unknown, since Muis’ annual reports were never made public. In the intervening years, he says, the most succinct summary of the commission’s predicament can be rendered as ‘fragile controls mean a fragile future’.
He suspects the commission will eventually achieve a proper system of financial reporting – though this ideal is more likely to be reached by default rather than design.
Meanwhile, Muis comments on a ‘dominant monoculture at the top of the commission, which allows those responsible to bluff their way through the numbers’.
Furthermore, there has not been clear monitoring of how many internal auditors have left the organisation, or their reasons for doing so.
He says that questions must be asked: ‘Is senior management always right?
Should we look at its functioning from an organisational-institutional perspective? Or, quite concretely, do I serve Mr Prodi and/or Mr Kinnock or their public offices?
‘Is it the function as envisaged in the EU Treaty and as interpreted by me, the internal auditor? Does that not mean the internal auditor is playing God?
‘I’ve always worked within the system and always felt I could express myself within the system. I decided to leave unilaterally. I mean how long can you spin your wheels?’
He suggests that a catalyst for his recommendations to be given a second look has been the Eurostat statistical office scandal, in which the Luxembourg-based agency maintained contacts with a French company already suspected of fraudulent trading.
And what of the two famous whistleblowers?
He notes that Paul van Buitenen is standing in next month’s European parliament elections on a clean-up-the commission ticket, though Muis is personally not in favour of single issue political projects.
‘But I wish him well and hope he becomes “the salt in the porridge”, a Dutch expression which means the lubricant,’ adds Muis.
As for Marta Andreason, the commission’s former chief accountant currently in the limbo of a suspension, who Muis has only met twice, he says that he warned Kinnock to be very wary of such a senior civil servant who was asking all the right questions.
The issue – however it is resolved – remains a ‘hot potato’ for this commission, which might try to pass it on to the next team of commissioners who take up their responsibilities in November.
If so, it will be an equally hot potato for the new team, Muis insists.
STATE OF THE UNION
The history of the European Union is never more controversial than when it’s about finance. And recent history has been all about money, how it’s managed and how it’s accounted for.
Figures from the European Court of Auditors are revealing. The department’s report on the 2002 accounts of the EU recorded that there was 10,000 cases of suspected fraud worth an estimated £700m reported to OLAF, the EU’s anti-fraud unit.
The court also revealed that the EU’s accounts had to be qualified for the ninth year running because of a litany of errors included in the accounts.
The accounts were so bad that the UK’s National Audit Office said there would be no sign of improvement until the EU’s new IT systems and accruals-based accounting system had been bedded down.
The current phase of ordeals at the EU began in 1999 when Paul van Buitenen blew the whistle on financial mismanagement and fraud, revelations that eventually led to the resignation of nearly all the European commissioners under Jacques Santer.
Recent financial difficulties revolve around another whistleblower, Marta Andreasen. She hit the headlines when she refused to sign off the 2001 accounts while working as the commission’s chief accountant.
Her subsequent claims and suspension from work led to a series of inquiries and investigations.
Jules Muis was the man who in effect vindicated her claims. He joined the commission after trouble-shooting at the World Bank and published a report noting that Andreasen’s claims were ‘factually substantive and correct’.
It was a serious blow to the commission and a vindication for 2003 Accountancy Age Award winner Andreasen who has made it known that she is interested in Muis’s job now that he has left.