Marta Andreasen holds no grudges against Neil Kinnock, vice-president for administrative reform at the European Commission. She just wishes he would recognise ‘some of his errors and change them’. But she is angry.
The Argentinian-born accountant was thrust into the spotlight last year for raising concerns about the accounting systems and refusing to sign off the 2001 European Commission accounts. She continued to hit the headlines after Kinnock suspended her from the post of chief accounting officer later that year for what he said was a breakdown in relations.
Despite criticisms against her, she is vocal about the changes needed at the EC. A report issued last week by the European Union’s court of auditors, which fails for the ninth year to give a clean bill of health to EU accounts, strengthens her arguments.
A culture change is required at the top, says Andreasen, because taxpayers deserve more respect through increased accountability.
‘The EC should set the example for private companies, but it is the opposite.
It issues directives, but doesn’t follow them,’ she says.
Andreasen has been asked if the accounting problems – and they do exist – are linked to the corporate failures at Enron and WorldCom.
The only difference, she says, is that the people affected at Enron were mostly willing shareholders and investors. At the EC it’s the taxpayers who suffer. ‘Investors make up their own minds where they want their money.
But taxpayers are not even asked this question.’
And the question has to be asked: is this commission going the way of the last? Allegations of widespread fraud and accounting anomalies led to its downfall in 1999. The current commission entered on a wave of purity, its war cry being to stamp out such anomalies and ensure transparency.
And if this is true, why did it take Kinnock two years to employ an experienced qualified accountant? Surprisingly, evidence is emerging that vindicates Andreasen. Last year, a report by Jules Muis, the commission’s internal auditor, described her charges of fraud at the EC as ‘factually substantive and correct’. Muis, a troubleshooter, sorted out the chaos at the World Bank before being headhunted to take over the EC’s audit service.
And now it’s the turn of EU auditors. The EU Court of Auditors last week criticised the EU’s system of accounting and the way most of the e100bn (£70bn) annual budget is spent. The auditors can give assurance to less than 10% of the EU’s annual budget for 2002. As a result, EC president Romano Prodi has proposed an improved code of conduct and better links with the EU’s fraud investigation office Olaf.
In a separate report, the EC’s system of accounting was deemed inadequate.
The commission has now said a new type of accounting will be introduced in two years’ time and that much of the mismanagement is in the hands of member states.
So is there a crisis of ethics in public and private accounting? ‘Absolutely,’ says Andreasen. But she says she understands the situation better in the private sector, because the technological advances have made the market change so rapidly and ‘people haven’t been able to cope with these changes’.
In the public sector, she argues: ‘I find no explanation, no justification.’
Andreasen says: ‘The stress and need for immediate results in the private sector doesn’t happen in the public sector.’
She speaks from experience on both sides of the fence. Before joining the EC, she had held various accounting and finance director posts in the software industry over the past 20 years. She moved into the public sector because is was an opportunity that normally went to long-serving internal candidates.
Indeed, Andreasen is the first qualified accountant to hold the post of chief accounting officer at the EU. In the months since her suspension, she has questioned the commissioners’ reasons for employing her, and the turnover of staff in the job prior to her arrival.
She says her understanding was that she was brought in – despite it being two years after this commission had taken office – to reform accounting systems and stamp out possibilities of fraud. Her views have since changed.
Her current status, under suspension with full pay, means Andreasen must stay in Brussels for three to four days a week, but she is not allowed to enter EC buildings, access information systems or hand out business cards.
In fact, her outspokenness on the EU accounting anomalies have led her into further trouble. She recently found out additional allegations may be laid against her by Neil Kinnock as part of a disciplinary procedure.
For a woman who is taking on the EC single-handedly you’d be forgiven for expecting a hard-headed, aggressive woman. Instead she is surprisingly unassuming and demure. Andreasen seems almost painfully shy as she greets us at the Intercontinental Hotel at Hyde Park Corner, ahead of the Accountancy Age Awards ceremony on 12 November, where she won the reader-voted Personality of the Year Award by a landslide victory.
‘This award is public recognition of my behaviour and I deeply appreciate it and thank all of you for making it happen,’ said Andreasen on accepting the accolade.
Indeed, the groundswell of public support has surprised her. Did she ever consider just turning a blind eye? No, she says. She says she suffered more sleepless nights when deciding whether to go public with her findings.
‘I had to make a decision whether I was prepared to act against my principles.
I haven’t done things that went against my professional integrity in the whole of my 20-year professional career. It’s not a question of philosophy.’
Although criticisms of disloyalty weigh on her, she says she would make the same choice again ‘as I have always performed my functions, my responsibilities with integrity’.
Despite the silence of the commissioners, she remains focused and determined to clear her reputation, which she believes the commission has damaged by suspending her.
‘I’m not prepared to give up because there has been a lot of damage to my reputation. I asked the commission to protect me but it refused. If I abandon now I would be damaging my credibility. I have public support, which is very important, and I will defend myself legally and fight to bring transparency and accountability to the EC in the best way I can.’
Surprisingly, she does see a future for herself at the EC and is philosophical about the people and events that have led to her removal as chief accounting officer. First she must win her case.
‘The latest reports from the European Court of Auditors and the Eurostat case have vindicated me. Reinstatement is the first step the commission should take in respect of this vindication. The EC must make important changes and it needs people with experience and who insist on integrity.
I think there are opportunities for me in the EC,’ she says.
In the meantime, she awaits news of her appeals. But the process has been frustratingly slow. And because she is suspended on full pay, there is no time limit on the process. The EC staff rulebook states that if an employee is suspended on half pay, as in the case of fellow whistleblower Paul Van Buitenen, the situation must be dealt with in four months. Van Buitenen was reinstated this year.
Andreasen doesn’t think her situation will be resolved before this commission steps down in September 2004. While she continues her battle, she predicts times will get tougher with EU enlargement. On 1 May 2004, 10 countries – Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia – are set to join the EU.
Tighter financial controls must be quickly implemented, if the EU is to be a credible force, or taxpayers will suffer.
But as long as we have whistleblowers, we will have accountability, albeit delivered by a slow and arduous process.
Experts claim that employees who expose malpractice in the workplace are being viewed in an increasingly favourable light. But there are still hurdles to overcome.
Whistleblowing can prevent untold damage to an organisation’s reputation and harm to staff morale. And it’s not always about financial issues.
Fraud, corruption, bullying, health and safety, harassment and discrimination should all be reported.
But companies must ensure a clear path for employees to follow. Raj Bairoliya, managing director of Forensic Accounting, established a fraud hotline in 2001 to enable employees to anonymously report suspicious activities.
‘The problem is with employers and will remain so until they accept whistleblowers as good guys trying to help them,’ says Bairoliya.
The Public Interest Disclosure Act 1998 goes some way to improving the situation. And the Financial Services Authority is proactive in this area providing dedicated help on the topic. In May 2002, the FSA set up a whistleblowing hotline and email address for people working in the financial services industry who have concerns about possible wrongdoing at work.
The FSA recommends the following procedures:
- a clear statement saying that the company takes failures seriously;
- an indication of what is regarded as a failure;
- respect for the confidentiality of workers who raise concerns, if they wish this;
- an assurance that, where a protected disclosure has been made, the company will take steps to ensure no person under its control engages in victimisation;
- the opportunity to raise concerns outside the line management structure, such as with the compliance director, internal auditor or company secretary;
- penalties for making false and malicious allegations;
- an indication of the proper way in which concerns may be raised outside the company if necessary;
- providing access to an external body such as an independent charity for advice;
- making procedures accessible to staff of key contractors; and
- written procedures.
For more, go to www.fsa.gov.uk/whistle.
Mark McMullen joins the private client services team from Smith & Williamson
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