9. We consider that the
following raises questions of political importance. We make no
recommendation for its further consideration, but suggest it would
be relevant to the debate we have recommended on (17750)-, the
Court of Auditors Report for 1995, and (17852)-, the Court's Statement
of Assurance of activities financed from the general budget and
related Special Report[17]:-
FOREIGN AND COMMONWEALTH
OFFICE
(17877)
OJ C 287
(30.9.96)
| Special Report by the Court of Auditors concerning the accounts of the Administrator and the European Union Administration of Mostar (EUAM) accompanied by the replies of the Commission and the Administrator of Mostar.
|
| Legal base:
| Article 3 of Council Decision 94/308.
|
Background
9.1 The Decision that
the European Union should support the administration of the city
of Mostar in Bosnia-Herzegovina as a joint action under the Common
Foreign and Security Policy was adopted by the Council on 16 May
1994[18].
The purpose of the action was to foster reconciliation between
the warring parties in the city and to create the conditions necessary
for its unification. As a result of the conflict in the former
Yugoslavia, the eastern part of Mostar was Muslim controlled whilst
Bosnian-Croat forces controlled western parts. The operation
began in July 1994.
9.2 The Council Decision
of 16 May 1994 also asked that the Court of Auditors should undertake
an audit of the EUAM. The Court has made a report after making
two visits to Mostar. As with many other special reports by the
Court of Auditors, it is not confined to matters of financial
management but also covers the general operation and effectiveness
of the Administrator and the EUAM.
The contents of the report
9.3 It is clear from
the report that the task of the EUAM has not been easy. The administration
set itself wide-ranging and ambitious objectives and has achieved
much against a difficult background, including in particular the
unwillingness of the two parties to live together or co-operate.
9.4 The report also points
to difficulties caused by the absence of any formal mechanisms
within the Council for the establishment of a mission of this
kind and the advance operations which preceded it. The Administrator
was not consulted about the nomination of expatriate staff to
the EUAM and the arrival of such staff was not adequately co-ordinated
with the advance party, leading to logistical problems. Nevertheless
the Court records that the majority of the appointments to the
EUAM have proved to be successful and, perhaps because in the
circumstances of Mostar there was no alternative, team members
have generally worked well together. It points out, however,
that the procedure followed could easily have led to a very different
result.
9.5 The Court found a
number of internal financial control weaknesses, some of which
were relatively serious. The Court says that the underlying reasons
for these could be tracked back to the shortcomings in the way
in which the EUAM was established. Following the Court's first
visit to Mostar in July 1995, it recommended the establishment
of a budget manager to take over responsibility for checking the
availability of funds prior to committing expenditure and making
payments, as well as budget reporting; and an internal auditor/evaluation
officer who would check the functioning of procedures within the
departments and evaluate the progress of departments towards their
objectives.
9.6 The ability of the
EUAM to manage and control its funds in a satisfactory manner
was also hindered by the lack of appropriate financial and management
accounting tools. The first proposed accounting system failed
because the software was unsuitable.
The Court's conclusions
9.7 The Court notes that
the EU Administration of Mostar was the first major CFSP joint
action of the European Union and that it was undertaken in extremely
difficult circumstances. The Administration was set ambitious
objectives but did not itself control the key elements that influenced
whether or not the objectives could be achieved.
9.8 The Court reports
that in administrative and constitutional areas, progress was
very slow because of the unwillingness of the parties to work
together. But in practical areas such as rehabilitation, reconstruction
and redevelopment, considerable progress was made.
9.9 The Court makes a
number of recommendations:
i) an effective
permanent structure for the management of CFSP joint actions is
needed, requiring inter-institutional agreement;
ii) planning
should ensure that adequate financial management and accounting
procedures and systems are instituted from the outset for this
kind of operation;
iii) the procedures
for appointing expatriate staff to joint actions should ensure
that there is choice between candidates and opportunity for the
head of the organisation to participate in the process of selecting
his team.
Commission's response
9.10 The Commission has
responded that political imperatives were largely responsible
for imperfections in recruiting staff for the EUAM. It says that
lessons have been drawn from this first joint action on more appropriate
procedures for management and decision-making. The Commission
agrees with the three recommendations made.
The Government's views
9.11 In his Explanatory
Memorandum dated 6 February 1997, the Minister of State at the
Foreign and Commonwealth Office (Mr Davis) says that the Government
fully supports the Court's efforts to improve the financial management
of EU taxpayers' money. He says that the Government considers
that the structure and implementation of actions under CFSP is
a matter for Member States "who keeps such matters under
constant review with a view to maximising effectiveness and efficiency".
The timing of the submission
of these documents
9.12 The Minister also
wrote to us on 4 February 1997 to provide an account of the circumstances
behind the considerable delay in making this report available
to Parliament. The report was completed in July 1996. The Minister
comments:
"We understand
that the ECA[19]
Report was sent in the usual way under a courtesy letter to the
Presidency on 25 July 1996. It appears, however, that at this
point the Presidency copy went astray, before the customary onward
distribution to Member States in the Council. As a result neither
the United Kingdom nor any other Member State received a copy,
and the normal process of deposit for scrutiny was not triggered
as the document had not been circulated according to the usual
system.
"The Report
was subsequently published in the attached form in the 13 September
edition of the Official Journal. While UK officials became aware
of its publication there, the question of whether it had already
been deposited for scrutiny was not raised - there being no reason
to doubt that what would normally be standard practice had occurred
in this case."
9.13 The Minister explains
that failure to deposit the report became apparent when the Council's
Budget Committee began considering the form of an ECOFIN response
to the Court's Annual Report which lists a number of special reports,
including that on Mostar, based on audits which the Court had
carried out in the preceding financial year.
Conclusions
9.14 We have noted
the Minister's explanation for the delayed deposit of these documents
and recognise that the delay was not of his Department's making.
9.15 As to the report
itself, it is clear that it raises matters of political importance
and contains important lessons for the organisation and administration
of any future common and foreign security policy joint actions.
9.16 Under Article
206 of the Treaty, the Council, before making its recommendation
to the European Parliament on the discharge of the budget, is
required to examine, as well as the Commission's accounts and
financial statement, the annual report of the Court of Auditors
(together with the replies of the institutions) and any relevant
special reports made by the Court of Auditors. We have already
recommended a debate on the Court's annual report for the financial
year 1995 and we therefore suggest that this special report will
be relevant to that debate.[20].
17 (17750) OJ No. C 340, 12.11.96; see HC 36-xi (1996-97), paragraph 10 (29 January 1997) and HC 36-xii (1996-97), paragraph 1 (5 February 1997); and (17852) OJ No. C 395, 31.12.96 (pp 5 to 85); see HC 36-xii (1996-97), paragraph 2 (5 February 1997). Back
18 Decision 94/308/CFSP. Back
19 European Court of Auditors. Back
20 (17750) OJ No. C 340, 12.11.96; see HC 36-xii (1996-97), paragraph 2 (5 February 1997). Back
|
