APPENDIX 5
Memorandum submitted by Article 19, the
International Centre against Censorship
SUMMARY
This submission focuses on the need for urgent
institutional reform of the system for funding NGOs to carry out
activities promoting human rights and democratisation.
This document outlines serious problems with
process, transparency and accountability which have been identified
by ARTICLE 19 and other human rights organisations when dealing
with the European Commission. These problems occur at every stage
of the funding process, from applications for funds, to receiving
the contracted monies and closing off projects. The main problems
lie within the European Commission's structure for granting funds
to NGOs after the Parliament has agreed a budget line for activities.
The Appendix illustrates problems ARTICLE 19
has had in dealing with the European Commission on programmes
to promote human rights, including a nine-month wait for the reimbursement
of £250,000 for a completed project.
Problems detailed in this memorandum include:
— Complete absence of grant supervision
at the Commission for a number of human rights budget lines for
a year;
— Extremely late payments of large
sums owed by the Commission;
— Reports lost by the Commission leading
to considerable extra work for NGOs;
— Inflexibility in project contracts
leading to underpayment on contracted funds;
— Opaque decision making and lack of
clear guidelines for applications;
— Lack of a complaints process or remedy
for problems encountered.
1. PROJECT APPLICATION
AND MANAGEMENT
PROCESS
Background
1. In 1999 a new system was introduced for
dealing with the human rights and democratisation budgets. A series
of guidelines applicable to all the budget lines has replaced
the previous fractured and unco-ordinated approach to inviting
applications.
1.2 The handling of different budget lines
has until now been carried out in different ways in different
parts of the Commission. For example, DG VIII has directly handled
the Africa budget line under which ARTICLE 19's Nigeria programme
is being carried out, while DGIA has, since 1980, contracted out
handling of the Eastern European project management—the
Phare/TACIS Democracy Programme—to the European Human Rights
Foundation (EHRF).
1.3 It is not clear how the new system will
work in practice. One example of change is that the EHRF may expand
to take on the management of further budget lines on behalf of
the Commission.
1.4 It is feared that the new system will
not address many of the existing problems, which are described
in greater detail below.
Recent problems
1.5 In May 1998 the contract for the EHRF
to carry out its funding activities expired and was not renewed
until May 1999. No alternative arrangements had been made by the
Commission to ensure that funds and projects were managed. In
May 1999, the European Commission finally renewed its contract
with the EFRF—for a one-year period.
1.6 During the period when the EHRF was
inactive, NGOs were unable to contact anyone from the Commission
for payments outstanding, information on the progress of projects
in the application stage, details of future funding rounds etc.
1.7 The negative impact this situation had
on NGOs cannot be overstated. Project management was thrown into
chaos, budgeting made impossible and cashflow management, particularly
for smaller organisations, precarious.
1.8 There is no official information available
as to the arrangements being made for the period following expiry
of the EHRF's current contract in May 2000, and no explanation
or apology has ever been given for the problems which occurred
in 1999.
1.9 ARTICLE 19 is about to sign a contract
for a two-year project with a budget of Euros 600,000 which is
due to be administered by the EHRF. We are extremely concerned
about the lack of information on future planning, given the implications
for relations with partner organisations, budgeting, time planning
and, indeed, the overall viability of the project should the current
uncertain situation remain unresolved.
2. ADMINISTRATION
OF PAYMENTS
2.1 The Commission is responsible for payment
of funds to NGOs. NGOs submit to requests for payment to the Commission
directorates, or to agents such as the EHRF, according to schedules
worked out at the contracting stage.
2.2 Despite contractural clauses which state
that payment should be made within a stipulated period (usually
60 days), the Commission has a history of long delays—sometimes
in excess of a year. (See Appendix for examples).
2.3 In such an environment, starting projects
on contracted dates becomes difficult for many NGOs, since even
the first tranche of money is often delayed. Many NGOs have insufficient
resources to commence projects without the project funds from
the EC, particularly when reimbursement may take an unspecified
amount of time.
2.4 When payments are eventually made, interest
which will have accrued is not paid over to the NGO, nor is any
account taken of the costs incurred when delaying projects.
2.5 Payment of tranches of project funds
always rely on reports being submitted. ARTICLE 19 always, therefore,
sends reports by courier. This is an expensive and time-consuming
business, and ARTICLE 19's submissions have weighed as much as
14 kilos to satisfy all reporting requirements. Despite evidence
that our packages have been received by the Commission, on more
than one occasion we have—when attempting to chase overdue
payments—been told to resubmit our reports as the department
in question cannot locate the original version sent.
2.6 Due to the Commission's strict reporting
criteria, it can take up to a month to produce a project and financial
narrative. As this process occurs after the end of the project,
the staff costs cannot be included in the project budget, however
substantial they may be.
2.7 Because there is a rigid financial reporting
structure, little flexibility is allowed for transfer of monies
within a project once it has been agreed. This approach does not
allow for reasonable cost variations (eg flights becoming cheaper,
but venue hire going up) over the lifetime of a project, which
might be up to three years. Overspends in one area and underspends
in others (above a minimal percentage) cannot be used to balance
each other out. In practice, this means that an organisation will
receive less than the amount stipulated in its original budget,
with the Commission keeping the difference.
2.8 The two principal effects of these issues
are that projects timelines often have to be re-written, to the
detriment of the intended beneficiaries (see also 4.3), and that
the actual cost of projects to an organisation can be substantially
more than the Commission permits for inclusion in the budget.
2.9 It is ARTICLE 19's observation that
the Commission's concern is with audit at the expense of financial
management: creating a trail of receipts that shows that money
has been spent takes precedence over achieving value for money
or examining how spending can best ensure the objectives of a
project are achieved.
3. PROCESS OF
AWARDING CONTRACTS
3.1 There is currently no accountability
as to who receives funds and why. The decision-making process
within the Commission is completely opaque.
3.2 For example, we understand that there
is acknowledgement at Commissioner level that the Commission can
only cope with administration of large projects, therefore applications
from small organisations or low-budget proposals from large NGOs
will almost certainly fail.
3.3 We are unsure as to the reasons for
this situation, but understand it may be due to a lack of capacity
in terms of human resources within the Commission.
3.4 Nowhere in the guidelines for applicants
is this criterion mentioned, leading to a lot of wasted time on
the part of those whose applications are doomed to fail from the
outset.
4. FLEXIBILITY
DURING PROJECT
IMPLEMENTATION
4.1 It has taken up to a year for ARTICLE
19's project proposals to receive approval and the first funding
tranche to be paid. Thus, a three-year project might be completed
four years after a proposal was submitted, during which time events
on the ground may have changed a situation significantly.
4.2 There is no practical mechanism for
responding to such changes by varying projects, which are specific
in their design, once a contract has been signed under certain
budget lines. This was the case under the old PHARE/TACIS Democracy
Programme and is likely to apply to all budget lines under the
new system. Until now, an addendum to any contract has been required
for such amendments. The process for agreeing this is onerous
and negotiating an overly bureaucratic process can itself take
several months. This means that responding to events on the ground—often
necessary in a human-rights oriented context—can be difficult.
4.3 Due to delays caused by the Commission's
processes, projects are often forced to overrun the scheduled
finish date. Ironically, this requires an official extension to
the contract, negotiation of which costs yet more time. This happened
with a PHARE contract for work in Albania, Romania and Slovakia
which ARTICLE 19 signed in 1996.
5. LACK OF
REMEDY
5.1 ARTICLE 19 has been unable to find any
remedy or practical means for addressing the concerns raised in
this document. We were astonished to be informed in one e-mail
that it was not the policy of the Commission to identify which
employee was dealing with an issue, or to provide any phone or
e-mail contacts.
5.2 MEPs who worked with us, notably Glenys
Kinnock MEP, have tried repeatedly to secure information on our
behalf and to speed up processes, including payment of overdue
money, but again without success.
5.3 Other mechanisms having failed, we wrote
both to Chris Patten, Commissioner for External Relations, and
Neil Kinnock, Vice President of the Commission, about these matter
in early December (see Appendix to this Memorandum). We have yet
to receive a substantive reply from either, although both have
said the matters we raise are under investigation and the money
for the Africa project was received in January 2000.
5.4 The European Paliament designates a
large amount of taxpayers' money for budget lines on human rights.
The European Commission is charged with administering these funds.
5.5 In ARTICLE 19's experience, the European
Commission in no way fulfils its obligation, as a public body
administering public monies, to be accountable, transparent or
efficient in the management of those funds or in dealings with
those seeking to assist in the implementation of the human rights
priorities of the European Union.
5.6 In short, ARTICLE 19 is of the opinion
that the European Commission regards itself as being above the
normal systems of accountability. The recent draft regulation
on provision of information by the Commission does not begin to
address this situation.
6. CONCLUSIONS
AND RECOMMENDATIONS
6.1 It is clear that many of the problems
outlined above are due to bureaucratic and administrative incompetence.
However, equally clear is that in the field of administration
of the EU's human rights budget lines there is a cumbersome system
with no accountability, no clear lines of responsibility and no
transparency. It may also be that insufficient funds are available
for the Commission to provide the human resources to manage the
budget lines efficiently and effectively.
6.2 ARTICLE 19 urges the Committee to make
the following recommendation:
A thorough and independent external audit of
the administration of the EU's human rights budget lines must
be undertaken urgently, which produces an honest and publicly-available
critique. Those conducting the audit should talk to all parties
with an interest in the matter, including NGOs and produce a set
of recommended improvements to be carried out according to a specified
timeline. The audit should be commissioned from a major international
funder with extensive experience of administrating large human
rights programmes.
6.3 Outcomes of this process which ARTICLE
19 would hope to see would include:
6.31 Project application and management process:
— Introduction of a clear and timely
planning process for the future management of funds for human
rights projects.
— Establishment of a stable situation
whereby a single individual in the Commission or its chosen contractor
is allocated to each human rights project for its entire duration,
providing a point of contact and support for NGOs carrying out
projects.
— Sufficient funding should be allocated
to the Commission to ensure that there are adequate staff to manage
a range of projects of different sizes, carried out by organisations
with different capacities. Funding opportunities should not be
limited to large organisations proposing large projects.
6.32 Administration of payments
— Whilst we recognise the need for
adequate financial accountability, the exhaustive reports required
of NGOs should be scaled down. If not, the Commission should allow
the inclusion in project budgets of a specific allocation of staff
costs for the production of such reports.
— There must be prompt payment by the
Commission of contracted funds. Any delays beyond those allowed
for in contracts should result in timely explanations, payment
of interest accrued, and possibly compensation.
— Greater flexibility should be allowed
in cost allocation in budgets, preferably introduced at the contract
stage.
6.33 Process around awarding of contracts
— Guidelines issued for project applications
should reflect the criteria actually used to assess those applications.
— Feedback should be given to applicants
when projects are rejected.
6.34 Involvement in project implementation
— The Commission should recognise the
need for flexibility in timelines without excessive bureaucratic
negotiation, particularly when over-running is due to problems
at their end.
6.35 Lack of remedy
— Clear lines of authority and responsibility
should be established which are made public, and a complaints
process introduced.
6.36 Evaluation
— There should be scope for the Parliament
to receive regular feedback from all parties involved on progress
of human rights projects, both effectiveness and process. Parliamentarians
should be able to scrutinise such reports closely, perhaps via
a Committee process, and there should be a way for them to make
recommendations for improvements which will be taken on by the
Commission.
February 2000
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