Committee on Budgetary Control Ordinary meeting
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CONT European Parliament
Follow its sittingsDick Erixon
So overall, almost €250,000,000,000 in capital is being guaranteed by taxpayers. And despite this, the EIB has departed from the usual European Parliament discharge procedure. In the report, we support the proposal that the European Court of Auditors should have full access to auditing the economic plans of the EIB. So, all in all, I hope that, regardless of our political color, we can agree on what is fundamental here in looking into what the EIB is doing: that we should be measuring results. We should require transparency.
We should guarantee accountability. And by doing that, we'll be able to achieve better results for the money that we are putting into the bank. Thank you.
Thank you.
Caterina Chinnici
Thank you very much, Mister Ericsson. Thank you for that presentation. Now I'd like to give the floor to the shadow rapporteurs for their comments and, obviously, for any questions that you might have to put to the representative of the EIB. First of all, for the EPP, I'd like to give the floor to Mr. Gottink for 3 minutes. Go ahead.
Dirk Gotink
Thank you, Ms. Kenichi. Thank you very much, and thank you to the rapporteur, as well as for the presence of the investment bank. I think for the EPP, one of the main guiding principles when it comes to the EIB is that the EIB stays very much central and that we are talking about an investment bank where investments are built on a business case, business cases that are not to be decided by politicians, I believe, but rather by experts in the room. Because if we open the door to the politicians, I believe, then within a couple of years' time, we can get rid of the eye in the EIB.
Then it's just a big pile of money, and we've seen that also in the last years: more and more, every time Europe is confronted with a crisis, the EIB is going to save the European Council from failure. And so, let's first of all acknowledge the importance of this structure that we have, which up till now has been a triple A infrastructure, very much value for money, not something we can say about other parts of the European budget. So, I would say the glass is very much half full there. And I would also like to be careful not to expand too much the topics and the priorities that the EIB is mandated with. Already, we've seen a big one; you already mentioned it.
We've seen a big increase in the number of topics like defense and all the other stuff. We have to be very careful there because it will create a vaguer mission for the actual EIB and for the people responsible. Then, when it comes to the report, I think we should really work on the part that is very relevant for us here. I am very open to discussing the issues of output, how we can look at that, how we can qualify that scrutiny, and the things you say on that. We'll have a closer look in the weeks to come. But for the EPP, the EIB remains a critical part of our investment environment, particularly at a time when a lot of EU money is being talked about for redistribution without a business case.
The EIB money is very much invested in order to create more value in the economy. And I think that is what we need more of, not less. So, in that sense, you'll hear clear support from the EVP for the EIB, but also a stronger line on the scrutiny issues related to that. Thanks for the initial proposal, and we will work on the details in the weeks to come. Thank you.
Caterina Chinnici
Thank you, Mr. Gotting. Thank you for that contribution. Now it seems we don't have the shadow from the S and D, Mister Raj, so let's move on. I'll give the floor now to Mr. Knoatek for the PFE Group.
You have the floor for 3 minutes as well.
Ondřej Knotek
Thank you, Madam Chairwoman, honorable colleagues. On behalf of our CEO reporter, Mr. Deutsch, who couldn't be here, a couple of sentences. Allow me. So first of all, I would like to thank the reporter, Mr. Ericsson, for his very balanced and professional work on this report. From our perspective, the draft is overall good, factual, objective, and very important, measured in tone.
Speaker 6
And so we agree with this strategy, and we would also like to highlight the analytical approach. We particularly welcome the report that focuses on the measurable economic outcomes. Key topic: competitiveness must remain the central objective of the EU investment policy. What Europe needs today is economic strength, innovation, and strategic autonomy. The reporter very rightly stresses this point, and we support this approach.
We recognize the important role of the EIB in supporting strategic investments. However, as the mandate of the EIB is expanding, we would expect that the scrutiny and accountability will also expand accordingly. And now just a couple of elements. So, we agree with the emphasis on measuring impact rather than just volume, avoiding crowding out private capital, and, very importantly now, ensuring defense and energy financing remain technology-neutral and based on objective criteria. And here, privately, I would echo our reporter touching on the words of nuclear energy.
And the last strengthening concerns conflict of interest, rules, and transparency. Of course, this is a key topic. So the report is neutral, balanced, and very serious in its assessment. And our shadow reporter, Mister Deutsch, is looking forward to cooperation with the shadow team. Thank you very much.
Thank you.
Caterina Chinnici
Thank you very much, Mister Ignortek. Now, I'd like to give the floor to the Renew group to the shadow, Mr. Vanaciro Vojkalesko, for three minutes. Go ahead.
Vlad Vasile-Voiculescu
Thank you. I'd like to start by acknowledging the tremendous importance of the EIB as an instrument for Europe, and also to acknowledge, as my colleague was mentioning, the "I" in EIB. I mentioned the word "b." It's a bank. So, it's a bank with a triple A rating, which is really important, and we should also watch that this is being upheld over the years to come.
Now, our role in Cont is also clear: to protect the EU's financial interests and ensure that every euro is spent transparently, efficiently, and with full accountability. The reports, and I would like to give our thanks to the rapporteur and to the shadow rapporteurs, should therefore ensure that oversight happens where it matters most: impact, integrity, and accountability. We all recognize EAB's solid financial results in 2024, but our job is, of course, to look a bit beyond signatures and volumes. We also need to make sure that EU-backed financing delivers measurable outcomes and real value for taxpayers. And this is also why my amendments call for stronger, explicit impact reporting.
The rapporteur was mentioning earlier: check better, and that's very well put, I think. A common methodology on additionality and clear KPIs on simplification and time to market, especially for SMEs and mid-caps. I think we all understand the importance of financing SMEs and mid-caps in Europe. That's the backbone of Europe's economy, and we should cherish and support it. I also firmly support a stronger EIB role in European security and defense, of course, with proper safeguards.
And we know that this is an interesting sector with interesting practices, sometimes with various conflicts of interest. And this is not a sector any bank deals with easily. So while EIB should definitely play a stronger role there, I think we need to make sure that proper safeguards in terms of integrity, anti-fraud measures, measures against conflicts of interest, and measures to support Europe and Europe's defense industry are of significant importance. I also call for stronger temper transparency and ethics, better follow-up to parliament's recommendations, and not least the recommendations towards an equilibrium on personnel. Both gender and nationality, geography of EIB's personnel, and closer alignment between the EIB's exclusion system and the Commission's.
Thank you so much.
Okay.
Caterina Chinnici
Thank you. Thank you very much, Mr. Vasilevoj Kalesko. We don't have shadows from the greens nor from the left. And if nobody else is looking for the floor, then I'd like to give the floor while still thanking the rapporteur and the shadow rapporteurs for what they have said. I'd give the floor to the Deputy Secretary General of the EIB, Mikulay Dogleevich.
I'd like to thank him for making himself available. And you have the floor now for 10 minutes so that you can give us the view of your institution and the answers to the questions that have been raised by colleagues who took the floor. You have the floor for 10 minutes.
Speaker 10
Thank you, Madam Chair. And I would like to start by thanking the rapporteur and the shadow rapporteur for the work they have put into this report. We had a very good visit from Mr. Ericsson with his delegation in Luxembourg at the EIB. Also, we had exchanged information through the questionnaire. So, I think this is a very fruitful and well-coordinated exchange of information.
We, of course, are discussing the report for 2024. Can I just say, very diplomatically, the world has changed slightly since 2024? But if you excuse me, I would actually try to refer very much to where we are now rather than only to '24. But I think what is the same is that both in '24 and in '26, and this is recognized in the report, the EIB has a stable financial performance, and it plays an important role, as you have mentioned, in the energy security of the European Union, cohesion, innovation, and defense capabilities. And I think it confirms the role of the EAB as the financial and investment arm of the European Union, indeed in line with the priorities set by the European Council and the member states.
With the report, I would like to mention a few achievements and a few considerations for your further work. And I think the main point is that since 2024, we have increased the lending of the EAB to the historic 100,000,000,000 in 2025, while maintaining the AAA rating and also stepping up support in crucial areas where Europe tries to enhance its competitiveness, security, and resilience. Still, about 60% of financing went to green projects, climate, and sustainability, but the focus is shifting, as it has been shifting in Brussels. We discussed this with Mr. Ericsson. Now, it's less about the carbon footprint.
It's more about making sure that we have a clean industry in Europe and that we can ensure, at the same time, competitiveness and energy security, so that we can invest more in grids and renewables. We also launched TechEU, the largest ever financing program to benefit technological innovation in Europe, aiming to mobilize €250,000,000,000 by 2027 in sectors such as AI, quantum, clean tech, and critical raw materials. Our subsidiary, the European Investment Fund, continues to anchor Europe's venture capital ecosystem. We quadrupled our support for security and defense. I'll say a few more words about this in a second.
We expanded our eligibility to key strategic projects and also reinforced support for SMEs across defense supply chains. It's important that we act in several fields to make sure that Europe can be prepared for whatever can happen. We also increased investment in housing, agriculture, and regional cohesion to ensure that growth remains inclusive. Since today is the fourth year since the start of Russia's aggression on Ukraine, I also want to highlight that in 2025, we had a record 1.5 new operations in Ukraine. One third of them are focused on energy resilience.
We are implementing at the moment over 500 projects in more than 150 communities in Ukraine. One priority for us going forward is the savings and investment union, with the EIB having a pioneering role. And in the context of the MFF, this is very much relevant for the discussions today to see the impact. So, for example, with Invest EU under the current MFF, with every €1 of EU guarantee, we have been able to deliver €15 in real economy investments. This is the leverage that can be achieved with financial instruments, not with grants.
So this is a very important lesson, I believe, also for the new MFF. Now, on economic impact and effectiveness, I think that it's clear that the EIB does not just strive to have bigger volumes. We want better, measurable outcomes. And I think it is clear that any outcome can only be measured as successful if it also crowds in private capital. So, the EIB is not trying to crowd out private investors.
It wouldn't make any sense because then we would not be able to achieve the expected mobilization of investment amounts. But we actually act very often as a lighthouse investor so that others can rely on our due diligence, giving a kind of quality label to different projects. Sometimes, those projects are risky. Yes. For example, thinking about Norvolt here.
So I could give you a few numbers about the impact, but maybe I can spare it because it will take too much time. I would just like to say that we also have a very important measure of where we should act, which is so-called market failures. And this is where we try to measure and add our additionality. In 2024, we deployed €8,000,000,000 in higher-risk equity and quasi-equity operations, mobilizing €110,000,000,000 for European innovators. And this was also very much thanks to the InvestEU instruments.
And such initiatives as the wind package or the European tech champions initiative are exactly designed to crowd in private investments, also using, in many cases, the European budget guarantee, and on that basis, to mobilize private capital. On security and defense, let me use the remaining two minutes to mention this specifically. For us, 2025 was a watershed moment. We adjusted our policies to cover pure military projects, and the volume of financing provided reached the 5% target of our business within the EU. We are working closely with the NATO Innovation Fund and the European Defense Agency, exactly along the lines you requested in your draft report.
We also support SMEs and defense supply chains through risk-sharing with commercial banks. These are precisely the areas where the availability of private capital has traditionally been insufficient, and where the EIB is showing the way to other financial institutions in Europe to invest more in security and defense. We are also firmly anchored in cohesion policy. Almost half of the EU financing goes to cohesion regions. And the last point that I would like to make is about simplifications.
Indeed, we are now very deeply into the process of simplifying procedures. This was mentioned specifically in the context of SMEs, and this is, for example, what we have done with the new dimension of our climate bank roadmap, where the focus has shifted in terms of policy. But at the same time, we also really simplified the procedures that would make these programs or products much more accessible to smaller companies. And, of course, accountability, transparency, and related policies and practices are very important, and we have undertaken quite a number of steps in this regard. I think we are both among our peer institutions, including the multilateral development banks globally, as well as within the family of European institutions.
I think we really have nothing to hide or to be ashamed of in this regard. Maybe a final point. Two, I think two of you mentioned the neutrality on the nuclear project. In fact, we apply the neutrality concept, and we are financing a different number of projects which are related, for example, to the possibility for Europe to maintain and strengthen its sovereignty in the provision of uranium. That's one project I have in my head at the moment.
And we are also looking at a number of projects in the so-called SMR sector at the moment. So I think this, I can reassure you of. Voilà. I think I would like to finish here, and thank you again for this discussion.
Caterina Chinnici
Well, thank you very much, Mr. Dovlijevic. Thank you for the answers you gave to the questions that were posed previously. So now I'd like to give the floor back to Mr. Ericsson to give some concluding remarks for 3 minutes. You have the floor. Thank you very much.
Dick Erixon
Well, yeah, it is important to note that there is an "I" in the European Investment Bank, which means we are talking about investments. Let's not forget that. I took that as self-evident, but, of course, we must have that in the back of our minds. I'm satisfied with what I've heard from the bank about the ongoing change and that they are in step with our security policy requirements. I think these are very important areas of policy.
I think we need to be frank and say it's not just the EIB itself that decides these political priorities. It's other parts of the union as well. So, thank you very much for that information. We'll continue our work on this report until it's ready to be presented before colleagues. Thank you.
Caterina Chinnici
Well, thank you, Mr. Ericsson, for all the work you've put in. I'm sure it will be a very in-depth report following your observations. Thank you to everybody who has taken part. Thank you to the Director General of the EIB, Mr. Dobrevich. And I'd like to conclude this item by reminding everybody that the deadline for tabling amendments is March 4 at 10 in the morning.
Okay. We move on to the next debate, but we're going to have a break of 5 minutes to allow colleagues and guests to join us. Thank you.
My name is Okay.
Ladies and gentlemen, let us continue with our committee meeting. Now, we've been joined by our guests. I'd like to welcome them. We're now going to look at a very interesting European Court of Auditors special report on tackling fraud in the RRF. The court has looked into the anti-fraud architecture in the RRF.
And there are four member states that have been looked at: Denmark, Spain, Italy, and Romania, with regard to their anti-fraud systems. And there are several recommendations that we made to the Commission, which are relevant not just to the Recovery and Resilience Fund, but also would be useful to any similar programs in the future where payments aren't linked to actual costs. I'd like to welcome Miss Katarina Kasia Sova from the court, who will be presenting the report to us. Warm welcome to you. Thank you for being with us this afternoon.
And also, I'd like to warmly welcome Miss Bernadette Frederic, Director for Resource and Performance Management at DG ECFIN in the European Commission. So now, I think we should move to the subject of this debate, and I'll give the floor to the Court of Auditors reporting member, Miss Kazasova, for her opening remarks. You have the floor for 8 minutes.
Speaker 11
Thank you, and good afternoon to all. As I've already mentioned this morning, fraud is an important topic for the European Court of Auditors. This is why we published two reports close together, looking at different aspects of fraud. This report focuses on fighting fraud in the Recovery and Resilience Facility (RRF). The RF is the instrument with unprecedented financial firepower worth €650 billion.
Speaker 12
This vast sum of money offers huge potential for fraudulent activity. We are now approaching the end of these instruments, with still a big amount to be spent. And while the RF is coming to an end this year, a similar funding mechanism may well also apply for the EU's new seven-year budget currently in the making. So, there are important lessons to be learned. In this audit, we examine the EU systems for combating fraud at both the Commission and the Member States.
As you already mentioned, we examined four countries in detail: Denmark, Spain, Italy, and Romania. We also looked at how the EU's finances are being protected, including recovering money from fraudsters. So, we assessed whether the Commission, through setting key requirements and carrying out audits of member state systems, has contributed to improving the RF anti-fraud framework, and whether the member states have set up good anti-fraud prevention and detection measures. This part of our work included a survey of RF authorities across member states. And finally, whether the procedures for reporting and correcting fraud are sufficient to protect the EU's financial interests.
Our overall message is that the protection against fraud in the EU's €650,000,000,000 COVID fund is patchy. As a result, the EU's finances are less well protected than they could be. While the commission has gradually taken steps to address the lack of detail in the RAF legislation, the framework now in place still has weaknesses in detection, reporting, and correction. Member states have introduced anti-fraud measures rather slowly, and some elements, such as data analytics and whistleblowing, are not always used. While the RF is coming to an end this year, it is likely that cases of fraud will only come to light in later years.
There is a risk that the commission might not have the information to follow up on cases and, consequently, to recover funds if member states have not sufficiently done so. This means that the EU may not be able to recover money spent fraudulently. To go into our findings in a bit more detail. The RF legislation has its limitations. We all know that it was developed during the COVID crisis, so in some rush.
As a result, although it set high-level requirements for member states' anti-fraud systems, the legislation was short on details. This affected the Commission's assessment of these systems before payments to the member states started. The Commission has been carrying out audits of the member state systems, which have led to some improvements in the four countries we visited. But there were also weaknesses in these audits in terms of the bodies and subject matter covered. To manage the RF, member states were free to use their own existing systems.
To varying extents, we found delays in member states in establishing anti-fraud policies and some weaknesses relating to public procurement checks. Whistleblowing channels exist at the level of selected implementing bodies, but no allegations of fraud were submitted through these channels. It's possible other channels are used, but we did not have access to them. According to our survey, 1 in 5 of the bodies consulted were not using a data mining tool to detect fraud. As I presented this morning, reporting suspicions of fraud by citizens, investigative journalists, or governmental agencies can be a complicated business with a number of players, including the commission itself, Olaf, and Apple.
However, while all these channels exist, the Commission, as ultimately responsible for the protection of the financial interests of the Union, lacks complete data on suspected fraud, and this affects its ability to target its antifraud actions and apply corrections. In terms of potential corrections, unlike other EU funds, for the RF, member states are not required to withdraw projects affected by fraud or suspend payments, nor are they automatically required to return money recovered from fraud to the EU budget. Systematic reporting by member states to the Commission on RF fraud will end this year when the RF itself ends. This means there is a risk that the commission will not be able to follow up on whether all the money that should be recovered is actually recovered. So, what do we recommend?
The size of the recovery fund, its novel financing mechanism, and the reputational damage of fraud mean that one would expect the effective anti-fraud safeguards to be in place by now. This is, unfortunately, still not the case. At best, we see that this is still a work in progress at this very late stage in the game. The weaknesses mean that the EU remains exposed to RF fraud. So, we recommend that the Commission further strengthen its checks of national RF antifraud systems, improve the reporting of suspected fraud in the RF, increase the impact of corrective measures, and define minimum antifraud requirements for EU countries in future RF-type programs.
We welcome that two recommendations were fully accepted by the commission and two were partially accepted. Thank you for your attention.
Thank you.
Caterina Chinnici
Thank you very much, Miss Casasova. Thank you for your presentation. And now I'd like to turn to the commission to hear what you have to say, Miss Frederick, and to give you your appraisal of the commission regarding this particular report. You have the floor for 6 minutes.
Speaker 13
Thank you very much, Madam Chair. Honorable members of parliament and honorable Miss Kazova, I welcome this opportunity to provide the Commission's perspective on the special report from the Court of Auditors on tackling fraud in the RF. So before addressing the specific findings of the court, I would like to emphasize two critical aspects related to the commission's ongoing efforts in its action to combat fraud. Firstly, I want to reaffirm that the commission maintains a zero-tolerance policy against fraud and pursues all cases of fraudulent activity with the utmost rigor. Throughout the implementation of the facility, we have made it a central priority to ensure that RF funds are disbursed based on the satisfactory fulfillment of milestones and targets, while also ensuring that member states have the necessary control systems in place to protect the financial interests of the Union.
Speaker 14
We are working on this in close cooperation with member states, the European Anti-Fraud Office (OLAF), and the EPPO. Any indications of fraud received by the commission under the RF are systematically reported to OLAF, which assesses the information and decides whether to launch a formal investigation or refer the case to the EPO. Secondly, I would like to underline that, as set out in the RF legal framework, member states have the primary responsibility for protecting the financial interests of the Union. They must ensure that the use of RF funds complies with the applicable Union and national law, particularly in relation to the prevention, detection, and correction of fraud, corruption, and conflict of interest. In doing so, the RF regulation explicitly allows them to rely on their regular national budget management systems.
Since the early stages of the RF implementation, the commission has verified, notably in the context of the assessment of RRPs and through its comprehensive audits, that member states have well-designed, efficient, and effective control systems in place to comply with their legal obligations. Furthermore, the commission systematically follows up on Olaf's recommendation. And finally, where necessary, the Commission may take corrective measures, including financial reductions or recoveries, to safeguard the Union budget. Turning now to the ECA special report. We appreciate the court's acknowledgment of the continuous efforts, both at the commission level and at the member states' level, to further strengthen the protection of the financial interests of the Union.
In particular, we appreciate that the court recognizes the crucial role of our audits in driving enhancements to national anti-fraud systems, as well as the court's numerous examples of member states' actions not only to comply with legal requirements but also to follow anti-fraud guidelines and recommendations. In its recommendations to the commission, the court proposes further potential enhancements, and this primarily involves fine-tuning specific aspects of the control system and, in some instances, extends beyond the RF legal framework. It also includes recommendations for future program design. The commission has accepted all recommendations, either fully or partially, demonstrating our ongoing commitment to strengthening the RF control framework in line with the court's view until the end of the RF. For instance, following the court's recommendations three and four, the commission will further develop its existing guidance to promote best practices related to member states' reporting of suspected fraud cases and recoveries from contractors and subcontractors.
Let me now explain in more detail our views on some of the court's report recommendations and conclusions that I have not yet addressed. Firstly, the commission considers that the control systems of the four audited member states are generally adequately designed to detect fraudulent cases. In particular, all audited bodies had effective anti-fraud policies in place, and, most importantly, whistleblowing channels for anonymous reporting. While the court notes some differences between the national approaches and anti-fraud strategies, none of these put into question the overall adequacy of national controls. The RF regulation specifically allows member states to use their national budget management systems.
Consequently, the exact bodies responsible for anti-fraud at the national level are left to the discretion of the member states, in line with their national institutional setup and the structure of their internal control system. Secondly, regarding the reporting of suspected fraud cases, we stressed that member states must have procedures in place to report suspected fraud cases until the end of the RF via their management declarations and summary of audits, and also beyond the end of the RF. The commission will provide guidance on reporting suspected fraud, including after 2026, very soon. In any case, member states are obliged to report to the competent authorities, such as OLAF and the PPO, and are encouraged to use the IMS, the irregularity management system. Thirdly, concerning the collection of data on suspected fraud cases, the commission tracks such cases and other irregularities using dedicated monitoring tables to record exchanges between the commission, member states, OLAF, and the PPPO.
And the commission will continue to do so after the formal end of the RF, meaning at the end of 31 December 2026. To give you some numbers, at the commission level, we have identified 86 potential irregularities leading to 18 OLAF recommendations across nine member states. Meanwhile, the EPPO has notified us of 132 cases, 98 of which are active, either in court proceedings or ongoing investigations. Out of those, 87% are linked to a single measure in one member state. Lastly, on recoveries, the commission has no legal basis to recover funds if the member state is already taking the necessary actions to correct irregularities at the national level.
It is the member state's responsibility to recover, under the RF, wrongly paid or misused amounts. And if a member state corrects an irregularity and the milestones or targets remain fulfilled, no harm is done to the Union budget. However, should the member states fail to act, then the commission takes corrective action as consistently done under its framework for reduction and recovery. Thank you for your attention, and, of course, I'm available to reply to any question.
Thank you.
Caterina Chinnici
You, Ms. Fredrik. Now, I'd like to give the floor to Mr. Boyer from the Renew Group has three minutes to give his opinion on this.
Speaker 15
From the Court of Auditors for their presentation. I'd like to say as well that the special report from the Court of Auditors on the fight against fraud in the framework of the RRF is a very high-quality report. It's very useful to us, and it comes at an important time, as has been said. A time when we are reaching the final phase of the implementation of this instrument, which will be at the end of this year. The court's report and the commission's response show the two visions we can have of the RFF.
Speaker 16
This instrument rests on an innovative logic, which means that payment evaluations are based on the achievement of milestones and objectives and their verification, rather than on individual spending. If we've understood correctly, the commission thinks that the budgetary impact can be appreciated when we look at the achievement of these milestones. So they think that if the achievements, if these milestones are reached, then there are no losses for the union. The court underlines the importance of maintaining a high level of requirements in terms of protecting the union's financial interests, independent of the achievement of milestones and objectives. It considers that any fraud linked to the instrument should be taken into account in the overall risk assessment.
Speaker 15
So the challenge here is to find a kind of balance that guarantees that the performance-based logic is matched by high standards of accountability and transparency. So, this question is even more important as the Commission has presented a future MFF, which is also performance-based. I would like to ask our guests a few questions. First, to the Court of Auditors. You underline, and you are right to do so, the potential risk linked to reporting after 2026.
I'd like to know if you could specify the scope and extent of this risk, and what mechanisms could respond to that without excessively increasing the burden for the different entities? And what mechanisms could our parliament put into place? I'd like to ask you as well about the national practices that you have suggested. I'd like to know if you have identified among them any that seem to you particularly exemplary and that could be used in the next generation of European instruments. A question for the commission: a question about the fact that you underline the importance of reaching objectives to determine the budgetary impact.
I'd like to know if you think that reaching a milestone or an objective is actually sufficient to consider that the European budget hasn't been infringed in any way. I'd like to ask you as well about the next MFF. What concrete lessons will you draw from the experience of the RFF? You've sketched out this idea of harmonizing the anti-fraud standards at the member state level. Thank you.
Thank you.
Caterina Chinnici
You, Mr. Vollier. Now I give the floor to Mr. Stokovsky for the EPP group for 2 minutes. Thank you.
Tomáš Zdechovský
Thank you very much, Madam Chair. From a budgetary perspective, it's very important. Every time, we have much more figures and detailed information about the frauds and the ongoing investigation. I saw there that Olaf has detected 86 potential irregularities at the commission level. Also, there are 18 recommendations, and we have a lot of problems identifying the effect of the end results of this financing.
Also, for me, it's very important not to have only an overview of what the error rate is in this project, but it's much more about how we use the money. And we know from many countries that this money is misused. They are misused by the oligarchs, friends of politicians. They are misused to really take power and used for some private purposes, and the effect of this money is very weak. And from my point of view, it's very important to have much more information about that.
And this is my question to the European Court of Auditors. If you saw there were any problematic countries where the government systematically used this money for some wrong purposes, and that commission didn't give very good feedback on how to use the money. And the second question is a general question about the rules. Do you think that the rules on how to use and spend money are clear? Thank you very much.
Caterina Chinnici
Thank you very much, Mr. Stikovsky, for those comments and questions. Now, I'd like to give the floor to our guests to return to this first round of questions and observations. So I'd like to give the floor, first of all, to the representative of the Court of Auditors, Miss Casasova. You have the floor.
Speaker 12
Okay. Thank you for the questions. The first one, as I recall, relates to the risk of reporting after the end of RF. It's basically the question we ask during our audit: how will the commission ensure that it can still monitor and correct RF fraud after the last payment is made? We know that the commission will no longer receive management declarations after September, which is basically the main means that member states use to inform the commission.
Of course, there are other channels. We discussed it this morning, Olaf, Apple. But this one was meant to keep the commission informed and have the overall picture of what is going on at member state levels. It means our risk, what we see, is the reason that the commission might not have the information to follow up on the cases after this very critical date and then subsequently or consequently recover these funds. We recommended that the commission establish how member states will report the suspected fraud cases after the end.
And if I understood correctly, it is already in the process, and some kind of guidelines will be issued. Of course, this is something that is today. And my suggestion is always to look forward. And as was mentioned, in case of similar instruments in the future, this is something that should be in place from the beginning and not done at the very last moment. The second question relates to our sample of 4 member states and some kind of national practices, better or worse.
You may see from our report that these four member states have very good examples in their approach. There are fewer good examples. And we really try to also balance the presentation of our audit for the future, to give examples of good practice that are worth perhaps implementing. You may find more examples in the report, but it was not the overall assessment of the member state itself, but of the other bodies responsible for setting up the anti-fraud measures and then to monitor and ensure that they work effectively. Example from Italy, which seems to be the country with the highest reported number of cases, might look at first like, ah, this is a bad pupil in the class.
But from our point of view, it is an indication that antiferrant systems are established and work effectively. We cannot conclude immediately that Denmark with zero or Spain with zero cases is the opposite case because there might be other reasons why there is a lower amount. It means it should always be read in context; for example, whether the country and the RF bodies have implemented or have been using Arachne or other data mining tools or not. It's also an indication of how the system could be effective or not. Regarding our approach when we see problematic countries with improper use of money.
I'm just quoting what Mr. Zekowski said. I would just repeat that our work is not to generally issue opinions about individual countries. But whenever we find a case, we think that there might be suspicion of fraud, as we discussed today. We reported to Olaf and EPO, and we disclosed the information to the extent available also in our annual report. In terms of the question of whether the rules are clear enough, this is not something I should answer as a reporting member of the ECA, but we can discuss my opinion that the rules are clear.
It's more about the willingness to adhere to these rules. Thank you. Madam Chair, and if I may, there were also some considerations about the use of this instrument for the next MFF. Just to let members of the Parliament know, exactly today, we published our independent opinion on the Commission's proposal for this big fund that is inspired by the RF. It means our opinion about this concept and where we see the risks is already published. And I think that my colleagues will come to present and discuss with you later.
Well,
Caterina Chinnici
Thank you very much for those answers. Now we'll give the floor to the commission representative, Miss Frederick, for her answers.
Thank you.
Speaker 14
You. I'll respond to the first question, which was about the milestones. If these milestones are met, can we consider that the budget is safe? Clearly, no. But I thank you for this question because it allows me to clarify or remind us that the insurance provided by Finne DG, the statement of insurance that he signs each year, has two pillars.
The first is the legality and regularity of payments founded on a satisfactory achievement of objectives, and the second is verification and control. That's the second, sorry. That's the first pillar. The second is the protection of the Union's financial instruments in line with Article 22 of the FRFF regulation. This second pillar, the Director-General gives us the assurance that member states will regularly and efficiently check that the funding is used correctly and in line with the applicable rules, including respect for public procurement markets and state aid.
This assurance also relates to paragraph 22, section five of that regulation, which allows the commission to recover that support under certain conditions. And we have to ensure that he assures those measures are put into place. I would say that, for the protection of the Union's financial interests, the member states are on the front line to guarantee the protection of those interests. The commission checks that the member states carry out their work correctly. On our side, to ensure that the member states fulfill their obligations, we evaluate each national control system.
We did it when the recovery plans were first submitted. And when these are submitted again to be reviewed, we will do this exam again. When the control systems have gaps or shortcomings, we include in our responses measures that need to be met before the next payments are made. We also carry out audits of the national audit systems to check that the member states respect the rules regarding state aid and public procurement markets. And the commission's auditors have audited each member state at least once, and I think six member states have been audited twice. We will continue with this planning through 2026.
We will continue to audit the systems, perhaps in a more limited way. The Court of Auditors has led to improvements in the anti-fraud systems of the member states audited. So the two pillars are there: the achievement of the objectives and the protection of the financial instruments. They're both important, and they are non-negotiable elements of our approach. And this assurance is signed annually on this basis.
The second question was about the implementation of the RFF and the strengthening and harmonization of minimal anti-fraud standards. The commission's proposal for the next MFF reflects many of the lessons learned from the implementation of the RFF. I'd say that at the level of prevention, I could cite two improvements. First, the proposal introduces 15 requirements in terms of control applicable to the national control systems, and these are defined from the very beginning. In relation to the RF, the RFF didn't have these 15 key requirements, but they will be included for the new funds.
There are details about these 15 requirements, and member states will have to show that they comply with these requirements in the process of producing their plans. These requirements should facilitate the implementation in the member states and strengthen prevention in the fight against fraud. As I said, that wasn't entirely the case for the RFF, which was conceived as a different, particular kind of instrument. And so, certain anti-fraud systems were detailed during the implementation of the RFF. Among these key requirements, member states are also asked to adopt, from the moment of implementation, an anti-fraud strategy based on an evaluation of fraud risk at the national level.
This reflects the necessity of ensuring we have stronger anti-fraud systems. So, that's about prevention. Now, turning to detection. And, in the future, member states will have to report any suspected fraud, including conflict of interest, double financing, and any other violations of the applicable rules in the management of irregularities, in the Irregularities Management System, which I spoke about earlier, the IMS. This will establish and produce a summary, which will be published each year and sent to the European Parliament.
So these are improvements drawn from the experience that we've had with anti-fraud. I think there was one more question.
Olaf's recommendations. I think I had a question on this. So far, I mentioned that we have received 18 OLAF recommendations, either administrative or financial. So when we receive these recommendations, we have the obligation to follow up. So, we need to assess the position and the recommendation of OLAF.
And, in particular, we need to check at the level of the member state if a recovery has already taken place. If so, then as I mentioned in my presentation, we have no legal basis to recover at the EU level. If no recovery has taken place at the national level, then we can initiate a contradictory procedure with the member state that can lead to recovery or reduction. And I would like to refer you back to a case in May 2025 where the Commission adopted a recovery and reduction decision regarding a conflict of interest case detected in Slovakia. It was a follow-up to an Olaf recommendation, but it was also detected via one of our audits.
We have another case that we reported in our annual activity report last year, which is still ongoing, so I will not comment on it. However, it concerns two cases of conflict of interest in Czechia. So, just to reassure you, we take this extremely seriously, and we, of course, follow up. And each time we are aware of problems of potential fraud in a member state, we report back to the OLAF. Thank you.
Thank you.
Caterina Chinnici
Thank you very much, Ms. Fredrik, thank you for those comments and answers. And now I'd like to give the floor to anyone from the other groups. So, for the ECR, Mr. Harrison has the floor.
No? No?
Okay. Well, let's move on to the greens then. Mister Freund.
Daniel Freund
The president, there you go. And, thanks again to the Court of Auditors for the good special report. I have one question where I'm not sure I understand the different numbers. So at the '24, Apple says they handled 307 active cases related to the RF. And in your special report now, you say that, when you look at the management declarations, six member states had reported 51 cases of suspected fraud from the start of their RF in 2021 until 2024.
So to me, it seems that there is only a limited number of the EPO open cases that are reported by the member states themselves. But the EPO says about 90% of the newly opened EPO investigations have been launched upon notification by national authorities. So I'm just unsure what is true. How many of the notifications come from member states or not? And does that mean that the member states' authorities are properly doing their work, detecting, and launching the required investigations or not?
And then maybe to both ECA and the Commission, I would like to get your assessment of the member states' ability to identify and report suspected fraud, and also the remedial measures. I mean, we know now that they report differently. Some do not report. Some have higher reports. But we basically need a clear answer.
Are member states doing this rightly or not? And if so, which ones are doing their job okay? And where do you have question marks? And what can we do about that? Thank you.
Caterina Chinnici
Thank you, Mr. Freund. Now, I'll give the floor to Mr. Krastet is for the left group.
Jonas Sjöstedt
Thank you, Chair. First, I would like to thank the Court of Auditors and Ms. Casasova, for this report. I think it's really vital. Unfortunately, it again reaffirms all our worries about the RF: this is not a construction built for budgetary control, and there is still a lot to do to be able to reassure that the money is spent in the proper way.
And you described the protection of the financial interest as patchy. And patchy is not good enough when it comes to financial control. And we are now a few years into this process. Some improvements have been made, but we are still at the point where we don't really know many things. And for us in the Body Control Committee, of course, one of the major problems is that we don't know either because of the lack of traceability and the lack of fundamental information, like who is the final beneficiary of certain projects.
It's very hard to estimate the effect of this and how much money was really spent in the right way or the wrong way. So, having said that, I would like to ask you three questions. The first one is: has this model that the RF has with this benchmark and milestones, and so on, and the lack of traceability and the dependency on national authorities made it more difficult for you as the Court of Auditors in comparison to follow other parts of the EU budget? I mean, does the model itself create problems for you as the Court of Auditors to actually estimate how the money is used? The second question is in connection to that.
On the normal budget, estimate the error rate in various parts of the budget. Do you now have enough information to estimate an error rate on the RF? Is it even possible for you, in the Court of Auditors, to do that? Have the control mechanisms improved so much that it is possible to do that estimate for you? And thirdly, of course, the big worry is that some of the problems here will be transformed into the construction of the new multi-annual financial framework.
And the commission reassures us that they do a lot of things to improve the control of the RF. What is the opinion of the Court of Auditors, for example, on these 15 requirements for the member states and their auditing structures? Is this good enough? Or is it the structure itself that creates a problem with the RF? Those are my questions.
Thank you so much.
Thank you.
Caterina Chinnici
You, Mr. Krastat. Now, I give the floor back to our guests to give their answers to this round of questions. We'll start with the representative of the Court of Auditors. You have the floor, madam.
Speaker 12
Thank you. Not easy questions. Okay. We'll try. First, related to the member states' ability to detect and later report on fraud, what are our findings?
And then, coming to figure nine, I need to double check with my team. But, generally, what we refer to in our report is that this lack of a standardized approach to reporting suspected fraud causes the problems. We illustrated that, for example, regarding the moment in the fraud detection and investigation cycle, it is used differently across at least these four member states we visited. Some of them report cases as soon as they are detected through management verifications, while others only report cases after an indictment has started. In our view, as auditors and those who really would like to have proper financial management in place, these cases should be reported as soon as possible and not wait until another or following formal steps are taken.
It means it was also, during our audit, already taken on board by those member states that reported later. But for the time being, and as it is designed, all these elements cause problems for the commission to have a comprehensive picture of the area of fraud because it's basically like putting a pause and pears in the same bucket without knowing and without analyzing why, for example, one country is reporting more. Maybe one of the reasons is not only the quality of detection, but also the timing. As soon as they see it, they report it. And another country is reporting less, waiting until, for example, the step of this formal induction is already done.
In terms of this, figure nine and cases, the difference, I already said that you are showing me something that I tried to already explain. I would come back to my morning presentation, as there are various reporting channels: Apple, Olaf, and then these man management declarations, which are for the search for the commission. I would say it's difficult to say which number is the final one because we did not re-audit individual cases. We did not have access to individual cases. This is what you suspected to be a fraud.
Did you report it via channel to Olaf, or to Apple, or for example, in the case of Italy, first to the financial police and later on to other authorities, or directly to DG ECFIN? I have to say that from my auditor's point of view, we've also been struggling with having one channel and one figure we can really work with. Next, and maybe we can come back to it later. We are searching for some detailed information to answer. Next question related to whether this model is more difficult for us to audit, and whether we could later estimate the percentage or error rate.
The answer is that it's not more difficult. It's a different approach. And, of course, if this instrument is later used in the next MFF, it will be an even bigger part of our work, and we will have to reassess our audit methodology and approach. The reason we have not estimated the error rate for RF so far is not because of a different model. It relates to statistical methods and the fact that, instead of having one large population of data, for example, projects financed by one policy like cohesion.
We have basically 27 individual national RF plans, which will most probably be repeated also for the next MFF. It means that it is very difficult to set up the population that is suitable for using statistical methods for estimation of the error rate. I don't have a crystal ball now to tell you whether in the future we will be able. Of course, it would be nice. But based on my auditing experience, I would say that we will have to think about this carefully because estimations of error rate are based on pure statistical methods that must be applied. What else was there?
This new MFF and whether it's a good approach for the future, whether there are any significant gaps in that design, I would again refer to our opinion that was published today. There are many answers for these questions and a very detailed analysis of the commission's proposal. And, hopefully, this opinion will also be used for, let's say, improving this legislation if there is will, and then avoiding future challenges with the fraud dimension in this instrument.
Well,
Caterina Chinnici
Thank you very much. Thank you to the representative of the Court of Auditors once again. Now, I give the floor to Miss Frederick for the commission to cover the other questions raised.
Speaker 14
Thank you, Madam Chair. Yes. I would like to come back to the question in relation to the statistics, which indeed have many figures, and in the end, we are a bit lost. So it really depends on the competencies of each reporting body. So the EPO is in charge of some tasks and reports 307 active cases.
Once the EPO considers that they are mature enough, they communicate to us a figure, which is 132. So it means that out of the 3,007, they consider 132 to be mature enough to be communicated to the commission. On top of those cases, we also have Olaf, which currently deals with 86 cases. And we monitor the 132 cases plus the 86 cases from OLAF. So, that is our work.
And in relation to that, we also liaise with member states to monitor and follow up where necessary. I mentioned, for instance, when we receive a recommendation from OLAF out of the 86, we act. Next to this, member states have the obligation to report fraud cases either to the APPO or to OLAF. So this is an obligation that they need to comply with. Next to this, they also have to report in the management declaration and the summary of audit suspected cases of fraud that they have detected, for instance, during their audit work.
But this reporting is linked to a payment request. So, it means that it is linked to the content of the payment request. And this is where there are discrepancies between the figures reported by the PPPO, OLAF, and our own figures. And we, of course, follow up with the member states on top of that part of the 51 cases because there is an overlap between the 51 cases reported in the management declaration and summary of audit and some of the OLAF cases that are followed up by OLAF and by the EPO. So, in a way, we have a complete overview of what is ongoing, not being in the lead, of course, but we monitor and act when it's necessary.
Okay.
Monika Hohlmeier
Raise her points. Yes.
Thank you very much. So, a quick question for the commission. How can the Commission guarantee the EU's financial interests when there is no obligation for member states to report fraud? So, looking forward, how can the commission actually guarantee that? How can we guarantee the interest of the Commission when the MFF states that member states are not expected to control the costs, nor are member audit authorities expected to control the costs? I can see a completely different understanding of oversight, obviously when the costs are not being controlled.
This is not just a poor choice of words, but a completely different way of seeing things when you look at risk. Obviously, the data in the Arachne system is needed data. And, apparently, there are hundreds of red flags from member states, and obviously, they can only look at a couple, but there are other points that you've drawn up from businesses which are in the system. So, is the data in the Iraqi system proportionate? And I'm talking about really the amount of data that's in there.
We need to ensure security as well. So we need to ensure there is the data there, but the data that is actually required and that would be useful. And then the third question: harmonized data. And this is why we need to make sure that the data is not so disparate that it can't be used. So, where are we with the interoperable systems, so we can follow up and actually use this data?
I think people know this when we ask about the RRF, that we're often told that there is no data. And we're told, obviously, we're given figures about what's been used, but it's something of a fairy tale, and it's just not clear. We don't have the data which has been provided by member states, and that means that the European Parliament has to wait to really find out about the RRF, what the problems are and the success stories. I mean, the data is just so general when it comes to the RRF that we're not really sure about what's actually going on in different member states. And final question: linking back to what was said this morning, member states see the RRF as national funds.
Now, obviously, it has been clarified that the RF funds are not national funds. They are EU funds, which can then be dispersed via a national system. So, there's a major misunderstanding of this at the member state level.
Thank you.
Caterina Chinnici
Thank you very much, Miss Hohlmeyer. So many questions. So rightfully put as well, of course. So, we do have a few minutes to hand. So, maybe I can just add some of my comments and a question.
I think it's already understood that we're looking at different situations in member states in terms of protection, prevention, and detection. The situation of anti-fraud systems and control systems, I think, obviously adds to the difficulties for us as the committee and you as the commission to be able to follow what's going on in terms of funding here. And my country, Italy, has established a system thanks to the contribution from the Guardia di Finanza. They certainly managed to sort out and detect potential fraudulent activity at an early stage. I would also like to refer to one aspect that was touched on in the report, which is, of course, very interesting to us, but I think it's part of this debate with the Court of Auditors, and that is the question of the final beneficiaries of the funds in terms of bolstering corrective mechanisms for the RRF.
In the annual report of the Court of Auditors for 2024, an activity report, we know that 2 of the 24 member states that were considered had systems meant to monitor RRF funds to the final beneficiary. And among those states, thanks to the computer systems in place, Italy was one of them that managed to do that. So, the question following the money in the RF is important. So I'd like to ask, in nuts and bolts terms, what happens if we cannot follow the funding all the way to the final beneficiaries? What's the impact of that on fraud, and how do we deal with this situation?
And having announced those points to you and raised those questions, I'll give the floor back to our guests. First of all, I'll give the floor to the representative of the Court of Auditors, Miss Casa Sova. You have the floor.
Speaker 12
Thank you. If I understood correctly, questions for Monica are mainly for the commission. It means I will not interfere. Yes, I agree with you. I think that issues regarding Agahni and the amount of data, as well as the use of any other data mining tool, are already explained in our report.
In terms of the question of final beneficiaries, or let's say, following money to the final beneficiary, what is the impact in terms of fraud? Of course, if we can't account for money, it's very difficult to assess, verify, or audit whether this money was spent, first of all, in line with the purpose it was supposed to be spent for; then that it was spent in line with the three E principles, in line with legislation, either EU or national; and then that there was no fraud or any other major irregularities caused by, for example, conflict of interest or corruption. It means the answer is very simple from our side. Of course, it does not mean that having a chance to forward money to the final beneficiary is the only auditing approach we can use. It's always combined with the assessment of the design, implementation, and effectiveness of, in this case, anti-fraud systems set up at the Commission level and the member states.
But ideally, we need to have both these pillars available for assessment. Then, we can conclude. Well,
Caterina Chinnici
Thank you for that reply. And I now give the floor back once again to Miss Frederic to answer all the questions that have also been put by Ms. Hornmayer.
Speaker 14
Many thanks for those questions, which I will take one by one. Maybe on your last question about how we cannot follow the money and what the impact is on fraud. I would like just to recall that member states have the obligation to collect the data and to keep the data for audit and control purposes until 5 years after the end of the RF. So there are still obligations, and I mentioned earlier today that we will issue guidance to member states on what will happen after the end of the RF. So you need a bit of patience, but it is coming.
And there, we explained that we will continue our audit and control activities on our side, and member states are obligated to continue monitoring the implementation of projects and, on the fraud side, of course, to continue monitoring and reporting. On the question of the non-obligation to report, I would be a bit more nuanced because the member states have an obligation to report to the PPO and to OLAF. It is true that they do not have the obligation to report in the IMS. So this is a weakness that I mentioned earlier in my presentation, which is corrected with the new funds because the reporting via this tool has been corrected. So now they are obliged to report in the IMS tool.
On Arakne, but it's a bit the same story. So, we have put in a lot of effort, I can tell you, to encourage member states to use Arakne. For some member states, I'm thinking of Belgium, they even had an audit and control milestone to use Arakne. But we have our own limitation in the sense that we cannot oblige a member state to use Arakne. So, in the case of Belgium, it was because there was no IT system.
Speaker 28
To Arachne, because Arachne is a system that is at the moment not very successful.
Speaker 14
But it is improving. So, we are now working to have an upgraded Arachne that will become compulsory with the next MFF. So, we have encouraged. We have increased the number of member states using Arachne. In the case of member states using Arachne, they are uploading their data into the tool to make sure that it is sufficiently populated to perform their checks.
And we are also using Arachne before, for instance, for selecting our milestones and targets, the sample of milestones and targets. So the Arachne issue is, in a way, being solved by the new MFF. Member states are not seeing RF as EU funds but as national funds. They have the obligation of protecting the financial interest of the Union, and we control that they are doing so. So, even if they had in mind that it would become national funds and they would not do any control anymore, this is not correct.
I mean, we are checking that they comply with their obligation, and I mentioned that they will soon receive guidance on what their obligations are after the end of the RF, meaning between 2026 and 2031, which is five years after the end of the RF. So that is upcoming.
Okay.
Caterina Chinnici
Miss, do you want to add something? We can't hear you. If you'd like to add something, you have to use the microphone because we can't hear you otherwise.
Monika Hohlmeier
No. I just said to the commission that I asked for the necessity of the data, the quality of the data, and the standardization of the data because, from 100 flags, normally two or three are valid. And the civil servants say we don't use it because it's not helpful to us. It's so time-consuming to find out which red flag is really an efficient one. There I was asking if the commission is improving the quality of data, the harmonization and standardization of data, as well as the necessity and proportionality of data.
Speaker 14
So, question. Yes. Sorry. I forgot one of your four questions. I agree that in order for the data to be useful, it needs to be of high quality, and we are working to improve that.
So it is part of the project that we call Corporate Arachne, which will come with the next MFF and the obligation of member states to use that tool to make sure that the checks we make when we use the database are indeed efficient and effective. I must say that we do not have reports from member states that the use of Arachne is painful or ineffective. So, I mean, some member states are quite happy with the use of the Arachne tool as it is now. So, not all are negative. I'm not saying that the instrument is perfect, but we are improving it.
Caterina Chinnici
Okay. Thank you very much. Thank you to all of you. Thank you to Miss Casasova from the Court of Auditors. Thank you to Miss Frederick for the commission.
I'd like to thank you because your contributions have proven very useful, and I think it's extremely valuable to hear from you. I'd like to thank all colleagues who have taken the floor, given observations, comments, and raised questions as well. And I think, obviously, this is a topic that we need to look into in detail. We are following this very closely indeed because the financing of the RRF, we understand, is extremely important for our countries, but it's also important that we understand that the money is being spent in a correct and transparent way. So, I think we can say we've appreciated your work here.
It has allowed us to follow what is going on. I think we're all pushing in the right direction to try to protect the financial interests of the European Union. That's our concern, and I think it's yours too. So, thank you everybody for having contributed to this very interesting and deep debate. Thank you.
Monika Hohlmeier
So, dear colleagues, let's start now with the joint meeting. And I welcome my colleague, Maran, as co-chair from the ENV. And I have the honor to start first. So, adoption of the agenda: if there are no objections, the agenda can be adopted without modifications. Is that okay?
That's fine. Then, item number two: the ECA special report on the Life strategic projects. I welcome Roel Elvinger and his team from the European Court of Auditors. We very much appreciate that you are with us today. And the commission will be represented by Miss Alexandra Vakku, Head of Unit for Green Knowledge Research Hub and Life at DG. Oh, sorry.
One moment. And Miss Stephanie Hisinger, Head of Munich Low Carbon Solutions, Research and Low Carbon Technology Deployment at DG Klima. Welcome. So, the committee has the habit of appointing a rapporteur, and I welcome our colleague as rapporteur for the committee. He will speak first, followed by the representatives of the other groups, first envy and then in order.
So that's the technicalities. I start now with, I think, the court's finding that life strategic projects support the implementation of environmental and climate strategies in the member states by improving coordination, stakeholder engagement, and continuity. Nevertheless, they do not adequately prioritize the most urgent challenges. So, the ECA lacked clear mechanisms for mobilizing additional funding, making impact reporting unreliable, and showed weaknesses in dissemination, sustainability after funding ends, and performance measurement. I look forward to hearing from Joel about all of these kinds of problems that you found.
So, you have the floor.
Speaker 30
Yeah. Thank you, Monica. Dear chairs of the Content and the Committees, Ms. Hornmeyer and Mr. Mahan, honorable committee members, ladies and gentlemen, I'm very happy to be here presenting our report on life strategic projects, and thank you very much for your interest in our audit.
Today, I will talk about projects that create a bridge between environmental and climate strategies and their implementation. It is a topical issue because it is tied up with the larger issue of the environment and climate change. The EU has set ambitious environmental and climate targets. And when various priorities are competing for resources, efficient and effective implementation of plans and strategies becomes even more important. This is where the Life strategic projects come in.
They support member states in implementing strategies to face various environmental and climate challenges. These challenges include air and water pollution, biodiversity loss, and climate change. So, very important issues. Our audit looked at how life strategic projects were designed and how they supported environmental and climate strategies in practice. Life strategic projects have been around for about 10 years and are part of the Life program.
For the current programming period, we talk about around €1,000,000,000 of the EU budget spent on these projects. But the impact could be much larger given the purpose to speed up member state implementation and attract additional funding. Now I will tell you about what we found during our audit. Our key message is that life strategic projects work. What I mean by that is that they encourage cooperation and attract extra funding.
Since these projects usually run for a longer period, they can also be a stabilizing factor to ensure the continuation of important work in the environmental and climate areas, even in times of uncertainty. However, as an auditor, I also need to point out the shortcomings. Now we have identified a few areas for improvement, and I want to talk about three of them. First, I'll discuss the project selection. Second, I'll talk about the impact and the evaluation of project outcomes.
And then I'll tell you about the weaknesses in ensuring the sustainability of project results. So, first of all, the project selection. The key point here is that the projects do not necessarily prioritize the member states' most important environmental and climate needs. When selecting projects for funding, those with the highest impact should be prioritized. But this does not always happen.
The Commission has a lot of knowledge about specific issues that the member states are facing, but these are not taken into account when selecting projects. This is a lost opportunity. Secondly, I mentioned the impact of the Life strategic projects. Our second important finding is about knowing how much these projects contribute. Ideally, we should talk about the evaluation of the contribution made by Life strategic projects to the EU's environmental and climate objectives.
However, this is not possible due to the shortcomings in the monitoring and reporting currently in place. Why is that? The indicators used to evaluate the life program are the same for standard projects and strategic projects. The indicators can be useful to measure results of standard projects and more tangible outputs, such as the impact on an area of land, but they do not measure key objectives of strategic projects. Therefore, we cannot really say how much they contribute.
There are other issues as well: for projects that are not completed, expected values are often used. There are two issues with this. One is that there is no guarantee that these results will actually occur. And the other issue is that when estimations are mixed with actual results, the numbers are not comparable. But what about the key objectives of Life's strategic projects?
Let's talk about additional funding. That sounds like a tangible and measurable thing to consider. Life strategic projects have to mobilize additional funding, and we found that they do. But what does it actually mean? What counts as additional funding, and how is it measured?
Unfortunately, there is no common definition. Each project can follow a different method to report additional funding. Sometimes, even money spent before the project is approved is counted as additional funding. This means that we cannot trust or compare the amounts reported as additional funding. And the commission says that billions have been mobilized by these projects, but the truth is that we do not actually know how much money we are talking about.
The impact of life strategic projects could also be amplified by the sharing of knowledge. Projects can come up with innovative ways to put a plan into practice, and making this fresh knowledge widely accessible could help others. They could get inspired to replicate or adapt the solutions to their needs. In fact, many projects have their own websites where they share knowledge and solutions. They network and participate in conferences, but few use or promote EU-wide platforms.
Actually, many of the project coordinators we talked to were not even aware that these platforms exist. And here, we see a missed opportunity. Then I come to the third point, and the last of the three things I want to emphasize is the shortcomings in ensuring that project outcomes outlive the funding period. This is what we call the sustainability of the project results. Life strategic projects must have afterlife plans.
That is a good thing. The afterlife plans should ensure that project benefits continue after the funding period. Very good. However, like the issue with the indicators, the approach to afterlife plans does not distinguish between strategic and standard life projects. And it is not always the bodies that prepare the afterlife plans that are responsible for implementing them.
This reduces the accountability for actually putting these plans into practice. And, in reality, the commission does not have any real effective means to enforce these plans once funding ends. So, these were our main findings. Based on what we found, we make a number of recommendations to the commission. We recommend putting more focus on member state-specific environmental and climate issues when selecting life strategic projects for funding.
We also recommend better guidance and reporting on additional funding, as well as promoting EU-wide platforms for more sharing of good practices. And finally, we also recommend that there should be stronger plans to ensure that results last beyond the funding period. The authorities responsible for strategy implementation should be actively involved in developing and implementing afterlife plans. So, that's it for a brief introduction to what we found in our audit. I would like to thank you once again for the invitation and for your interest.
I am very happy to answer all your questions, together with the head of the task, Milan Schmidt, who accompanied me today for this meeting. Thank you very much.
Pierfrancesco Maran
Thank you. Thank you so much. From our perspective, this report is highly relevant. The LIFE program is one of the key instruments for environmental and climate action, and this strategic project is intended to support the effective implementation of our objectives at the national and regional levels. Your remarks are important on the monitoring indications, the way the projects are selected at the national level, and of course about the legacy of the post-life.
And so it's important to know also the position of the commission about this first impulse, and I leave the floor to Miss Alexander Vaccaro, DG AMVA.
Speaker 32
Thank you very much. First of all, we would like to thank the Court of Auditors for this timely report that they have executed. We believe that this report is very timely and relevant for two main reasons. First of all, as not many strategic projects have been finalized, the commission has not yet done a full evaluation of these types of projects. So, we very much welcome the extensive work that the Court of Auditors has done.
Speaker 33
And second, as you also mentioned, we are currently discussing the future MFF. We find that the ideas proposed by the court through the recommendations and the areas of improvement identified are giving us valuable tools to implement strategic projects better in the future. We would like to address some points raised by the court and underline the following. First of all, we are very happy with the validation of the concept of the life strategic projects. It gives us more elements to think that this type of life projects are addressing policies, are addressing implementation on the ground, and, above all, they bring a strategic dimension to it.
Speaker 32
These are not small projects. They are projects implemented on a wider scale, with the support of relevant authorities and stakeholders on the ground. They bring this policy mix, and I think, and we think, and I hope also that this is demonstrated by the court's report, that the strong involvement of key stakeholders, the mobilization of additional funding, although we can dispute how much, but also the capacity to ensure continuity of these projects over wider periods, gives us essential elements to demonstrate the effectiveness of these projects and also to demonstrate some long-term impact. With regard to the court's observation on recommendation one, it suggests that the selection process does not take on board the member states' important environmental needs, but we consider that the evaluation of a proposal is what it is. And we will not, of course, start analyzing and assessing if a national or regional strategy approved by a member state or a regional body is good enough for that.
There are other ways, policies, and forums to do that. These strategies that a strategic project is proposing are already adopted by the member states, and there is no dispute on that. This has been done following the relevant legislation. And, of course, we had identified a point that we do not think that, in the context of an award of a project, an executive agency can do this type of assessment. Considering the complementary funding, we accept the court's recommendations, and we will work to clarify the definition of the additional funding mobilized.
Speaker 33
It is because the strategic projects implemented so far have used all programs and funds available. They tried to make the connection. They tried to create synergies. They tried, as I said, to bring stakeholders together in order to also mobilize this additional funding. And we have found that there are significant differences in the national procedures to access these fundings.
Every member state has different types of programming. So, we will try to bring in some additional criteria. And, of course, we fully take on board the recommendation to share good practices and to use standardized European Union platforms to promote the use of these projects and to bring future projects on board. And now, I will turn to Stephanie from VICI CLIMA.
Speaker 34
Thank you. Yeah. Allow me to complement what my colleague laid out on two specific aspects. One is the monitoring of the performance at the project level and program levels, where, indeed, we would like to recall that project-level indicators for the strategic projects, like for all life projects, are designed as tailored solutions to complex challenges. For us, by definition, that means there is no one-size-fits-all approach that we can adopt. But we acknowledge, at the same time, that program-level indicators do not capture all project results.
Speaker 35
However, in our view, this does not affect the robustness of the monitoring and evaluation at the project level, which is carried out by the beneficiaries with the support of the live monitoring team. Indicators related to governance, stakeholder involvement, and capacity building are largely qualitative in nature and cannot be meaningfully aggregated at the program level. This, in our view, leads to an underestimation of life performance at the program level and is an issue that we have been actively trying to address, including with support from external experts, and we will continue to improve that aspect. With regard to the afterlife plans that you have already referred to, we understand and also share the recommendation of the court because we share the importance of ensuring that the benefits of the strategic projects extend beyond the funding period. Therefore, we will ask member states to involve the relevant authorities responsible for the plans to the greatest extent possible.
Speaker 34
At the same time, as is also acknowledged in the court's report, we have to recall that the commission has no legal means to enforce the implementation of these plans, as they take place after the closure of the grant agreement and do not involve additional EU funding. So, in conclusion, the Commission wants to reaffirm its strong commitment to implementing the Court's recommendations to the best of its ability, in line with the LIFE multi-annual work program, and in close cooperation with the Member States through the LIFE program committee, as we have done over the past years. And now, we are happy to respond to any questions that you have for the commission. Thank you.
Pierfrancesco Maran
Thank you so much. We move to the account rapporteur, Mr. You have 3 minutes.
Jonas Sjöstedt
Thank you so much, Chair. And first of all, I would like to thank Madame Elvinger, as a member of the Court of Auditors, for this very interesting report on the life strategic projects. I'm a member of both the Environment Committee and the Budget Control Committee. And I find this report not only interesting but also very useful because it is concrete and shows a way forward when it comes to this work. First, I think it's important to keep in mind that it's natural for a budget control report to focus on the weaknesses, and of course, that's the job of the Court of Auditors to do that.
But I think one thing has to be clear, and it is also clearly said by Madam Eldingen that this works. These strategic projects do a lot of good, and they meet many targets. They are an important tool to reach the environmental goals for the European Union in a number of different fields. But I totally agree that with some changes and better follow-up, this could be more efficient, a better use of taxpayers' money, and provide more knowledge about what we actually achieve with what we do. And as has been pointed out here, it's about how we choose the projects and which projects we actually choose. So it's actually providing maximum benefit to reach the goals.
It's about clearer rules regarding the additional financing. So, we have knowledge about how much extra financing there is, from whom, etc. And there has to be a methodology for that. It's about sharing best practices: a lot of information is out there, but it's apparently not used by other projects in a way that could be useful. And, of course, then we have the very complex issue of what happens after life, which we all think about sometimes, and the follow-up of these projects.
But I think this is a core issue that is vital to improving these programs. And I'm also very happy that the Commission clearly states that they are willing to follow all the recommendations from the Court of Auditors. Now, I would like to move on to some questions. First, the court finds that the selection of life strategic projects does not sufficiently take into account member states' most pressing environmental and climate challenges, and that the geographical balance may dilute the focus on impact. That's a very important conclusion.
And I wonder if you can give some examples of projects that might be good, but it would have been better to choose something else. Something more urgent would have been a better use of taxpayers' money; some would have contributed better to achieving the environmental goals of the Union and of the member states, because I think this is a crucial point. The report also highlights major inconsistencies and a lack of verification regarding their reporting of mobilized additional funding. And, of course, this whole system should be built on catalytic effects, as this is a cooperation between various levels of authorities. And this, of course, has to do with funding, and you rightly point out the fact that we don't know.
We have not enough reporting on the additional funding, so it's hard to measure. But I would just like to add that the effects of this program and of environmental policy, in general, cannot be reduced to an economic issue. The sheer fact that we improve the environment, be it air quality, things that make us more efficient in fighting climate change, or biodiversity, also has a value in itself. And that's the real goal of this. So, I think it's important.
I mean, the Court of Auditors looks at the money. That's fine. But the commission, and we have to focus also on the impact of how we meet the goals of the Union's environmental legislation. So I would like to nuance that purpose a little bit. And then we have this big question: what happens after life?
But in the environment committee, we also discuss the future of life. And this, I would say, is one of the most controversial things that we discuss when we see the proposal of the MFF. And if this works, and if we now know how to improve it, maybe we should not change it too much. Maybe we should just take the conclusions and improve them, because if it's not broken, you don't have to mend it. And I really see a risk with this big reform that they are doing with the new proposal from the MFF: merging all the programs, having a totally new structure, and also with all the budget control aspects that we have, because we have the lessons learned from the RF that we have to have traceability.
We have to know where the money is going. And if you redo everything, you risk being forced to invent the wheel once again. And it might be better just to preserve some things that actually work. And life programs, with some minor changes and improvements, might be one of those things. So, I would like to ask both the Court of Auditors and the Commission: what are the risks of redoing this whole structure? Might we lose projects, structures, and things that we've learned along the way, have to restart things again, and actually be less efficient by doing so?
That being said, both from a general perspective when it comes to how programs are formed, and also from a budgetary control perspective, there are big differences in the structure of the MFF compared to the present model regarding the ability of both the Parliament and the Court of Auditors to ensure that the money actually meets the needs it was meant to meet. Those are my questions. Thank you so much, Chair.
Pierfrancesco Maran
Thank you. Now, we move to the group representatives. You will have two minutes each. We start with the current representatives. Let's start with the EPP for Conte Dirk Gottink.
Dirk Gotink
Thank you, Chair. I like this concept very much, that in Kant, where we mostly look at money and what money is used for, we have the professionals on the policy side who simply join together to discuss the same object. And that is, in this case, a special report. I want to thank the Court of Auditors. We've been working on something in this Cont Committee, and actually, we've had the privilege to have access to hundreds of contracts related to life.
Although that's my first question. Most of those contracts are not long-lasting. Are these eight-year contracts, or what is the shape of the contract that is then used? In our discussions about these contracts, we also discussed the role of CINEIA because a lot of this money goes through CINEIA. The role of experts and how you select them.
Now, I understand that these strategic plans are very much linked to what the member states want. To what extent is then CINEEA involved? What is the exact role of CINEEA in that process? Or is it that they are just rubber-stamping the preference of a member state or following a sort of strategic long-term plan of a member state? Or are they actually conducting their own objective evaluation?
Because that would lead to what the Court of Auditors is saying: the most optimal project being selected. I would understand. So, with the biggest impact, if CINEIA were to look only at impact rather than member states' preferences. So, that's one point. Second is the shape of these contracts, and what we found, at least here, is that—and I'm not talking about a lot of the good stuff that also happens in Member States with Life projects.
But there is an element that's about shaping policy, about lobbying, about communicating, about engaging, about being here in this building, having access to, and also influencing the commission. Actually, commission paying money to influence another part of the commission is literally sometimes what we run into when looking at some of these projects. How would you describe these strategic projects as being different from what we may have had access to in terms of one-year or two-year contracts? And do they also consist of normal operating grants? So, is the eight-year contract also an operating grant, where they simply have a lot of freedom to actually decide what happens afterwards, making it difficult to understand what's actually done with the money?
Those are some of the questions I have, Chair. Thank you.
Stefan Köhler
Yeah. Thank you, Chair. I would like to talk in German.
Miss Elvinger, thank you very much for presenting this special report, first and foremost. And I think, together with other committee members here, that there's a serious shortfall when it comes to transparency. The accusation that farmers should be funded by this is something that many of my constituents are worried about because we're not sure what's going on. And the question of trying to protect livestock products projects and seeing what is actually implementable and what's being funded through the LIFE program. This is often done without the farmers being on board, which leads to dissatisfaction to a large extent.
It's certainly problematic that money is being spent on providing funding for organizations that don't need to provide much, if any, proof. And yet, when farmers have to claim money that they should have a right to, it is linked to serious amounts of red tape. The correct use of taxpayers' money and European funding should surely be essential. So, how do you make sure that this will be guaranteed in the future? Thank you.
Pierfrancesco Maran
Thank you. For me, if somebody wants to participate in the KGDI, just inform us. And I leave the floor to S and D: Thomas Pelevin and Caroline. Thank you.
Thomas Pellerin-Carlin
You, Mr. President. We are seeing the greatest extinction of living species since an asteroid hit the Earth, killing off most of the dinosaurs. Protecting biodiversity is one of the fundamental objectives of the Life program. Today, 80% of biodiversity is in Europe, in our outermost regions. Yet, these outermost regions do not appear in your report.
Like you, I want to use European public money well. So, I have two questions. One is for the commission. Out of the 22 strategic projects that you analyzed, how many concern the outermost regions? Second question: do you think it's still possible to enrich your report by considering a fifth recommendation?
If 80% of our biodiversity is in our outermost regions, to use public money well, we should invest more money in these regions where the biodiversity is. I'd like to finish with a message for my colleagues who are on the other side of the parliament and who say they want to defend the outermost regions. We know that defending the LIFE program means more money going to protect biodiversity, and this will protect the quality of life in our outermost regions. And so, I hope you'll vote to save the life program and that you'll be coherent on this point. The Saving Lives program is a way of protecting Europeans who live in these outermost regions.
Thank you.
César Luena
I think it's important to read the report carefully because its content is very clear. What does it say? The life strategic programs work, and they work very well. The report recognizes that the programs facilitate and help member states to implement environmental and climate programs that help them to mobilize additional financing and involve stakeholders. And something else very important: it says that they guarantee continuity and financial stability over 8 years.
So these projects outlive changes of governments, and this is what we need to apply to all the European legislation, but particularly legislation that needs to be implemented in the long term, like environmental legislation. What other improvements are needed? Yes. We need to select programs better, for example. Yes.
But none of this actually calls into question the value of the instrument; on the contrary. In fact, it shows that it works and that it has to be strengthened, not weakened. We don't want to see these attacks, climate negotiators. We see the right, the extreme right, doing this. We get these attacks.
So, what we need is more of this life program. So, if we want environmental legislation to continue and be strengthened, we need these instruments that are long-term, that are predictable, and that's exactly what life is. So I would ask that the next, the future MFF, continues to have the LIFE program as an autonomous and strengthened program within the MFF because that is what we need. Thank you very much, Chair.
Pierfrancesco Maran
We move to the ECR. I don't have a request from the conference, sorry. From Patriot. I don't have a care; we don't have a request from MV, mister. Sorry.
Sorry. So, Mathilde, Andrew.
I didn't know.
Mathilde Androuët
It's not a case of being against NGOs, but being pro-transparency and pro-concrete results for the environment. The 7,400,000,000 euros paid to the NGOs, actually, the total of that could be much higher. The concentration is concerning around 4,000 financed NGOs. A small number of them took up a large part of the funding, and their identity wasn't communicated.
Mathilde Androuët
Apparently, certain contracts were reviewed, but in most cases, the contracts had already finished and the NGOs didn't actually respond.
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