Committee on Budgetary Control Ordinary meeting
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CONT European Parliament
Follow its sittingsAndreas Schwab
And I close the vote, and it's adopted with 15 to 10 and one abstention. Thank you very much to all of you and also to mister Krotik for having worked out this proposal. Thank you very much. Then we come now to agenda point four, amending regulation 904 of 2010 as regards the access of the European Public Prosecutor's Office. I know that you're now very happy about the vote, but we want to continue the work immediately after.
Speaker 6
Julian is already here. Good morning. Okay, colleagues. Thank you very much for your silence. I would like now to give the floor to our colleague, Gilles Boyer, who is the draftsperson for the opinion on the report on regulation 904 2010 as regards the access of the European public prosecutor's office and the European anti-fraud office to value added tax information at union level.
Gilles Boyer
Gilles. Thank.
Thank you very much, chair, colleagues. Our committee on budgetary control has been requested to give an opinion to the Econ Committee on access to VAT data for the EPPO and OLAF. The commission's proposal broadly says that there is VAT fraud by organized crime and is generally underdetected, and this represents a total of billions per year at the taxpayers' expense. This shows that there are shortcomings in our system, fragmentation of information flows between the national authorities and European authorities. There is data, but they are often not easily accessible.
Speaker 5
They're only accessible through long and inefficient procedures. The commission's proposal is a significant step forward. It will allow for a centralized access for EPPO and OLAF to the VAT data, which represents significant progress. However, this text shouldn't mean just a technical change. It's part of a broader modification.
Gilles Boyer
This has to do with the anti-fraud architecture announced by the commission in July. So the amendments that I proposed are part of this anti-fraud architecture. We need to have a more integrated and coherent procedure, moving away from the current fragmented process. The first amendments are bringing in the customs data. At the moment, there's a bit of a blind spot when it comes to VAT information and information coming from customs, even though a lot of the anti-fraud regimes combine these two aspects.
For example, we've got cases where goods are imported into the European Union and are being undervalued or declared under a specific scheme like the procedure 42, which allows for VAT exemption on import. These goods are then again sold in another member state without the VAT being correctly declared, or this is part of carousel fraud schemes. In these kinds of scenarios, the lack of exchange for this data means that we can't detect these inconsistencies, mainly between the declared value and later values. So we need a transmission mechanism, which is faster and that can share the relevant VAT information to EuroFisk, EPPO, and OLAF, to improve the detection of this kind of fraud. Secondly, our amendments aim to strengthen coordination at the national level.
Fragmentation is not only between member states, but also within the organization of national administrations. We need increased cooperation between national authorities to detect complex fraud. The amendments also take into account the discrepancies and asymmetries that exist within the European Union, particularly linked to the nonparticipation of EU member states in the EPPO. This means that there are limits when it comes to sharing information and the kind of action that we can take in a coordinated manner at the European level. We need mechanisms that will allow us to share the relevant information specifically through Eurofisc and OLAF.
Speaker 5
And then final point, the amendments look at sanctions and follow-up. The differences between national regimes can create opportunities for the fraudsters to exploit the best jurisdictions. And so this shows that we need some kind of minimal harmonization of sanction for the worst kind of offenses to increase the deterrence at a European level. We need a regular assessment mechanism to be able to measure the effectiveness of this mechanism, measure real impact of access to data, and strengthen coordination, as well as being able to identify shortcomings. The proposals of this opinion aim to strengthen coherence, readability, and efficiency of the European response when dealing with cross border freight fraud, which can too quickly adapt to the shortcomings of our system.
I would ask you to support this approach, and I look forward to working with the shadow reporters on this issue. I'm very curious to hear your comments and look forward to taking them into account as much as possible. Thank you.
Andreas Schwab
Thank you so much for sharing with us your opinion on this and to introduce this to your opinion. That's a very important matter, not only because we have been voting no, but that the internal market committee will vote tomorrow on the European customs code, which should finally give a big step to improve the current lack of exchange of information between customs authorities. But there is, for sure, also that VAT angle that you have been referring to, Sergio. Therefore, I also would like to welcome now our guests that are with us to represent the European Commission, its Director General for Taxation, Mr. Ricardo Castiglione. And from Olaf, we have Pablo Theodo Murua, head of customs and trade operations and investigations, and they are now available to reply to questions from rapporteurs and members.
I would like to remind that this is a procedure under Article 113. Hence, the European Parliament is only consulted. However, the matter is of great relevance for us because it's about the revenues of the European Union. And therefore, I would like to give the floor to colleagues to ask the European Commission or Olaf on the matter. Who would like to have the floor?
Mister Sikhovski.
Tomáš Zdechovský
Thank you, chair. Thank you very much for the reporter overview of the situation. I totally agree with him, and I think that it's really necessary. And EPP fully support to have its special hearing on these topics because, really, if we would like to make the trade union, we need much more, much more give the energy to solve the problem with the frauds and where is misusing the money. I think it's in the time of digitalization. We need to have it information, and we need to have it better coordination.
And I'm looking forward with cooperation with the European Commission and especially with ECA because I follow many ECA reports and many ECA recommendations and also the Olaf recommendation in this fair sphere. And I think it's really necessary to have the clear position of EU institution and work together on all these things what was mentioned by a reporter. Also, I think it's crucial for next anti-fraud infrastructure, and I totally agree that we need to have it, I think, with committee together, any discussion of what we can do much more, as a European Union to fight against fraud.
Andreas Schwab
Thank you so much, Mr. Stichowski. Is there any other colleague who would like to have the floor? Please, yes.
Speaker 8
Thank you very much. I wanted to thank Mister Boyer as rapporteur for having prepared this draft opinion. And I'm sure that on behalf of the committee, we will be making a good contribution to this. Now as was repeated 15 days ago by the EPPO when we went on a Libbey mission to the EPPO, what we heard again and again was that the volume of VAT fraud is such that it suggests that there's systematic involvement in these very complex schemes using modern technology of the most dangerous criminal organizations. So fighting VAT fraud means protecting the EU budget and protecting the legal economy.
Speaker 9
At the same time, it's the security and freedom of our citizens that is at stake. So as a result, we need to have a system for combating VAT fraud, is effective, which is fast, and avoids duplication of effort. The work that's been put before us by Mr. Boyer is one that we can support. It makes the system more effective, more coherent.
It makes it more interoperable. So this cross-border system for combating VAT fraud should get better. And it should allow data flows to be faster, which is the structural weakness of our current system. Also, we have the issue of customs data. And the linking customs and VAT authorities is one of the major issues.
We need to ensure that there is full access to the necessary information, and that should include EPPO and OLAF. In terms of my own work, I will try to contribute a couple of amendments. What I'll be focusing on is clarifying the shortfalls that have been flagged up by the court of auditors. And I will also note the issue of access to information, ensuring the EPPO and OLAF have the resources they need to effectively combat VAT fraud using the new rules that are coming into force. I am sure that together with Mr.
Speaker 8
Boyer and all of the other colleagues, we'll be able to have full cooperation among ourselves to get the best possible result, as is usual in committee. Thank you very much.
Ondřej Knotek
Thank you, mister chairman, colleagues, on behalf of the Patriots. So, the draft opinion from the reporter very correctly identifies the shortcomings of the commission proposal, namely by focusing on customer authorities. This legislative file should meet mainly two priorities: protecting European taxpayers' money and also respecting the limits of EU competencies. Cross-border VAT fraud is a serious problem. It costs billions from national budgets every year.
Improving coordination between authorities, including Eurofisk, OLAF, and the EPPO, is very necessary. But I have two key concerns, which will be also addressed in our amendments. First, are the data protection and proportionality. The European data protection supervisor clearly warned that such access must remain strictly targeted, linked to specific investigations and not lead to generalized monitoring or phishing expeditions. And secondly, the effectiveness versus complexity.
The real problem is fragmentation of information flows between authorities, but more data does not automatically mean better enforcement without proper coordination at the national level, especially between customs and VAT authorities. These new system risks will become bureaucratical burden, bureaucratical errors rather than the operational tool. So to simplify, my priorities are fight fraud effectively, ensure strict data protection, and avoid unnecessary administrative burden. Thank you very much.
Yes.
Speaker 12
Thank you very much, chairman. Now I've been a member of this parliament for some time. So for the last 15 years, I've been following Europol and access to data, particularly Europol access to customs data. Now responding to Mister Knotic, Europol gave us concrete examples of the kind of data they would have loved to have access to. And now when I think about EPO, if not even EPPO has access to that data, then I must say something is wrong in the bureaucratic obstacles. Well, I would totally agree with mister Boyer.
The investigative bodies have to have the possibility to get this data. I mean, I understand that they don't want to give data to anybody. There's a principle of proportionality, and there are good reasons to have restricted access to this data. But if there is no access, if there is no cooperation with customs or authority from member states, and I hear that this is once again the case from the Libbey committee, then this is something that actually really irritates me. We're talking about 200,000,000, 100,000,000, 500,000,000.
Speaker 12
Billions, and no one is doing anything about it. This is an age of digitalization and artificial intelligence. Surely, that like with PNR, we can do this simply without bureaucracy, and we can have the European level help the member states to get this into place. This is not some kind of gentleman's crime; that's not trivial. It's a question of billions of euros.
It's a question of VAT and customs. These are real billions that are lost. So it would be a big success if we can get this data, and I have full support for everything that Gilles Boyer said.
Thank.
Andreas Schwab
You, Monica. If I understand correctly, there are no further questions. So I'll give the floor to Mr. Castiglione from the European Commission.
Speaker 14
Thanks a lot for the comments. This is a targeted amendment to regulation 904 to give access to share information with the EPPO and OLAF. And if we want to get an agreement, we should take this into consideration. That this is the scope of our targeted amendment. Thank you.
Andreas Schwab
Thank you very much, Miss Castaglione. Maybe we can also invite Mr. Pablo Murua from Olaf to make some comments.
Speaker 15
Good morning to all honorable members. So first of all, on behalf of Olaf, thank you very much for the support to the activities against fraud and therefore these proposed amendments, which go in the perfect direction. So we want to just stress that indeed we are concerned about a gap that we detect over the years, which is the cross border cooperation between customs and VAT authorities and how it is affecting customs fraud and VAT fraud inextricably linked. So in Olaf, we have a long history of trying to address this, and the access to this data would be a multiplying effect that would foster cooperation and would help to partly address the matter. So with having said this, we fully agree on proportionate and respectful in terms of data protection access to the data.
And we remain accountable for this access, and we assure that it will be case-related. So with this, we think that we will be equipped to foster the administrative cooperation between the two main actors that operate at the administrative level, which is Olaf and Eurofisc, and at the same time, detect more crimes that could be reported and dealt by APPO and even national authorities by criminal means. Thank you very much.
Andreas Schwab
Thank you very much, Mr. Mouroure. Before giving the floor to Gill to conclude on his opinion, I would like to reiterate that, for sure, we are, as a European Union, in a very difficult angle in between customs and customs controls and information, in between VAT information and controls. And both of this have an impact on our revenue. So there is no doubt that some member states, only a very few, but some member states have an interest to play with this.
And I think we, therefore, have an interest as parliament to have a better overview about where the entry points are, where people know that they can bring in goods into the European Union, where the rules are a bit different than in other places in the European Union. And this, for sure, being controlled without too much bureaucratic burden and too much, as our colleague Njotik has said, fishing for information, but based on very clear and solid principles. And as our colleague, Stikovsky, has been proposing, maybe we could also consider this to be deepened a bit. And there are also some investigations that could bring us a lot of information. But I don't want to dwell further.
Diagele, the floor is yours.
Gilles Boyer
Thank you very much, chairman. Just a few words of conclusion. I just wanted to thank my colleagues for their support. I would be very curious to see how we can further improve the text. We're in a situation where VAT fraud has long been identified as a major problem.
Every single year, it costs billions of euros to the European taxpayers. I think it would be irresponsible of us not to use all the levers at our disposal to combat VAT fraud. I think the contribution from our committee on budgetary control is that we should be proposing, flagging up the extension of this to the customs data. The text proposed to the econ committee is already a lot of progress. But I think that this is something concrete that we can add, and that's what I'm proposing to you.
Given the massive levels of fraud, we have an obligation to use not just the available means at our disposal, but to bring in results. We need to prove to the taxpayers that we are doing everything possible to solve this problem. In econ, where I'm also a member, I will try to pass on these concerns. It's not just a concern for our committee, I want to ensure that the context responding to the commission proposal is ambitious enough to genuinely combat this scourge. Thank you very much.
Andreas Schwab
This is a really important topic, and we are looking forward to your opinion will help the leading economic and monetary affairs committee to come to a great conclusion. And as I said, we will consider going deeper on this at a later stage. Thank you very much. Like this, we can come now to item five on our agenda, which is the special report of the European Court of Auditors on the EU's advisory bodies. I would like to welcome first Miss Catalina Casasova.
She will present the report today. Thank you very much for being with us. The report looks at the functioning of the European Economic and Social Committee and the Committee of the Regions, which play an important role in the EU decision-making by providing opinions and representing stakeholders at different levels of governance. The court assessed whether these bodies deliver their opinions in a timely manner and whether they can effectively contribute to EU policymaking. I also welcome, apart from miss Katarina Casasova, the representatives of the European Economic and Social Committee, miss mister Isabel Legalo Flores, miss, sorry for this, in her capacity as secretary general, and from the committee of the region, the secretary general, Petr Biltzkowski.
Thank you so much for joining us. And like that, I would like to give the floor to Miss Casasova to present the report.
Katarina CASASOVA
Dear chair, dear rapporteur, honorable members of the budgetary control committee, I'm delighted to have this chance to present to you this morning our special report on the EU's advisory bodies, which we published just before Easter. The two bodies we examined in this audit were the European Economic and Social Committee and the Committee of the Regions. Both committees are established in the treaty, the EESC back in 1958, and the Committee of the Regions more recently in 1994. Their purpose is to speak for their constituent groups in the development of the EU legislation. The EESC represents three groups: employers, workers, and civil society, and the Committee of Regions represents local and regional authorities at sub-member state level.
Speaker 17
They exercise their functions by issuing opinions on the proposed legislation. In some cases, these opinions are a mandatory part of the EU's legislative process, but the committees are also able to act on their own initiative and publish opinions at their choosing. Each committee consists of up to 350 members and is supported by a secretariat providing administrative services. While they are distinct separate bodies, they do share some services such as translation and building management. This is actually the first time that either of the two committees has been subject to a full scale audit by us.
Katarina CASASOVA
While expenditure items may occasionally come up in our annual statement of assurance work, we have not previously carried out any performance audits in this area. Despite their unfamiliarity with our audit, I would like to express my thanks to the members and staff of both committees for the very constructive working relations. Turning to the substance of our work. While we report on them together, we examine each committee separately. The aim of our audit was to assess whether the committees had the processes in place to prepare relevant and high-quality opinions delivered on time to contribute to the legislative process and to systematically assess their impact.
We covered the period 2019 to 2024, when over 1,000 opinions were produced. We did not directly examine the content of committees' opinions, as that would not have been appropriate or feasible. We examined in detail a sample of 30 opinions from each committee, covering different types of opinion and different policy areas. For 20 of these opinions, we used AI to analyze the extent to which the legislation was revised to reflect the committee's views. We also contacted a wide range of committee stakeholders, including representatives of the EU's legislative institutions, selected cities and regions, and employers, employees, civil society, and academia.
Speaker 17
So, what did we conclude? Overall, we found that the committees do indeed have quality management procedures in place, covering the entire life cycle of producing opinions. However, there are some important gaps relating to the selection of experts, the timing of opinions, and the committee's evaluation of whether opinions have had the desired effect. First, I will reiterate that the committees in general have clear rules and guidance in place, designed to ensure a consistent level of quality in opinions. This includes, for example, high-level planning aligned with the EU legislative cycle, how to deal with particularly urgent requests for opinions, and internal review of draft opinions before adoptions.
Both committees make extensive use of experts with specialized knowledge to help them prepare opinions. There's nothing unusual in this. We also draw on expert advice for some audits. While these experts are not paid for their services other than getting their travel expenses reimbursed and daily allowances, we found that neither committee had transparent criteria for selecting the experts. And the committee of regions did not have an established process in place for picking experts nor a register of which experts had been used previously.
Katarina CASASOVA
We consider that these weaknesses lead to a risk of bias, and could pose a reputational risk for the committees. Turning to the timeliness. This is a key success criterion for the committees. The best opinion in the world is worthless if it arrives after the legislation has been adopted. In terms of deadlines set by the Parliament, Council, and Commission, the picture is mixed.
Speaker 17
The economic and social committee meet these deadlines in 71% of cases, and the Committee of Regents in 33%. However, the committee's judge that a more meaningful deadline is to deliver their opinions before voting takes place in the relevant parliament committee. Here, performance is better with the ESC achieving 84 and the committee of regions, 74. Despite the importance of these deadlines, neither committee uses relevant performance indicators nor has an automated system to measure in a consistent, systematic way where the opinions are being delivered in time. This does not help them to identify and deal with potential problems at an early stage, nor to subsequently report on performance.
Katarina CASASOVA
Finally, we looked at what the committees were doing in terms of measuring the impact of their work. While they have communication strategies which cover modern forms of media, we found that they tended to focus on outputs, the number of opinions or media mentions. But what they do not do very much at the moment is assess the impact of their opinions on draft legislation, their core activity. While both committees are moving slowly in the right direction, for example, changing the format of opinions to facilitate assessment of impact, it remains the case that a committee consistently tracks how their recommendations are reflected in EU legislation. Our recommendations reflect our findings.
We made three recommendations relating to transparency in selecting experts, improving the monitoring of the timeliness of opinions, and focusing performance measurement more on impact. I'm pleased to report that all three recommendations were accepted by both committees. That concludes my brief presentation of our report, and thank you for your attention. And if members have any questions of clarity, we would be pleased to answer them. Thank you.
Andreas Schwab
Thank you very much, commissioner, for this very enlightening, very, let's say, strong opinion. But I think it's also the strength of the European Union that we look at the facts and that we have a critical assessment of them and that we are ready to reflect all the time on what we can do better. Therefore, thank you very much for your contribution. We have now no? Exactly.
That's what I'm thinking about here. We have now Ms. Legalo Floris to come in on behalf of the European Economic and Social Committee. The floor is yours. Please, over to you.
Isabel LEGALO FLORES
Thank you very much, Chair. Honorable members, thank you for the opportunity to present the perspective on the Court of Auditors' report. Let me also thank the member of the court, Ms. Katarina Casasova and her team for the excellent cooperation and constructive exchanges throughout this process. This first ECA performance audit has been a significant exercise for the EESC, involving a substantial part of the administration.
We approached it in a constructive spirit as an opportunity to further reflect on our working methods and to further strengthen how we contribute to the EU decision-making as the voice of organized civil society. I believe this report is of great value to our institution. On the one hand, it recognizes several important strengths. The high quality of our opinions, the dynamic compromise as a key working method for achieving internal consensus between our three constituent groups, and the general robustness of our internal procedures for drafting opinions. It also helps to better explain, particularly to those less familiar with the ESC, the unique role and contribution of organized civil society within the EU's institutional framework.
At the same time, it highlights areas where we can and will implement improvements, in particular with regards to timeliness, impact measurement, and aspects related to the selection of external experts. On timeliness, the audit shows that in the period 2019-2024, the ESC adopted 10-15 opinions, approximately 200 per year, confirming a substantial and sustained contribution to the EU decision making process. More specifically, out of approximately 335 opinions on legislative proposals, as you have seen, 84% were adopted before the political deadlines and 71% before the institutional deadlines, thereby ensuring that the vast majority of our opinions could be taken into account by the legislators. These figures demonstrate that the ESCs already largely align with the legislative cycle, and that on timeliness, the issues identified are occasional rather than structural. The court also found that deadline monitoring was already in place in the ESC, but not yet sufficiently systematic.
In response, we were already developing since 2024 a centralized monitoring system, including an early warning mechanism in line with the ECA recommendation. The objective is to better anticipate legislative timetables and to actively manage timelines. This is a clear priority for me. On impact measurement, the court rightly points out that our current approach needs to be more structured. At the same time, it is important to recall that ESG opinions are not binding on the co-legislators.
The question is therefore not whether the ESG has an impact. Actually, it has demonstrated impact in numerous examples on which, if you would like, we're happy to continue developing in the questions and answers. But the question is on how the impact is systematically captured and demonstrated more effectively. This impact takes different forms. It may be reflected directly in the legislative process, but also in the broader public debate, and in the evolving position of organized civil society over time.
It is also important to recognize that organized civil society has the legitimate role and right to express positions that may differ from those adopted by legislators. This is a core element of democracy, even if it is not always immediately visible or easily measurable when assessing the uptake of a specific opinion. In this context, I am glad to inform you that we are already working since 2024 on internal methods and tools for impact assessment. This includes the development of impact indicators, as well as a pilot project, for example, exploring the use of artificial intelligence to better track the references to EESC opinions in the legislative process. Lastly, on experts.
On the selection of the experts, the court acknowledges that the EESC already has a solid and consistent procedure in place, supported by a database of over 4,000 experts. At the ESC, experts are proposed by a rapporteur and appointed by the President of the Competence Section following an assessment of the candidate's profile. However, the court found that the absence of publicly available selection criteria may limit the transparency of the process, and this is a point we fully accept and will address. As a conclusion, overall, the audit confirms the solidity of the ESC's procedures and working methods, while providing a clear and actionable road map for further improvements. All recommendations have been accepted and we are fully committed to their effective implementation within the agreed timeline.
We see this process as an opportunity to continue modernizing our institution and to further strengthen our contribution to the decision-making process. I thank you very much.
Andreas Schwab
Thank you very much, Mr. Secretary General, for your contribution. And this gives us now the possibility to hear Mr. Petr Bliszkowski. He's the secretary general of the committee of the region. Over to you.
Petr BLIZKOWSKI
Thank you very much, chair. And, dear member, thank you very much for inviting us to this discussion, which I welcome. And let me also start by thanking the member of the ECAM, madam Kasacheva, and her team for a very productive and nice cooperation. And I welcome, we welcome in the committee the outcome of the audit, and we take it as an opportunity for us to improve what we are doing. We accept fully the court recommendations, and the process was very transparent, and our replies are clearly stated in the audit.
And, we are inviting, and I think it was already confirmed by madam Kasachova, the member of the ECA, to our conference of the presidents on June 30. This will be an opportunity to go for a frank exchange on the next steps. And maybe it is also important to say who we are. So we are a consultative body. Or where our members are not full time in Brussels.
They are basically based in their constituency. So this is the situation which we were we have the leaders at the subnational level working in their constituency and coming here normally six times for a play for the plenary. So let me briefly comment on the three main findings. Number one, on the experts. The committee will establish and publish the criteria for which the selection of the act for the experts, which the reporters have to comply with.
So we are fully on this one. And we will also make sure that we will develop a record of the previous areas of expertise for the members and make sure that we have a register which is in line with the requirements of the ECA. On the timeliness, so with the limitation that we have. So we have a budget. We have 6 plenaries.
We have the members who are working on the ground. Fully agree that the timeliness is a key issue for the opinions. I would like to say that once we are preparing, our members are preparing the opinions, we are in very close contact with the parliament, with the commission, and with the council. So we are working in parallel, and especially, I would like to praise the cooperation with the parliament. Since we do long term planning, which was appreciated by the audit.
Since 2025, we have a register of the institutional deadlines in our internal tour. But I agree with the findings. This is not an automated process, and we will work towards making it automatic. The deadline tracking currently, the institutional and political deadlines are being monitored by the office policy officers in the commission secretariats. And since '25, we have a register of the deadlines.
And in line with the COECA recommendations, we are now preparing organizational adjustments such as speeding up the appointments of the rapporteurs, which can be a helpful exercise, and assigning the referrals to the competent COR commissions. On the third finding about the monitoring and reporting on the impact, we are fully committed to improving the measurement of our impact in line with the ECA's recommendations. What we are doing currently, we have an annual impact report, and I'm very proud to say that we have it prepared at the very beginning of the year for the last year. So already in January of the year x, we have the report on the year minus one. And it all already includes qualitative and outcome-based indicators.
However, we will further develop it in line with the recommendations and strengthen the reporting. In general terms, the impact depends on the other institutions because we are proposing something, and whether it's taken or not by the other institutions like parliament and the council depends on the political nature of what is on the table. So I would, once again, like to say that what is, I believe, helpful is that once we are adapting, for instance, our opinions, we are inviting the reporters from the parliament to be present, to listen his or her opinion. So we work very closely in order to enhance the impact and the uptake of our positions. We have already done some new initiatives like a new format of the opinion so that also the members of parliament and the council members can easily read our opinions, and we will continue improving the work on this one.
And we are testing the new IT tools, how to precise more, how to measure more precisely the impact of our legislative work. Concluding remarks, very good cooperation. Thank you very much. Very helpful. I would also like to say that on top of what was subject to the audit, meaning the mandatory opinion making, our committee is also very busy with the work which goes beyond this work.
So our members are regularly adopting their own opinions. And our committee is also very much investing in outreach. And here, we do it together with the Parliament, with the Commission, with the Council. And, we are working also with other institutions on many other areas, like better regulation, territorial impact assessment, alliance buildings, and so on. Dear members, thank you very much for this opportunity.
I welcome it. And once again, thank you very much, Eka, for the audit. Thank you.
Andreas Schwab
Thank you very much, Mister Secretary General, Mister Biszkovsky. This has been very helpful. Thank you so much for your presentation, and also thank you to the European Court of Auditors for that courageous presentation. I would like now to give the floor to our members for questions and comments. Mr.
Tomáš Zdechovský
Thank you, chairman. I first, I didn't have the opportunity to say that we have a very good Cont team, and I would like to thank the Cont team to follow us on the mission in Malta because it was great work and a great cooperation. Also, first, I would like to thank you. And second things, what I would like to say, our sisters committee, brothers and sisters committee, that it is a pity that they are not included in the European parliament. I like both the secretary general.
They are very kind people. Peter is my very good friend, but I hope that, in the future, we will go in the process of more and more cooperation and bring our economic and social committee, and committee of region included in European parliament. It's very important for the future. First, you will have much more power, and we will have much more power of region in European parliament. And second, we will have it more expert in the European parliament.
Also, I think it's the way to do it, and thanks, Katrina, for your way of thinking. I am very happy that you are a little provocative. We were waiting here for someone from ECA who will give us the overview and some points what will give us as politician some output for thinking. And I am absolutely sure that this debate is needed. Really, you are doing an amazing job, but nobody knows it.
Also, it's a pity that you produce something that nobody takes seriously and discusses in European parliament. In European parliament, we have a committee. Also, we need much more cooperation. We have it, Econ. We need more cooperation with your expert from the member states.
We have a social committee. Also, this is the way how the thinking. And I was a little bit provoked at the beginning, and I would like to conclude it a little bit provoked also. I said one times in the media that, this committee are zombie committee. I didn't mean that you are zombies or some things, but I mean that it's really some things that it was prepared next step that you will be part of the of our power.
You will not give us only the recommendation, but you will participate in the legal framework of the European Union, and I think it's the time to change it. Also, thanks very much. I like both committees. I have there a really very good cooperation with you. I think I'm only one or we are only two members who are reading your report and what you are producing, but we would like to have you inside, not outside also.
Please think about it, and thanks, Katharina. I'm looking forward to the next report, and I hope so that you will continue with your great job. And I am very happy that from Slovakia, we have a courageous member of ERCA.
Andreas Schwab
Thank you very much, Mr. Stichovsky. Are there any other colleagues who want to have the floor? Please, Mr. Erkan.
Dick Erixon
Thank you, Sharon. The question this report raises is whether those two adversary boards deliver opinions on time, and whether those opinions actually shape legislation. That should be their core mission. First, timeliness. The committees are delivering late.
Speaker 22
As ICA member Casanova said, the advice published late has less impact, of course. And I can see that the Economic and Social Committee adoption time rose from 97 to 120 days between 2019 and 2024. Second, no outcome tracking. Those committees use up to 87 key performance indicators, but none measure timely delivery or impact on legislation. Citizens have negative concerns about the added value of those institutions when they cannot reliably meet their own core missions.
Dick Erixon
My question to the court is when does the court realistically expect both committees to implement its recommendations, and has the court identified best practice from other jurisdiction jurisdictions where similar advisory boards already measure their impacts? If so, where? Thank you.
Andreas Schwab
Thank you very much, colleague. I don't see at the moment another question, so I would like to come in myself, building on what you said, colleague. I mean, the figures that have been brought to our attention by the European Court of Auditors, they raised some questions for sure, especially, and I would like to start with the Committee of the Regions. I know plenty of colleagues from the regional level that are sitting there, and I know that they enjoy a lot to speak about European topics that very often they may know from the press, but not even this very often. So they get a flavor of what Europe is about.
And therefore, I think there is a useful element for them to adjourn and come together. At the same time, the role that officially is attributed to the Committee of the Region is, for sure, as the court has been outlining, to make contributions for the legislative process, to make the European Parliament aware and the lawmakers council in Parliament of what regional concerns of legislation could be. And let's imagine, for example, I see Karla Tavares, who is our rapporteur on the budget. There are important questions with the performance-based indicators that could impact the regional level. So if a comment or if a judgment of the Committee of the Regions on the concerns of the regions with performance indicators does not come in timely into this parliament, we cannot take into consideration important issues for the regional level.
And I think for that reason, the concern that the work of this institution has to follow some sort of timeline cannot be ignored. And so if I have the right numbers in mind, I think 74% of the contributions arrive in time before the committee starts discussing or decides from the Committee of the Regent. I would like to know from you, Secretary General, Mr. Bliskovsky, how do you see the awareness of your members in relation to this reality? Do they see a use for their contributions?
Or do they have the feeling that it doesn't matter what they are doing? Or how would you explain that low level of meeting the time frame that is set by the lawmakers? Thank you very much. Are there any other questions? If not, then I would like to give the floor, ladies first, okay, first to the European Court of Auditors, and then to mister you mean, me, mister Liskovsky.
Katarina CASASOVA
Thank you. Thank you, chair, and thank you, everyone, for praising our work. A few remarks based on the discussion. First, there was a question when we, as a European Court of Auditors, will see implementation of recommendations. There are the deadlines in the report, so the committees are supposed to implement recommendations until December 27.
But, generally, we, as occurred, will come back to all recommendations we issued this year in the special reports in three years. It means we will stay in touch, and we will see how it goes. In terms of the question of benchmarking with other bodies, the frank answer is we have no experience like this. It would not be fair to compare without understanding the content of the work. But, generally, measuring impact of work is a very challenging activity, and you've seen it also here in a committee when we referred, for example, to Agarev, yeah, which is, which was one of the cases.
It means comparison would be good, but this was not part of the audit. Then regarding the intervention of mister Zekowski, I think that you basically pointed out to the elephant in this room because there are very many questions raised about the added value of these committees. And, definitely, there is a potential to contribute to better policymaking, but the added value is not always guaranteed. It very much depends on external factors. We've already discussed, like timing, relevance, and what you pointed out, willingness of EU institutions to take these opinions into account.
And, basically, what you did not find in the report was something that we wanted to do, and his homework may be for you as members of the European Parliament, if you would like to follow the idea presented by mister Zekowski. We launched the survey, and we addressed it to all 530 members.
Katarina CASASOVA
The European Parliament and 27 permanent representations, the survey asking how they are satisfied with the opinions prepared by the committees, whether you use it in your work, if there are any ideas how to improve it. And guess what? Despite prolonging deadlines and reminding us, we received just five responses from all members of European parliaments and nine responses from maps and five from permanent representations. It means, this very low response rate led us to the conclusion that we cannot use the results of this survey. It means this is very important, from my point of view, part of our work did not materialize.
It means it's also a question for you as members of the parliament and those who are responsible for EU legislation to think how to assess the work of the committees from content point of view and the relevance. Because I think that without this, you will always come back to the question that was raised previously. And just to conclude, regarding these KPIs and late delivery issues,
Katarina CASASOVA
I think that the commitment of both committees to implement the recommendations and to look at this issue is another added value of our audit because the outcome of the audit is not only for members of the European Parliament, but also for the committees themselves. And I'm very pleased to see that they are fully committed. Thank you.
Andreas Schwab
Thank you so much for this further explanation. I would now like to give the floor, as I already said before, to Mr. Bliskovsky.
Petr BLIZKOWSKI
Thank you very much. I thank you for the exchange. Mister chair, to your question about our cooperation between the committee of the regions and the European Parliament specifically, I was very happy that you mentioned the name of miss Tabarez. And I would take it as a case study because I would like to praise our cooperation and Miss Tabarez's involvement in our work. We did recently three opinions on the MFA files.
We were in everyday contact with the rapporteur on the parliament side, and we were on time before concluding your work so that our input was available in these three MFF related files. Recently, I was very happy that Mister Tavares was also present in our various meetings, including the plenary. So I take it as an example of what we are trying to do in timeliness and in impact. We want to establish a concrete working relation to work in the preparatory phase so that both sides know where the problem is. So we were very clear where the problem of the committee of the regions is in these three files.
And we were on time so that you can use the elements which you find important for you in your parliamentary work. So this is, for me, one concrete example, which is also a reply to whether our members are aware of the political work of the parliament. Of course, there are many of them who have everyday contact. They are the linkages also via the policy on the policy side and the part and the political party side. So definitely, yes.
And, once again, I would also say that our members see also their role vis a vis the parliament and the council as messengers for the local reality. So that's why we are making this impact analysis, territorial impact analysis, place-based input so that you can use it in your work. Once again, thank you very much, and I take it as an impulse for the further improvement of the work of the committee of the regions and our cooperation with the parliament. Thank you.
Andreas Schwab
Thank you, Mr. Secretary General. But you can come back on my question, how members of your committee take it as motivation. Maybe the example on the budget, I don't know the details, but as you have presented them, shows that there is a high level of awareness in relation, I would now say, to very important issues in brackets for the budget, closing the brackets. But what could we do? How do you assess the situation that, for other topics, there might be a similar attraction for feeling responsible for being included?
What is your answer to the fact that if this case went well, why others, plenty of others, do not go that well?
Petr BLIZKOWSKI
Thank you very much for this additional question. I think I believe in the structure approach, we have a fresh cooperation agreement between the parliament and us as of last year, and there are many areas which give a basis for our cooperation. Example is that, for instance, we do joint meetings of the committee to committee like Cotter, Regio, Regi. We do it in Nat area, in the Enve area. So for me, those are the best practices which allow both sides to be aware also on the political impact and on the topics and also the people to people contact.
So this is one example. Other example is that we are also trying to be, to provide our input in the trial process. So we are commenting on the trial documents. So not only the adoption of the opinion, which was the subject of the audit, but what comes after. So once we have an opinion, this for us, this is not the end of the work, but this is the continuation of reaching out to the council, to the parliament, and to do, if necessary, follow-up positions, for instance, on the trial documents.
So I see it in the, I think that using fully the potential of the cooperation agreement could be a good way forward. Thank you.
Andreas Schwab
No. That's very helpful. I mean, we will come to the European Economic and Social Council in a second. I do share the experience that apparently my colleague, Karat Havardas, has made in relation to the agreement that the European Union has concluded with Switzerland recently. And it's, for sure, a useful exercise that people who are at regional level politically having a mandate are talking on such, let's say, very general but also very precise commitments of the European Union in relation to a neighbor without having all the criteria of the treaty and the different areas that we are caring about here, but having rather an emotional, a positive approach to such questions.
But still also here, is the question of how experts are chosen, of how procedures are done, and how we could maybe also ensure that there is a very strong commitment of your members, not only of the administration, to make sure that the performance of your institution is, let's say, corresponding to the treaty situation. Maybe if there are no other questions to the Committee of the Regions, but I check with my colleagues, you may get the floor again if you like. And then I would like to also mention some questions in relation to the European Economic and Social Affairs Committee. Please, over to you.
Petr BLIZKOWSKI
Thank you very much. And once again, I will be very concrete. You mentioned the relations with the Swiss Federation. As a follow-up to our joint work, we are now signing a memorandum of understanding for the regions to regions level exactly to implement what we were discussing in the framework with the discussion with the parliament. Another example is that we have very frequent guests from the parliament to all of our bodies.
And, I would mention one specific body, which is the, let's say, the leadership of the committee of the region, the conference of the presidents where the vice president of the parliament responsible for the inter institutional relations is often our guest. It was the case, earlier this spring, where we discuss exactly the issues how we can be more productive in our cooperation. So I take this exchange as an encouragement to go further. Thank you.
Andreas Schwab
Thank you very much, Secretary General. Now maybe turning to the European Economic and Social Affairs Committee. You have slightly better performances on that level of performance that the European Court of Auditors has declared as a complicated element of assessment, for sure. You have been mentioning the committees as being of different performance. And immediately, I thought about the parliament's committees, but you have only referred to outside committees.
But I think we could also have a very self-critical approach in that respect. So I think it's a very positive sign that we are challenging this morning our own performance. I'm not sure how many answers you would get on specific reports of committees in this house if you asked the public, but have you read them? So we have to be very, very critical on this in all respects, which makes it then also easier for the two institutions that are here today to understand that there is a general challenge for all of us and not only for you. But we have to take it seriously because we are delivering for our citizens.
And in that respect, Secretary General Legalo, Orest, for you maybe it's a bit easier to meet the time frames because your members are maybe as they are from trade unions, from businesses, from outside institutions, they are maybe a bit more eager to deliver in time compared to politicians who think that they can take the time they need. How would you explain that still there is a bit of a missing timeline, a gap for coming to the parliament or to integrate into the legislative procedure in time? And how would you see the level of awareness of your members of being taken seriously by the council and by the parliament, so that their input matters or should matter. May I give you the floor directly? Please, over to you.
Isabel LEGALO FLORES
Thank you very much, Thier. So going directly to your first question on where the delays occur, they relate primarily to the fact that some proposals are complex. So it takes, it requires additional time of this dynamic consensus building, and this is why sometimes it's not that easy to get to the deadlines. It relates also to the fact that we have only 9 plenaries a year, and this is where opinions are actually validated. So that's another difficulty.
It also may relate a bit to the fact that the period that has been studied, 2019 to 2020, actually includes the COVID period. And so all of these elements contribute to the fact of the results on the question of the timeliness. The very interesting, I think, and to the point question on the willingness of members to actually take that point of timeliness, I think, is a very important one. It's not, in my opinion, only a question of willingness. It's also a question of practicality, of logistics, of elements that actually allow for all the chain of elements that need to happen to actually occur.
What I can say is that our members are very much aware of the importance of timeliness. I can say also that it is a crucial element of the new cooperation agreement with the European Parliament that we still have to fully deploy, but it's there. And the last point I would like to make is since July 2024, together with the members, we have set some strategic seminars that are actually aimed at reflecting at the highest political decision-making level inside the institution on the question of impact and prioritization and these issues of timeliness, with a very good response. As Ms. Casasova was saying, the question of evaluating impact is complex.
It is not a direct impact. It's much more complex. It's also complex to put in place. But I believe we are innovating, we are extremely committed, and we are making good progress in this direction. I want to make a question.
Would you like us to actually give some concrete examples? We talk of impact. Some concrete examples of the impact some of the ESG opinions have had, which are not that easy to measure concretely, but there are success cases. So if time allows and if you see it fit, I would suggest to give a few examples.
Andreas Schwab
Thank you very much, Secretary General, for this explanation. I mean I think we are all here together to reflect on the output of our institutions. I think we are altogether not fully satisfied with this output. And therefore, we are all wondering about the same issues. Therefore, every input to show what could be improved will be useful for all of us.
And it would also show the dignity of the role that we have in relation to the European public, that we should take very seriously. Now I don't know how the follow-up to this meeting can be best structured. I would like to, so therefore, let give us a chance to the coordinators to decide on how we could do this because good examples are always positive, but there are probably also very bad examples, and then we should have also them so that we understand better what we can do to tease you to be not only in time but with full commitment of all your members to be aware of what you have to do. And I think for the budget, if it's about money, it's always easier, I know. For the budget, it apparently worked very well.
Now my question to you would be, Mr. Secretary General Gallo Flores, do you also choose specific topics that you work on? Or have you a role of commenting on everything where there is officially an opinion being asked to your institution? Or do you already make some, let's say, preferences on the important topics? And do you skip some elements that you think there will be no impact, anyhow?
Over to you.
Isabel LEGALO FLORES
Thank you very much for the follow-up question. Yes, actually, each of our sections, there are thematic sections concentrating the work on opinions, actually have strategic plans, and they are working in a strategic manner on the different opinions that have to be produced. Some are obligatory. They are not being chosen. Some others are not obligatory, and they are being strategically placed on the work plan of the year of the sections themselves.
I hope I answered your question.
Andreas Schwab
Yes. Thank you very much. I'm not fully familiar with your institutions, but it has been very helpful. I'm sure that my colleagues will reconsider our hearing. And I think it's a serious topic, and therefore, I would like to thank you for your contribution.
I would also like to thank the European Court of Auditors for this contribution. I was wondering here informally if there are not any other institutions that we should make such reports to as well, to understand what challenges we have in addition. But this has been only a short comment. But it's a serious topic because we are here to make the people's voices heard in different institutions. And if there is any missed opportunity to make this being successfully done, there is a problem.
And therefore, it's your task to check what you can do, and we take it also very seriously for us, because there is no doubt that once upon a time, there will be another treaty reform, and there will be questions of that type all over the place. And I think we should better prepare now, instead of being surprised later. And therefore, it has been very enlightening to me, this hearing. Thank you very much to all of you. Thanks a lot, also to my colleagues.
And I don't know, Ms. Karasanova, if you would like to make a short final statement as you have done the report.
Katarina CASASOVA
Thank you again for having interest in our report, and also for this enriching discussion, because it shows clearly that there are topics and challenges that go beyond our report. But I'm confident that our report is a good basis for further thinking how work of both committees could be improved in terms of timing and impact, but it also calls for those who are addressees of your opinions to sit and think about whether your work is valuable for them and how you could improve your interactions. I think that participative democracy and having this bridge between EU legislators and EU citizens is very important, and I'm very happy that also my institution, the Court of Auditors, could have contributed to this. Thank you.
Andreas Schwab
Thank you very much, Miss Kasasova. Sorry for this, for your contribution. This has been very helpful, and I would, therefore, now like to close this point. Thank you very much for your attendance. And we would then come to Item six of our agenda, colleagues, which is the second report back of the Conscrutiny Working Group, which has been postponed from March 24, where we would like to speak now with our rapporteurs Carlo Fidanza and Dirk Gotting.
So now we have the working group scrutiny working group to report back to us. I don't know. Mister Gottig, is your colleague Fiddanza joining us? Are you aware of this? But if not, if colleagues agree, I think that we should start with your report, if you want, because this agenda item comes after four months of work and four intensive meetings of the working group.
I had the pleasure to chair one of the meetings in Strasbourg myself. Today, this is the second formal reporting back from the Scrutiny Working Group on Toucan in line with our agreed working matters. And therefore, there is interest from our colleagues and members to hear what you have been able to find. And yes, Dirk, I would like to give the floor to you as one of the coauthors, hoping that Carlo Fidanza will join us, and then we will make an exchange of views with the other political groups. And therefore, you have the floor now for roughly 10 minutes.
Dirk KÖTTING
Ten minutes will be more than enough. Good morning, colleagues. I, as you know, we've been doing one meeting every Strasbourg session. I can't really remember, I think it was in January that we were here for the last reporting back. So that means that it was February and March that we have done in the meantime.
The main, let's say, events of those two sessions, they were around two specific topics. One very much related to Sinea. We've talked to CINEEA now twice. CINEEA is the executive agency. They are quite an unknown giant, I would say.
They are huge. They manage EUR 60,000,000,000 to EUR 70,000,000,000. The MFF co-rapporteur will know what they do. They manage EUR 60,000,000,000 to 70,000,000,000 in this MFF, but much more in the next MFF. And they're responsible.
They're under the direct supervision of the commission, and they are basically responsible for targeting our investments into the strategic priorities that the commission has. And we've been looking at how their working processes function, and specifically the use of external experts, because we found that the use of external or the role of experts was not very clarified. It was not very structured. For the first time, we've received a list of experts who have been working on the evaluation and the ranking of the proposals for contracts at CINEIA. These are external people.
You can anyone outside this room, if they want an interesting job and they have expertise, they can try to become an evaluator at CINEIA. And so we gained access to this information, but it was simply a list of names. No information, no profiles, no background, no expertise, no reason why these people were selected, etc. So that's been an ongoing topic. An interesting part of that was that part of that list was not accessible for us.
And why not, Chair? Because the commission has a contract with a Canadian company called Stantec, and Stantec is responsible for organizing the experts. So they have delegated the role, the finding of the experts, to an external company listed in Canada. And they said, no, it's against GDPR rules to give us, the Budget Control Committee, the names of the experts. So, well, that's the question.
I mean, usually, this committee doesn't like to be told that, especially not when it's about a deeply strategic function inside an executive agency of the European Commission, which is dealing with a lot of the money in the MFF. So who are these experts? And who is organizing them? We're following up with a letter to the commissioner. I don't know, Chair.
I think it's already on your desk, and we need to ask the questions about this company. I googled them. They used to have contracts with ICE in the U. S. So there are some serious questions about that.
So that's one train of thought that we're working on. A second one has to do with what we've always announced, is that we would be expanding the scope of sort of the initial interest around all the life contracts, which were in the commission's audit, and we would expand it to other areas. We did that with DG Just and DG Home. But we've also asked for a very big list of contracts of consultancies. You may know that consultancies in Brussels have obviously a very big footprint.
So we asked for the first, the total list, the gross list of all the contracts with the big four in Brussels of the Commission. We received that. I think there were 1,600 lines, of which for two years. So two years, 1,600 lines for four consultancies. One three of the, let's say, of the lines didn't have an indication of the amount because they were ongoing.
And a lot of them referred to commercially sensitive information. Today, I understand we have received now the documents that we have requested, the contracts that we have requested. But we're talking about 1,000 PDFs, if I'm not mistaken. So, Mr. Chair, the two FTE that we got to do this in the Con Secretariat, we might need to double the request because either they're trying to flood us with information and send us into the woods or we need to really find a structure now how we can deal with this information.
Clearly, and if you look at the list, I was very surprised by the amounts that we're talking about. I think over two years, we're talking about 500,000,000 for four consultancies, 1,600 contracts. There seems to be no structure behind it, no templates. This is also taxpayers' money. And obviously, there, the intent behind it also is to always also look at how the commission is dealing with this separation of power, if there's some way, a backdoor of trying to influence the work that is going on under the other institutions, because we all know how this ecosystem works and irrespective of the topic that we're talking about.
So we're, I think we're closing in on the possibility after looking at those documents, and that will really take some time. We will be closing in on sort of the preliminary conclusions, which also the timeline of this scrutiny working group imposes on us. Considering now this last batch of information and documents, I think we might need to think about extending it a bit, to give us some time to include that review also in our work. And apart from that, there is still, well, we're still sending out this letter on the experts that what we already said. And there is every time we get new information, new questions are raised.
And we're also every time getting information that we did not have before and did not know before. So in that sense, it is a meaningful exercise. And yes, we simply look forward to working towards a conclusion in the coming months. Thank you very much, Chair.
Andreas Schwab
Thank you very much, Mr. Gotting, for that presentation. That has been very useful. We have now the chance to exchange on it, because I don't see Mr. Fiddanza so far.
The first comments would come from the S and D groups. I wanted to know if, Carla, you want to have the floor. Over to you.
Carla Tavares
Thank you, Sherdir, colleagues. Good morning. I will speak in Portuguese. It's more easy. Well,
Don't have very much to add on behalf of the S and D group. Our position on the scrutiny group has been clear from the very outset. We continue to feel that the court of auditors and the discharge process, etcetera, is appropriate and that funding of NGOs is legal and regular, that they respect all transparency rules. I think it's clear to all colleagues our position on how this scrutiny group was set up. So we have nothing to add to our previous positions.
Thank you.
Thank.
Hannes Heide
you. Yeah. Thank you. I would really like to thank the colleagues and the secretariat for their thorough work so far. And having really carefully reviewed the contracts and agreements myself, I'm really concerned that the current classification, and this is really an important topic, still prevents meaningful public scrutiny and, above all, prevents a healthy dose of transparency.
Speaker 28
And given that, we speak about the use or abuse of European taxpayers' money, and the main headline is accountability in this concern. I still don't understand what the genuine commercial interest is for these NGOs, which merits such a high level of classification on the contracts. Furthermore, in light of the contents of these agreements, which in some cases show NGOs acting against European interests and even against core EU objectives, I would really urge us all to challenge or review this classification to allow for greater transparency and proper democratic oversight. This is, for me personally, a really very important topic, that classification is not acceptable.
Andreas Schwab
Thank you very much, König. I just would like to clarify that as far as I have understood our apertures, the classification is the names of the independent advisers, and not of the NGOs. The question is if the parliament can get access to the names that the commission has chosen for evaluating the projects of NGOs. That's the classification that we are challenging, but not the NGOs themselves. That's my point on this.
Next one would be ECR, but I see now Carlo Fidanza. So he's coming perfectly on time. So maybe he can also take his minutes to report back quickly from the working group. And then maybe, I don't know if Mr. Ericsson or who else want then to speak about the working group.
Carlo Fidanza
Over to you, Carlo. Thank you, chair. I will speak in Italian. Thank.
Speaker 30
Thank you very much. Thank you to the chair. Thank you to all the colleagues who have been working hard on the Scrutiny Working Group over the last few months. I must say I'm very satisfied with the work that's been done to date. And I think it really has proved its value going into this depth in scrutinizing the spending of resources, particularly where resources have been spent inappropriately by NGOs and where they were dispersed inappropriately without the necessary controls by the Commission.
Carlo Fidanza
I think this is primarily an issue for the agencies. According to the hearings we've held, it's the commission agencies that have the operational role, primarily. It's the executive agencies that are providing these kinds of funding. And they are distanced from the kind of horizontal controls that are carried out by the DG budget. It's the internal controls within these agencies that are lacking.
They exist on paper, but they do not seem to be effective in practice, particularly when it comes to lobbying and advocacy activities carried out by these NGOs towards the European institutions, including parliamentarians, but also other parts of the institutions, the Commission, etc. You've got the paradox of Europeans' taxpayers' money that is being given by the commission to NGOs that are then using the money to convince other parts of the commission that their policies are correct. So I do not think this is the right way to spend taxpayers' money. And our suspicions have been confirmed. We've also had confirmation from Mr.
Seraphin said that before the Scrutiny Working Group was set up, he confirmed that the procedures were not entirely linear. There are a number of different examples that we could cite that we've already dealt with in the Scrutiny Working Group. This is all publicly available information, but we haven't been dealing with information that is confidential. We have paid close regard to issues of confidentiality since the outset of the work in the group. There's, for example, a grant agreement that expressly allowed for advocacy activities on the part of the NGOs, but there was no control as to how these advocacy activities were actually carried out.
As I say, it was actually included in the grant agreement. And what was the effectiveness of the controls in place? In one case, there was even a contract talking about the number of European parliamentarians to be contacted and influenced. Now I don't know if these contacts were actually made. I don't know how they were able to measure the results.
But I must say this is rather an absurd situation. Now, on the basis of what I've heard, I think the expert opinions have already been cited. It is a subject worth talking about. The formal absence of a conflict of interest is not enough. In many cases, NGOs that are connected to each other work in an interconnected manner.
You find an expert from one NGO is judging the projects that are proposed by another NGO, but they are actually connected. So we have the problem of the independence of individual experts. We have no way of ensuring that they have full independence from the NGOs that they're called to assess. Then there's also a question of liability or responsibility. Someone has authorized these grant agreements.
Someone has signed them. Someone validated the lists suggested by the experts for the final ranking lists for the adjudication of funds. So there's no one checking that these are properly implemented. No one is controlling the controllers. In many cases, there is just no one in the DG who is responsible for this.
So I could also add that since the new guidelines entered into force in 2024, I mean, these guidelines were introduced by the Commission after the first signs that something was not working correctly. They accepted to change their contract clauses. But when it came to the organizations that accepted changes to their contracts and the majority that did not accept the changes, no difference in treatment was made by the commission. It seemed that there was no clawback of resources that were unduly paid when there were clear abuses. It seems that no one is responsible for anything.
Everything is just continuing as if nothing had happened. Now I think the responsibility has to be taken by somebody. So we're now looking for the budget for 2028, 2034. The guidelines are a step forward, but they haven't worked yet. So we now need to start thinking about how we can avoid this problem being repeated in the next MFF period.
If it's written in the guidelines by the commission that you cannot use EU funds for lobbying, then there should be clear responsibility in a reporting chain, clear and effective controls that should assure the full independence of those who are assessing the projects. So there are plenty of documents available to us in the scrutiny working group that we still need to work through. There are also issues linked to the green deal and other issues.
Andreas Schwab
Mr. Fiddanza, for this assessment of the working group that you are leading together with our colleague, Kurt Gotteng. As I said, the role would now be to intervene for the ECR group. I don't know if no. Okay.
That's then that was then also the intervention of mister Fiddanza, and there is a renewal, but I think there is no one. And then there is the Greens, and there is Mister Markbach. Please, over to you.
Erik Marquardt
Yes. Thank you. I think I will speak German. Yes. Thank you very much for the report we've heard.
I think that, fundamentally, we're in a situation where there is a part of the parliament that is saying money from the commission should only go to our political allies, whereas we and other parts of the parliament feel that it's part of a liberal democracy that a variety of different organizations should receive money and should be able to critically question what the commission, council, and parliament are doing, and provide us with advice as to what we could do better or worse, depending on the case. So I think this is something we can discuss, but unfortunately, this appears to be becoming something of a culture war. It's not just a question of transparency. It seems that there's an effort to simply take funding away from organizations they do not agree with. I think that this scrutiny working group has become part of the culture war rather than really being dedicated to transparency.
I think you've got one important question here. How should we work in the Budgetary Control Committee so that we actually solve these issues? Now what does the Scrutiny Working Group do with regard to the discharge process for the agencies and commission? I mean, these are normal parliamentary processes that should be allowed to work, but I think that, actually, you're creating a duplicate structure to the standard discharge procedure in the committee. I think the commission would probably find it easier to provide us with documents if they did not have to fear that they would have these documents immediately leaked to national newspapers.
Access to these documents has to be provided in such a manner that these documents are not used to make short-term political capital from it. I'm not just talking about a particular Dutch national newspaper. I think that's part of our job in the Budgetary Control Committee, and we should take it seriously, that we should not try to put everything into this scrutiny working group. We shouldn't be trying to broaden the scope of the scrutiny working group to further issues. We do not want the scope of that working group to go beyond the competencies of the Budgetary Control Committee.
Rather, this debate should be in the main Budgetary Control Committee as part of the discharge procedure. If we think that the current procedure is not good enough, we need to see how we can change the procedure to better take it into account. I think it's a shame that this should degenerate into a cultural war against NGOs that don't represent certain ideas. Where there have been abuses or misconduct, then why have these not been covered by the discharge process and the European Court of Auditors? I'd be very interested to see what's wrong with our procedures if these cases are not being picked up.
Otherwise, if there is nothing there, then maybe we should just go back to normal procedures, discuss these issues in the committee, rather than creating new working groups and bodies. So that rather than this being some kind of echo chamber for certain people to sound off about their pet hates.
Andreas Schwab
I think we all share a need for transparency, not more, and not less. And for that reason, I think it's very useful also to exchange here. And you are absolutely right that we should limit our time. I'm the first one to consider this. Therefore, let's give the floor to the ESN group.
Mr. Bausermann is next.
Thanks.
Arno Bausemer
Chairman. I just wanted to start by reminding you that the proper parliamentary procedure would be for all groups in the European Parliament to be involved in the scrutiny working group. Now the ESN group, my group is not represented there. I realize there are certain reasons for that. But let's see if we become stronger in the future, and that position changes.
Now there have been certain groups here in the parliament who have been very active in trying to hinder the work of this scrutiny working group. I could mention this to my green colleague. Now simply to block this scrutiny working group from day one, refuse to cooperate, well, that's not really in line with transparency. It's a sign of weakness. And we do need to look at these issues because clearly, the commission and others have been trying to engage in politics with European taxpayers' money.
I think that's a major problem. In Germany, before the last elections, the CDU was trying to say to the voters that they were going to drain the swamp, but rather they've actually expanded funding for NGOs. There was a case in Hannover in Germany where an NGO went bankrupt working in the integration of migrants, but there were a whole load of issues there. There were sports groups that didn't exist. There were lots of rules that were broken.
Mister Heide just mentioned that we do need to have a look at these files we're given. A lot of it is redacted. It was all blacked out. So it's a bit of a shame that in the documents, you can't actually see who is involved. I think it really needs to be cleared up who has authorized the disbursement of certain funds.
We have said that you have to have liability for the decisions that you take in office. If you make a bad decision with taxpayers' money, then you should be liable for it. So that's why the Scrutiny Working Group has to continue to work, and I wish you the best of success.
Andreas Schwab
I now like to get back to our reporters to maybe come back quickly on the results of that last hearing with the commission to make sure that we understand what the key point at the moment is, that we are further, that you are further checking so that there is an answer to those colleagues that have been questioning what and why we, why you want to clarify that finally. Can I ask you, Dirk and Carlo, to have a final comment?
Dirk KÖTTING
Of course, Chair, thank you very much. And of course, members are free to come to the meetings, yes, so that they also know, because every time we're doing feedback here. But of course, the work is done there. And the work, like I said, has had access and has learned things that have not been done before in this committee because it also is of a much more structural nature, and it's not just one year of the budget discharge. It is how they function, how CINEEA functions, how the funds are distributed.
Now there's a big confusion, and I believe, Mister Markhardt, you're also trying to keep this confusion a bit alive. And that is that we're here only to shoot NGOs. But you would have noticed, and actually a colleague of yours asked me, why don't you ask NGOs to the scrutiny? Not a single NGO. We have not invited a single NGO.
Why not? Because the issue is with the commission. They're dealing with the money. Whoever wants to get money from the commission, feel free to go. Be my guest.
But it's the commission that gives the money. Yes? So that's why we are only talking to the commission. It's DG Budge. It's DG Enf.
It's DG Clean, DG Just, whoever. I don't care. Yes? We have not invited NGOs because this is not about NGOs. It's about who gives them money and what are the kind of conflicts of interest could exist with giving that money.
So if you want us to start inviting NGOs, please join us, and we will have some questions for them. Because, in fact, on these commercial interests and that they don't, they refuse to change the contracts despite the guidelines of the commission, and they refused to publish. That's also an issue because you need both sides of the contract to agree to the full publication of the work program. They refused it. Okay.
Fine. Fair enough. But that's simply the fact on the ground now. Yes? From the start, and mister Tavares knows that, we have indicated also from EPP because I see that there's a split.
There's a tough split on right left here. Yeah? It's clear. EPP was ready to support any information requests that you would have on any topic, any entity, yes, because it's about transparency. For the Greens, the same thing.
I'm not afraid of these contracts. Give us more information. Give us this power we have to ask these contracts. We have the extra manpower in the committee to actually work on it, to actually review them, because it's a lot. It's thousands of pages.
So there you go. Our goal is full transparency, and that means automatic publication. And I fear that some of you, and mister Markan, you might must be afraid of it. And I actually talked to Transparency International, and they were like, is it true that EPP wants full transparency? Because they don't believe us.
But this is what it's about. We need to publish it. If I'm convinced that if these contracts would have been public and the work programs as well, this problem would have never gotten where it did. And yes, like I said, we just received all the consultancy contracts. Honestly, I'm quite shocked that some other groups are simply not interested because under normal circumstances, they would be all over this topic.
We need time to look at this. These are a thousand, this is apparently a thousand documents. We don't even know if our IT system can handle it. So we need a strategy to somehow review that, look at the content, and then come back to you also with our findings.
Andreas Schwab
Thank you very much, Mr. Köttingen. I conclude or I understand that, for sure, this transparency that you do could also be assured in a way of confidentiality, if needed, for the European Commission and not to be brought to newspapers, to make sure that the concern of Mr. Marquardt can be met. But I would like to give the floor also to Carlo Fidanza.
Yeah.
Speaker 30
Thank you, Chairman. I wanted to follow on from you, last words you said. I wanted to reassure Mr. Marquardt. Nothing about the work that we've been doing has appeared in the press.
Carlo Fidanza
He referred to articles in a Dutch newspaper, but that was actually before the scrutiny working group was set up. Since we started working on these documents, none of them has been released to the press. Unfortunately, only a few members from this committee have taken part in the scrutiny working group, but we haven't even passed on to the press the public documents. A number of these documents can be accessed publicly, particularly the summary documents.
Carlo Fidanza
None of this has been leaked to the press. So to date, those who have been working in the scrutiny working group have been very serious. We have shown full respect for confidentiality. Then on the discharge procedure, there is a big difference between what this committee can do along following the discharge rules and what we have been doing for the last few months, where members have been given access to a limited number of documents, and the Scrutiny Working Group has been able to get availability from the commission, well, different levels of ability in different parts of the commission. But we've got a lot more documents available to us in the scrutiny working group compared to what is available under the discharge procedure.
So, it's not just taking one random contract from 1,000, but rather by looking at dozens of these contracts in-depth. We've had a look at where the vulnerabilities are in the system. And in the final report from the scrutiny working group that we're going to have to draft, we will be making some proposals for improvements so that the shortcomings we've identified can be corrected for the future work of the European Commission, both in the Commission itself and the agencies.
Andreas Schwab
Mister Fidanza, I think that there is no doubt in this house that our civil society needs private enforcement of citizens for the better of our societies. And this is without any prejudice of what seems to have happened here, that parts of the support have been used intentionally by the commission to look for lobbying, and that's the only question that is at stake here. And I would like to encourage our rapporteurs to work hard so that we can come to a point of closure of this investigation and bring it back to the normal budgetary control procedure, which is, for sure, the best place to deal with it if it is not so complex. Thank you very much for this point. And then we come to item number seven, which is at 11:45 only.
And therefore, we are ahead of time. Thank you so much, colleagues, for your speed in the exchange, and for your clear arguments. But that could mean that we either have to postpone this.
A little break.
Andreas Schwab
Or that we make a little break to catch up again at 11:45. Thank you very much. Let's adjourn at 11:45.
Tomáš Zdechovský
Okay. The budgetary control committee decided that you will have the best chair in your future and history. Also, let's go through the procedure. Nice to be here, and I will do my best really to go very quickly and to have a very good mood for our discussion. I'm absolutely sure that you will enjoy.
We have it now, lesson learned of ten years of yearly detection and exclusion system at this and future challenges. It will be an exchange of views with the commissioner representatives. Also, dear colleagues, we now turn to the last item on today's agenda on the lesson learned from the early detection of exclusion systems commonly known as the ADEIS systems. We have with us Miss Maria Isabel, Rufes, a Pujol. Pujol.
Pujol. Sorry for my pronunciation. I will try my best. Hi, Maria. Current chair of the Edespanel and Miss Beatrix sounds redrado.
I think that it was good pronunciation, but I will try my best. Deputy director general of commission director Ratt and the general for budget and mister Olivier Welbrock. Yes. Nice to see you. Olivier, principal adviser for legal affairs, final true rules control reporting.
Welcome to all, and many thanks for being with us here in the budgetary control committee. The EDES system is the current topic in debate and in our general work. And I welcome this initiative of sharing with the results of the expert and in ten years of implementation of the early detection and exclusion system. And this is a pillar of anti-fraud in infrastructure, and it has undergone significant structural changes since its establishment in 2016. Intend intended reinforce its deterrent impact to extend its scope mainly in 2018 with the revision of the financial regulation and then again in 2023 with the recast of the financial regulation.
Currently, as per July 2025, with the presentation of the post 2027 package, we have been analyzing the perspective of having the relevant antifraud and exclusion measures apply to programs that are adequate to the RAF, but only for programs adopted or financed from first January 2028. Many of these changes we called for by parliament, and Conte has been monitoring developments, and it's looking forward to recent clear information on the impact of measures and have been requested in part adopted. And I am therefore very glad to give the floor to Miss Ruffez to present the panel's work and the results, challenges, and experience learned. And after her, miss, Sands, Redrado, who will give us additional information in the way of other system is going to be exchanged and straightened in the post February and via the Rafa revision. Miss Ruth, you have the floor.
Maria Isabel Ruffez-Pujol
Good morning, everybody, and thank you very much, mister chair and members of this committee, for inviting me to share with you the most salient achievements of the early detection and exclusion system that I have been privileged to witness since its inception. I first joined the early detection and exclusion panel in 2016 as vice-chair. I was then appointed chair in 2021 for a five-year mandate that expires in November. Exactly five years ago today, I had the pleasure of accompanying Mister Christian Penera, first chair of the panel, when he came to inform the members of this committee of his tenure and to share with you his insights and experience on the functioning of the system. I can tell you today that the positive outcome that was already noted in 2021 regarding the protection of the EU budget from unreliable entities has been further confirmed and consolidated during my mandate.
Speaker 41
I'm very proud of the progress that we have made over the years, and I am sure that at the end of my tenure, I will leave a well tried and well performed structure capable of successfully facing the new challenges brought about by the 2024 recast of the financial regulation. The need to protect effectively the substantial funds managed by the European Union has featured prominently among the aims of the successive versions of the financial regulation. Since 2016, the objective is embodied in the early detection and exclusion system. The system is designed ultimately to prevent, but also to detect and react to cases of serious misconduct on the part of companies that have mismanaged EU funds. This is the case especially where there have been fraud, corruption, or grave professional misconduct, such as distortion of competition, influencing the outcome of an award procedure, attempts to obtain confidential information, and conflicts of interest.
Speaker 40
The administrative measures that may be taken under the system are meant to stop untrustworthy economic operators from accessing EU funds, albeit for a limited period, and, at the same time, deter them from misbehaving once they are allowed to benefit from those funds again. The measures that can be adopted by Edis are basically five, and are all related. First, we have the registration in the database for one year, then the exclusion of an entity, eventually the imposition of a financial penalty, very often the publication on the commission website of the measure adopted, and sometimes the registration in the database for internal purposes exclusively of the names of the natural persons directly involved in the entity's misconduct. The system is very effective because we can deal with cases before there is a final judgment. There may never be one or there may be one in the future, but we can act forthwith as soon as there is proof of misconduct.
Maria Isabel Ruffez-Pujol
The fact that we can follow the procedure to exclude without having to wait for the facts to be established before a national court allows us to blacklist unreliable economic operators in a swift way. At the heart of EDIS lies the panel, an inter-institutional and specialized body that ensures the centralized assessment of requests from authorizing officers and the coherent operation of the system. The reputational authority of the panel is based on the independence of its chair and vice chair, on the impartiality with which all members contribute to the debate.
Speaker 39
In the robustness of our legal arguments, and in the convincing reasoning of our recommendations. The panel has no investigative powers and can take no initiative. It is the authorizing officers that implement the budget who can refer a case to the panel and ask for a recommendation where they consider that there might have been mismanagement of union funds. The panel then examines the evidence, performs a preliminary classification in law, and decides whether, in the light of the observations and further proof provided by the entity, administrative measures are to be adopted. The financial regulation has tasked the panel with upholding the right of the person or entity concerned to submit observations.
Maria Isabel Ruffez-Pujol
More generally, the panel abides by the principle of legal certainty, ensures the right to due process, the respect of the right of defense, the right against self-incrimination, and the equality of arms in the procedure. In this respect, the panel makes sure that the evidence taken into account is not only incriminating but also exonerating, that only documents which have been made available to the entity and on which it has been given the opportunity to comment shall be taken into consideration, and that any measures recommended fulfill the principle of proportionality, assessing the weight of the overall measure to be adopted of the aggravating and mitigating circumstances. But given that we are celebrating the adoption of our one hundredth recommendation, I imagine that you are mainly interested in hearing about our tangible achievements. Let's see. From 2016, 1,962 cases have been referred to the panel, five of them only this year.
Speaker 39
Out of this, we have recommended an exclusion on 64 occasions. In this respect, I want to point out that although the panel acts exclusively in an advisory capacity, its recommendations have been followed in 100% of the cases. In my view, this means that authorizing officers attach great weight to what we do and are convinced by both our proposals and our reasoning. Of these 64 exclusions, 19 have been contested before the General Court. Four have been out, three of them on the substance, and eight appeals are pending.
As you can see, the right of litigation is nowadays moderately high. After a relatively short start where entities used to produce in-house observations and very few decisions were appealed, I have identified a clear trend where entities take the procedure before the panel very seriously indeed and resort ever more often to representation by counsel at a very early stage. This makes for an increasingly burdensome procedure with which the panel's secretariat deals expertly and with great professionalism. I have noticed that little by little, the judges at the general court have become familiar with Edith and that they fiercely support its aim to protect the financial interests of the Union, refusing to condone the argument that an exclusion could only be adopted following a national final judgment. The low overall annulment rate of EDI's related decisions reflects the robustness of the system design and the quality of the panel's assessment.
The careful implementation of recommendations by authorizing officers under the close scrutiny of the commission's legal service has greatly contributed to maintaining the system's effectiveness. Judicial review is playing a constructive role in the shaping and consolidation of the system. Where a decision has been a note, the General Court has provided valuable guidance. We have drawn the right conclusions and taken the steps to improve its administrative practice. In parallel, the 2024 version of the financial regulation has introduced changes, some of which are already in force, that will further strengthen the early detection and exclusion system.
For instance, new grounds of exclusion have been added. New subjects liable to exclusion have been included in an already long list. The role of the vice-chair of the panel has been regulated, and an expedited procedure has been introduced. Following the entry into force of the 2024 financial regulation, and to enhance the efficiency of its operation, the panel undertook to reform and adapt its rules of procedure, which were published in 2025. As the most salient features of this reform, I can refer to the rules applicable to the expedited procedure and to the possibility for the panel to adopt a breach recommendation.
And how do I perceive, do you think, the challenges of the next 5 years? As we all know, the scope of EDIS will be extended to shared management and to funds dispersed in direct management with member states and apply to programs adopted or financed as from 01/01/2028. This means that the panel in its new composition will have a fair period to prepare and adapt. This very positive development will undoubtedly have a steady but direct impact on the day to day functioning of the system. Anything that I may add in this respect would be guesswork on my part.
Nevertheless, I believe that one can realistically expect a gradual but fair increase in the number of referrals to the panel, which will eventually necessitate dedicating more resources to the operation. If the caseload were to justify it, the chair and/or the vice chair might then have to work full time. Who knows? But it is early days yet. To conclude, I cannot finish this presentation without stressing how remarkable the milestones achieved by the early detection and exclusion system in its first 10 years of operation are.
I have been able to witness firsthand the personal dedication and conscientiousness of the present and past members representing the commission and of all the referring authorizing officers with whom I have had the privilege to work. I must commend the professionalism, the competence, the expertise, and the commitment to the efficient operation of the system of the permanent secretariat provided to the panel by DG budget. I want also to pay tribute to the representatives of the commission's legal service for their consistent support and for enlightening us week after week with their wisdom, as well as to the personnel of Olaf whose investigations are often at the heart of our cases. Finally, let me say that I am delighted to have been able to add, together with the vice chair, my modest contribution to the panel's success. Thank you very much for your kind attention, and I will be available to answer any questions that you may wish to put to me.
Tomáš Zdechovský
Thank you very much, miss Ruffez, for your overview and for your work, what you did last five years. Before I will give the floor for the question, my colleagues, and member of the European Parliament, I would give the floor to Miss Santo Retro. And after them, we will have the questions and answers slots also. Miss Retro, please take the floor for ten minutes, but I think that you have a shorter presentation. It's up to you.
My second name is one-minute speeches also. I know it. How is it? Very useful to speak short.
Isabel Santoro
Yeah. No. Thank you very much, and thank you, Chair and honorable members. It's a pleasure to be here today to talk about the progress of EDES, the early detection and exclusion system. Coming myself from Olaf, I lived through the early warning system, for those that remember.
And it was working well, but there had been some weaknesses that were highlighted by the general court. And therefore, in 2016, we built EDES, which strengthened the procedural safeguards, as Ms. Rogers Rofezipujol has presented the first part of her intervention. So the others panel was established as the core of the system, and its main purpose is to recommend exclusions. They do much more, but that's the main purpose.
It is a success story, as we have heard. And since the establishment, it has made significant strides, and it has issued over 100 recommendations. And of course, 100 recommendations is in the period of ten years, but it went crescendo, of course, in 2016, when we started putting in place the ADAS panel. It took some time to start receiving files. But now it's something that has been integrated by the AODs, that OLAV also has integrated in their way of recommending.
You know that OLAV recommends different types of recommendations, and one of them can be administrative recommendations, which can lead to exclusion. And also the AODs, by their own initiative, can address the panel. So all this confirms the pivotal role of EDES in the prevention of corruption and other misconducts, building on the lessons from, as I said, the early warning system. And I take this opportunity to thank Ms. Raffesi Pujol for the dedication and guidance through this year chairing the EDES panel and also been as vice chair before.
As she has said, with the new financial regulation that is effective since 2024, we have expanded the toolkit to protect the EU's financial interest. Most of the novelties introduced follow the recommendations from the court of auditors report on 2022, that was on protecting the EU budget, better use of blacklisting needed. And it allows us to close the structural gaps on the protection of the union financial interest. Among all these recommendations and actions that we have put in place, we have extended the scope to funds disbursed in share management and direct management with member states that will be effective with the next MFF in January 2028, and we are all already working on that. So as I said, as from January 2028, EDES will cover all management funds.
And I think this is very important and very useful. We have already, or your house has already, here that EPO has sent to the EPO, well, to the AODs, and some recommendations for exclusion on share management. So today, the AOD cannot send them to the EPO, but we see already that the EPO has integrated in their reasoning and in their notifications the possibility to recommend exclusion also for share management. So far, we cannot do it. From January 2028, we will be able.
So we will have Olaf, but also EPO being able to recommend and to address the AODs to say, hey, maybe we could do something to protect the financial interest a bit more. Another notable targeted improvement of system is the explicit exclusion of entities inciting to discrimination, hatred, or violence, which is aligning with the EU values defined in article two of the treaty. And this is also a novelty because, so far, it was only about the financial interest. And now we are also expanding, and this was one of the recommendations also of the Court of Auditors. We have adopted further measures to strengthen the system.
In 2024, the commission revised the internal rules to harmonize how authorizing officers handle nonexclusion cases. Because, of course, authorizing officers might receive a recommendation to propose an exclusion to the head spanner, but it is an initiative of the authorizing officer. They can decide to follow that recommendation and propose and submit the file to the head spanner, or not to do it. Now if they decide not to follow, they have to communicate with DigiBudget and the legal service that we also provide an assessment and reasoning. So it strengthened the whole system of making sure that we protect the financial interests of the union.
We also had, and the chair has talked about it, have the simplified Ed Espanol rules of procedure, having the process of more expedite and effective way of issuing the recommendations. So if we use this system that we don't use all the time, the issuance of the recommendation can be done in an average of three months instead of seven to ten months, which is the average duration. So we see that when we have to be or if we have to be fast because there is a specific risk, can we strengthen and be faster. And the other system protective framework, even if it's about recommendations, and we have also been hearing this, it is a multilayer. It goes from having an exclusion in a central database.
We can also have penalties, financial penalties. We can publicize the exclusion. So we have different tools depending on the severity of the offense. It has also been fundamental, and we have to recognize the work and the collaboration of the Edspenel, the commission, and Olaf. Olaf is a permanent observer to the panel meetings.
And since 2022, the commission has expanded the oversight to monitor the follow-up of OLAB recommendations related to the EDS measures. And this is important to know what is being done with all these recommendations, and that's why we can conclude that 100% of these measures have been implemented. None of these will be possible without the tireless work of the other secretariat in DG Batch and of the members of the panel. And here, we have two. We have the permanent member representing the commission, Olivia Welbrooke, and also the legal service here present.
So they are really working hand in hand with the chair to really advise and to make sure that the decisions are well-balanced. These milestones show that EDES is ready for further growth and development. And as we look at the future and post a new MFF, we must acknowledge the opportunities that lie ahead. The first one includes improving interoperability with other EU and national IT systems to enhance cooperation with anti-fraud actors and maintain an efficient system, given the resources available. The upcoming extension to share management will increase the case flow for the panel.
We have seen already that EPO is sending cases even if we cannot deal with them. We think that we will have more and more. And also, member states will be able to do it. It will also increase the key role of the member states in the protection of the financial interest due to their obligations to report relevant judgments and information through the IMS, the regularity and management system, and enforce the exclusion decisions in EDES. We are preparing for these challenges by developing guidance, offering training for member states' authorities, improving the EDAS database, and preparing the IMS system for reporting this new type of information.
In the broader context of the revision of the antifraud architecture, we are also looking forward to strengthening the cooperation with the EPO and building on the existing relationships. We will explore new opportunities for collaboration, particularly in the areas of information sharing for the purpose of excluding unreliable entities under EDES, and developing common best practices and guidelines to streamline such cooperation. In conclusion, I do agree with the chair that the EDES system has made remarkable progress in protecting the EU budget against fraud and other misconduct. And as we move forward, it is essential that we continue to work together with all anti-fraud actors, including OLAF, EPO, and member state authorities, sharing best practices and fostering a culture of cooperation. Thank you very much.
Tomáš Zdechovský
Thank you. It was around ten minutes. Also, thank you very much. No. Don't say sorry in this committee.
In this committee, we are not saying sorry. We are saying only the facts. Also, I will give directly the floor to my colleagues because I saw that there is a lot of interest, my colleagues, and we have it here. Many experienced colleagues. What can give you some question or some overview, I will start with Kinga Kolar from the EPP.
Kinga Kollár
Thank you so much. Thanks, dear chair. First of all, I would like to thank you for your work because I understand that your recommendation has been followed 200%, which is, I think, a great achievement and also upheld by the judgment by the judges in the courts. So I think it's a good signal that the quality of your decisions are very good. Now I think Frost, we all know that fraudsters actually move quite quickly, and they reinvent themselves.
And I understand that you actually publish also the natural persons behind the companies. But do you actively follow up if these persons actually do have other companies, other formations where they would actually try to trick the system and apply for EU funds in another name? I mean, do you have the prevention arm of your system? Does this track this kind of activity? And also, I mean, we know that fraudsters use a lot of new technologies, cryptocurrencies, encrypted communications, so on.
Do you foresee to use some of your, I mean, some digital tools yourselves and artificial intelligence to reinforce your prevention arm? Again, that's the question. And also in the new MFF, you actually already talked about that there will be much more funds spent by the member states. So the question is, how do you see that the member states could, can they actually also come to for recommendations to you? And or is it already foreseen?
And I was wondering actually as well whether I am the authorizing officer from the commission. I understand they are quite active, Eli, asking your opinion. But, other bodies like the agencies and the European Investment Bank's joint undertakings, do they actually also, actively ask for your opinions, or, do you see any need for improving, that kind of cooperation? Thank you.
Tomáš Zdechovský
Thank you very much, Khinga, for your very good question. I will give the floor to ECR. Also, the floor is Mr. Ericsson, is yours.
Dick Erixon
Thank you, chair. I have a question about the dialogue with the authorizing officers, when, as you mentioned in your report. And I think in the more about other things and administrative procedures, like, if the applicant entities are following article two, which is European Union's core values. How do they measure that entities are following that? That's another question than safeguarding the union's financial interests, but it's very important to follow that rule.
And do we have any discussions with these authorizing officers about how they check these values? Thank you.
Daniel Freund
at 25. Also, Daniel, you heard still five minutes. Also, you the time is yours. Thanks, Thomas. I have to say I cannot share the enthusiasm that you presented here.
I actually had to laugh a little. I mean, at the moment, if I look at the list right now, there is one single company from the entire European Union on your public list. One. I mean, the World Bank has 1,200 entities blacklisted. I know you talk about, you know, the 162 referrals and the 64 exclusions.
But, I mean, a lot in this MFF alone, we're talking about a budget of €300,000,000,000, tens of thousands, if not hundreds of thousands of entities that are operating with these funds. We have Apple. We have Olaf. Hundreds of cases. And then there is one single entity that is on this list.
I cannot say that that is a huge success. I mean, for me, this list is, well, one, so that the EU doesn't give money to a company that has already been convicted in court for corruption, but it's also to tell national, regional, and local structures to not give money to the same corrupt entity that has just stolen from the EU. Right? Well, and if there's no one on this list but that one entity, well, we're not doing that. And I know that some of this is legal, that so far, the shared management has been excluded, that so far I mean, if someone steals with one company from the EU and then basically just sends an application from his other company, he's still getting funding, and they're not excluded as well.
I mean, these are things that, hopefully, as of 2028, we're fixing. I don't know why it took so long, but okay. But I have a concrete question. Can you tell me, I mean, from the moment, if today, a company steals money from the EU until they get blacklisted, how long does that take on average? How many years, you know, do they, in a way, continue stealing, continue receiving projects, until they appear on the blacklist?
The second question is, I mean, you can blacklist for 3 to 5 years. How long do you actually blacklist? How many five-year blacklistings have we seen? And the last question, a bit more theoretical on the new rules that will enter into force. I understand that as of '28, also incitement to discrimination, hatred, and violence are an exclusion ground.
I mean, I know a CEO of a company that has shown a public Hitler salute, that is, going against the interests of the European Union, but that person has received over 330,000,000 of EU funding in the last few years, Elon Musk. I mean, is a public Hitler salute, is that I mean, does that exclude him then? Or I mean, how do we define when this enters into force, what discrimination, hatred, and violence actually really is, and how someone would be excluded for that? Thank you.
Tomáš Zdechovský
Perfect. Also, we have it now the time for your response, and we are very happy that we can give you the floor back. And I don't know who wants to take the floor and start. I will send the micro in this part of the room, and you can go around.
Olivier Waelbroeck
Thank you. We'll do our best. So first, in reply to the question by the PP representative, I wanted to say that the system, the rules of the other systems, have been adjusted to take into account the fact that indeed companies very often try to escape or circumvent the rules. And the new systems allow us to exclude not only the company, the main one, but also its affiliates or to go up to the beneficial owners. So from the moment, we have excluded one entity.
All the other entities which are related can be excluded by the authorizing officer immediately. This is one reply. And then we have a no circumvention provision, which allows us to exclude a company who has, for instance, demerged in different parts because they are trying to skip the effect of the first exclusion. You also ask us about the new technologies and to what extent we use them. I would say the panel has no investigative powers.
So it's not the task of the panel to use these technologies, but it's definitely the use of the OLAP and of the authorizing officer when they investigate respectively or when they look at the implementation of the contracts. And we are looking at this in the context of the review. You know, we are reviewing the inter fraud bodies, and we are looking very much on how we can use that. And this technology would be part of the future tool, which is a risk scoring tool, and there will be the new technologies embedded. You also asked to what extent is indirect management actually feeding this Aegis work.
I want to say that we have quite a few direct management cases, but there are cases which are delegated to the member states, and they mostly concern external aid. We do not have so far referrals from the EIB or the World Bank or other partners or implementing partners for the simple reasons that they have their own exclusion or debarment system, and which has been working. You have heard it quite effectively. So they do not then have the need to come to us to exclude the company, because they have already done the job. And in this way, we rely on their assessment.
And then turning to the representative of VCR, I wanted to ask you about the values. And I want to make clear that for us not respecting the EU values is already a case of misconduct, and we already covered it in the past. And in the document we have distributed that you have referred to, there is actually one example of a case of values, which is on page, I think it's the first one. It is the first one. Yes.
On page 10, you'll find the summary of this case, which was a problem about racism and antisemitism. And we did exclude for 1 year and 6 months. Grief portion mix misconduct has a maximum three-year experience exclusion period. So it was a case which was severe, but because the financial impact was limited, we couldn't go up to the maximum. Then you also ask how do the AODs actually check these values before awarding your funds?
And this is, of course, something that the panel doesn't do. It is, again, a task of the DOD. But DOD has a number of tools to make sure that we do not actually give these funds to persons which conduct activities which are against our values. And this is, first and foremost, we'll use a hackney. Also, in the future, we'll have a number of fields which are related to the area of activities of the enterprise of the entity, the fact that it is has been politically exposed in a number of cases that there has been press reports or etcetera.
So that will help the DOD to be extremely attentive and to conduct audits and to ask for guarantees, for instance, and to avoid that money is wasted. So and all through the implementation of its projects, of course, of the funding, DODs must then check that there hasn't been no implementation which is contrary to your values. Otherwise, he must, of course, ask for the recovery of the money which has already been paid. And then there were a number of questions that were asked by our colleagues, Daniel Friend, on these big discrepancies between how many cases the World Bank has excluded and how many cases all system have excluded. I wanted to say once and for all that it is not by looking at the public version of our site that you will learn about our activities.
Because, again, you find in this publication only the exigence which are active for a given period of time, and you find only the ones which are severe enough to be published. So it's only part of the iceberg, and all the rest you don't see. And this is why I've insisted we provide you with the cumulative figures and the view of our activity so far. But comparison is not a reason. The system of the World Bank is very different from our system.
They also blacklist people who poorly execute the contracts. And first and foremost, they have very little judicial control over them. So it is a dramatically different system, and I don't think we should be pushed in necessarily to apply it. Our legal system has to respond to the control of the court of justice to respect proportionality, the rights to be heard of the entities, etcetera. Finally, there was a question also on shared management by Daniel Front.
And on that, I think we will see in the future that, I mean, you cannot ask the system to be efficient if it was not applicable to two thirds of the budget up to now. It's as simple as that. So you cannot compare the full amount of the current budget with the activity of the. And how long does it take to blacklist, and how long have we blacklisted? I think that is how long does it take to blacklist, then it you first have to have the audit period or the activity of the investigation of the OLAF who makes their report or the audit.
And both the audit report and the report by the OLAF are very useful because they are contradictory evidence that we can use, and they help us to establish a fact. So first, you have to have this investigation. And that it can be reasonably quick. It can be six months. And the last report that has in principle obligation to be done within one year, but you know that in many cases, it exceeds that period.
And then you have the times to come in front of the panel, and we have told you that we have an average of 7 to 10 months. And in if we need to go quickly because it's urgent, because it's a very serious case, we do have the means to go more quickly, and we can go down to three months, which is basically the time it takes to send the case to the panel and to have this adversarial process, which is fundamental for the protection of the right to be heard. That's it, chair.
Promise two minutes.
Okay.
Isabel Santoro
So maximum. Maximum. So just two things, just to complement. Because on the question how the AOD can make sure that he applies, he doesn't have to go and look in a listing. So it is interoperable.
So it is linked with SUMA. So SUMA is the budgetary and financial system of the Commission. So whenever you want to enter a commitment, for example, with an excluded person or entity, it is blocked. Well, it is blocked. It depending on the severity, it gives you an alert saying, attention, there is an NEDES entry, and then the person knows that it has to dig further, but nobody will go and say, okay, I continue. For 2028, because we have member states, we are working in making a link between EDES and Arachne Plus that will be available.
So it's this risk scoring tool. It will be available to all member states so they can check the seriousness or the reliability of the economic operators that they will use. So that's that. And just on what MEP Freund said, currently, we have 9 11 entities or person excluded in the database. So it's not three.
It's just that, as Olivier said, it's proportionality. Only in the very severe cases, we will publish. It's an additional, if we want to call it punishment. But we have 9/11 currently active exclusions. That's all.
Thank you.
Tomáš Zdechovský
Thank you very much. I would like to thank you all of you. I think that you can have its last remarks, and then we have to send it to all interpreters and staff to lunch because they are very hungry. Andrea? Yes, please.
Thank.
Maria Isabel Ruffez-Pujol
You, mister chair. I'll be sure this time. We were asked how many times we have excluded in five years. I wanted to explain that it doesn't depend on us directly. It depends on what the misconduct has been.
And for it to be five-year exclusion, it has to be the most serious one, fraud, corruption, money laundering, etcetera. So it is not all cases that are related to this conduct, first of all. The second thing is that we have to abide by the principle of proportionality, and we have to take into account aggravating and mitigating circumstances. So as soon as there is a mitigating circumstance, we cannot propose an exclusion for 5 years. So I just wanted to clarify this point.
Thank you.
Tomáš Zdechovský
Perfect. Everyone on time. Also, I would like to thank our staff for preparing this, committee. I would like to thank my colleague for active participation and for a very good question. I would like to thank you for participating here, and I wish you all the best after November 2026.
I would like to thank our staff and all of you who are present, and last but not least, our interpreters that you give us much more than six minutes of your time. But if you go directly to the canteen, tell them that it's the responsibility of the con that you have to go directly to the meal that we take six minutes plus with our intervention also. Thank you very much, and I wish you a pleasant day.
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