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Corruption in the European institutions and the
role of the National Audit Office 'Whistleblower'
Robert
Dougal Watt writes to Nick Wright
I wish to bring to your attention the
highest-level case of corruption in the history of the European Community; and
the role played in its cover-up by the United Kingdom National Audit Office.
I am employed as an Auditor by the European Court
of Auditors (“the Court”), where I have worked since 1995. I was
previously employed by the National Audit Office, where I qualified as an
accountant, and reached the grade of Principal Auditor – promoted in
absentia while on secondment to the Court. Prior to employment by the
National Audit Office (NAO), I worked for Her Majesty’s Customs and Excise,
1987-89. Prior to this affair, I had no disciplinary record.
Corruption in the European Court of
Auditors
On 22 April 2002, I “blew the whistle” on
corruption in the Court, in a letter addressed to the European Ombudsman.
I alleged that all fifteen current Members of the Court – equivalent in
grade and status to the Commissioners of the European Commission – had
benefited from a regime of nepotism, venality and mismanagement. I
copied my letter to MEPs; and to my colleagues in the Court. The
assertions presented in my letter of 22 April were endorsed one week later by
205 staff of the Court, in a secret ballot organised by the institution (a
Staff Committee election).
In November 2002 the European Anti-Fraud Office
announced its recommendation that Mrs Kalliopi Nikolaou, Member of the Court
1996-2001, be prosecuted for fraud – and presented dossiers of supporting
evidence to state prosecutors in Luxembourg and Greece. The “European
Voice” newspaper, owned by “The Economist”, has alleged that further
charges include nepotism, soliciting bribes in return for jobs, and fraud by
two associates of Mrs Nikolaou then in the Court’s employ.
In fact, current serving Members of the Court have
also engaged in nepotism. Mr Clemente secured the employment by the
institution of the daughter of a former colleague; and Mr Fabra Valles,
President of the Court, secured the employment by the institution of a former
associate.
The European Anti-Fraud Office has yet to examine
most of the detailed allegations which I presented in April 2002. For
example, I alleged, “It would seem that allowances have been paid by the
[Court’s] Administration, to which Members are not entitled.” In a
further letter to MEPs of 18 June, I explained further: “Permanent officials
are entitled to receive a limited proportion of their salary in the currency
of a Member State other than their country of residence, at a special exchange
rate… The weighted nature of the special exchange rate can significantly
increase the real value of some officials’ income. I understand that
Members of the Court are not eligible for this special provision. I also
understand that nevertheless, due to the action of the Administration, Members
may have benefitted from this special provision.” As in the case of my
other allegations, staff of the Court had known for years that Members were
receiving payments to which they were not entitled; and that Members were even
turning a blind eye to the same practice in the other European institutions.
I understand that Members of the European Parliament, Judges of the European
Court of Justice, and Commissioners of the European Commission, have also
benefited. On 8 July, the “Daily Telegraph” reported that following
a ruling by the European Court of Auditors on 1 July, henceforth Commissioner
Mr Neil Kinnock would be deprived of £30,000 per annum which he had
hitherto received in respect of the above provision. The inappropriate
nature of these payments had been known to auditors for years; and the
payments ceased just thirteen days after I substantiated my allegation.
In twelve years as an auditor – six with the Court, and six with the UK
National Audit Office – this is the fastest I have seen any “audit
finding” result in concrete action.
Corruption in the European Commission
However, the thoroughness of the European
Anti-Fraud Office is open to question.
In 1993, a senior Commission official under
investigation for mafia-linked corruption, Dr Antonio Quatraro, Head of
Division responsible for tobacco subsidies, died violently in suspicious
circumstances. The European Parliament was subsequently informed by
Commission investigators that Dr Quatraro had acted alone within his
institution.
On 4 December 2001, upon the basis of two years’
work in the tobacco subsidy audit area, I wrote to the President of the Court,
bringing to his attention the failure by the European Anti-Fraud Office to
investigate adequately the “Quatraro Case” – and my own superiors’
failure to follow up such inaction. I also brought to his attention a
series of serious abuses of Court audit procedures committed by my superiors.
I received no response from President Karlsson.
My “whistleblowing” letters of 22 April to
MEPs were not promptly delivered by the European Parliament’s internal mail
service. Subsequent research has found the delay in delivery to have
been unprecedented. I deduced it possible that such a delay might have
resulted from masonic intervention – freemasonry is a powerful influence in
the European institutions. I then realised that all of the many unusual
features of the “Quatraro Case”, and of its inadequate investigation,
would become explicable if freemasonry had been a feature.
I communicated relevant evidence in support of my
hypothesis to the Court on 17 June 2002. Given the “mafia
connection”, I expressed fear for my life, and for my family. The
Court disregarded my evidence and my concerns, and passed my letter to the
European Anti-Fraud Office – the very body which I alleged had been
responsible for covering-up the “Quatraro Case” since 1993. The
Court also freely informed the masonic fraternity of my allegations. On
1 July, I therefore copied my letter to the Chairwoman of the Budgetary
Control Committee of the European Parliament, drawing to her attention the
fact that she had been misled to date regarding the “Quatraro Case”, and
expressing my fears. I received no reply. On 3 September, in
considerable fear for my life – as a lone and ostracised
“whistleblower”, raising awkward questions about official cover-up of a
corruption case involving the mafia – I publicised my hypothesis more
widely.
Subsequent investigation – by a courageous
journalist, Mr Martin Jay; official bodies have done nothing – has confirmed
key aspects of the thesis which I presented in my letter of 17 June. The
investigators who interviewed Dr Quatraro in 1993 have now revealed that he
told them, shortly before his violent demise, that others within the
Commission were involved in his activities. But there was no follow-up
in 1993 – even though investigators considered that the available evidence
confirmed Quatraro’s indication. As recently as 2001, the European
Anti-Fraud Office has reiterated the 1993 investigation findings.
Furthermore: the senior Court auditor who reviewed the Commission
investigation in 1993 – and found nothing wrong; the official who in 2001
invited me to become a freemason; the official who asked me to withdraw my
letters to MEPs of 22 April; and the only official in May 2002 who spoke
off-the-record to the press, denouncing my allegations – are actually all
one and the same individual.
National Audit Office awareness of Court corruption
In my letter to MEPs of 22 April, I alleged, “It
may be deduced that, in general terms, Member States are aware of the internal
abuses in the Court. Since the Court was established, posts have been
reserved by the Court to receive on temporary secondment a senior auditor on
detached service from each of the national audit institutions of Europe.”
I explained further in a letter to MEPs of 18 June: “Fifteen
‘Principal Auditor’ posts are reserved for occupation on a temporary basis
(normally for a period of two years, renewable) by suitably qualified
auditors, one from each of the National Audit Institutions of Europe.
Each of the National Audit Institutions of Europe therefore has a direct
corporate knowledge of the situation in the Court.”
The UK National Audit Office has a particularly
good corporate knowledge. During the period 1995-2000, staff seconded
from the NAO filled both attache posts of the British Member of the Court; a
Director served as an attache to the French Member of the Court; and several
further seconded staff – of which I was one, 1995-97 – worked in line
audit divisions of the Court. The UK National Audit Office had a larger
presence than any other national audit institution. Awareness of Court
nepotism and mismanagement was, to my certain knowledge, shared by the
seconded staff of the National Audit Office. At least one senior NAO
seconded official returned early to the UK, in disgust at the methods and
practices of the Court. But in May 2002, the National Audit Office
presented a quite different picture of “Europe”…
On 13 January 2002, Mr Kamal Ahmed, writing in the
“Observer”, noted, “pressure on universities to reform will be increased
this week with the publication of two reports by the National Audit Office...
The reports will say [etc.]”. The relevant NAO report (HC 485,
2001-2002) was published five days later. This is normal and accepted
NAO practice: selective pre-release of reports helps to stimulate press and
public interest, in the days immediately prior to report publication. On
5 May 2002, Mr Ahmed wrote another article – headlined, “Europe squanders
billions spoiling MEPs” – again based upon pre-release NAO report
information. The article begins: “Among the smart cafes and the
chic boutiques of Strasbourg and Paris, the people who run Europe enjoy what
might be described as a sumptious existence. With free travel, generous
pensions, unchecked expenses and allowances for simply turning up for work,
members of the European Parliament enjoy perks usually reserved for the chief
executives of private companies. But a series of devastating reports, to
be published in the next month, will once again raise the question of
profligacy, waste and mismanagement at the heart of the European Union.
The National Audit Office will report [audit findings described]…”.
There are two key differences between the above
newspaper articles. In the case of the latter article, the relevant
National Audit Office report (HC 859, 2001-2002, “Financial Management of
the European Union”) was published with an accompanying Press Notice
specifying, “This statement is not for publication or broadcast before
Thursday, 30 May 2002”. That is, Mr Ahmed’s article was published a
full 25 days before the report’s formal release date. And furthermore;
in fact, the published NAO report features no reference to the benefits
received by MEPs – be they “sumptious” or otherwise.
Mr Ahmed’s article was in reality a
“spoiler”, for a story which appeared the same day in the “Sunday
Times”, headlined, “Briton lifts lid on EU nepotism”. This story
publicised the allegations which I had sent to MEPs on 22 April. That
is: on the day the “Sunday Times” publicised my appeal for MEPs to combat
corruption in the Court – the “Observer” attacked those same MEPs for
profligacy and waste (“Europe squanders billions spoiling MEPs”),
referring to a forthcoming NAO report which, when published, contained no
relevant evidence. (Later editions of the “Observer”, and the
on-line version, featured an additional paragraph to Mr Ahmed’s article,
making reference to my allegations against the Court.)
Conclusion
The “Nikolaou Affair” already represents the
highest-level corruption scandal in the history of the European Union.
And it happened in the European Court of Auditors; the “financial
conscience” of Europe. Quo custodes custodet?
To date, the European Parliament has remained
silent on the problem of corruption in the Court. But so long as the
supreme audit body of the European Community remains fundamentally
compromised, so it cannot be expected to receive the respect of auditees,
citizens and Member States. And the influence of the Court on the other
European institutions, which it examines and reports upon, is out of all
proportion to its modest size. If the Court had been effective in the
past, then there would have been no need for Mr van Buitenen, Mrs Andreasen
and others to “blow the whistle” on their institutions’ failures.
The Court is an institution in crisis. Last
year, three senior officials – one Director and two Heads of Division –
brought the institution before the European Court of Justice, alleging
irregularity in the appointment by the Court of a new Secretary General.
The European Court of Justice decided there was a case for the institution to
answer; however, that case was ultimately unsuccessful. This incident
does demonstrate, nevertheless, the degree to which the current hierarchy has
lost the confidence of senior and experienced managers. Such managers do
not deploy lightly the “nuclear option” of bringing a case before the
European Court of Justice. The fact that three senior officials would
nevertheless band together to protest the manner in which the fifteen Members
had acted, is unprecedented. The fact that in April, 205 staff of the
institution endorsed serious allegations of impropriety, and voted for all
fifteen Members to resign, demonstrates that knowledge of high-level
corruption is widespread, and that the disaffection of professional auditors
is of a fundamental nature.
The current investigation by the European
Anti-Fraud Office – limited in scope as it is to suspected criminality,
which may exclude even the grossest mismanagement – is not adequate to the
present crisis. I wish to respectfully suggest that the Court be subject
to formal investigation, as per the “Committee of Wise Men” enquiry into
the Santer Commission.
Yours faithfully, R Dougal WATT Auditor European Court of Auditors 17 December 2002 (Sick absence, 19 April 2002 to date; suspended by the institution, 13 December 2002)
1A, Rue de Kirchberg, Weimerskirch, Luxembourg,
L-1858. Telephone: ************
Note: This letter was published for the first time as part of an exclusive report by JUST Response on May 7 2003.
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