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Upholding the rule of law to preserve the EU’s key values

Inge Gräßle during a session at the European Parliament. Source: European Commission.

In her almost 15 years of experience as Member of the European Parliament (EP) Inge Gräßle has built up a reputation as a persistent MEP who does not shy away from calling a spade a spade. As Chair of the Budgetary Control Committee (CONT) she is also the heading the EP committee with which the ECA has a privileged relation. Moreover, Inge Gräßle has developed a particular interest, expertise and a track record when it comes to fighting fraud and corruption with EU funds. In her usual open and upfront way, she shares in this interview her views on this topic… and a few others, including looking back at her work in CONT.

Interview with Inge Gräßle, Member of the European Parliament and Chair of its Budgetary Control Committee
By Gaston Moonen

Scrutinising the implementation of legislation — not always the most popular task

Inge Gräßle has been a Member of the European Parliament (MEP) since 2004. Since her early days in the EP she has built a reputation as a committed MEP with a particular interest in accountability issues, including those relating to irregularities affecting the EU budget. It turns out that she took up this task, not only because she wanted to do so but also, at least according to her, because someone had to do it. ‘In my early days as an MEP, I got interested in the topic of the implementation of the EU budget. It turned out that not many people wanted to deal with it, and I really believed that this issue, the proper implementation of the EU budget and accountability for it, was very important for the EU. And since nobody wanted to do it, I did it.’ Experience has taught her that it is not the most popular topic in many committees. ‘Not all of my colleagues are really keen on carrying out checks on what we decided to do. Sometimes you can also see this in the rather limited interest other committees have in working with the Budgetary Control Committee and the European Court of Auditors.’

The German politician, who has been chairing the Budgetary Control Committee (CONT) for almost five years now, has an explanation for what she calls a lack of interest in accountability issues. ‘The European Parliament is a multicultural and multi-country organisation. A lot of MEPs focus mainly on issues relevant to their own country. The consequence is that too few Members are willing to look into issues that concern other Member States, particularly when it comes to budgetary issues.’ In her view, this is however not the right approach. She points out that the EP by its very nature as a European institution has to look at the overall picture for the EU and the reputational risks for the Union as such. ‘And this is what I am trying to do.’

Inge Gräßle, the No 1 of the Budgetary Control Committee during the last five years.

This also has consequences for finding MEPs willing to be active in CONT. Inge Gräßle explains that in CONT MEPs have a full seat or a substitute seat. Then, smiling, she explains how this differs from other committees: ‘Unlike other EP committees, CONT allows MEPs to have one more full seat at another committee. We do this in order to make sure that we get enough Members from spending committees.’ She points out that in general MEPs are more interested in ‘spending committees’ than in ‘checking committees.’

The interests of the ‘spending committees’ are also reflected sometimes in the way these committees relate to CONT. Inge Gräßle, sighing: ‘Over the past years I have tried to encourage other committees to cooperate, and they often did so. CONT is one of the committees which have the highest number of joint meetings with other committees.’ She underlines her committee’s interest in sharing experiences with other committees, inviting them, exchanging information with them. ‘For example, when we get somebody from the ECA, we always invite Members of other committees to participate, listen and discuss with us.’

CONT is one of the committees which have the highest number of joint meetings with other committees.

Building up experience takes time, also when fighting fraud

If there’s one thing that characterises the relatively small office of Inge Gräßle, it is the abundance of documents: stacks of reports, papers, and files. Laughing she explains that this comes with the job. ‘What I learnt in journalism is to ask questions, to compare documents over the years and to bring to light contradictory information.’

What I learnt in journalism is to ask questions, to compare documents over the years and to bring to light contradictory information.’

All this would not be possible without her staff. ‘Another thing is that you need to attract brilliant staff who really want to contribute to the job.’ Inge Gräßle cherishes her assistants as her main ‘asset’. Then she confides: ‘And I never change my team. I like to keep them as long as possible. Our collaboration is based on mutual trust. Their knowledge is as good as mine.’ The CONT Chair explains that it takes at least two years to get a staff member trained for this kind of job, and her assistants are specialising in different topics. ‘One of my assistants works on staff regulations, another one on discharge, and another one works on the fight against fraud. This means they are all highly specialised, and their experience is of real added value. They like it and I like it.’ She underlines that they need an interest in the job, but they also need success stories, successes in what she and her team are trying to achieve. ‘Success stories in their daily work are important, because results are very motivating!’

When it comes to experience with fraud and corruption, Inge Gräßle can draw on her early days as a journalist. ‘In Germany I worked as a journalist at district courts in Baden-Württemberg and Bavaria. I was there every day, to listen and to write about those cases — murder, theft, and also fraudsters.’ She adds that the latter group were mostly clumsy, often not too intelligent fraudsters. Jokingly she says: ‘Maybe this was because the justice system only deals with fraud cases which were discovered.’

Inge Gräßle, showing the most recent PIF report.

This quickly takes us to special report 1/2019 issued by the ECA earlier this year. The CONT Chair is rather outspoken on this, and the topic this special report covered. ‘The ECA report is a very important one because it also examined the PIF report — the European Commission’s annual report on the protection of the EU’s financial interests.’

She points out that the PIF report is voluminous but very important. ‘In its special report 1/2019 the ECA rightly observes, in a forceful and convincing way, that there are big loopholes.’ She underlines that she has read many of the PIF reports, showing the most recent issue. ‘If you look into the report you have the impression: something is going wrong! And when you read the ECA special report, you realise what is missing. The usefulness of the ECA report is to name the problems and to suggest remedies.’ She explains that more than once she has criticised the ECA for its recommendations not being sufficiently precise and detailed, not practical enough. ‘But in this ECA report we have rather detailed recommendations, setting out a number of problems related to these PIF reports. And you realise that there is still a lot to be improved in the reporting on irregularities and fraud concerning the EU budget. The ECA clearly has built up knowledge and expertise on this and I can only encourage the ECA to continue with this. I am keen to see, when we assess the next Commission PIF report, what kind of improvements will have been made.’

Getting the basics right

‘I compared the information we received from OLAF, the European Anti-Fraud Office, over the last ten years, and I am not satisfied.’ Inge Gräßle explains why: ‘Over time we received less and less harmonised data. OLAF changed the terminology, they changed what they report on, they changed their statistics. All this makes it difficult to make comparisons over several years, and sometimes it makes me doubt the reliability of these statistics. So I am quite tired of the way the PIF report is prepared.’ She raises another concern she has. ‘Sometimes I think that our institutions — the Commission, but also the Parliament or the ECA — are reluctant to be forthcoming on reporting on fraud because that would give the impression that fraud is quite common in the EU. But this is not the case, and we can only show that by reporting on it. This is why we need to make an effort in providing comprehensive and robust figures on fraud cases and in improving the databases on which these figures are based. Otherwise, the EU’s reporting on fraud will not be taken seriously.’

… our institutions […] are reluctant to be forthcoming on reporting on fraud because that would give the impression that fraud is quite common in the EU. But this is not the case…

She points out that she had many discussions with several directors-general of OLAF on these Commission’s statistics on fraud. ‘But the result was meagre: there is no real willingness to improve the reporting.’ As regards the figures provided in the 2017 OLAF Report — according to which fraud levels are supposed to amount to 0.3 percent of EU spending — Inge Gräßle is sceptical. ‘They presented these figures to deflect criticism because they believe that the reputation of the EU is at risk, they do not use it as a starting point for action.’

Fraud and corruption: from case-based to systemic characteristics

When discussing whether fraud and corruption will be a big issue in the upcoming elections for the European Parliament, Inge Gräßle thinks it will differ a lot by country. ‘In some Member States, particularly the older ones, and perhaps more in the North, this will not be a big issue. But in some other Member States, particularly in Central and Eastern Europe, I think the systemic risk of semi-legal systems enabling fraud is more and more present, and we need to do something about it.’

… in some other Member States, […] I think the systemic risk of semi-legal systems enabling fraud is more and more present, and we need to do something about it.

For her, the fraud risks of today are rather different from ten or twenty years ago. ‘When I started working at the CONT, organised crime tried to file invoices for old machines and pretended that they were new, trying to get paid for new ones. But now we have cases where politicians systematically use their power and the influence they have over EU projects and/or national projects to enrich themselves, their companies, or their friends or family. This is something which was unheard of ten years ago!’

Inge Gräßle expresses her great concern about this development. ‘The EU is now finally giving itself the instruments to face this development, such as the European Public Prosecutor’s Office and the regulation on the protection of the EU budget in case of deficiencies as regards the rule of law in the Member States. The EU is basically under pressure because of non-action on national problems for which the EU does not have the competence, the power to act. But at the same time people expect us to do something.’

She does not refrain from naming and shaming. ‘Slovakia, Czech Republic, Hungary, Romania, Poland: in these Member States we see cases of single bidding in public procurement, companies building up monopolies because other companies are thrown out of the competition.’ Regarding information on this development the CONT Chair sees a big role for the ECA: ‘No organisation is as close to getting to these bidding practices as the ECA is, and I would like to see the ECA ringing the alarm bells louder on these issues.’

She points out that, in its regular audit work, the ECA has to look at the number of bidders, to look at whether the public procurement process took place in a fair and orderly fashion. ‘These processes can be tarnished because of these issues, something which I learnt for example from studying the TED database, the EU database which publishes the calls for public procurement. Every year 175 000 calls for tender proposals are launched in which EU funds are involved.’ She refers to a study by the European Commission’s Directorate-General for Regional Policy on single bidders, underlining that this question of fair competition is a matter of major concern to her. ‘This directly undermines the single market idea, but it is also a political problem for the EU. If we make the rich ones richer with EU money, then citizens will lose faith in our system.

This is what I mean with the semi-legal and systemic fraud issues which have arisen. We are now facing problems which are beyond project level, so you need to go above this level to tackle them. I think the ECA can play an important role in doing so, assessing and informing us on how the procurement process was done. On paper, everything may look perfect. But fraud does not necessarily start at project level, it may originate further upstream. If the ECA suspects fraud, then of course the case has to be sent to OLAF. But looking into the systemic issue is at least as important.’

… fraud does not necessarily start at project level, it may originate further upstream. […] looking into the systemic issue is at least as important.’

She also links such systemic issues to the functioning of Member States in the Union. ‘When we look at what is happening, for example in Hungary, perhaps we should ask: do we really have the right accession criteria and right procedures to ensure that all Member States continue upholding what we agreed upon together when countries join the EU?’

More information exchange on taxation issues

Another issue, though less related to EU funds, but relating to fraud, is tax evasion and money laundering. Discussing recent scandals related to banks such as the ING and Danske Bank, Inge Gräßle sees little opportunities for the EU to take up a major role in this area. ‘As long as the Commission has no rights regarding taxation issues, there is no point in discussing this. If you want the EU to acquire more powers in this area — and I am not against it — you will need a Treaty change. And this is a difficult enterprise in the current political situation!’

At the same time, she agrees that changes are necessary also in this area. ‘If we do nothing, we will have Member States that will carry on arranging their taxation issues on their own, thereby harming their EU neighbours. And this gives a very bad impression.’ She refers to Member States like Luxembourg, the Netherlands and Ireland, where companies may pay lower taxes than others because they have tax agreements with the respective governments. ‘If companies are not treated in the same way, and do not pay the same taxes in a single market, this harms the reputation of the EU. If I tell people that we, as their MEPs, cannot do anything, and that unanimity — meaning approval by all 28 Member States’ governments in the Council — is required for the EU to act, then people understandably are dissatisfied.’

… If companies are not treated in the same way, and do not pay the same taxes in a single market, this harms the reputation of the EU.

Inge Gräßle is keen for measures to be taken as soon as possible without a Treaty change, pleading for more cooperation between Member States. ‘For example, when you open a bank account in another Member State, the competent authority in your home country will be informed about this. However, when you buy an apartment, your national fiscal administration gets nothing. There simply needs to be more information exchange between Member States when you buy for example real estate, so that they can deal with any potential tax issues.’ She recalls that the financial crisis after 2009 triggered some discussions. ‘At the time we saw a lot of Greek money flowing out of the country. And now we see a lot of money flowing out of Italy. I met a local banker who told me that recently two Italians bought two companies in Germany. Obviously, there is nothing wrong with this as such. But these transactions make an information exchange between the local tax authorities necessary, so there can be cross-checking on how clean the funds used for these transactions are.’

Pleading for clear information on what the EU stands for

With the European Parliament elections coming up, Inge Gräßle considers it more important than ever to inform the EU citizens what Europe is and what Europe does. For her such information is a condition for trust in the EU project. ‘We need to have a permanent information campaign on what Europe does, because people are not well informed about the EU. What was very striking to me, during the Brexit debate, was how little knowledge the British government had on what it means to be a Member State of the EU, and how closely the UK is actually linked to the continent. They did not comprehend, which resulted in a campaign based on non-information and even lies.’

She realises that people are not always interested in having a better understanding, but she still thinks more work is needed here. ‘I am sure that citizens would like to know at least some key facts about the EU.’ She gives an example where a lack of information can easily create the wrong picture. ‘Did you know that the EU allows more agricultural goods from the less developed countries into the common market than the US, Canada, Japan, Russia, Korea and China combined? EU agricultural funds are heavily criticised, supposedly being responsible for the bad situation of farmers in developing countries. But there are some basic facts which tell a different story, and they need to be communicated to the public.’

We need to be clear that our main EU export product is not cars. It is human rights!

For a politician from Germany, Inge Gräßle presents a striking slogan. ‘We need to be clear that our main EU export product is not cars. It is human rights!’ She explains that for many people in the developing countries the key issue is human rights. ‘They are fighting for their human rights. And if they did not have the EU, they would have no support at all.’ She argues that there are plenty of things EU citizens can be very proud of. ‘The European integration is a process of progress for humanity, a process which reaches beyond Europe.’

She clarifies that one perhaps has to change perspective to see the key value of human rights. ‘I also have a tendency to speak a lot about the economy, the financial side of things, about what is relevant to people’s own situation, their own material interests.’ The CONT Chair pleads for a closer look at the immaterial values of the EU. ‘Of course, there is peace, which many people nowadays take for granted. But besides peace there are many other benefits brought by the EU, by our community of countries. Despite our occasional quarrels we should never forget that we share the same values. You can see these values in the actions taken by the EU. I really regret that we speak far too little about what unites us and far too often about what separates us.’

… we speak far too little about what unites us and far too often about what separates us.

Bringing issues back on the agenda, including unpopular ones

Having been the CONT Chair for almost five years, and a member of CONT for ten years longer, Inge Gräßle has not lost her energy to pursue issues. ‘We are among the four committees which hold the highest number of meetings. I believe that putting issues on the agenda regularly contributes to solving them.’ She refers to how CONT regularly called upon the Commission to follow-up on the systemic problems identified with EU spending in the Czech Republic, Hungary and other Member States. ‘If you do not do that, things will be forgotten. And yes, we do naming and shaming — as well in the discharge resolution — much more than before. Because if we do not clearly point to the specific problems in some countries, we treat each of them in the same way, and that’s not helpful.’ She underlines that naming Member States is not done just to point a finger at them. ‘We do this to help them overcome the problems identified, and also to help the Commission officials who work on these dossiers.’

She mentions a few examples of success in putting things back on the agenda. ‘I tried to have more and better digitalised information on third country projects, so we developed our own monitoring system. The outcome was that the Commission devoted more care to those 2 000 projects because they knew that the issue would rear its head again. It may be boring but it was rather successful.’ Another example relates to putting the issue of conflict of interest into the EU’s Financial Regulation. ‘Politicians are now forbidden to interfere in bidding processes in which EU money is involved. This is also applicable to politicians who own companies. I believe this to be important for building trust, for equal treatment.’

However, she also remains self-critical. ‘I think we can never do enough, also in the fight against fraud and corruption. Of course, we now have the European Public Prosecutor’s Office — the EPPO –, which is a big step forward towards a more harmonised penal law, also one of the reasons why it was blocked that long by the Council. Just imagine — the EPPO now finally has powers to fight VAT fraud!’

One of the areas she considers clearly needs more work is the rule of law. ‘We now have a rule of law proposal on the table. In the last five years we saw awareness-raising on this. And we now see that the criticism we have levelled is shared by the Commission as well.’ She realises that it is a difficult topic for the Member States. ‘But we will overcome that. Otherwise people will get the feeling that in this Union you can enrich yourself with taxpayers’ money and that nobody will do anything about it.’

CONT and the ECA: pursuing mutual interests and cooperation

For the CONT members the ECA reports and opinions are an essential tool in keeping the Commission and other executive bodies accountable for the implementation of EU policies. The CONT Chair is very positive about the way in which the ECA and the CONT cooperate. ‘The ECA Members are open to listening to us, to our concerns, to our needs. It is not just listening, it is really a feeling of interest and cooperation. They pick up our proposals.’

The ECA Members are open to listening to us, […] it is really a feeling of interest and cooperation.

But Inge Gräßle also has a wish list for the ECA. ‘I would like to see reports which are more specific and hard-hitting, which call things by their name, and present less an avalanche of words but focus more on the main issues found. Let’s be precise and practical, also in the recommendations.’

Inge Gräßle is standing again as a candidate for the new parliamentary period. Whether she, if elected, will come back as CONT Chair remains to be seen. ‘We will have to see who will get what, always a complex process the outcome of which is difficult to predict. But I hope to support the ECA in its work also in the future.‘ She is not in favour of having a newly elected MEP becoming the chair of a committee. ‘. We have seen this before in CONT and it weakens the influence of the committee, with repercussions for all its stakeholders, including the ECA. Now we really have built up something together, also thanks to President Lehne — an experienced former MEP himself — and we will see how we can maintain that.’

This article was first published on the 2/2019 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.



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