Statement by Commissioner Designate Siim Kallas at His Hearing in Front of the European

SPEECH/04/555

Siim Kallas

Vice President designate of the European Commission responsible for Administration, Audit and fight against Fraud

Statement by Commissioner designate Siim Kallas at his hearing in front of the European Parliament

European Parliament

Brussels, 11 October 2004

Honourables members of this House, chairmen, ladies and gentlemen,

I am proud on Europe’s behalf of the recent enlargement, of the stability brought every day by the European Union to our region, and of the stabilising signals and values that it continues to project to the rest of the world. I need not recall my own country’s history to prove this point.

President Barroso has designated me as “Triple A” Vice-president – meaning that my responsibilities would include Administration, Audit and Anti-fraud. Before touching on each of the three areas, I would like to make one general remark: This wider Europe will have to be a new Europe. We need to modernise to reach the targets set in the Treaty, at the Lisbon Summit and proposed in the draft Constitutional Treaty. This call for “Modernisation” and reform relates to Union-wide economic policies. But as an important instrument to reach the targets, the call for modernisation also applies to the Commission itself.

Over the past few years, the European Parliament – and this Committee in particular – has either proposed or supported many of the improvements implemented by the Commission in the areas of administration, audit and anti-fraud. I therefore wish to acknowledge that contribution, including from members present here today, and express the hope that the creative work and cooperation will continue in the future.

A letter sent to me by Mr Otto Graf Lambsdorff wished me luck and wrote that we, the EU Commission, “must get rid of this unpleasant mixture of arrogance and inefficiency that so many well-meaning friends of the European idea complain about”. These comments probably echo the frustration many feel at hearing about the European institutions. These assumptions are somewhat exaggerated and unfair. But I want to start my work from the acknowledgment that the image of the public administration in the European Union needs improvement.

Over the past weeks I have met the heads of services, representatives of trade unions and staff. I have met members of the European Parliament as well as national politicians. I have listened to advice, opinions, observations, and expectations, and let me stress that this consultative approach is the way I intend to work in the future.

So let me now turn to the challenges facing the EU in my proposed areas of responsibility:

The first “A” in my assigned area of responsibility stands for Administration.

Let me share with you my first impressions:

My predecessor Neil Kinnock has brought about tremendous positive change. Yes, we have a huge task ahead to consolidate the administrative reform. Yes, we need to put the declared principles into practice. Yes, the European administration has to come closer to the citizen and business and be more open. Yes, we must do further work on the public perception that money entrusted to the EU is well managed and spent.

No request should be asked twice, no order should be given twice. “Did I respond to the request as fast as possible?” everyone working in the institutions should ask himself every day. This is the meaning of the service orientated public administration which I want for the Commission.

I wish to comment on the perception of Commission staff as distant “Eurocrats” that ignore practical realities. The people I have met are hardworking women and men, aware of national concerns, but conscious of their duty to give priority to the shared European interest. These are people deeply committed to the values of European integration.

With these remarks, let my fully acknowledge that nothing is perfect. Personnel policy has already undergone substantial change over the past five years. The biggest asset of the Commission remains staff, and I would see it as my job to further develop a system, to ensure that it works for – and not against – the ability of staff to deliver results. I fully support the reform concept. Staff in the European Commission now rightly expect the smooth implementation and the restoration of a stable working environment.

I would therefore concentrate on what I see as the six major challenges in the area of administration:

First, one point which I will follow closely: we must have clearly established competences and agreed priorities. The European competences have grown and so has the administration, but not always in sound structures. I have heard complaints about parallel organisation and lack of coordination between institutions and units. The new Commission will prepare a realistic work programme, which takes into account real priorities, available resources and respects the principle of subsidiarity. The organisation between institutions has to be clarified, to save on overlapping and have transparent areas of responsibility. I see great scope for broad inter-institutional collaboration.

Second, we must convince staff that the new system of assessments, promotions and nominations is a credible one. We must achieve the selection of officials at all levels based solely on professionalism, individual merits and capabilities. Merits must come first.

Some circles consider the appointments to top jobs as political deals. This is old fashioned. The success of the public administration in the EU relies heavily on the professional capabilities of the officials, departments, agencies, secretariats. I see only one solution: working in the Commission must be so attractive and procedures so transparent that we can choose from a very large number of highly qualified candidates for every appointment.

The third observation is that people have at times felt that the system does not protect them enough. People are innocent until proven guilty and unfair or premature accusations could hurt the morale of the staff.

We have to create a climate where criticism is welcome and addressed in a constructive way. This ensures protection of those who speak up and allows reform from within rather than only reacting to outside pressure.

The fourth observation is that we have to carefully maintain the balance between controls and decision-making. Several management and supervisory bodies have been designed to avoid malfunction and double check. At the same time there are increasing complaints about delays in delivering. But we cannot allow red tape to dilute and delay decisionmaking.

Fifth, we must use the tools available in our contemporary world to modernise the public administration This means first and foremost the increased use of information technology. New tools can make Europe more transparent and easier to understand, as they will allow better access to documents and information on our sometimes complex rules and procedures.

We need “Less paper, more use for computers”. My home country, Estonia, has a long and good experience with e-government. This experience has already been studied in the Commission and I hope very much that the E-Commission will contribute to making Europe more visible and user-friendly.

Sixth and final administrative concern - security at the European Commission must be dramatically improved. This matter has been seriously underestimated so far. Few people outside the Commission share the Commission’s own assessment of being a soft target with little sensitive information. The Galileo satellite system? Negotiations positions, which can change the destiny of the third countries? Fines for breaking competition rules? Is there really nobody interested in influence or disrupting our work? We must raise awareness and tackle the increased attempts of unfriendly intelligence against the Commission.

The second A in my designated area of responsibility stands for Audit. For me, Audit allows accountability and efficiency.

Audit and sound financial management have to be a concern for all Commissioners. I will seek to make sure that information is exchanged regularly, that relevant findings are transmitted up to the level of Commissioners.

My ambition is that internal audit recommendations will reach a very high level of quality, making them accepted and interesting suggestions for administrative improvements. The aim of audit is not to minimise identified problems, nor is it to make sensational revelations. Rather, the audit must be seen as an undramatic and confidential opportunity to freely discuss how things can be done better. I will do my best to exploit the synergy of the combined portfolio of audit and discharge to ensure an efficient follow-up up to the discharge procedures and related recommendations.

As concerns external audit, a system of budgetary discharge that is to a certain extent questionable has been created in the European Union.

A primary goal for me in the new commission will be to work towards a positive declaration of assurance -DAS . I want to achieve a situation where the Council, the Parliament and the public can have the assurance that the system in place effectively controls expenditure and that risk of misspending is maximally avoided. This reality shall then be reflected in the procedure, and avoid the annual row over a negative DAS.

The single audit model recently presented to you by the Court of Auditors, as well as moves towards a more qualitative assessment are very promising and point the way forward. The methodology has to be worked on, the Commission must continue its improvements and Member States and all actors must cooperate. Again, Audit is the tool for the Commission to take on responsibility for managing the EU budget, with the support from the Court of Auditors and the MemberStates.

The third A of my tasks is the Anti-Fraud.

Fight against fraud means eradicating corruption and mismanagement. Fight against fraud also means protection of the financial interests of the European taxpayers to ensure that money is well spent for a vast number of programmes and other needs.

Our revenues are levied by the Member States. More than 80% of the EU budget is spent in the member states, and they have to co-finance many projects. The EU financial interests thus stretches much wider than the € 100 billion of the annual budget.

The financial interest of the EU is reaching out across the continent, into rural areas and local administrations. It touches on people who receive training and businesses that carry out contracts.

The European anti-fraud office, OLAF was created to achieve more trust among the general public, that management in the EU, especially financial matters, are handled properly. Is this goal achieved? Unfortunately it seems to me, that the answer is no.

I have heard concerns about efficiency, leaks and sensational feelings, interference in investigations and the protection of individual rights.

I want OLAF to become a pillar for confidence, and not a subject of suspicions and speculations.

We must create a Union which is an example of sound fiscal management and transparent use of public money. For this purpose we must have in place excellent legislation and a strong and efficient cooperation with and between the Member states. As crime has moved to the international level, so too must the fight against it. The European Anti-fraud office is a very important link in this framework.

We have to clarify the tasks, rights, obligations and functions of different institutions including OLAF in fighting fraud and fiscal mismanagement with the main purpose to create more confidence in the public administration of the Union among citizens.

I hope that in cooperation with Parliament we will secure the smooth work of the system to fight fraud and mismanagement of funds within the EU. Citizens will not understand if we do not join forces to combat fraud where the big money is: on customs, agriculture and structural funds. And as a recent example has shown, the efficient working of OLAF is also crucial for the reputation of the institution. OLAF has also a very important task to fight against any kind of corruption inside of European institutions. Zero tolerance is today`s demand.

The three ‘A’s in my proposed portfolio will bring together an unprecedented amount of information on the state of the reform, the control systems and the financial management in the EU. I intend to share this information with you as often as possible and as much as possible. I will report to you on the situation in the Commission and I will be the spokesman for the budget control committee and the Court of Auditors inside the Commission.

With your help, this portfolio will not be only about ‘A’s, but also stand in for: Modernisation, Management, Motivation and Money well spent.

I thank you for your attention and look forward to your questions.

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