Berlin / Brussels 3 May 2006 — European Union citizens deserve to know where their taxes are going. Full implementation of financial transparency recommendations issued today under the European Transparency Initiative (ETI) will help citizens keep an eye on where and how their money is spent. The ETI, headed by EU Commission Vice President Siim Kallas, seeks to improve public transparency of the EU.

“The credibility of the European Union’s commitment to open government is at stake,” said David Nussbaum, Chief Executive of Transparency International. “Access to information is fundamental to a healthy democracy. It is the foundation of citizens’ ability to trust their government.”

A lack of clarity in the flow of EU funds can mask errors and mismanagement, and leave the door open to fraud. The end beneficiaries of the €80 billion spent by the EU in shared management schemes (amounting to 76 per cent of its entire budget), including agricultural support and structural funds, remain largely obscured to the public, and the right to disclose them lies in the hands of the EU’s member states. Though member states manage the funds and their final distribution, ultimate budgetary responsibility remains with the Commission.

“Greater transparency in the distribution and expenditure of these EU funds means greater accountability, more efficient management and better insight for citizens into where their taxes are going,” said Miklos Marschall, TI’s Regional Director for Europe and Central Asia. “EU member state governments have an obligation to their citizens to heed these recommendations and to take concrete action to implement them, in particular changing current data protection laws where necessary.”

A question of responsibility

Today’s recommendations call for obligatory disclosure of recipients, an important step toward making the current system more transparent. However, today’s ETI Green Paper does not include an EU-wide debarment, or “blacklisting”, system, as proposed in the initial ETI Commission Staff Working Group’s recommendations. Debarment disqualifies companies found to have engaged in corrupt behaviour from bidding on public contracts. It prevents corrupt firms from benefiting from EU contracts, and serves as a powerful deterrent to illicit behaviour.

“Member states currently have little incentive to closely monitor EU funds, as they bear the cost of the monitoring while the Commission reaps the political benefits. The Commission and the EU governments must find a more rational and transparent distribution of management and responsibility,” said Rune Rasmussen, TI’s EU policy officer.

Shortcomings in the shared EU fund management are the main reason why the European Court of Auditors has withheld a “positive statement of assurance” on EU accounts for the past 11 years. The battle for reform within the EU is ongoing, as evidenced during recent negotiations for the 2007-13 budget. Despite improvements, there is still a reluctance to address the core problem of a lack of clarity in management and responsibility between the EC and the Member States

Media Contacts:

Brussels / Rune Rasmussen
Tel: +32-2-229-36-46
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Berlin / Conny Abel
Tel: +49-30-3438 20666
gro.ycnerapsnartnull@sserp

TRANSPARENCY INTERNATIONAL
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10559 Berlin, Germany
Tel: +49-30-3438 2061/19
Fax: +49-30-3470 3912