Category: Anti-corruption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As the EU’s multi-annual budget is being negotiated, the amounts and efficiency of spending matter but also priorities and European values when disbursing programmes. Smarter conditionality is needed, triggering less political backlash, and, where needed, direct payment to beneficiaries, argue Benedek Jávor and Laszlo Andor.

Benedek Jávor is a Member of the European Parliament in the Greens/EFA Group and Laszlo Andor, Senior Fellow at FEPS, is the former EU Commissioner for Employment, Social Affairs and Inclusion. Both are from Hungary.

The draft MFF proposed by the European Commission includes new tools for addressing the systemic misuse of EU funds. This is a major step forward, as the Commission does not only acknowledge the problem that EU funds can become more likely targets of fraud and corruption than national budgets in some countries, but also that what we are seeing today is a systemic problem.

We fully share the Commission’s analysis and agree that the situation is grave: state-level fraud is organized by political actors. That results in a waste of EU resources but inevitably undermines democracy, the public interest, and the rule of law, as well as the principles of partnership and planning inherent to the policies. We see that government actors use European funds to enrich their political or business affiliates with the ostensible goal to strengthen their power regardless of the financial and moral cost. A black book could be filled with cases representing a variety of countries and various political families, although close observers would agree that the current Hungarian practice is in the class of its own.
While we are deeply concerned, we also believe that the discussions have so far not explored all options and there is a high risk of launching a mechanism with serious flaws by 1. reliance on a political decision as a trigger of sanctions (i.e. to establish that country X violated the rule of law), and 2. threatening to cut country X off entirely from EU funds once the trigger is pulled. In our view, the triggering of sanctions needs to be objective and transparent which requires a solid set of indicators and benchmarks and that the sanction must be well targeted to hit the perpetrator of fund abuse rather than the innocent hostages.
The Commission proposal to suspend payments and commitments comes from a good intention. If triggered, this would prohibit entering into new commitments until the Member State in question returns to the expected path of European values. However, experience shows that abusive governments do not respond to such threats. In fact, they are likely to turn these to their own advantage by showing the EU as a biased body which blackmails and punishes the non-abiding Member States. If the EU withholds all the funds from the Member States, it can be easily interpreted as blackmail with a high risk of backfiring politically.
The EU must show that it regards only the best interest of the citizens when acting on sanctioning a Member State; taking those funds into its own hands and distributing them in the Member States according to the original goals would be the way to do that. In other words, our proposal is that the Commission in such cases should suspend shared management. This way the EU’s actions cannot be regarded as blackmail while it could avoid the corrupt allocation channels and financing of oligarchs close to governments.
Direct management solutions could be also introduced in a gradual and proportional manner: first, only those payments could come under direct control of the Commission, where they have already rejected payments as a consequence of irregularities or detected fraud. As a next step, in case of systemic problems in operative programmes or the complete management system and democratic control mechanisms in a Member State, direct or indirect management could be introduced in a more comprehensive in the case of serious and systemic breaches. Alternatively, a third type of management method: “assisted management” could be invented by planting EU experts in national agencies without completely sidelining them. This could be either requested by the Member State or, above a certain threshold (frequency of errors, suspensions and OLAF investigations), assisted management could be launched by the Commission as well.
Cohesion policy and EU funds are not “gifts” for Member States, but indispensable parts of a balanced and fair functioning economic governance and single market in Europe. Thus, complete withdrawal of funds should remain a  “nuclear option”. On the other hand, systemic corruption can lead to a situation where EU funds simply do not fulfill their original goal of improving competitiveness, developing infrastructure and investing in human capital or better governance. In those cases, the solution shouldn’t be to punish societies of the affected Member States but to repair the management system in a way which is able to efficiently prevent systemic misuse of funds by national political or management systems.
Choosing the best way forward is by no means easy, especially on such a highly politicised instrument. Pro-European forces in the European Parliament and elsewhere should be united and turn up their efforts in defense of EU values and resources. However, this should not only translate into taking a strong stand against populism, but also defending the rights and opportunities of the victims of misbehaving governments, which often can be found among the citizens of the Member State in question.

https://www.euractiv.com/section/economy-jobs/opinion/of-funds-and-values-conditionality-in-eu-cohesion-policy/

In September, the European Parliament took the historic step of voting to launch Article 7 procedures against Hungarian government. 448 votes to 197, a large majority in the European Parliament spanning the political spectrum, including the clear majority of EPP as well, approved the proposal. Approval means the European Parliament sees a clear risk of a serious breach of the EU founding values and the Parliament asks the Council to debate the issue. The values identified at risk are judicial independence, freedom of expression, corruption, rights of minorities, and the situation of migrants and refugees are key concerns. Launching Article 7 procedure sent a clear message to Viktor Orbán’s government, that he would no longer be able to disregard EU membership rules without facing the consequences. Although the government presented it as an unfair attack on the Hungarian nation, according to recent polls, the majority of Hungarian citizens are aware that this is a debate about the state of democracy in Hungary, and according to the same poll 51% of Hungarians would have voted in favour of the report

There are still many stages left in article seven procedure, the proposal for a Council decision will now be sent to the EU member states. They may determine the existence of a clear risk of a serious breach of the EU values in Hungary. Afterwards, the European Council may determine, by unanimity and with the Parliament’s consent, the existence in Hungary of a serious and persistent breach of the rule of law, democracy and fundamental rights. A unanimous vote is unlikely to happen because both Poland and Hungary are in similar article 7 situations, and have pledged to vote against the punishment of the other.

Since the vote to trigger Article 7, there have been meetings regarding the next steps. After one such meeting, MEP Judith Sargentini (Greens/EFA, NL) criticized EU countries for stalling the process. She explained that as time is lost, “we see further deterioration of academic freedom and the undermining of judicial independence in Hungary”. The Hungarian government has distributed its assessment of the issues. But, as of now, it is not clear what will happen at the next ministers meeting in December.

The impact the Article 7 vote had on the EPP party is noteworthy because Orbán’s Fidesz party is a part of the European Parliment’s EPP. Benedek Jávor explains that earlier on, Orbán’s goal was to push the whole EPP into a more far-right position. Nevertheless, his allies within the EPP voted in favor of the Sargentini Report meaning, he was unsuccessful. The vote made clear that Orbán’s only allies are Eurosceptic, racist, far-right parties. An EPP summit that took place after the vote sent a unified message to Orbán by adopting a resolution in defence of liberal democracy in the face of rising populism across Europe, that showed Orbán cannot challenge basic EU rules and values.

Benedek Jávor discussed two possible future developments that may take place because of the Article 7 vote. The first is that Orbán will likely attempt to bring Eurosceptic far-right forces together into a political group at the European Parliament. A second possible development is practical sanctions on Hungary, which could happen even without a council decision on the Article 7 procedure. At the next multiannual financial framework, there is a proposed option to freeze payments of EU funds in cases of corruption. Meaning payments from the EU to Hungary could be frozen.

Members of the European Parliament will stop at nothing until EU laws aimed at tackling court cases that intimidate investigative journalists and independent media are introduced, MEP David Casa said yesterday.

The Nationalist MEP gave comments to The Sunday Times of Malta in the wake of calls by a cross-party group of europarliamentarians on Friday, proposing new EU laws to address SLAPPs (strategic lawsuit against public participation).

The group – made up of Mr Casa, Ana Gomes, Monica Macovei, Maite Pagazaurtundúa, Stelios Kouloglou and Benedek Jávor – wants the European Commission to create a directive which would allow journalists and media houses to ask for such suits to be dismissed and seek compensation while also fining companies which dodge the directive by filing SLAPP lawsuits in non-EU jurisdictions.

Read: SLAPP down companies bullying free press, MEPs urge Commission

The MEPs have also asked for the creation of a fund for journalists and media houses fighting such suits and that the Commission names and shames companies which resort to SLAPP tactics.

A call for such anti-SLAPP legislation was also made in the report by MEPs from the Pana and Libe committees, who carried out a two-day fact-finding mission in Malta last year. The report was published last Thursday.

The delegation looked into allegations of maladministration and money laundering in Malta, meeting with the Prime Minister, the Police Commissioner, the Chief Justice, representatives of the Malta Financial Services Authority and Financial Intelligence Analysis Unit, as well as journalists and civil society activists.

According to Mr. Casa, the MEPs will now be waiting for the Commission to respond, pointing out that if there is no action, a number of options were available to them, including making the call on the Commission during plenary.

“But more concretely we could also use a particular mechanism to draft the directive ourselves and send it to the Commission to propose. We can do this under a provision of the Treaty on the Functioning of the European Union.

“What is certain is that we are determined and committed to push for this legislation for as long as necessary,” Mr Casa said.

On the other recommendations in the report – mainly those calling on the European Banking Authority (EBA) and the European Central Bank (ECB) to assess whether the MFSA has fulfilled its obligations and to investigate whether Pilatus Bank holding a licence requires an intervention – Mr Casa said this was a different situation.

While the request to the ECB to take action had originally come from him alone, it was now the European Parliament which was making such calls on both the ECB and the EBA, the MEP explained.

“It should be the MFSA of its own volition that does what should have been done ages ago and revokes Pilatus’ license.

“On my part I will be communicating with the ECB again in the coming week, as I have received further evidence confidentially which needs to be passed on to them,” Mr Casa went on.

On a national level, the report points out that keeping politicians suspected of money laundering in office affects the government’s credibility, fuels a perception of impunity and could result in further damage to State interests by enabling the continuation of criminal activity.

When questioned on Friday about the recommendation to remove those named in the Panama Papers, Prime Minister Joseph Muscat said simply: “We take our decisions”.

He added that the MEPs who travelled to the island on the fact-finding mission had decided what they were going to say even before coming to Malta.