EU agencies should tighten their rules and controls to minimise the risk of managers and other senior staff leaving for jobs in the private sector that may present conflicts of interest, according to the annual report on the agencies published by the European Court of Auditors on Thursday 27 October.
At the same time, the EU’s financial watchdog confirmed the reliability of the agencies’ accounts by signing off on their 2021 accounts.
The auditors also gave all 44 agencies a good rating for how they collect revenue for their operations and gave all but one agency (eu-LISA) a clean bill of health for spending.
Rimantas Šadžius, the Court Member in charge of the audit, said that “legislators and agencies must heed our wake-up call and handle the potential ‘revolving door’ situations more stringently in order to avoid conflicts of interest and reputational damage to the agencies themselves and to the EU as a whole”.
EU rules impose very few obligations on EU bodies when it comes to monitoring compliance of current and former staff with ‘revolving door’ requirements. On the other hand, agencies are particularly prone to the risk of ‘revolving doors’ for two reasons: firstly, their reliance on temporary staff, which leads to high staff turnover rates; and secondly, their governance model, with short terms of office for board members.
The ‘revolving door’ rules do not apply to agencies’ board members, as they are not part of their staff.
The auditors regret that this has created a legal vacuum and believe that only a small proportion of potential ‘revolving door’ cases are being investigated. Furthermore, few agencies go beyond the minimum legal requirements in this area. Most do not monitor the compliance of their current and former staff, relying exclusively on self-reporting instead.
The report once again points out governance issues concerning banking, insurance and financial market supervisory agencies. As a result of these problems, there is a risk that national interests will be favoured over those of the EU.
The auditors are also critical of how agencies procure goods and services. They recommend that they ensure that they make the best use of the funds.
In fact, weaknesses in public procurement are still one of the main reasons agencies fail to comply with payment rules.
For half of the agencies, the auditors identified shortcomings in the contracts. For one agency, eu-LISA (large-scale information systems in the area of freedom and security), they detected €18.1 million of erroneous expenditure. The auditors thus give the agency another yellow card in the form of a qualified audit opinion on its payments and ask it to improve its public procurement procedures and contract management.
The audit showed that the war in Ukraine affected three agencies. The EU Asylum Agency (EUAA) has requested more funds and staff to respond to requests for additional assistance from EU countries that have taken in Ukrainian refugees. The activities of the EU Agency for the Space Programme (EUSPA) have been affected because Russian Soyuz launchers could no longer be used for its Galileo satellites. For the Single Resolution Board (SRB), which is responsible for the liquidation of failing banks, the war has exacerbated the credit risks associated with banks’ exposures to counterparties in Russia, Belarus and Ukraine, as well as loans to domestic companies most exposed to the effects of the war.
Read the report: https://aeur.eu/f/3tb (Original version in French by Lionel Changeur)