Louis Galea, Malta’s representative at the European Court of Auditors.

Malta’s representative at the European Court of Auditors, Louis Galea, told MPs yesterday that the EU was becoming increasingly concerned about ensuring positive outcomes from the money spent on projects.

Addressed a joint session of three parliamentary committees – Foreign Affairs, Economic and Financial Affairs and Public Accounts – the former Nationalist minister said the EU budget amounted to some €300 per EU citizen. This provided a reality check since out of these finances, the EU must not only fund the present needs of its member states but also the future projects for their development.

He said the court was changing its perspective: not how much was spent but if the money spent brought added value. This, he said, gave greater value to accountability for the money spent, ensuring that the decisions were not knee-jerk reactions but really did have lasting effects.

The court was looking beyond the balance sheets to the systemic risks of the decisions taken. The banking architecture of Europe had changed radically since the recession, pandemics and terrorist attacks, all of which carried systemic risks which needed to be assessed for the sake of accountability.

The challenge, Dr Galea said, was the fragmentation of scrutiny among the member states. Pulling these elements together would enhance transparency and accountability but it did involve restrictions.

He said accountability of the outcome was the lodestone of the Court of Auditors. The EU would no longer be accepting a “use it or lose it” approach to finances. Member states were now being directed to absorb the EU funds regularly based on specific objectives and with a clear assessment of the impacts created by the use of the funds.

The EU would no longer be accepting a use it or lose it approach to finances

This approach, warned Dr Galea, would increase the pressure on governments, carrying not only the carrot of funding but also the stick of compliance. The results would be achieved only through intense capacity building and thorough verification not only of the spending but of whether the money had been well spent and yielded positive results.

Dr Galea’s first comments were about the trustworthiness of the accounts kept by the EU. This reliability, he said, had been of the highest order for many years, particularly with the introduction of accrual accounting. This prevented financial manipulation to a considerable extent. The control on income was impeccable.

However, the same could not be said about the procurement side. This area, even because of practical considerations, had an error rate of 4.5 per cent. This rate was similar to previous years and seemed to be rather chronic.

He attributed some of these mistakes to claims for expenses in projects that were ineligible and were co-funded. The major offender, said Dr Galea, was rural funding.

He advised that Malta would do well to look into the matter since the European pattern in this case might well be replicated in Malta and a useful learning outcome may accrue. In funds spent under budgets which were exclusively managed by the EU, these mistakes were negligible.

Another source of mistakes was the compilation of excessively complex conditions. He said that Malta had to be careful not to be even more complex than the EU directives.

He said that simplification should be the by-word.

Turning to his own tasks at the European Court of Auditors, Dr Galea said he was responsible for revenue scrutiny and in 2013 he was the dean of the section as well as being involved in the running ofthe court.

Last March he ended his term as dean and was tasked with reviewing the accounts of the EU agencies and joint undertakings. These turn over a €4.2 billion budget. He said the court, for the first time, introduced private auditors to help with the workload and many learning curves had been overcome.

He had also been tasked with writing a number of reports among which was whether the European Parliament should meet in two cities – Brussels and Luxembourg.

Dr Galea said the issue of limitations due to size was insurmountable. He cited as an example the European Central Bank, which employs 300 lawyers. Rather than size or numbers, Malta must go on guarantees and safeguards. Openness and scrutiny should not be seen as a threat but as an opportunity to help political incumbents stay on the straight and narrow.

Malta already enjoyed a high reputation but it needed to be strengthened not only through capacity building but also through training.

Concluding, Dr Galea encouraged parliamentarians to insist on the strengthening of the scrutinising offices and to push through a culture of accountability.