European Parliament under pressure for spending taxpayer money on ‘ghost offices’

Each member of the European Parliament receives a so-called General Expenditure Allowance (GEA), costing the EU around €40 million annually. The 4342 euros every month are intended to fund an office in their own country, but following research by journalists at ‘The MEPs Project,’ it seems the funds are potentially being misused.

A series of investigations across the 28 member states found at least 41 cases where MEPs pay rent to national political parties or even to their own personal accounts. In 249 cases, MEPs either said they have no offices, refused to reveal their addresses, or the location of the offices could not otherwise be tracked.

As the EU Parliament does not audit the use of these expense payments, there is no documentation available for how the funding is used. And, according to the research, neither the existence of MEPs’ national offices, nor certain conditions of their funding are monitored by the parliament.

In this unprecedented EU-wide collaborative effort, our journalists in every member state looked into the way in which the 748 current MEPs (three seats are vacant) make use of the general expenses payments received from the parliament. Our reporters requested information from all current 748 MEPs and analysed documents from the parliament, land registries and other sources. So far, just 134 answered what they pay in office rent, while only 53 said that they were willing to share documents on their public spending.

Atlatszo joined the project and our findings about the offices of Hungarian MEPs can be found here.

MEP allowances

MEPs receive a monthly pay of €8,484, a generous budget of up to €24,164 for office staff, and a daily subsistence allowance for personal expenses during sessions of €307 per day, the latter one tax-free. On top of all that, the parliament pays each MEP a lump sum of €4,342 per month – again, tax-free.

The latter amount is the so-called General Expenditure Allowance (GEA), which is intended to cover the cost of national offices that, among other things, facilitate contact with EU citizens.

According to the investigation, the parliamentarians themselves have a rather varied understanding of how the GEA may be used. Many of them claimed to use the whole sum every month on office equipment, internet subscriptions and other work-related costs. Some also included travel expenses for visitors, charity donations and payments to their national party as a “general expenditure”.

Questions also arise with respect to the beneficiaries of the rent payments for the national offices. According to our research, in Germany alone eight MEPs from different political parties are themselves the owners of the buildings where their national offices are located.

Among them is Manfred Weber, the chairman of the centre-right EPP group, the biggest group in the EU parliament. His local office sits in an annex to his private home in a small village in the Bavarian country side, far away from the more populated areas of his region. Weber left questions on this issue unanswered.

Frequently, MEPs seem to be sub-renting offices from their own local political party branches. Some 38 MEPs confirmed rent payments to a local or national party branch. Others did not answer questions on that, whereas some insisted there is a proper separation and that no subsidies were given to the party.

Some MEPs also transfer all of their GEA payments to their national party.

(Un)intended purpose

However, in a considerable number of cases, it seems to be unclear what use the MEPs make of their expense payments. And it is equally uncertain as to whether they are actually used for their intended purpose.

The investigation revealed that MEPs – in member states from Belgium to Bulgaria, Italy, Germany, the Netherlands and Spain – do not seem to maintain any national office at all.

A number of MEPs refused to tell where their office is situated. Neither the EU parliament nor its national offices in at least three countries were able to provide any information about where these offices are located, whereas, in one, all the addresses provided were not up-to-date.

In several member states, MEPs refused to reply to the inquiries, even though our journalists had sent repeated emails, followed up by phone calls. The worst case of MEPs unwilling to answer questions about their public spending was found in Poland, where all 51 MEPs failed to reply to our journalists’ questions.

According to the EU parliament, MEPs may rent space for their national offices from themselves or from their political party – as long as certain conditions are fulfilled. These conditions are not part of internal rules or regulations but seem to be mere informal guidelines, and their fulfilment is not monitored in any way.

Under the rules in place, the MEPs may not use the money to finance their national party or for any private purposes. Rather, the allowance is only “intended to cover expenses directly linked to the exercise of a Member’s [MEP’s] parliamentary mandate”.

Rough guidelines

On paper, there are also guidelines for the use of national offices, which are financed with the parliament’s money: “The premises must be used solely for the parliamentary activities of the Member [MEP].”

“Renting an office is one of the expenditures covered by the General Expenditure Allowance. This is a lump sum that – as a principle – is not controlled by the European Parliament,” EU parliament spokesperson Marjory Van Den Broeke explained.

“An MEP may indeed rent an office from a national political party, provided certain conditions are respected and the rent is at market price, in order to prevent an indirect financing of the national party”, she said.

“Moreover, the office should be used solely for the exercise of the European mandate. As such, the office should be separate from other offices and clearly marked as one for European Parliament work. It can also not be used by other people or for other purposes” she added.

However, the parliament has no way of knowing if and how these conditions are being respected, Van Den Broeke admitted: “The fact that it’s a lump sum means that MEPs do not need to hand in any invoices or other bills. This also means that the European Parliament administration does not have any information on any offices used by MEPs.”

There are no controls in place to ensure that MEPs return expense payments, which remain unused for parliamentary work. Only a small number of MEPs return funds to the parliament’s administration due to them remaining unused. To illustrate, according to the parliament, since 2010 as few as five to 20 MEPs have reimbursed the institution for a total amount of €100,000 to €600,000 – depending on the year.

No controls

Only in April, the parliament voted down amendments asking for more transparency and at least random checks on the use of the GEA.

Wouter Wolfs – a researcher in European politics at Leuven University with a special interest in political financing – is critical of the handling of these expense payments.

“In general it is problematic because there is no transparency for the public,” he said, adding that: “It would not be a problem, if we were sure that there was rigorous internal control in the parliament. But as we know that is not the case, either.”

In a time with low public trust in politics and the EU institutions in particular, “this is very damaging for the image of the European Parliament and of the politicians,” Wolfs said. When asked how the lack of control of the GEA can be seen in view of usual auditing demands for public bodies and private enterprises, Wolfs said: “Considering the fact that the expenditure from the EU budget is subjected to strict controls and audits, it is remarkable that the MEPs do not uphold the same standards for their own finances.”

“Of course all controls must be proportionate, but if you consider that it is an annual amount of €40 million and there is a reason for suspicion since we have seen misuse in the past, a stricter audit of the GEA is justified,” Wolfs added.

Nick Aiossa, EU policy officer at Transparency International, commented our findings: “I could never imagine MEPs giving out 40 million a year to member states for cohesion policy, without one receipt. There is a level of hypocrisy on the financial management score that we find is quite astounding.”

“We talk about the rise of the eurosceptic nationalist forces, the narrative that has been put around Europe on this. And yet here we see such small but symbolic problem with the parliament that can be fixed, literally, almost immediately,” said Aiossa.

“Frankly, they are doing a disservice to themselves, particularly in the run-up to the 2019 elections, and some of the national elections. I think that the sooner they fix this, the better they’ll be,” he argued.

The Green/EFA group in the EU parliament recently adopted a declaration, according to which members of the group have to commit themselves to stricter rules on the use of the GEA from July 2017 onward. “After the end of each mandate, Greens/EFA MEPs should return any unspent GEA funds to the European Parliament accounts”, the text says. MEPs in the Green group will be obliged in the future to keep all of their receipts until the end of the mandate and publish overviews of the headline expenditure by category, or at least have them available upon request.

European Parliament under pressure

These reports put the EU institutions under pressure. After the publication of the investigation EU anti-fraud office OLAF immediately announced it would look into cases where MEPs pay rent to themselves. Olaf Director General Giovanni Kessler even spoke of “structural problems” with the MEPs’ expenses. Antonio Tajani, President of the European Parliament announced “more control” over deputies’ spending.

Among the cases reported last week by the journalists of The MEP Project was the Belgian MEP Gerolf Annemans who pays 3700 euros every month in rent for two offices in Brussels. But when the magazine “Knack” asked him for the addresses he did not want to disclose them “due to security reasons”.

The Lithuanian MEP Viktor Uspaskich disclosed an address — his former party’s headquarters. When journalists went there, they were told by the party’s administration that Uspaskich had no office there.

The Finnish MEP Hannu Takkula rents an office in his home region Oulu. The office is owned by his own assistant to whom Takkula pays rent.

The Bulgarian politician Maryia Gabriel is her country’s nominee for the EU Commission, and she is currently an MEP for the centre-right GERB party, which belongs to the EPP group. According to research by Bivol, she benefited from a 120 square meter flat owned by the municipality of Sofia, which is controlled by her party. Her rent was 200 euros compared to a market value of 700 euros. She claimed she had simply looked for a place to store files, and did not answer the question of whether she paid the rent with GEA funds.

The Finnish MEP Hannu Takkula told broadcaster YLE that he had tried to return about 800 euros to the Parliament in 2015. But the administration had replied to him that he did not need to pay that money back, he said.

A spokesperson for the Parliament assured that MEPs easily could transfer money back to the Parliament’s account. But until now MEPs hardly felt the need to do so, as there were no controls in place.

Political parties on the payroll

In principle, MEPs are required not to use the Parliament’s money to subsidise their political parties. Nonetheless, 38 MEPs admitted that they pay rent to their parties. Some added that the rent is at market price and therefore does not constitute illegal party financing.

Others seemingly care less. „We just hand over the 4,000 euros to the party and they manage the money”, a representative from the left-leaning Spanish party Izquierda Unida told the newspaper El Confidencial.

The investigation also showed that eight MEPs from Germany, among them EPP party group chairman Manfred Weber, have their offices in houses that they themselves own. Two MEPs even confirmed rent payments to themselves, either at or below market level.

True to the satirical character of his party German MEP Martin Sonneborn gave a provocative answer after Stern magazine asked him about his expenses. On his Facebook page he posted what he called „proof“ of his spending: „Just for fun we have ordered 1000 completely unnecessary t-shirts which we want to offer to citizens.“

German MEP Fabio De Masi claimed that nothing remained unused of his 4342 euros in GEA payments every month. At the same time he admitted that the overall payments from the Parliament – including the 307 Euro subsistence allowance for every day in Brussels or Strasbourg – is extremely generous. According to his own account he is able to save about 3000 euros per month for himself. And he says on his website that he uses his income “to donate every month about 2300 euros” to his party and different foundations.

Dead promises come back to life

After these reports came out there the leaders of the European Parliament could not deny that they have a problem. “I think we have to change the situation”, President Tajani admitted. During a live chat on the Facebook page of the Parliament, Tajani also repeated what he had told the Italian newspaper Il Fatto Quotidiano: At the next meeting of the Parliament’s Bureau on June 12, he intends to assign a working group to prepare a more precise list of expenses that may be covered by the GEA, and to complete and finalize a draft reform ”as soon as possible”.

Unfortunately, some of these promises are more than 13 months old. Already on 28 April 2016, the plenary of the European Parliament asked for the establishment of „full transparency“ for the GEA payments. The MEPs also urged the EP „to revise the list of expenses which may be defrayed from the GEA“ – the very announcement President Tajani just repeated.

Majority against reforms

As late as 27 April this year a majority of MEPs voted against concrete steps towards more transparency. MEPs from the Greens/EFA and the GUE/NGL group had tabled amendments, proposing that MEPs be obliged to handle their GEA funds in a separate bank account, keep all receipts and return unspent amounts. They asked also for sample audits of five percent of the expenditure and publication of the results.

All these amendments were rejected by the Parliament. The data visualisation and MEPs’ office search facility published today by The MEPs Project shows how individual MEPs voted. To what extent they followed their party group can be found on the portal Vote Watch, where The MEPs Project acquired the voting record of 27 April. President Antonio Tajani was present at the European Parliament on that day. Alas, he did not vote.

A quick and easy solution

The revelations pose the question of why the GEA, with its annual budget of nearly 40 million euros, is not audited like most other expenditures in public bodies or private enterprises – and not for the first time.

In a Bureau meeting in December 2016, the Austrian Green MEP Ulrike Lunacek reminded her colleagues of growing demands for transparency. But then-President Martin Schulz and two other leading German MEPs argued against more controls because it would „require an important increase in human and administrative resources“ for the Parliament. The Parliament’s Secretary General has said that 45 to 75 new staff members would be needed, a statement that was repeated by new President Antonio Tajani in a press release.

It is not clear, however, what this figure is based on. A spokesperson of the EP mentioned an “estimate” of the number of bills and receipts any MEP would produce.

Transparency International has proposed a quick and easy way of financing audits:
”The Bureau of the Parliament could decide to earmark a percentage of a MEP’s secretarial or GEA existing allowances for carrying out an external professional audit. There already is precedent for the Bureau earmarking allowances, and it is a decision that could be made as soon as their next meeting. It should be an interim measure only, establishing best practices, until the Parliament installs proper financial control mechanisms.”

Spanish conservatives and the UK

MEPs from some countries don’t want to wait to hear what the leaders of the European Parliament decide.

In Spain the Partido Poplar, which belongs to the conservative EPP group in the European Parliament, promised that in the future they will keep track of all GEA expenses and present individual accounting entries to the EP administration. The Partido Poplar’s MEPs, however, were very reluctant to disclose any of their spending when journalists of El Confidencial asked them as part The MEPs project.

The UK’s MEPs practice a higher degree of openness after an expenses scandal hit the national Parliament in Westminster in 2009. MEPs from the ranks of Labour and the Conservative party have their GEA expenses audited regularly and publish details of their spending. Green MEPs Jean Lambert and Keith Taylor, who share a constituency office, go further: they already publish the invoices linked to their spending of GEA on their websites.

Europaportalen.se, a Swedish website on EU-issues has taken the initiative to find out how the Swedish MEPs actually spend their GEA. Other watchdogs will certainly follow.

The investigation into MEPs’ national offices was conducted over several months by a group of 48 journalists, representing all 28 EU member states, with financial support from Journalismfund.eu.

In 2015, the group formally asked the European Parliament for access to documents, showing how MEPs conduct their public spending. The requests were denied. The journalist then brought the case to the European Court of Justice, where it is still pending.

Background information on the legal case and more about the journalists’ initiative – including names of the participants – can be found here.

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