Grant scheme for investigative journalism vs. the European Commission – Round Two

This summary was prepared by Peter Rauschenberger who advises MEP Benedek Jávor on anti-corruption and transparency issues. 

Highlights of Round One

When MEP Benedek Jávor assumed office last year we were soon informed of a support scheme for investigative journalism which the European Parliament proposed back in 2009, but which never materialized. We started to dig out what might have happened to it. ‘Kafkaesque’ would be a proper adjective to describe the story that unveiled.

I gave a detailed account of the course of events here in November 2014 from the time the programme first got a budget line in the general budget of the European Union until the time when the budget line vanished five years later without a single grant having been given out to investigative journalists. But here is a quick re-cap.

In 2009 the European Parliament proposed a grant scheme for teams of investigative journalists who plan to investigate cases that affect at least two member states, or the EU as a whole. EUR 1.5 million was set aside for this purpose in the EU’s 2010 budget. The budget line remained in the budget for five years.

In 2010 a pilot project started, a call for proposals was launched, but it was soon revoked due to an unresolved administrative issue: while the journalists understandably insisted on the strict confidentiality of the proposed investigations, the Commission did not see how this could be squared the requirements of the Financial Regulation.

From the next year on, the pilot project was turned into a preparatory action. An external consultant was hired for about a quarter of a million Euros to figure out how the administrative problem could be solved. A feasibility study was drafted in 2013.

In October 2013, in a “letter of executability,” the Commission declared it would not be in the position to implement the preparatory action in 2014 due to further administrative difficulties: because of the change of guards in both the Commission and the Parliament the necessary legislation to properly establish the programme would be difficult to push through, they said. The Commission also started claiming that the administration of the grant scheme would cost too much anyway. They said “an appropriate scheme would necessarily have 33% overhead cost.” They made this claim on the ground of a “draft study”, i.e. the feasibility study they ordered in 2012, but which they did not publish by the time these claims were made. In fact, they did not publish it until the end of March 2015. The published study contains a much more moderate cost estimate (20%). We managed to get hold also of an earlier version of the study, dated to December 2013. It has exactly the same cost estimate as the published version. In 2014 the Commission did as it had told it would. They did nothing. Their report on the implementation of pilot projects and preparatory actions in 2014 only restates the excuses for not implementing the programme.

The budget line was then dropped from the draft 2015 EU budget. When we realized it in September 2014, Jávor, alongside two other MEPs, Helga Trüpel and Dennis de Jong, tabled an amendment to reinstate the budget line for the project. The amendment was turned down. We were told that it came too late for the Commission to evaluate it. But, as we soon learned from an exchange between Jávor and Director-General Paulger, then head of DG COMM, the department of Commission administration in charge of the programme, the amendment could not have gone through anyway. An administrative obstacle again: there is a rule in the Financial Regulation which says that no preparatory action can run for longer than three consecutive years. This preparatory action started in 2012, so its lifespan is over. It is a very peculiar programme: it never started, but it is also one that has already run too long to be continued.

This piece of advice on the administration of preparatory actions we received In November 2014 when Jávor requested information about the feasibility study from DG COMM. Director-General Paulger responded that the feasibility study was not for our eyes yet. “Of course, I will send you the appropriate links to the study as soon as it is published,” he wrote.

This is as far as it went by the time I first reported on the story here at atlaszo.hu.

Round one: Parliament-proposed grant scheme for investigative journalism lost in the maze of Commission administration

Round Two: The feasibility study finally published, but with reversed conclusions

We waited for a while, but neither Director-General Paulger, nor his successor (Paulger retired in the meantime) ever sent the “appropriate links.”

In March 2015 MEP Jávor inquired at the Commission again about the status of the feasibility study, this time in the official format of a written question. The written question was submitted on March 20, 2015 (http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+WQ+P-2015-004551+0+DOC+XML+V0//EN). Eleven days later, on March 31 the Commission published the feasibility study on a relatively obscure website (http://ec.europa.eu/smart-regulation/evaluation/search/download.do?documentId=13428665). Another ten days later, on April 21 we got an indignant answer from the Commission stating that the feasibility study “was published on 31 March 2015 according to internal rules and procedures”, and that “the Honourable Member…was informed” (http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=P-2015-004551&language=EN).

Interestingly, the date the published feasibility study sports on its front page is “October 2014,” as if it was published much earlier, earlier than, or at best at the same time as, the director-general of DG COMM wrote us that he would send the links someday (his letter was sent on 31 October 2014). But never mind. This is the least of the problems with it.

In a press release of 4 June, the original chief authors of the study, a group of respected journalists and lawyers, claimed that the study’s conclusion had been changed since the time they last saw it (http://www.aej-uk.org/investigative-pr.pdf). They say they were hired to “determine whether there is a need for EU financial support for cross-border investigative journalism and to define possible models of funding that would satisfy both the requirement of independence of investigative journalists as well as all legal obligations of the Commission.” They did so by studying the existing literature, including the studies previously commissioned by European institutions, surveying the state of investigative journalism in all member states, and conducting more than 200 interviews by potential stakeholders. Their progress was closely monitored by the European Commission’s DG COMM, with which they had five progress meetings in Brussels while working on the study. In December 2013 they submitted a version which they meant to be the final one. They say they came to the conclusion that there is a case for EU support for investigative journalism projects, and that the grant scheme as proposed by the European Parliament is both legally and financially feasible, but the study’s conclusions have been reversed without any further reference to them.

As I mentioned before, we managed to get hold of the December 2013 version of the study, the version of which the expert group says it is the one they submitted as final. We took the time to meticulously compare it to the version that the Commission published 15 months later. The full comparative analysis is in a separate document (PDF). Here I would like to highlight only some main points.

The sameness of factual basis, no new research

The first thing to note is that there is very little difference in the factual statements that are made in the two versions of the feasibility study. There could hardly be, since they are based on the same research, the same body of hard data obtained, the same opinions and perceptions surveyed, and the very same detailed calculations. There is no sign in the published study of any new research done in the 15 months between December 2013, the time when the expert group submitted its final version, and March 2015, when the Commission published the study. In the December 2013 version the detailed findings that support the conclusions are presented in annexes. These or any other annexes have not been published alongside the published version of the main body of the study, but from the data that made it to the main text it is clear that the new version is based on the very same data as the old one.

The sameness of factual basis makes the contrast between the two sets of conclusions only more striking.

The issues to sort out, and the overall conclusions

The experts had to answer four questions in particular: 1) Is there a need for additional funding for investigative journalism, and if yes, how pressing is it? 2) Would an EU funding scheme be justifiable by the normal standards of justifiability (in terms of subsidiarity and proportionality) applicable to EU policies? 3) Is there a way to satisfy both the special needs of journalistic investigations (confidentiality and an arm’s-length principle to be respected between the public body that provides the funding and the beneficiaries), and the requirements of the Financial Regulation (rules to ensure the responsible and transparent use of public funds)? 4) What would be the costs of a suitable arrangement?

Answering these questions, the earlier, December 2013 version presents a European investigative journalism scene that has been affected badly by the recent media market changes and struggles with a serious shortage of funding, especially in the countries in which its contribution to the full democratic function of the press would be the most crucial. It presents the proposed EU grant scheme as being justifiable by the general standards of justifiability for an EU action, and as one that would have a significant and important positive impact even at low funding levels. It emphasizes that there is a possible arrangement that would observe the specificities of investigative journalism and would be in conformity with the Financial Regulation. It acknowledges that this arrangement would be relatively costly, but emphasizes that this relatively high cost is inevitable and is counterbalanced by the potential value generated by the programme.

The published version, on the other hand, presents an IJ scene affected by the changes in the media market, but navigating through the challenges with flying colours. External funding would be something that the IJ community would appreciate, but could essentially do without as well. It presents the proposed EU action as completely unjustifiable. Even if it was justifiable, the arrangement that suits the nature of IJ would entail costs that exceed the limits of what is considered sound financial management anyway.

Let me expand briefly on some of the key issues.

An argument left out completely: investigative journalism in member states with weaker democratic traditions

In the December 2013 version of the study there is a line of argumentation to support the need for funding that can be reconstructed as follows: (1) The media’s watchdog function is a key element for a healthy democracy, and it can’t function without investigative journalism. (2) This is especially important in the younger and weaker democracies, where democratic values are less entrenched. Investigative journalism could have the most important contribution to the development of democracy in these countries. (3) It is precisely these counties in which IJ is the weakest. (4) It is these countries where the recent crisis had the most damaging impact on the funding of IJ, and where the dependence of IJ on external funding is the strongest. (5) It can be expected that applications for support in the grant scheme would come to a large extent from these countries. (6) Unevenness in terms of the development of IJ could be taken into account in the fine-tuning of the selection criteria. Therefore, (7) the grant scheme could make a very significant difference in these countries.

This argument has been completely eliminated, there is no trace of it in the published version. Some references suggest that the data that supported this argument is included in an annex, but no annex was published with the new version.

It is hard to see what justifies the elimination of the argument. Its premises seem empirically well-established, the non-empirical premises are plausible, the inference from them seems valid, and the conclusion is highly relevant.

The treatment of the issue of justifiability

Both versions of the feasibility study address the issue whether there is a legal basis for EU action in the manner envisaged, and whether it conforms to the principles of subsidiarity and proportionality. Both versions use the Pelkmans test for subsidiarity. The actual analysis provided in the two versions differ from each other only in a small detail. Yet they come to conclusions that diametrically oppose each other.

The Pelkmans test consists of five steps. Step 1 is to identify whether the envisaged measure falls within the area of shared competences. Step 2 establishes whether there is a need to act in common. Step 3 is to establish whether the same goals could credibly be achieved by means other than centralized action, i.e. action at member state level, or through a non-centralized cooperation between member states. Step 4 is not an independent step really, it just checks the results of the previous steps: if 1 and 2 are confirmed, and 3 denied, then the purpose of the envisaged action can be assigned to the EU level. Step 5 is a proportionality test whose objective is to establish if the envisaged action is the least intrusive way to achieve the goals in question.

The two versions give very similar answers to the question of the Pelkmans test. The only significant difference is to be found in Step 1.

The earlier version was confident, without ambiguity, that support for cross-border investigative journalism falls within the area of shared competences. The argument is simple: investigative journalism is essential for the freedom and the proper democratic function of the media, and through that, to freedom and democracy in general, therefore it falls within shared competences.

The published version shows some reservation with regard to this argument, without actually saying that it is invalid. The new version says “one could consider” this argument, but “further analysis” is required to see if it is actually correct. It is worth to cite this passage from the publish version in its entirety, because, as we will see, a lot seems to turn on it:

“One could consider, however, that press freedom and by extension its different forms falls under the area of freedom, security and justice; this is an area that is directly linked to the values of respect for democracy and human rights, stated as a founding principle for the European Union (Article 2 of the Treaty of the European Union). However further legal analysis would be required to make sure that this interpretation is correct.” (p. 39.)

Apart from this, the two analyses yield practically the same results.

The conclusion to be drawn about justifiability is postponed in the published version to a few pages later. There (on p. 42.) the section titled “Conclusions for Part One” boldly refers back to the analysis given a little earlier as if it underpinned a fully negative conclusion:

Based on the above analysis, an intervention by the EU aimed at funding cross-border IJ does not comply with the guiding principles of subsidiarity and proportionality. (p. 42)

One who reads both versions will find that it is only because of the above-cited, and completely unexplained, reservation about an argument (presented as potentially valid but requiring further analysis), that the conclusion is reversed in the published version to the opposite of what it was in the earlier version.

It should be noted that if the verdict cited from the published version, just above, is correct, then the rest of the study is completely pointless. As we have seen, the authors of the published version should not state this verdict so confidently, because their very own analysis does not ground it. The verdict turns on the issue whether the proposed action falls within the area of shared competences, and in the published version the authors say they don’t know for sure: it may, but further legal analysis would be required to eliminate uncertainty. If this is true, then presumably, instead of hiring a team of consultants to write a full feasibility study, the Commission should have started with hiring a team of lawyers who can produce a definite answer to this one question, for if the answer to this question is negative, then spending public money on the rest of the study was a waste.

Cost estimation

The consultant was hired in the first place to work out a solution to the apparent conflict between the specific requirements of investigative journalism in terms of independence and confidentiality, and the requirements of the Financial Regulation. Both versions agree (although only the earlier version emphasizes it explicitly) that there is a solution. The envisaged grant scheme should be managed by an intermediary organization which can ensure that an arm’s-length principle is maintained, and the provisions of the Financial Regulation are respected. In this respect, there is no difference between the two versions. It is still a question, however, how much such an arrangement would cost.

If one looks at the main bulk of both texts, it turns out that the cost estimates given in the two versions are the same. The only difference is that some detailed calculations that support the numbers presented in the earlier version are omitted from the published version. But the numbers are unchanged. Strangely, in the passages designed for the hasty reader (Executive summary, Overall conclusions), the significance of the very same numbers is presented quite differently.

Both versions present a first approximation for the overhead cost at 23.8 per cent of the funds managed, and then both present some considerations about conditions that can reasonably be expected to be met which will make the cost somewhat less than that, so they settle on a final estimate at about 20 per cent. (See p. 77 of the published version.)

Both versions add that this relatively high cost is an inevitable consequence of the arrangement that is necessary for respecting both the FR and the independence and confidentiality inherently required by IJ projects, and that it should be evaluated in the light of the goals that it makes possible to achieve.

It should be noted that this estimate calculates with a prize scheme alongside the research grant scheme, which both versions deem very costly and relatively ineffective as a tool to support investigative journalism. Thus, in effect, on the basis of both versions, the administrative cost of a pure grant scheme, without an inessential prize scheme on the side, must be below 20 per cent.

If one doesn’t read the main bulk of the study, only the summaries, one gets a bleaker picture from the published version. The passage that explains why the costs are relatively high appears in both versions but it is included in the Executive summary only in the earlier version. Moreover, the overall conclusions of the published version explicitly contradicts the substantive sections of the same version on the budgetary estimates, and states that the cost would exceed 20%.

For the record, these figures are quite far from the 33 per cent overhead which the Commission claimed on multiple occasions the grant scheme would necessarily have, when it looked for an excuse for not implementing the preparatory action. The 33 per cent figure was included in at least one Commission document that was published at a date later than October 2013, a date at which we know a much lower cost estimate already existed. (It is the “First Commission interim report on the implementation of pilot projects and preparatory actions 2014,” in which the Commission explains why it does not implement the preparatory action: http://www.europarl.europa.eu/meetdocs/2009_2014/documents/imco/dv/comreportbudget_/comreportbudget_en.pdf)

A complaint of maladministration filed

We are not claiming that it was a public official of the Commission who rewrote the feasibility study with reversed conclusions. It is much more likely that the Commission had the consultant do it behind the backs of the experts who were hired to do the research and write the study in the first place. The Commission has leverage on consultants it hires regularly.

We are of the opinion that it is a highly questionable practice that the Commission negotiates the findings of a feasibility study with a consultant, especially for such a long time. The Commission and the consultant spent 15 months over the study after the experts submitted a version which they meant to be final, before it eventually got published. Apparently, it wasn’t just lying forgotten in the drawer of some Commission official. If it had been the case, an MEP’s inquiry could have prompted its publication. It was held back for a reason. We suspect that the reason was that the text of the study was being carefully engineered to yield the results the Commission wanted to see. We are also of the opinion that the idea of so altering the conclusions of the study did not come from the staff of DG COMM. They must have followed orders from the political leadership of the Commission which apparently wanted the programme binned.

In our opinion, the reversal of the conclusions, which will be clear to anyone who reads the two versions of the study and our comparative analysis, constitutes the falsification of the feasibility study, and that it is intolerable.

Therefore, on 9 June, the Greens/EFA group in the European Parliament filed a complaint of maladministration to the European Ombudsman against the European Commission for blocking programme. The complaint concerns not only the falsification of the feasibility study, but the whole process from the adoption of the programme in 2009. We think the Commission abused its responsibility for managing pilot projects and preparatory actions to block the programme.

A budgetary amendment again to reinstate the programme in 2016

In June, Green MEPs Benedek Jávor, Ulrike Lunacek and Helga Trüpel tabled an amendment to the draft 2016 budget to reinstate the budget line. The proposed amendments will be evaluated by the Commission. I will report on the results.

This summary was prepared by Peter Rauschenberger who advises MEP Benedek Jávor on anti-corruption and transparency issues.