This article was first published in the September 2016 international edition of Accounting and Business magazine.

The European Union ombudsman since 2013, Emily O’Reilly deals with complaints about maladministration in the EU’s institutions, bodies and agencies from any person, business or non-governmental organisation (NGO) in the economic bloc. She can also take on cases on her own initiative.

In an exclusive interview with Accounting and Business, she says: ‘In that spirit, my office does not divide complainants into professional categories. Of course, professional accountants and auditors could be potential complainants. If they feel that they have been handled badly by an EU institution, they can turn to me.’

Complaints can be  made in any of the EU’s 24 official languages and the service is free. O’Reilly stresses: ‘The more complaints I receive, the more I can help the EU institutions to further improve their administrative practices.’

Financial wrongdoing

That said, O’Reilly, who was Ireland’s ombudsman before taking on the EU role, points out that some financial maladministration cases are directly referred to the EU Court of Auditors, the EU financial watchdog, while fraud cases go to the EU’s anti-fraud office, OLAF. But financial cases are still assessed by her office. ‘Several of the complaints that cross my desk involve problems with how, for example, the European Commission audits a contract for a project it helped to fund,’ she says. 

She cites a ‘very recent case’ about how the commission audited a project to preserve a heritage site. ‘The complainant, an NGO involved in environmental education and eco-citizenship, disagreed with the audit finding by the commission – a finding that would have seen the commission recover more than €20,000 in EU funding – and turned to my office. After my office’s intervention, the commission agreed to reduce the amount to be recovered by almost 75%.’

O’Reilly is unwilling to demonise commission auditors in such cases, however. ‘My experience has shown me that in the vast majority of cases auditors are not acting in bad faith. They are simply doing their job, making sure that EU money is spent as it should be.’ 

However, she adds: ‘That said, sometimes rules get applied too rigidly or there is a misunderstanding about the exact paperwork needed, and by when. In these cases, the ombudsman can help to find a just and fair solution for the complainant.’

Cleaning up lobbying

O’Reilly spoke to Accounting and Business following a 30 May press conference where she released her 2015 annual report and gave an overview of her work and priorities, notably to clean up lobbying in Brussels. 

O’Reilly really wants the transparency register set up by the European Parliament and the commission, which currently has over 9,200 entries, beefed up into a mandatory rather than a voluntary listing. She also wants it to cover lobbying of the EU Council of Ministers, which is the EU’s co-legislative body alongside the parliament. This would be ‘fairer to lobbyists who register’, she says. 

Barring wrongdoers from a voluntary register is not much of a punishment, either, and O’Reilly has called for sanctions ‘with teeth’. She wants financial penalties. ‘Something that makes a difference. Something that isn’t just a tap on the wrist.’ But any fine would have to be proportionate, she says, not €3m for an NGO with three people and €50 for a multinational. 

A particular bugbear for her is law firms that lobby on behalf of their clients but are exempt from the register. She says a distinction needs to be made between helping clients with litigation and lobbying, and that the latter should require registration.

Corporate influence in Brussels also needs more scrutiny. ‘The EU generally has to up its game in relation to these matters,’ she says. She has already investigated several complaints about corporate influence, including so-called ‘revolving doors’ whereby officials leave key jobs in the commission for posts in the industry they had been responsible for regulating. 

Conflicts of interest

The rules ‘are not being implemented correctly’, O’Reilly has concluded. The main problem is that the officials’ ex-colleagues and friends often police these offers of work, making it difficult for them to be objective as well as reluctant to deny new job opportunities to former workmates. She is calling for systems to prevent such personal conflicts of interest, perhaps through an independent body, ‘to take that understandable human piece out of it’.

However, she faces an uphill struggle getting commissioners and others in EU institutions to take the problem seriously, because ‘culturally there is not sufficient understanding of why this is an issue’. 

O’Reilly tries ‘to make the business case for it’ – if somebody with information obtained from a position in the commission shares it with their new employer, then that business gets a major competitive advantage over others. ‘I just get the sense people consider it’s not a big deal,’ O’Reilly says, but ‘I think it is a big deal.’ She says that commissioners tell her that ‘people have to work’, but argues: ‘you wouldn’t let somebody steal your files’ and the information in somebody’s head is the equivalent.

Lack of transparency

Most cases O’Reilly dealt with in 2015 involved alleged lack of transparency in EU decision-making and lobbying, she reveals. As in other years the commission was ‘our biggest client, because of its very powerful role in the EU’. Nevertheless, one case involved an EU agency, the European Food Safety Authority (EFSA), which was told to simplify its public consultation procedures for the weedkiller glyphosate.

The European Central Bank (ECB) also reviewed its policy on speaking engagements after a board member unveiled key market information in a dinner speech. Although she received no complaints O’Reilly thought this needed investigation and the ECB has now extended its ‘quiet period’ for officials in the run-up to its monetary policy committee meetings.

O’Reilly also used the 30 May event to announce a new probe into European Commission special advisers – outside experts appointed on a temporary basis to counsel commissioners. She stresses she was probing how these advisers are appointed in general and not the 40 or so individuals involved. All 2015 and 2016 appointments will be investigated to check that the commission has monitoring in place to identify conflicts of interest and whether the rules are adequate. 

Although the inquiry is general, it was inspired by a case about one particular adviser, former German politician Edmund Stoiber, to European Commission president Jean-Claude Juncker, where she has already ruled against the EU executive, declaring his appointment constituted maladministration and that the commission had been deliberately misleading about it. Stoiber’s appointment was announced in a December 2014 press release before all conflict of interest checks had been carried out (indeed, he was only formally appointed the following March). The ombudsman found Stoiber also had positions with Nürnberger, a large insurance group, which the commission had failed to declare.

O’Reilly says ‘any normal reading’ would assume the appointment had been made in the December, as announced in the press release, so the press release had been misleading.

The potential for problems with special advisers is their high-level access to commissioners. O’Reilly explains: ‘Most of these advisers who have direct access to commissioners are part-time, some are unpaid (by the commission) and some are retired; however, many do work elsewhere in a private capacity. In order to manage any potential conflicts of interest, each adviser’s mandate should be examined to make sure that these do not arise.’

Sara Lewis, journalist based in Brussels