By Brian Kenety
Inter Press ServiceFebruary 2, 2001
A group representing 930 European non-governmental development organizations (NGDOs) here says it has no option but to disband due to the top European Union (EU) development official's policy of "zero tolerance" for alleged financial discrepancies.
The Liaison Committee of European NGDOs to the EU, known by the French acronym CLONG, announced today that in view of the European Commission's decision to suspend payments, following a lengthy audit, it would recommend to its members that CLONG's affairs "be wound down in an orderly fashion." CLONG spokesman Sam Biesemans told IPS that the organization could not continue to pay its bills and that staff members were given letters of redundancy yesterday. He said the formal motion for closure will be made during a special general assembly to be convened in early April.
By far the largest network of European NDGOs active in the field of development co-operation and humanitarian emergency aid, CLONG has characterized the audit process of the network, launched by the Commission, the executive arm of the EU, as "harassment." Furthermore, the network has pointed an accusing finger directly at the current EU Commissioner for Development and Humanitarian Affairs, Poul Nielson. At various times CLONG has implied that the audit was part of an effort by Nielson to consolidate power within the Commission or stemmed from a hostile attitude towards civil society groups.
"There have been no allegations of fraud. The audit found a problem of clarity of the rules, which it said was also the responsibility of the Commission to monitor," said Biesemans. "Only the top level at the Commission is blocking the payments. It is clearly Mr Nielson's decision." He said that the stand-off came at a crucial time in relations between civil society and the Commission, referring to the new trade and aid partnership agreement between the EU and the 77 states of the African, Caribbean and Pacific (ACP) group in Benin in June, which explicitly refers to the need to include civil society in the decision-making processes to ensure that it is more pluralistic.
"What is incredible is that all this -- the audit and the failure to compromise -- is taking place during the implementation of the Cotonou Agreement," said Biesemans. The European Parliament's Development and Co-operation Committee had called on Nielson to do just that -- cut CLONG some slack and allow it to survive. "In order that the Liaison Committee can continue to operate, the Commission should not use the argument of the ongoing audit process to block payments to it under existing contracts," said the president of that committee, MEP Joaquim Miranda, in a letter to Nielson dated Dec. 13, 2000.
"Any need for an audit (the Liaison Committee has already had a two-stage audit this year, taking up some eight months) must avoid paralysing an organization that has existed for some 20 years and which constitutes an important element for civil society for the construction of Europe," he said. Miranda further stressed that, "in general, it must be possible to reconcile good accounting methods with support to NGOs which have proved their worth and efficiency."
Since the network's creation in 1975, the Commission has always provided the lion's share of its funding. For his part, Nielson says the only issue at hand is "financial probity." The auditors, Ernst & Young, have found that approximately 1 million euros were either not spent according to EU regulations or could not be accounted for, and should therefore be recovered from CLONG. "The audit report finds no evidence of fraud or financial malpractice on the part of CLONG or its national platforms," said Nielson on Dec. 21 in a written reply to Miranda. "Yet it paints a worrying picture of financial mismanagement, particularly at the level of the platforms and in the relations between them and the secretariat of CLONG." He noted that the Commission spends roughly 1 billion euros annually on programs run predominantly by NGOs, which have a dedicated budget line of 200 million euros.
"The present case is so far the only one where we are facing this kind of financial mismanagement. The CLONG issue is -- I hope -- an isolated case and it has nothing to do with how we work together with NGOs in development cooperation. Obviously this collaboration is essential in our fight against poverty and will continue to be essential for the Commission," said Nielson. In a Jan. 16 plenary session of the European Parliament, Nielson said, "it is important to ask Euro MPs not to make the mistake of thinking that accepting a special lower standard of financial management for CLONG is an adequate way by which the Commission should demonstrate its positive attitude towards the inclusion of civil society as such" in EU decision-making.
"This is not the problem. The problem we are facing is simply one of financial management," he said. "I still remember the very loud applause I received at my confirmation hearing...a year and a half ago, when I said that I and this Commission would take the line of a 'zero tolerance' policy relating to mismanagement." The network, however, sees no justification for the audit, which spanned the last five years, and questions payments allocated to the general budgets to some of its 930 member organizations or 15 national platforms.
CLONG responded in writing yesterday to the findings of the final draft audit that the network recognized the need to improve its accounts and financial management systems, but stressed, "at the same time we are pleased to note that they have only very limited criticism" of those systems and "they testify to our good faith in handling EU funds made available to us."
The letter said CLONG accepted "the contractual basis for recoveries in a few areas," totalling about 100,000 euros, some 10 percent of the amount Ernst & Young has put forward.
Biesemans told IPS that in the immediate future CLONG's legal team would be sending a formal letter demanding payment on outstanding funds from the Commission, which the network and its national platforms needed in order to meet their own commitments.
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