Committee of Independent Experts
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6.1. Introduction
6.2. The sequence of events
6.3. Observations on the environment within the Security Office
6.4. Allegations regarding the tender procedure for the new Security Services contract (1997)
6.5. Conclusions
6.1.1. The Commission Security Service provides for the internal and external security of the Commission's premises as well as of the persons working within it and/or having official access to it. The Service also provides accompanying security services to Commissioners and, in special cases, other staff of the Commission when they are on official missions and/or on their way to and from Commission premises.
6.1.2.The Service acts under the direct responsibility of the President of the Commission and is headed by a Director who reports directly to the President's Chef de cabinet.
6.1.3.The Security Service, since it also deals with matters of public order at the Commission's places of work in Brussels, has been outsourced by the Commission to security companies in possession of a licence to operate in Belgium. In the case under examination, the contract for Security Services in the years 1992 to 1997 had a value of ECU 79 554 861 in commitment appropriations.
6.2.1. On 18 August 1997, the Belgian newspaper 'De Morgen' published an article which contained severe criticism of the security contract (surveillance of Commission buildings, etc.) with the company IMS Group 4/Securitas in Belgium for the period 1 November 1992 to 1 November 1997. The newspaper made the following allegations:
6.2.2. The above-mentioned article in the press was the catalyst for the Commission to initiate inquiries in the matter.
6.2.3. Two days after the press allegations appeared, on 20 August 1997, the Commission departments responsible for financial control (DG XX) and staff (DG IX), the Security Office and UCLAF concluded that UCLAF should undertake an investigation into the allegations. As a starting point, UCLAF took receipt of a copy of an audit report on the Security Office security contract by DG XX which had been finalised on 23 April 1993 and issued on 7 July 1993. The Security Office endorsed the audit report on 14 July 1993.
6.2.4. The above-mentioned audit report by DG XX on the Security Office of the Commission dated from 7 July 1993, i.e. nine months after the Security Services contract with IMS Group 4/Securitas was concluded. The findings in this audit report contained, inter alia, the following observations with regard to the allegations that would be made public four years later:
Referring directly to the security contract, the audit report further stated:
1. With regard to the implementation of the Commission Protection contract and subsequent modifications (as detailed in Section III.B.2), the financial conditions of the contract have undergone substantial changes, which were not approved by the ACPC.
2. If the offer terms of the contract are to be respected, the price charged by IMS should be the offer price in ecus and only adjusted for any official increases in the index taking place after October 1992.
3. In the circumstances where the amendments to the contract are considered to be accepted, then;
6.2.5. The audit thus revealed a number of weaknesses in the area of financial management and control and also noted that the contract had undergone substantial changes which were not approved by the ACPC, this being a serious infringement of the Financial Regulation. In spite of the very precise indications of infringements of the rules, the report made only very general recommendations and did not draw any specific conclusions as to the handling of the security contract. The problems identified were not regarded at the time as evidence of fraud or criminal offences.
6.2.6. The follow-up to the audit - by DG XX, the Security Office or other services - remains an open question, and no documents were submitted to the Committee in this connection. According to the UCLAF report, the invoicing arrangements were changed in order to improve control within the Security Office.
6.2.7. During the weeks following the allegations in the press in August 1997 a number of meetings took place between UCLAF, DG XX, the Security Office and the Legal Service at which the investigation strategy, the collection of documents and the legal framework of the investigation were discussed as well as the invoicing procedures of Group 4 and the Security Office. During these meetings, the Director of the Security Office denied all the allegations made in the press article and the existence of any irregularities in the Security Office.
6.2.8. In its note No 4961 dated 28 August 1997, UCLAF informed the Secretary-General about the initial inquiries into Group 4/Securitas and suggested that a thorough investigation should be conducted by UCLAF in collaboration with DG XX. This suggestion was confirmed the following day by the Secretary-General, and he asked that such investigation should be conducted 'without further delay'.
6.2.9. On 19 December 1997, UCLAF submitted the provisional investigation report to the office of Mrs Gradin, to the Secretary-General and to DG XX.
6.2.10. The report states that the investigations indicated the existence of irregularities in respect of the rules governing recruitment and the Financial Regulation relating to the hiring of a considerable number of staff through the Security Office, or through 'intermediaries'. This implied an unspecified number of 'ghost personnel'. Since there was no establishment plan for the Security Office, and since it was difficult to assess the number of staff actually working at any given time, the Security Office used the security contract to cover its staff shortages; about 65 persons were at the disposal of the Security Office for periods ranging from one month to one year, about 20 persons were employed on the basis of 'various recommendations', and a limited number worked at the 'disposal' of the Assistant in the Security Office. In general, Group 4 recruited personnel and determined remuneration on the basis of telephone calls with the Assistant.
6.2.11. As to the allegations concerning the manipulation of the contract, the fact that the company in question had hitherto refused access to documentation and information had prevented UCLAF from drawing any conclusions on these points as yet.
6.2.12.Following a number of meetings and exchanges of information between Group 4/Securitas, UCLAF and DG XX, the final report No 1859, dated 12 March 1998, on UCLAF's investigation was submitted, and it concluded, inter alia, the following :
6.2.13. Concerning 'ghost personnel', it was concluded that
6.2.14. On 13 March 1998, Commissioner Gradin sent a note to Commissioner Liikanen informing him that the UCLAF report on Group 4/Securitas had been finalised and that its conclusion pointed to both disciplinary and judicial proceedings. She added that in her opinion the behaviour of the Director of the Security Office appeared to be highly questionable, in particular since the post carried particular responsibilities and required absolute integrity. She therefore asked that, in the light of UCLAF's conclusions, disciplinary proceedings should be initiated against the Director of the Security Office and that the Commission should suspend him from his duties pending the final outcome of the inquiry. She finally noted that, because a number of other staff had been operationally involved in the alleged fraud, firm and rapid action would be required.
6.2.15. In a note dated 17 March 1998 from Commissioner Anita Gradin's Chef de cabinet, reference was made to the established procedures regarding UCLAF's investigation, and it was indicated that the preliminary investigation of the Commission's contracts had been completed. He further noted that the conclusions of the report should be brought to the immediate attention of Mr Liikanen, the Commissioner responsible for staff matters, Mr Trojan Secretary-General, and President Santer's Chef de cabinet.
6.2.16. Following the submission of the UCLAF report, on 21 April 1998 the Secretary-General of the Commission instructed the Director-General of DG XIV to conduct an administrative inquiry, the report on which was submitted on 14 July 1998.
6.2.17. By letter of 23 April 1998, the Secretary-General submitted the UCLAF report to the Public Prosecutor in Brussels and requested a police investigation pursuant to Article 209a of the Treaty on European Union.
6.2.18. In a letter dated 12 May 1998, from the Chair of Parliament's Committee on Budgetary Control, Mrs Diemut R. Theato, to the Director of UCLAF, the Commission was asked, amongst other matters, whether it intended to initiate judicial proceedings against officials involved in the Group 4 case and what measures it intended to take if the Belgian judicial authorities did not pursue the matter. She further asked that the reports on the Group 4 contract drawn up by UCLAF and DG XX (Financial Control), finalised on 12 March 1998, be made available.
6.2.19. In his reply to Mrs Theato, the Director of UCLAF confirmed that the whole file on Group 4/Securitas had been forwarded to the Public Prosecutor in Brussels by the Secretary-General of the Commission on 23 April 1998. She was further informed that the Secretary-General of the Commission had appointed a Director-General to open an administrative inquiry regarding the role of Commission officials in relation to the contract in question. He regretted, however, that he was unable to forward the above-mentioned file to Parliament, since it contained documents handed over to the judicial authorities in Brussels and concerned ongoing disciplinary procedures which were confidential.
6.2.20. On 18 September 1998 IMS/Group 4 Securitas submitted its own inquiry report prepared by a consultancy called Farleigh Projects International Ltd. This company is part-owned by Group 4 Securitas, and the investigation was carried out by two former Scotland Yard police officers. The investigation focused on the allegations made in the press on 18 August 1997.
6.2.21. Even though the report concedes that the contractual details were 'finalised' between Group 4 and the Security Office on 5 October 1992, this was one month after the ACPC had recommended that the contract be awarded to Group 4. Even though it notes that 'the tender by Group 4 IMS (as revised) was not the lowest bid. Evidently the Security Office had decided that Group 4 IMS should be awarded the contract on the basis of considerations other than price', the general conclusion of FPIS Ltd. was 'that the allegations made in 'De Morgen' in August 1997, together with their imputation of corrupt business practices on the part of a former managing director of Group 4 IMS, are unfounded.'
6.2.22. This conclusion was partially contradicted during a meeting between the Director of Group 4 and representatives of UCLAF prior to the publication of the report on 2 September 1998. In the course of this discussion, the Director of Group 4 said that the inquiry by Farleigh International would reveal that manipulation of the Group 4 proposal had probably taken place between 1 and 2 September 1992 (i.e. just before the tender-opening procedure).
6.2.23. On 11 September 1998 representatives of UCLAF officially informed the heads of Group 4/Securitas of the conclusions of the UCLAF inquiry and of the fact that they had obtained clear evidence that the proposal submitted by Group 4/Securitas had been manipulated. The Secretary-General, Mr Trojan, and Commissioner Gradin were informed by way of a note from UCLAF.
6.2.24. On 6 November 1998, seven months after the UCLAF report on Group 4/Securitas had been submitted to the Public Prosecutor in Brussels, the latter asked the Commission to waive the immunity of eight officials, including the Director of the Security Office.
6.2.25. By decision of 29 July 1998, the Commission initiated disciplinary proceedings against the Director of the Security Office in connection with the security contract concluded in October 1992 with Group 4. In the context of the disciplinary proceedings, the Director-General of the Commission's Translation Service was appointed to hear the Director, as stipulated in Article 87 of the Staff Regulations of Officials.
6.2.26. On 6 January 1999, the Director-General presented her report on the hearings conducted with the Director of the Security Office, together with those of three other officials from the same service against whom disciplinary proceedings had been initiated. The above-mentioned report of 6 January 1999 concluded that the professional behaviour of the Director revealed failings which should be sanctioned by disciplinary action. No further decision has yet been announced.
(The information below is essentially based on internal Commission documents)
6.3.1. The Director of the Commission's Security Office took up his post in 1986, replacing his predecessor who had retired. He was nominated at the behest of President Delor's Chef de cabinet.
6.3.2. On a recommendation from the Director of Security in Belgium, the Director of the Security Office recruited into the Commission Security Office an ex-colonel from the Belgian police. This recruitment was undertaken, according to an internal note from UCLAF dated 5 December 1997, in an effort to strengthen and to improve relations between the Commission's and the Belgian Security Services.
6.3.3. These circumstances were made public when, in the course of a parliamentary inquiry, a Member of the European Parliament, Mrs Dury, expressed her surprise that a member of an extreme right-wing political organisation should find employment within the Commission's Security Services.
6.3.4. Furthermore, the effectiveness of the above-mentioned ex-colonel was called into question when, in 1991 (the year of the Gulf War), five days after the implementation of what is known as 'phase II' (enhanced protection of the Commission's buildings and staff), no particular measures had been taken to that effect. The person concerned was subsequently transferred to another post in the Commission.
6.3.5. In 1991, the ex-colonel was replaced by Mr Y. This measure was seemingly generally welcomed, to the extent that the Director of the Security Office appointed him as his assistant with the agreement of the President's Private Office (internal UCLAF note dated 5 December 1997). In this capacity, Mr Y was head of the 'Brussels protection' unit and of the financial unit of the Security Office, which entailed the following responsibilities:
6.3.6. When he visited the Seville World Exhibition in 1992, the President of the Commission himself noted the presence of 10 Commission security officials, even though security on the spot was provided by Spanish Security Services. Moreover, their behaviour (feet on the table, heavy drinking, etc.) was considered intolerable.
6.3.7. When the Director of the Security Office was informed about these incidents he 'covered' for his staff.
6.3.8. On 8 October 1992 Mr N, then a member of the President's Private Office, was visited by a member of the Staff Committee who reported dubious incidents at the Security Office, such as the disappearance of office equipment and furniture.
6.3.9. When these events were reported, Mr DM of DG XX was asked to undertake an internal audit of the Security Office.
6.3.10. Mr N in the President's Private Office was completely unaware of the contract for Security Services concluded between Group 4/Securitas and the Commission. He had no knowledge of either the call for tenders or the signing of the contract.
6.3.11. The only information he received was a note from Mr Y dated September 1992 stating that IMS Group 4/Securitas had been chosen.
6.3.12. On 15 October 1992 Mr N was succeeded by Mr M in the President's Private Office.
6.3.13. Mr M apparently had a very poor opinion of both the Security Office (amateur police) and its Director. He never had confidence in Mr Y, even though he had no indications of any violation of the rules on recruitment. As to the internal audit by DG XX, he said that no special attention had been paid to it by the President's Private Office and that it only confirmed that the Security Office was organised in a 'shambolic' way. As a general rule, he himself, as a member of the President's Private Office, did not pay special attention to what was going on in the Security Office.
6.3.14. There was a peculiar complicity within the security system and between the Security Office and other circles in the Commission that created a kind of 'regulation-free-zone', where existing laws and regulations were regarded as cumbersome barriers to various forms of arbitrary action rather than as limitations to be respected. The security system appears to have been undermined by a sub-culture which was characterised by personal relationships, a system of 'give-and-take' and a withdrawal from the overall system of control and surveillance. The question must be asked as to how such a sub-culture could develop, exist and prevail in a section of the European civil service without being detected from within, brought to light only when a newspaper published the allegations.
6.3.15. Confidential Commission notes disclosed particular features of this sub-culture such as:
6.4.1. Overlapping with the above-mentioned proceedings connected with the revelations in the press concerning the contract awarded to IMS Group 4/ Securitas, another tender procedure for the provision of Security Services as from 1 November 1997 was opened on 6 June 1997. Two companies submitted bids, the Belgian company 'Securis', which already in 1992 had taken part in the procedure, and the German company, 'SIBA', which planned to open a subsidiary in Belgium.
6.4.2. At a meeting with the German bidder on 19 June 1997, Commission officials gave assurances that the fact that SIBA had not yet established a formal presence in Belgium (requiring licensing by the Belgian authorities) would not be taken into account as a selection criterion, but that such a presence (and licence) would be required for the contract to become effective.
6.4.3. On 18 July 1997, the Commission's ACPC considered only one of the bids submitted for the Security Services contract, that from 'Securis'. The SIBA bid, even though supposedly ECU 1.5 million less expensive per year than the 'Securis' offer, was not submitted to the ACPC, since it was said be a 'conditional' offer (i.e. the company would only apply for a licence in Belgium 'on condition' that it was awarded the contract).
6.4.4. SIBA contested the notion of a 'conditional' offer and pointed out that the criterion that a licence had to be submitted together with the bid had not been included in the original call for tenders. However, the call for tenders did stipulate that a specific licence should be obtained from the Belgian authorities. 'Conditional' offers, i.e. bids which include a declaration that certain requirements of a tender will be fulfilled 'on condition' that the contract is awarded, are normally not accepted by the Commission, to protect it against non-compliance with such declarations once the contract has been signed.
6.4.5. On the same day, SIBA sent a message to the Commission that it would seek to acquire a licence for Belgium well before the start of the EC contract on 1 November 1997 and irrespective of the outcome of the call for tenders. On 22 July 1997, SIBA sent a letter to the Director-General of DG XV (14) asking him to inquire urgently into this procurement procedure. One of the arguments put forward was that the facts had been wrongly presented.
6.4.6. The contract was finally signed with 'Securis' by the Director of the Security Office by the end of July 1997. Neither the Secretary-General nor the President's Chef de cabinet were informed. By letter of 2 October 1997, the Commission Security Office informed SIBA that its bid had been rejected.
6.4.7. The proceedings surrounding this call for tenders give rise to another set of questions, with particular regard to the comparison of prices and compliance with conditions laid down in the call for tenders. It must be noted that the German company claimed that its bid was ECU 1.5 million less than the one from the Belgian company 'Securis' and that no answer was given as to why, at the beginning of the procedure, the condition of having a licence for Belgium had not constituted a problem, whereas it later emerged as the decisive factor in SIBA's exclusion.
6.4.8. In a letter dated 28 October 1998, the then President of the European Court of Auditors, Mr Friedmann, informed SIBA that he had asked UCLAF to investigate the matter. The same question was raised in a letter from the Chair of the European Parliament's Committee on Budgetary Control, Mrs Theato, dated 12 May 1998, to the Director of UCLAF.
6.4.9. In his letter of reply to Mrs Theato dated 17 July 1998, the Director of UCLAF noted that neither the relevant Commission departments nor UCLAF had received any indications as to possible irregularities regarding the award of a Security Services contract to the Belgian company 'Securis'.
6.4.10. In a letter dated 5 March 1999, i.e. almost two years after the events in question, from DG XV to the President's Chef de cabinet, the reasons why DG XV did not react to the complaints from SIBA are explained: 'It would appear that we did not reply to the complainant as the contract had already been approved by the ACPC on 16 July 1997 and we were informed that the complainant had already been in contact with the service responsible, in this case the Security Office. This omission may also result from the fact that this case is not subject to the Directives on Procurement.'
6.5.1. Following the first allegations of violations of rules and of criminal laws in the Commission's Security Office in the Belgian press in August 1997, the Commission acted both comparatively rapidly and according to established rules with regard to the verification of the allegations, the opening of an internal administrative inquiry, the opening of procedures leading to possible disciplinary measures and the forwarding of relevant material to the Public Prosecutor in Brussels.
6.5.2. The first action was taken within 48 hours, the administrative inquiry was launched five weeks after the UCLAF report became available, and judicial proceedings were initiated two days later. After another three months, in July 1998, disciplinary proceedings were initiated.
6.5.3. Given the existing rules, the procedures to be followed and the investigations to be conducted, the time-frame described above can be considered acceptable for a public institution like the Commission.
6.5.4. The internal audit of the Security Office carried out in 1993 revealed a number of weaknesses in the area of financial management and control, and it stated that substantial changes not approved by the ACPC had been made to the contract. However, the audit was confined to the formal procedure and did not go to the heart of the matter. It did not reveal anything about the 'ghost' personnel system. To the Committee's knowledge there was no procedure to follow up the findings of the audit. According to the UCLAF report, however, measures were taken to improve control arrangements. Although it was precise and correct in its findings, the audit procedure as a whole seemed to be very lax in character, which illustrates the weak institutional position of internal audits in the Commission.
6.5.5. It is the Committee's view that disciplinary proceedings should have been launched as early as 1993 on the basis of the internal audit report.
6.5.6. Regarding the second Security Services contract awarded to the Belgian company 'Securis', no allegations have been confirmed. The German firm SIBA has lodged complaints against the Commission, but the Committee was not in a position to consider this case in the time available. At this stage, it should merely be noted that the Commission, after its experience with the previous contract for IMS/Group 4, should conduct any tender procedure for Security Service contracts with the utmost caution.
6.5.7. In the Security Office case, the Commissioner responsible, Mr Santer, acted swiftly after the allegations of fraud appeared in the press. This said, audit results as early as 1993, if followed up, could have made it possible to identify the nature of the problems in the Security Office much sooner. The prime responsibility of Mr Santer in this case is that neither he, as the official nominally responsible for the Security Office, nor his private office took any meaningful interest in its functioning. As a result no supervision was exercised and a 'state within a state' was allowed to develop, with the consequences described in this report.