The background to the complaint

1. The Commission (Eurostat) is the statistical authority "designated by the Commission to develop, produce and disseminate European statistics."[1] This complaint, which originates within the context of the Euro area debt crisis, is about the Commission (Eurostat)'s role in ensuring the quality of statistics reported by Member States, in particular, within the context of the Excessive Deficit Procedure (EDP)[2]. The complainant is a Greek citizen who asserts that the Commission (Eurostat) should have audited the deficit and debt statistics reported by Greece in 2008 and 2009 and thereby identified that they were incorrect.

2. Specifically, on 1 March 2010, the complainant contacted the User Support service of the Commission (Eurostat) and noted the criticism the latter had recently addressed to the Greek National Statistical Service for providing inaccurate statistical data. The complainant asked to be informed of the procedures carried out by the Commission (Eurostat) to review and audit these statistics and the reasons why these procedures failed immediately to identify the "fraud performed by the Greek authorities." The complainant expected that the Commission (Eurostat) would have implemented and monitored all the necessary preventive measures and wished to be informed of the reasons for the delay in its finding.

3. In its reply of the same day, the User Support service outlined the Commission (Eurostat)'s competence in relation to data reported by the Member States under the EDP. These notifications take place twice a year, at the end of March and at the end of September. The role of the Commission (Eurostat) is to assess the quality of the deficit and debt data provided and their compliance with the European System of Accounts (ESA95)[3]. In case of doubt, the Commission (Eurostat) expresses reservations. The Commission (Eurostat) went on to state that, in addition to the notification periods, the Commission (Eurostat) maintains regular contact with the national statistical institutes and consults the Committee on Monetary, Financial and Balance of Payments Statistics (CMFB). When new types of transactions are undertaken by Member State governments, the Commission (Eurostat) provides methodological guidance.

4. The Commission (Eurostat) further stated that "although responsibility for monitoring statistical data is vested in the Commission, it should be underlined that Eurostat does not directly compile statistics or control their production in the Member States. In this respect, it depends on the data compiled and reported by the Member States, as well as the administrative ability, goodwill and loyal co-operation of the respective national authorities." It then provided a link to its Report on Greek government deficit and debt statistics (henceforth, 'the 2010 Eurostat Report')[4].

5. On 2 March 2010, the complainant replied, stating that he still did not understand the Commission (Eurostat)'s procedures which failed to identify the problem with the Greek statistics. He requested a more detailed reply and demanded to know whether the Commission (Eurostat) had "made a risk assessment workout."

6. On 3 March 2010, the Commission (Eurostat) replied that it had no further information to add to its original reply.

7. On 8 March 2010, the complainant lodged the present complaint with the Ombudsman.

The subject matter of the inquiry

8. The Ombudsman opened an inquiry into the complainant's allegation that the Commission (Eurostat) failed properly to audit the Greek statistics in 2008 and 2009 and the complainant's claim that the Commission (Eurostat) should take adequate action to prevent similar maladministration from occurring in the future.

The inquiry

9. On 25 May 2010, the Ombudsman invited the Commission (Eurostat) to comment on the complainant's allegation and claim. On 12 October 2010, the Commission (Eurostat) sent its opinion, which was forwarded to the complainant. On 26 October 2010, the complainant sent his observations on the Commission (Eurostat)'s opinion.

The Ombudsman's analysis and conclusions

A. The Commission (Eurostat)'s alleged failure properly to audit the Greek statistics in 2008 and 2009

Arguments presented to the Ombudsman

10. In support of this allegation, the complainant argued that the Commission (Eurostat) should have performed the necessary audit procedures within a reasonable period of time from the moment when the relevant data were submitted by the Greek authorities. In his view, such an audit should have identified at an early stage the falsified statistical data submitted by Greece.

11. In its opinion, the Commission (Eurostat) rebutted the complainant's allegation on the ground that it is not vested with audit powers as regards the data provided by Member States within the context of the excessive deficit procedure.

12. The Commission (Eurostat) outlined its competences under the Treaty on the Functioning of the European Union and the Protocol on the Excessive Deficit Procedure. These entrust the Commission with the task of providing the data to be used for the application of the EDP. According to the 'EDP Regulation',[5] these include the tasks of (i) assessing the quality of the data to be used within the context of the EDP, and (ii) establishing a permanent dialogue with Member States' statistical authorities in order to ensure that the data reported by Member States, and the underlying government sector accounts, are compiled in accordance with the ESA95.

13. The EDP Regulation also defines the instruments available to the Commission (Eurostat) for assessing the quality of statistics. On the one hand, Member States are obliged to provide detailed inventories of the methods, procedures and sources used to compile the data. On the other hand, the Commission (Eurostat) performs regular dialogue visits and has the possibility, under certain conditions, to perform methodological visits.

14. Consequently, although the Commission (Eurostat) bears the responsibility for monitoring statistical data, it does not directly compile statistics or control their production in the Member States. In this respect, it depends largely on the data compiled and reported by the Member States, as well as on the administrative ability, good will and cooperation of the respective national authority.

15. Moving on to the specific issue of cooperation between the Commission (Eurostat) and the Greek statistical authorities for the statistical data concerning the EDP, the Commission (Eurostat) pointed to the 2010 Eurostat Report on the Greek government deficit and debt statistics. In the said Report, the Commission (Eurostat) noted that it has paid continuous attention over several years to the reliability of the Greek government's deficit and debt statistics. It has also frequently contested these data. In its bi-annual News Releases, it has repeatedly expressed reservations on the reported Greek debt and deficit figures and made frequent visits, including several methodological visits, to the Greek statistical authorities. These visits have led to, among others, methodological reports and agreed action plans with the Greek statistical authorities, which the Commission (Eurostat) has monitored carefully.

16. However, the shortcomings revealed in Greece go well beyond what can be tackled using only the statistical monitoring tools available to the Commission (Eurostat), which, as already referred to above, does not have audit powers. The Commission (Eurostat)'s concerted and consistent efforts (since 2004) to ensure that the applicable rules and methods are respected have therefore not been able to prevent the renewed problems in Greece.

17. As regards the complainant's claim, the Commission (Eurostat) argued that "it departs from the erroneous presumption that the Commission has failed to act upon a prerogative which it did in fact not have", but informed the Ombudsman that the strengthening of the governance framework for fiscal statistics[6], which had taken place in the meantime, constitutes adequate action for the purpose of ensuring that such statistical misreporting does not occur in the future.

18. The Commission (Eurostat) noted that Regulation 679/2010 grants it additional rights of access to a widened scope of information for the needs of data quality assessment. The information which it can access is thus no longer limited to the statistical domain, but also includes the actual accounts of government entities, including the underlying detailed accounting information and further related information. In addition, the importance of the reliability of data in this domain is emphasised by a provision establishing the accountability of officials responsible for reporting the data to the Commission. In the Commission (Eurostat)'s view, these additional rights do not confer upon the Commission (Eurostat) the formal role of an auditing authority. However, they have been referred to as "audit-like powers".

19. In his observations, the complainant highlighted the Commission (Eurostat)'s mission which, in accordance with its website, is to "provide the European Union with a high-quality statistical information service."[7] That statement encapsulates the importance of high quality statistics and the role of the Commission (Eurostat) in providing such statistics.

20. As regards the importance of high quality statistics in the context of the EDP, the complainant referred to the sixth recital of the preamble of EDP Regulation, which voices the demand for high quality statistics[8]. The complainant further elaborated on the Commission (Eurostat)'s role in this regard. First, he pointed to recital 10 of the EDP Regulation, which provides that "Eurostat is responsible, on behalf of the Commission, for assessing the quality of the data and for providing the data to be used within the context of the excessive deficit procedure," Second, he drew the Ombudsman's attention to Article 8(1) of the EDP Regulation, which provides that "[t]he Commission (Eurostat) shall regularly assess the quality of both of actual data reported by Member States and of the underlying government sector accounts compiled according to ESA 95...".

21. These principles, combined with the Commission (Eurostat)'s powers to (a) perform dialogue and methodological visits, (b) express reservations on the quality of the actual data reported by the Member States and (c) "amend actual data reported by the Member States and provide the amended data and a justification of the amendment where there is evidence that actual data reported by Member States do not comply with the requirements of Article 8(1)" led the complainant to disagree with the Commission (Eurostat)'s contention that it does not have the competence to carry out an audit of the statistics reported to it by the Member States. By contrast, the complainant argued that the responsibilities entrusted to the Commission (Eurostat) under the EDP Regulation imply enhanced audit powers.

The Ombudsman's assessment

22. As a preliminary remark, it must be pointed out that the complainant and the Commission (Eurostat) depart from a completely different starting point as regards the Commission (Eurostat)'s powers concerning the assessment of the quality of Member States' fiscal statistics.

23. On the one hand, the complainant's position can be summarised into the following proposition: high quality statistics are very important for the Union's operation and for the conduct of its economic policy, including the topical issue of devising a response to the financial and debt crises. The complainant bases this argument on the specific competences entrusted to the Commission (Eurostat) in the EDP Regulation. If the Commission (Eurostat) is entitled to make dialogue and methodological visits to Member States, express reservations and even amend the actual data reported to it by the Member States, it goes without saying that it also possesses auditing powers over such data.

24. On the other hand, the Commission (Eurostat) underlines that its competence is limited to the statistical methodology domain, principally, to ensure compliance in the reporting of the Member States' statistics with the ESA95 standards and does not extend to auditing powers. In fact, the Commission (Eurostat) juxtaposes its powers at the time when the present complaint was lodged with the Ombudsman, with those which were later entrusted to it pursuant to Council Regulation 679/2010[9], which amended the EDP Regulation and conferred upon it the right of access to additional information, including the right to an in-depth review of the upstream data[10].

25. In this regard, it should be borne in mind that Article 13(2) of the Treaty on European Union promulgates the principle of conferral which applies to the Union institutions in the following terms: "Each institution shall act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them." This principle informs the legislative, the executive, as well as the administrative power of the Union institutions, including their responsibility for the effective implementation of agreed policy initiatives and legislation. The strictness of the principle of conferral is tempered by the principle of implied powers, in accordance with which the existence of a given power, if it were not to be rendered wholly ineffective, implies also the existence of powers which are indispensable in order to carry out the task the former power enables[11].

26. The legislation which governs the operation of the Commission (Eurostat) and establishes its powers, as is currently in force, provides that "the Commission (Eurostat) shall ensure the production of European statistics according to established rules and statistical principles. In this respect, it shall have the sole responsibility for deciding on processes, statistical methods, standards and procedures and on the content and timing of statistical releases." Furthermore, "within its area of competence, Eurostat is in charge of the selection of scientific techniques, definitions and methodologies best suited to the attainment of the principles and objectives laid down in the Basic Regulation."[12]

27. Specifically within the context of the EDP, the EDP Regulation also entrusts the Commission (Eurostat) with the task of ensuring compliance with the required budgetary discipline by monitoring the development of the budgetary situation and of the stock of government debt in the Member States. Article 8(1) of the EDP Regulation sets forth that the Commission (Eurostat) shall regularly assess the quality both of actual data reported by Member States and of the underlying government sector accounts compiled according to ESA95 and ensure "compliance with accounting rules, completeness, reliability, timeliness, and consistency of the statistical data."

28. Moreover, the Commission (Eurostat) may express a reservation on the quality of the actual data reported by the Member States, amend actual data reported by Member States and provide the amended data and a justification of the amendment where there is evidence that actual data reported by Member States do not comply with the requirements of Article 8(1)[13].

29. In light of the foregoing analysis, notwithstanding the complainant's meritorious argument that, in order to attain the objective of high quality statistics and exercise its undisputed powers, such as the amendment of actual data, the Commission (Eurostat) does possess powers of audit, the Ombudsman considers that the Commission (Eurostat) has made a prima facie case that the applicable legal framework at the time of the present complaint did not provide for audit powers. The Commission (Eurostat)'s position finds further support in its 2005 proposal to amend the then basic EDP Regulation,[14] in which the Commission requested the strengthening of its powers with respect to data quality. However, it was not before the amendment of the EDP Regulation by Council Regulation 679/2010 that such powers were ultimately granted to the Commission (Eurostat). The Commission (Eurostat)'s increased powers at present militate against the complainant's argument that such powers existed previously.

30. The above observations notwithstanding, the Ombudsman does not consider it necessary, for the purposes of the present inquiry, to address the question of the Commission (Eurostat)'s powers in a definitive manner for two reasons, one institutional and one linguistic. First, in an institutional perspective, the question of the Commission (Eurostat)'s powers would be best addressed, if necessary, before the Court of Justice, which is the highest authority in interpreting EU law. As regards the linguistic reason, the Ombudsman underlines that, while the exchange of correspondence between the complainant and the Commission (Eurostat) took place in English, the present complaint was submitted in Greek. In the Greek language, the word "έλεγχος" may be translated in English as "audit", but also as "control" or "check". The Ombudsman feels compelled to ensure that the translation from Greek into English does not narrow the scope of the complainant's allegation and the corresponding scope of the inquiry.

31. Having regard to these considerations, it is necessary to define the scope of the present inquiry in light of this difference of standpoint between the complainant and the Commission (Eurostat). The Ombudsman understands the essence of the complainant's grievance to be the alleged failure by the Commission (Eurostat) to identify the inaccuracies of the Greek statistics and thereby ensure the quality of the data reported to it. The audit of the Greek statistics is seen by the complainant as a suitable means to achieving this end. While the Commission (Eurostat)'s powers might extend to an audit, they are not limited to it. A holistic approach, which, in any event, cuts across the inquiry, should be adopted in order to assess whether the Commission (Eurostat) exercised its powers to ensure the quality of data reported by Greece within the context of the EDP in a manner compatible with the rules and principles of good administration, notably, the Commission (Eurostat)'s due diligence.

32. In assessing whether the Commission (Eurostat) exercised its powers in a diligent manner, the Ombudsman assigns cardinal importance to the 2010 Eurostat Report. In that Report, the Commission (Eurostat) summarised the historical background and highlighted the systemic and methodological problems in Greece's data reporting which culminated in statistical data inaccuracies for 2008 and 2009.

33. Already in March 2004, the Commission (Eurostat) expressed reservations about the quality of the Greek statistics. On 22 November 2004, the Commission (Eurostat) published a comprehensive report on the revision of the Greek government deficit and debt figures (henceforth, 'the 2004 Eurostat Report')[15]. The 2004 Eurostat Report showed that, in the years preceding 2004, the Greek authorities failed to follow the ESA95 rules in EDP reporting, which resulted in the Commission opening an infringement procedure against Greece. The Commission's letter of formal notice identified methodological problems in the recording of taxes and social contributions, the surplus of social security funds and hospitals, and the recording of debt assumptions and military expenditures.

34. In the years that followed, the Commission (Eurostat) conducted dialogue and methodological visits, making Greece the only Member State to which the Commission (Eurostat) made methodological visits. Following a methodological visit in June 2006, an action plan was agreed. By 2007, Greece adopted all the measures foreseen in the action plan and the Commission closed the infringement procedure following the conclusion that, in view of the measures undertaken by the Greek authorities, the specific grounds for the infringement procedure no longer existed. However, the Commission (Eurostat) underlined that the recommendations contained in the action plan were mainly focused on methodology and did not address the issues of institutional setting, accountability, responsibility and political interference.

35. Between 2005 and 2009, the Greek authorities made ten EDP notifications and the Commission (Eurostat) expressed reservations on the quality of the data submitted no less than five times. After the closure of the infringement procedure at the end of 2007, the Commission (Eurostat) issued a reservation on the quality of the Greek data as regards the April 2008 notification, but accepted the notifications of October 2008 and April 2009 without reservations. However, these notifications were only accepted after the Commission (Eurostat) intervened before and during the notification period to correct mistakes or inappropriate recording, with the result of increasing in both instances the deficit that had initially been communicated.

36. It is against this backdrop that the Commission (Eurostat) asserts that it paid continuous attention and frequently contested the data reported to it. In addition, it made frequent visits, including several methodological visits. However, its concerted and consistent efforts could not have prevented the renewed problems, in particular "the deliberate misreporting of figures."

37. In light of the above considerations, the Ombudsman takes the view that the 2010 Eurostat Report provides an account of the Commission (Eurostat)'s actions and initiatives that is sufficiently detailed as to make a prima facie case that it has exercised its powers with diligence. Moreover, the Commission (Eurostat) appears to acknowledge the governance shortcomings in the field of fiscal statistics and has taken the initiative to improve the existing legal framework[16]. Despite having raised important questions of both principle and practice, the complainant did not adduce sufficient evidence to demonstrate that the Commission (Eurostat) could have identified the inaccuracies in debt and deficit statistics reported by Greece in 2008 and 2009. The Ombudsman therefore concludes his inquiry with a finding of no maladministration.

B. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following conclusion:

There is no maladministration as regards the complainant's allegation.

The complainant and the Commission (Eurostat) will be informed of this decision.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 16 June 2011

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[1] Article 6(1) of Regulation 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics and repealing Regulation (EC, Euratom) No 1101/2008 of the European Parliament and of the Council on the transmission of data subject to statistical confidentiality to the Statistical Office of the European Communities, Council Regulation (EC) No 322/97 on Community Statistics, and Council Decision 89/382/EEC, Euratom establishing a Committee on the Statistical Programmes of the European Communities, OJ 2009 L 87, p. 184.

[2] Article 126 of the Treaty on the Functioning of the European Union (TFEU) and Protocol on the excessive deficit procedure annexed to the Treaty (No 12).

[3] Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community OJ 1996 L 310, p. 1, as amended.

[4] Report on Greek government deficit and debt statistics, 8 January 2010, available at http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/COM_2010_REPORT_GREEK/EN/COM_2010_REPORT_GREEK-EN.PDF

[5] Council Regulation 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community, OJ 2009 L 145, p. 1.

[6] Council Regulation (EU) No 679/2010 of 26 July 2010 amending Regulation (EC) No 479/2009 as regards the quality of statistical data in the context of the excessive deficit procedure, OJ 2010 L 198, p. 1.

[7] http://epp.eurostat.ec.europa.eu/portal/page/portal/about_eurostat/corporate/introduction

[8] In his observations, the complainant referred to Council Regulation (EC) No 2103/2005 of 12 December 2005 amending Regulation (EC) No 3605/93 as regards the quality of statistical data in the context of the excessive deficit procedure OJ 2005 L 337, p. 1. This Regulation amended the original EDP Regulation (Council Regulation 3605/93 of 22 November 1993 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community OJ 1993 L 332, p. 7) before it was repealed by Regulation 479/2009 (Codified version) currently in force.

[9] Council Regulation 679/2010 of 26 July 2010 amending Regulation (EC) No 479/2009 as regards the quality of statistical data in the context of the excessive deficit procedure, OJ 2010 L 198, p. 1.

[10] Recitals 5 and 6 and Articles 11a and 12(2) of Council Regulation 679/2010.

[11] See, Cases 281, 283-285, 287/85 Germany v Commission [1987] ECR 3203, paragraph 28.

[12] Article 6(2) of Regulation 223/2009.

[13] Article 15 of the EDP Regulation.

[14] Proposal for a Council Regulation amending Regulation (EC) No 3605/93 as regards the quality of statistical data in the context of the excessive deficit procedure, COM(2005)71 final, 2 March 2005.

[15] The Commission (Eurostat) draws a parallel between the 2004 and 2010 Reports and states that "In both cases, in the aftermath of political elections, substantial revisions took place revealing a practice of widespread misreporting, in an environment in which checks and balances appear absent, information opaque and distorted, and institutions weak and poorly coordinated."

[16] COM(2011) 211 final, Communication from the Commission to the European Parliament and the Council, Towards robust quality management for European Statistics, Brussels, 15.4.2011.