Making the EU accountable to its citizens

[00:00:01] Mary McCaughey: Good afternoon and welcome to this edition of Eurofound Talks. Today Eurofound talks just a little bit differently. We're particularly interested at the moment in the Irish in the EU institutions. And today we are delighted to be joined by Tony Murphy, who's the President of the European Court of Auditors and who has a very big job. It's to ensure that he audits the EU finances, which of course is not only a task for improving accountability and transparency, but also at this stage, keeping the lights on in terms of what they're doing when we're at the crossroads of so many decisions as to how we are going to spend our money into the future. 

[00:01:15] Mary McCaughey: We're going to talk to Tony over the next little while about accountability and transparency. There is no doubt that when we talk about the European Union, these are certainly elements which are very much to the fore. There's a lot of talk about compliance, but also there's equally a lot of talk about potential corruption within the EU institutions. And today, I hope we're able to dig into this a little bit to ensure that we have the correct narrative. The narrative is that there are watchdogs in place and that these watchdogs serve a purpose which is there to ensure that the values and the ethics of the European Union that we believe in are implemented and monitored on an ongoing basis. So you're very welcome, Tony. 

[00:01:57] Tony Murphy: Thank you very much. Pleasure to be here. 

[00:02:00] Mary McCaughey: The remit and the work of the European Court of Auditors is certainly familiar to those of us who are working in the institutions—we seem to be audited every two weeks! But perhaps that's not the case for most people in the general public. Maybe you could just give us a quick overview of what the institution does and what your role is in terms of supervising the use of EU funds? 

[00:02:26] Tony Murphy: Indeed, I think I'll cover probably some of the phrases used already about accountability, transparency, ethics, and values, because these obviously are very important to us. We are one of the seven EU institutions, based in Luxembourg. We have around 1,000 staff from across all the different Member States. And what we do is we tend to "follow the money." We follow the EU funds to make sure that they're being spent in compliance with the rules and that, you know, the projects are eligible and the projects are real, let's say. 

[00:02:58] Tony Murphy: That's on the financial audit side, which is roughly 50% of our resources. And then we have another 50% which is dedicated to what we call "Special Reports." These are where we're looking at specific topics, whether it's defense, security, migration, climate, or energy, where we're looking at aspects of policy implementation because these are being funded by the EU. We only have a mandate to follow the EU-funded elements of policy implementation. Obviously, there are other policies which are the prerogative of the Member States where we don't have a role, and this would normally be within the remit of, for instance in Ireland, the Comptroller and Auditor General. 

[00:03:31] Mary McCaughey: Okay. And would you be evaluating and assessing those policies? 

[00:03:33] Tony Murphy: Well, we're not politicians, so we're not there to evaluate the policy per se. What we're looking at is how the policy is being implemented—if it’s been implemented as it was envisaged, let's say in line with the rules and regulations. We look at the objectives that were set for a policy and whether they are actually being achieved or not. So we're not saying whether a policy is good or bad. We're basically trying to inform the decision-makers on how those policy decisions that they have made are being implemented, with the idea that it’s like a follow-through for the next cycle of programmes. If there are lessons to be learned, they can make decisions, I would say, on a more informed basis. 

[00:04:11] Mary McCaughey: And when you talked about the first 50% of auditing the use of EU funds, tell me what you find. I mean, is it full of corruption and non-compliance? 

[00:04:21] Tony Murphy: I would say not at all. I would say, I mean, we see from our work—and I think it's not just from our work, we see it as normal EU taxpayers—we see the impact, for instance, of the EU across different Member States. If you go to Poland today, it's a different Member State than it was 20 years ago, and it's largely due to EU infrastructural funds. So I think there is a huge positive impact of the EU funding. Unfortunately, like many things in life, the focus tends to be on the negatives. 

[00:04:47] Tony Murphy: I mean, we do find errors; I wouldn't say fraud or corruption. We can come back to that. We do find errors because it's normal in policy areas which are complex that people make mistakes, and that's what we call an error. So an error is different from fraud, which is a deliberate act, you know, to circumvent rules or to obtain money under false pretences. If we find an error, it could be somewhere where they didn't follow the procedure fully or properly. And there we will sometimes make a recommendation that the Commission could consider taking the money back. 

[00:05:17] Tony Murphy: Let's say, for instance, if I look at our last year's annual report, we reported that we found errors. We do a sample of transactions across all the Member States and across all the policy areas, and we came up with an error rate of roughly 3.6%. But as I say, that's not fraud. And I think it's important that we say, I mean, fraud—we actually are required to sort of have a professional skepticism when we're looking at projects to see if we think there's a suspicion of fraud. But we're not the fraud investigators of the EU. 

[00:05:49] Mary McCaughey: That’s an important thing to define here. Your role really is to see how policies have been implemented using EU funds and if there has been an error in implementing which may lead to, maybe, the sub-optimal use of funds. 

[00:06:09] Tony Murphy: Yeah, it could be the sub-optimal use of funds. I mean, I would like to say that, you know, we talk about errors; there are some projects where we find an error which are extremely beneficial to the EU taxpayer. And equally, there are projects which are completely error-free where the added value could be very low. So you have to take everything in the round. 

[00:06:28] Mary McCaughey: So here you're talking about, when you make that analysis, that error rate, if you like, is in and around 3.6%. Relatively speaking, compared to, if you like, equivalents in other countries or other institutions, what would that be? 

[00:06:43] Tony Murphy: There's no equivalent because basically we have a, you know, under the Treaty we're required to give this opinion. It's not a normal thing that accounting firms give; they normally give an opinion on the accounts, which we do as well. But under the Maastricht Treaty, we're required to give this opinion on the legality and regularity of the underlying transactions. So it's a bit unique. I think they used to do it in the GAO in the States, but other than that nobody does it. 

[00:07:11] Tony Murphy: What I would say is that we do use a threshold which is generally recognised in the accounting profession across the world. We have a materiality threshold of 2%. So once we go over 2%, that's where we start running into difficulties in terms of the opinion we would give. For instance, for the expenditure, we have given an adverse opinion because it's 3.6%—it's more than the threshold, but also it’s widespread. It's not just in one specific policy area; it's generally speaking. 

[00:07:41] Mary McCaughey: But I mean, I was perhaps being slightly flippant when we started about the aspect of corruption. But of course, there is a link between your work and the anti-fraud office, the EU Anti-Fraud Office (OLAF). And tell me, how does that function? How do you liaise with them or link in? 

[00:07:52] Tony Murphy: Well, as I said, we are required to have a sort of professional skepticism when we're looking at transactions, and if we see something that we think is suspicious, it could be fraudulent, let's say. We tend to stop there because we don't want to compromise any future investigation. And we basically do an analysis with our legal service and then we basically forward it to the two bodies who are responsible for fraud. One is the EU Anti-Fraud Office, OLAF. And the second one is the EPPO—the European Public Prosecutor's Office. 

[00:08:28] Tony Murphy: So some Member States are not in the EPPO. For instance, Ireland is not a member of the EPPO. So if we were to come across a case in Ireland, we would just send it to OLAF, not the EPPO. What we tend to do, because it can be a little unclear as to who has the remit it falls into, is we just send it to both of them and let them decide. 

[00:08:46] Mary McCaughey: Explain to me why a country like Ireland would not be part of that? 

[00:08:51] Tony Murphy: Well, I think in Ireland's case, it goes back to the fact that we're a common law Member State. We had the same rules as the UK basically, so there were issues there. I don't know whether they eventually will now become a member; I'm not sure. There are less and less non-members at the moment, so I think pressure will build. 

[00:09:13] Mary McCaughey: Yeah. And when you talk about the work that you do, I mean it's a fairly challenging role to look at the disbursement of EU funds and ensure that we reduce the error as much as possible. What kind of challenges do you think you've faced most in your time? You've been there since 2018, I think it is. 

[00:09:30] Tony Murphy: Yeah, I think like most organisations, we are experiencing issues with resource constraints and probably higher expectations from stakeholders. We get more and more work and no new resources. So we kind of have to adapt in terms of using IT tools, and AI will be something going forward we will have to rely on more or use more, providing that we can ensure that the risks are managed or mitigated as far as possible. 

[00:10:05] Tony Murphy: I mean, there has obviously been unforeseen circumstances. The COVID pandemic obviously caused a problem in terms of our whole work methodology because all of a sudden we couldn't follow the money to the Member States; we couldn't visit. So we had to do a lot of work remotely, which changed our methodology. These sort of issues have a longer-term impact, you know, you're talking about more teleworking and things like that. 

[00:10:34] Tony Murphy: Also, as a result of the pandemic, we had the NextGenerationEU flagship programme of the Commission, which was a totally different delivery mechanism. It caused us a lot of problems as auditors. From a political perspective, I can understand the attractiveness of it, but we're looking at it from the perspective of protecting the EU financial interests. There we found, because it's now a model which is not linked to costs anymore—it’s financing not linked to costs—and auditors obviously love something to track the cost so you have a trail you can follow, and that's not there anymore. So it's more difficult, I would say, for us as auditors. 

[00:11:15] Mary McCaughey: Okay. Would you see agencies like Eurofound being able to facilitate or support you in your work, which would kind of offset some of these challenges of resource depletion? 

[00:11:24] Tony Murphy: We do use Eurofound’s work because basically you have expertise we don't, and you also have deeper insight into what's going on in the Member States than we would do. As I say, we have a limited mandate in terms of following the EU funds; Eurofound is looking at general trends of what's happening in particular areas or across policy areas linked to your role. And we have used your work before; we do reference your work in different reports. We had one on disabilities where you were specifically mentioned. 

[00:11:53] Tony Murphy: Another one which I think was a very good example was when we were looking at traineeships. Basically, you facilitated us by adding a couple of specific questions to your survey for us. So I think there has been, and I hopefully there will continue to be, this kind of synergy and cooperation. Information is there, we should use it, and we're all being funded, as you say, by the public taxpayer. 

[00:12:22] Mary McCaughey: Exactly. So the more use that we can make of each other's work, it's in all our interests. Absolutely. I mean, when you look at the work of the ECA in particular, and we talked there about the Anti-Fraud Office, also the European Parliament. We've seen in some of the work that we've been carrying out in Europe, when we look at trust across the European Union, that the institutions play a really important role in trying to maintain that level of trust for the EU citizen. 

[00:12:51] Mary McCaughey: But we've also seen that there's been a decline in that trust in national governments; it's gone down considerably over the last five years. In institutions, it's remained more or less stable, but it's always a little bit fragile. My question to you would be, what do you think institutions like your own, and particularly one that's so important to this—what can the ECA, the Court of Auditors, do to try and optimise, harness, maintain this level of trust for the EU citizen? 

[00:13:24] Tony Murphy: To go back to your very first question about what we do, I think this is what we're there to provide: a level of trust to the EU taxpayer. The European Commission is the executive which implements the EU budget. I think it's very important that the taxpayer can see that somebody is holding them to account for the stewardship of their funds, which after all are European taxpayers' money. I mean the EU budget is basically an average contribution of €300 to €350 per person. So I think it's important that there is a body there which basically holds them to account. 

[00:13:58] Tony Murphy: We don't always agree with them and I think that's only right and proper, because if we did then that would be worse. On the other hand, we can sometimes be criticised for feeding Euroscepticism because basically people tend to focus, as we said earlier, on the critical elements and not only the positive aspects. But I always would say, well, it's better that there is somebody there that is taking these people to account rather than it being just a sort of a "gentleman's club" where everybody said everyone is great. 

[00:14:28] Tony Murphy: I think it's better that there is this level of accountability and transparency. And I think it's very important in this age of disinformation that I hope that we're seen as a credible institution where we are evidence-based. And basically we will say as we see it. And sometimes, you know, our stakeholder or our auditees may not agree with us. You can see in their reports that sometimes they disagree, particularly on the new Recovery and Resilience Facility. We have huge problems with them because they don't agree with many things we say because for them it's really such an important flagship programme. 

[00:15:01] Mary McCaughey: And I suppose one of the things that I would maybe suggest is, and maybe it's coming from my own perspective, but communicating that role more and more is probably an important way of ensuring that the citizen understands that watchdog is in place and that that level of compliance is adhered to as a result of the work that you're doing. 

[00:15:22] Tony Murphy: I couldn't agree more. I mean, I think auditors by their nature are conservative. So I think until recently we were quite in the background and we were quite happy to just do our work. Whereas now we see the importance of actually creating an awareness that we are there and what we're actually saying, I think it's very important. So that's why we do a lot of these. 

[00:15:40] Tony Murphy: I visit many of the Member States with the relevant Member from that Member State—because like the Commission, we have 27 Members, one from each Member State—and we go on visits to try and raise the profile with the different ministries in the Member State and with the different parliamentary committees. I would always encourage our Members that they're like the ambassadors for the Court in their Member State and that they need to be proactively selling that we’re there first of all, and what we actually do. So perhaps a little bit less conservative, a little bit less "brown suits." 

[00:16:11] Mary McCaughey: Potentially! I think we have a few more flamboyant characters now; they're not all brown suits. 

[00:16:19] Tony Murphy: So I think, I mean there is potentially, and I think we have made a lot of progress in terms of our communication strategy as well, I mean in terms of social media and stuff like that, reaching out. So I think we have invested quite a lot in that. I'm not saying it's perfect, no, but it's a work in progress. 

[00:16:35] Mary McCaughey: Clearly it's more of an objective than it would have been previously. And talk to me then, Tony, just briefly about yourself. I mean, what's your own "brown suit" trajectory? I mean, did you start—you come from Dublin originally? 

[00:16:49] Tony Murphy: I do. 

[00:16:51] Mary McCaughey: What was your route into the EU institutions? 

[00:16:54] Tony Murphy: Well, my route was a long route I would say. I actually started in the Comptroller and Auditor General's office in Dublin here when I was 17. I was supposed to go to Trinity, but for different reasons didn't, and I did my accountancy examinations with them. I spent quite some time in the C&AG's office where I think it was a great training ground, if you like, for public auditors, and still is. 

[00:17:14] Tony Murphy: And then I went on to a couple of other boards in Europe, like the Council of Europe and Eurocontrol. And I got this idea, maybe I'd like to try and be abroad for just to see what it was like. So I went on secondment from the C&AG's office to the Directorate-General for Economic and Financial Affairs (DG ECFIN). 

[00:17:39] Mary McCaughey: What age would you have been then? 

[00:17:41] Tony Murphy: Let me think... after my maths now I have to add up. You're catching me on the age here! Probably, yeah, 37. 

[00:17:57] Tony Murphy: And then from then on, I went to the Commission. I was in the Commission as a detached expert. Then I did a competition and I became an officer in DG ECFIN, and I became a Head of Unit there. In the Commission, you have to rotate. We were in Luxembourg and the family were still based there, so it didn't really suit me to go to Brussels. So in the end I moved and became a Head of Cabinet for a Member of the Court on a recommendation from somebody I'd never met before. 

[00:18:30] Tony Murphy: I was there for four and a half years as the Head of Cabinet. Then I became a Director in the Court for a chamber which was dealing with competition and markets and research and development and the agencies, actually including Eurofound. I was there for about nine months and then the Irish government had an open competition for the Irish Member. I began on the 1st of March 2018 for a six-year term. 

[00:19:03] Tony Murphy: During that term, I became President of the Court. Then I was renewed for another six years. And I was renewed as President last October for another three years. So that's a long journey, but an interesting one. Very interesting and not really very well planned, but this is the way as we know things happen for a reason maybe, and you just never know. 

[00:19:27] Mary McCaughey: No. And it's one of the things that my last question would be about Ireland. We have the Presidency coming up in the second part of this year. It's an important time for Ireland; all eyes will be on Ireland. There's a lot of important things happening both on the agenda but also in terms of how we're going to manage the entire six-month period. I suppose there's a focus also on Ireland in Europe and seeing people like you growing through the institutions and ending up in positions which are influential and important. As someone who has done that, what would you say that you would like to see Ireland achieve during its Presidency? 

[00:20:06] Tony Murphy: Before I go into the Presidency, I'd like to encourage anybody to consider a career in the institutions because, as you know, our footprint is becoming less and less. Many of the people who've been there for a long time are retiring now, so we really need some new fresh blood. We spend a lot of time promoting not just the Court but the EU project as a whole to Irish people to try and get them to consider joining. 

[00:20:26] Tony Murphy: I mean, we have traineeship programmes in the Court; we're small, but even still, I think in the last intake we had five Irish trainees, which was quite a lot out of about 60 altogether. And I think actually Brexit has helped a little bit because people generally are looking for English speakers as well; it's normally an advantage in terms of report writing and things like that. So I think it's an opportunity. 

[00:20:52] Tony Murphy: In terms of the Presidency, I just hope it's looked on as being a positive Presidency, that there is some obvious added value from it. I think it will be a difficult Presidency; it's a very challenging period that we're entering. I think one of the big files on the table—and it's not just because it directly links to us—is the next budget, the 2028 to 2034 budget. Because obviously there are issues there in terms of new priorities which are emerging, whether it's enlargement, defense, or security, and how this will be funded. 

[00:21:30] Tony Murphy: So I think everyone is expecting that this will be a tough negotiation. I was joking with the President of Cyprus last week that he could do all the hard work and we would just then take over and get the flowers for finalising it in the second half of the year. But I think it will be a very difficult process. 

[00:21:47] Mary McCaughey: Well, Tony, thank you so much. It's a pleasure and a privilege to have you with us here. Tony Murphy, President of the European Court of Auditors, congratulations on your new term and the very best of luck with it. And I hope to see you back here in Dublin over the next period, certainly during the Presidency and after that again. 

[00:22:09] Tony Murphy: Thank you very much.