Sunday, 6 June 2004

Perks at EU Parliament: A system out of control?

BRUSSELS Over the last several years, the European Parliament has passed a muscular array of measures governing the continent and the daily lives of the now 455 million European Union citizens, from bans on single-hulled oil tankers to requiring blunt cancer warnings on cigarette packs.

But when its Socialist faction gathered in a private meeting last December, with June’s parliamentary elections in mind, it was clear from the impassioned language that something of particular urgency was at stake.

This debate was not over government policy, but about the legislature’s well-oiled system of perks and privileges, which might make a corporate president smile in recognition: chauffeured cars; daily and monthly stipends that can add tens of thousands of euros to basic salaries; jobs for relatives paid out of a E150,000 (about $180,000) a year secretarial allowance; free health care; pensions that, as one legislator put it, can put “gin on the terrace”; and, most stunningly, a travel expense procedure that reimburses legislators for as much as 10 times the amount of their airfare ticket prices.

According to payroll and expense records obtained by the International Herald Tribune and The New York Times, a legislator can add well over E100,000 to a base salary when all the tax-free benefits are calculated.

The sense at the Socialists’ meeting was that voters would not be amused.

“I have been accused of boarding the gravy train,” said Bill Miller, a Scottish member who argued for reforms. “I have been accused of being dishonest. I’ve been accused of being greedy. I’ve been accused of being a parasite. I’ve been accused of being a leech. And that’s just by members of my own political party.”

Eluned Morgan, of Wales, warned her colleagues with gloomy urgency. “I’m telling you,” she said, “if we don’t reform the expenses system, it simply will crucify us once again in the next election.”

But reform never took place.

Whether the legislators will be crucified remains unclear. Europeans will engage in sweeping elections June 10 to 13, sending 732 delegates from the 25 countries of the newly expanded European Union to a legislature whose laws will govern life from western Ireland to the borders of Ukraine.

Substantial issues involving trade, immigration and integration of the 10 new, mostly Eastern European members are certainly campaign trail topics.

But so, in many places, are the legislature’s grab bag of goodies, with items like the E262 daily expense allowance legislators receive when they register for work in the Parliament’s seats in Brussels or Strasbourg, a delicate election problem for some who have been seen signing in at 8 a.m.

and then bolting for planes home.

Michiel van Hulten, a Dutch Democratic Socialist member who has campaigned for reform, said the issue was basic for the EU because to win popular acceptance it needed “institutions that citizens have faith in.”

Voter turnout has steadily slipped in European Parliament elections, slumping from 63 percent in 1979 to 49.4 percent 20 years later. Many observers believe disaffection about the perks is a factor.

Budgeted at nearly E100 million in the aggregate, European deputies’ benefits easily top those for members of any EU-member national parliament. (The U.S. Congress, in which members of the House receive million-dollar budgets to finance sizable staffs is another story, but nepotism in hiring is barred there and reimbursement is generally tied to actual costs incurred.).

Ambling through European Parliament corridors with a hidden minicam the size of a big sponge, a slightly disheveled Austrian legislator, Hans-Peter Martin, assembled some of the most revealing information about the perk system.

Caught on tape was last December’s Socialist group meeting. Also captured were German politicians fleeing Brussels and Strasbourg after signing in for their daily stipends, pictures that caused huge embarrassment when they appeared in the press.

But that is only the beginning. Martin, 46, a former Der Spiegel journalist, claims to have 1,500 hours of tape. His videos sometimes veer between midsections and double chins, with unintended ceiling shots thrown in. But they clearly display his ability to pose banal questions that draw frank admissions.

In tapes he provided to the Herald Tribune and The Times, a Finnish Socialist, Reino Paasilinna, confided his doubts last fall about taking a coveted new job because of the loss of Parliament benefit income. “It is roughly 20,000 easy,” he said of the extra monthly income. And for the most part, he added, “that is without taxes.”

An Irish legislator, John Joseph McCartin, waited at 7:59 a.m. to register for his daily payment in Strasbourg so that he could catch a 9:30 a.m.

flight home. When the registry did not open in the next few minutes, he signed a piece of paper and rushed out, telling Martin, “Seven minutes is a lot to lose.”

Neena Gill, a British Labor Party member on the budget committee, bemoaned the establishment of a E50 a week cab perk. “My name became mud because I said to them, ‘Look, it’s not right to increase this money,’” she told Martin, referring to the stipends legislators already receive.

Martin said he went undercover out of disgust. “The system was set up in a way that everybody would deny it,” he said. “I considered filming an act of defense in the interest of taxpayers and voters.”

Other Parliament members scorn him as an unethical self-promoter who makes defensible perks look sinister. The Socialists barred him from meetings, and Pat Cox, the Parliament president, dismissed his campaign as a “grotesque attempt to maximize personal publicity.”

Yet, German and Austrian legislators, who are particularly revolted by him, recently pledged to take no more travel money than they spend. And Martin may have found popularity where it matters. Running as an independent, he is performing well in Austrian polls.

History In some ways, the perk system is a metaphor for an evermore powerful institution that has melded the political cultures first of six countries, then 9, 12, 15 and now 25. Costs of living and legislative compensation differed, and the disparities became the lever for escalating benefits. Members’ basic salaries are paid by their national governments and, except in the Netherlands, are the same as those paid to their state legislators.

As a result, Italian members received E131,700 last year, while Spaniards were paid only E36,672, according to a German social scientist, Hans Herbert von Arnim. The disparity will only grow with the arrival of members from the new countries. Hungarian legislators, for example, earned only E9,660 last year, von Arnim said.

The variations spawned an expense system whose mission, was “to compensate for those differences,” van Hulten, the Dutch reformer, wrote last March in a report of the Committee of Budgetary Control.

Decisions concerning the benefit system are not made in a recorded Parliament vote, but by the Parliament leadership committee called the bureau. This insulation, von Arnim believes, has been the system’s enabler. “Public opinion is the only control,” he said in an interview.

“But this control wasn’t there because they decided on these things not in public.”

It is difficult to find defenders of the whole system. Some say that a E3,700 a month general expense payment is necessary to cover the costs of travel through large constituencies and rubber-chicken dinners. Others defend the early morning sign-ins, which are allowed even for Fridays in Strasbourg when there are usually no official meetings. McCartin, for example, said he was leaving early when he ran into Martin because he had to work into the previous night.

Although reforms are needed, the general criticism is overblown, said Richard Balfe, a British Conservative who has served in the Parliament for 25 years and heads its five-person committee that administers the benefits and recommends new ones.

Balfe prides himself on having establishing the voluntary pension fund, a fitness center for legislators and a former members association that receives annual subsidies from Parliament of more than E100,000.

“Don’t let’s pretend that people are being carried in here on litters by servants picking grapes and then going home,” he said. “Most people come into Parliament because they believe they have a mission to accomplish and they work pretty hard at doing it. Clearly they need expenses and facilities to accomplish that mission.”

Travel On a summer day in Strasbourg, Martin, camera rolling, casually chatted up Paasilinna, the laconic Finnish Social Democrat who was weighing a new job and the pay cut it would bring. Paasilinna explained how through perks his Parliament income could rise to more than E240,000 a year.

With gentle prodding from Martin, Paasilinna said that on top of his monthly legislative salary of E5,000, he pockets E2,500 of his general E3,700 monthly expense allotment. But the biggest boon, he said, was travel. Depending on the cost of a tourist ticket, a weekly round-trip flight of 1,800 kilometers, about 1,120 miles, between Helsinki and Brussels could result in tax-free payments of up to E2,500, he said. “So if you take 2,500 four times a month, that’s 10,000,” he said.

Adding up his monthly take, he concluded in a dry voice, “It is almost 20,000.”

In the odd arithmetic of Brussels, airfare expenses, regardless of actual cost, are paid out at the highest economy fare listed for a route.

This flexible, unrestricted fare is called the “YY” and, according to Hugo van Reijen, author of “Why Not Fly Cheaper?” a book about discount airfares, it is paid by a relative handful of travelers. “The full fare is easily five to 10 times the discounted fare in Europe,” he said.

Last week, for example, the Travelocity Web site offered a round trip between Helsinki and Brussels on Brussels Airlines for about E200. But under Parliament’s compensation rate, Paasilinna, judging from the most recent figures obtained by the Herald Tribune and The Times, would have been reimbursed for a fare of roughly E1,700, and also for another E357 for traveling more than 1,500 kilometers.

With similar math, a Parliament member from Berlin receives roughly a E1,000 payment for a round trip to Brussels (cost on Travelocity, about E169 on Brussels Airlines). Over a year, the profit can run into the tens of thousands of euros.

In a recent interview, Paasilinna could not recall the details of his conversation with Martin, and said his monthly income was more on the order of E12,000. But he said the system still warranted reform.

His Finnish colleague Esko Seppanen, of the Green Party, also endorsed reform in a conversation with Martin in which he talked about receiving travel bonuses similar to Paasilinna’s. It was just after 8 o’clock one morning last November, and Seppanen had just signed in for his per diem and was waiting for a car service provided by Parliament to get to the airport.

“The biggest part of our salary is coming from flying,” he said. “That is why the turnout in our elections is so low, because people just don’t want to support that kind of representation.”

He said that was why all Finnish legislators always voted for reform. But “as long as it’s paid,” he added, “everybody takes it.” Nepotism.

There are countries, like Spain and Italy, that have fashioned rules to discourage legislators from hiring relatives. There are members of the European Parliament like Helmut Kuhne of Germany, who at the Socialist faction meeting described nepotism as “morally unacceptable to the vast majority of European citizens.”

But there are plenty of legislators who see nothing wrong with it, and there are no prohibitions. The number of family members employed and their pay is something of a mystery, because the parliament does not make payroll records public. The Herald Tribune and The Times, however, obtained a 2002 payroll list showing that at least 20 to 30 legislators, and probably more, employ relatives.

The legislators include members from France, Greece, Belgium and Italy, but disproportionately they come from Britain and Ireland. According to the records, Sir Robert Atkins, of the Conservative Party, employed his wife, Lady Dulcie Mary Atkins, for a listed salary of E8,333, which is higher than his own. He did not return repeated calls to confirm the figure, and his wife declined to comment.

Sir Neil MacCormick, of the Scottish National Party, retains his wife, Lady Flora MacCormick, for what he said was roughly E2,000 a month. Eryl McNally, a Labor Party member from England employed her husband, Jim, for what she said was about a year at E1,665 a month.

The Reverend Ian Paisley, the militantly Unionist Northern Irish minister, had three relatives on the payroll, his wife, Eileen, and twin sons, Ian Jr. and Kyle.

Even Miller, who called for reform at the Socialist meeting, employs his wife for what he estimated was about E25,000 a year. “I don’t have a problem with people hiring members of their own family as long as they’re doing the job,” he said. “If you’re a politician, you have to be able to trust the staff. I trust my partner.”

McNally, and many of the others, defended the practice as an accepted British political tradition. “It happens in the British House of Commons,” she said. “This is done openly and correctly. This is not done surreptitiously.” She said her husband’s background in science was helpful when she started in Parliament with a focus on research issues.

Many of the dozen or so legislators interviewed disputed the salary amounts listed for their relatives, but few would provide documentation.

One, Balfe, the British Conservative, refused to comment on hiring his wife, Susan Jane Honeyford, who was listed as earning E12,052 a month.

Fine tuning.

The system of pay and perks has evolved like new generations of computers, each more efficient and faster than the last.

When members complained that they couldn’t sign for their daily expense money at 8 a.m. without risking missing their flights, registration hours were pushed back to 7 a.m.

When parliamentary leaders became concerned that new legislators from Eastern Europe would strain the free car service, the result was the E50 a week taxi subsidy that so irked Gill.

A E5,000 a year payment for language lessons sounds ample, but Parliament also offers two free flights to European countries for immersion lessons abroad, along with a E131 daily stipend.

And when the heads of the pension fund decided it would be too burdensome to collect monthly pension payments individually, they decided to automatically deduct the E971 contribution from members’ E3,700 monthly general spending allowance. Because the money does not come out of their salaries, they can in effect make pension contributions at no cost to themselves. Although the fund advises members to repay the expense money out of their pockets, no one checks to see if they do, and it is widely believed that a substantial number of members do not.

Presiding over this efficient system, is the group of five Parliament members headed by Balfe. It is known as the College of Quaestors, a title that dates back to ancient Rome, where quaestors supervised the empire’s treasury.

Balfe rejects the idea that the perks are playing a role in disillusioning voters and causing lower turnout rates.

“I think politicians often overestimate their importance,” he said from his spacious Brussels office, where a blue European Union flag hangs in a corner. One reason for low turnout, he said, could be a “culture of contentment,” using the phrase first coined by the U.S. economist John Kenneth Galbraith.

“That is a part of the possible philosophical landscape,” he said. “I think one of the things politicians often do is they underestimate the voters.”

By Doreen Carvajal and Martin Gottlieb

This article first appeared in the International Herald Tribune.