COURT OF JUSTICE: DAMNING REPORT FROM THE COURT OF AUDITORS ON REAL ESTATE POLICY.

The European Union Court of Auditors has published a highly critical special report (No5/2000) on the Court of Justice's expenditure on buildings, accompanied by criticism of and even accusations against the Grand Duchy of Luxembourg regarding tendering procedures and public procurement. The auditors criticise the Court for lacking flair in the assessment of its real estate needs, and of having too blind a faith in the state where its headquarters are located regarding the construction of buildings. While adversary procedure has permitted the Court of Justice to defend itself, the Luxembourg authorities have not been in a position to explain their actions.

On November 15, 1994, the Court of Justice of the European Communities concluded a rental agreement with the Luxembourg administration with a view to buying three buildings annexed to the main building, the Palais, situated on the Kirchberg plateau, which the institution has occupied since 1972. Between 1986 and 1994, the Luxembourg administration arranged for the construction of these three buildings, covering a total surface area of 65,949 m2, in accordance with the Court of Justice's specific requirements. These constructions have gradually been added on to each other in response to the Court of Justice's constantly developing needs and, since completion of the work in 1994, one single building complex has thus been able to accommodate all the Court of Justice's staff, which had previously been dispersed over a number of sites.

The Court of Justice launched and proceeded with this construction operation, which involved long-term financial obligations for the Communities, without first submitting it to its Financial Controller for examination. It also failed to inform the Budgetary Authority about the scale of the planned operations with a view to obtaining its prior authorisation. More seriously still, according to the Court of Auditors, the legal and financial arrangements agreed between the Court of Justice, the Luxembourg administration and the property developer, a wholly-owned subsidiary of the constructor, made it virtually impossible for the Communities to exercise technical and financial control over an operation for which, in the end, they would bear the final cost.

Quite apart from the fact that the Communities' Financial Regulation does not make any provision for having recourse to borrowing in order to make purchases of property, under such an arrangement the Communities...