This Rotten Heart of Europe
The British Parliament spent last week debating the pros and cons of signing up to the Lisbon Treaty (the infamous European Union constitution in its new clothes) even as bell-ringers within the EU were once again highlighting the massive fraud that is deeply entrenched within this complex imperialist institution. It seems that fraud and corruption simply go hand in hand with the EU and its various institutions.
In 1994, a British former EU technocrat, Bernard Connelly, once head of the European Commission unit responsible for the European Monetary System, exposed both the political and financial fraud that is so deeply entrenched at the very heart and core of the European Union. In his book titled The Rotten Heart of Europe, Connelly clearly outlined a case for massive fraud against the EU.
He was fired for his trouble.
Five years later, auditor Paul van Buitenen was suspended by the Commission following his making public allegations of widespread corruption within the EU. So embarrassingly condemning was his report that the whole EU Commission was replaced. But that did not stop the corruption; it simply got worse. In 2004, the Commission’s chief accountant, Marta Andreasen, was also suspended for her exposure of massive EU fraud.
A year ago, “suspicions of corruption, the manipulation of tender procedures and fraud in the context of the leasing and procurement of EC delegation buildings and their security installations in countries outside the EU” were brought to the attention of olaf, the EU’s antifraud office specially created following Van Buitenen’s exposure of rampant EU Commission fraud (olaf press release, March 28, 2007). Little publicity has been given to any progress on this investigation.
Last week, fresh allegations of EU fraud were again made public, this time by British Member of the European Parliament Christopher Davies. EUobserver stated (February 21):
A report examining the way meps use their monthly funds is causing a ruckus in the Parliament with a call for the EU’s specially created anti-fraud office to investigate possible misuse of public European money.
The secret report examines a sample group of 167 payments—there are 785 meps—and how deputies go about using their staff allowances, which amount to up to 17,000 euro a month. Chris Davies, UK liberal mep, who saw the report, which is being kept under lock and key in the basement of the Parliament building in Strasbourg, told EUobserver his first reaction was “a degree of hysteria given the scale of the abuse that is taking place and given the fact that it has been kept secret.”
So here we go again, it seems, on yet another investigation of the endemic fraud that eats at the rotten heart of Europe.
Corruption within the EU appears to be so deeply entrenched that olaf has very little hope of bringing the sickness under control. This is especially so given the history of the incompetence of that office in carrying out independent, unbiased investigations of EU institutions and instrumentalities, including even imposing limitations on investigations into its own operations.
Concerning a recent attempt to investigate allegations of misconduct by olaf’s head, Franz-Hermann Brüner, Paul van Buitenen observes via a press release: “The fact that the head of the antifraud office now wants to decide himself what will be investigated, during an enquiry which is in fact about his own functioning, is outrageous and can never have any independent results.”
Van Buitenen, now a member of the European Parliament, remains a thorn in the EU’s side. He refers to the EU’s fraud office as the “black hole of the EU.” In support of this claim, he lists numerous irregularities within olaf, claiming that “Internal fraud investigations still don’t seem to have priority at olaf, the European Anti-Fraud Office. Unfortunately, this is not the only irregularity that can be found at olaf. Transparency and responsibility seem to be concepts that are unfamiliar to olaf.”
One unfortunate connection between olaf and its “black hole” reputation is the Teutonic mindset of its head. Perhaps it’s purely coincidental, but Franz-Hermann Brüner’s career path was developed within a system that is renowned for, and has been recently publicized as, being steeped in endemic fraud and corruption. Brüner, who was appointed as olaf’s head in 2000, is considered by some responsible sources to be a failure in the job. Under the headline “Commission overrules member states to reappoint failed anti-fraud chief,” Open Europe reported, “The European Commission has overruled member states’ request for a new head of the EU’s internal anti-fraud agency olaf. The Commission decided to re-appoint German citizen Franz-Hermann Brüner, who has headed olaf since March 2000, from among 181 candidates for the job” (Feb. 16, 2006). What this source did not mention is that Angela Merkel specifically lobbied for Brüner’s reappointment against the wishes of EU delegates who had favored a Swiss ex-police chief for the job.
Why would Merkel want a German compatriot in this vital investigatory function? Could it be that, given the deeply entrenched fraud within her own country—and further, given the links between corrupt German corporatists and EU institutions—she needed a friendly face who would fudge the line in favor of her fellow countrymen?
Last week, concurrent with the most recent accusations of fraud emanating from within the EU, the German press headlined allegations of massive fraud involving German taxpayers. The German newspaper Süddeutsche Zeitung broke the story of around 50 German-controlled foundations that had been set up in Liechtenstein as tax-evasion shelters. The fraud involves private German banks and financial services groups in what has been described as a massive tax-evasion scam.
German media group Deutsche Welle indicated that hundreds of wealthy Germans were involved in the scheme, considered one of the largest ever in German history. Later reports have indicated that the number of tax shelters could in fact number over 1,000, with the number of Germans coming under investigation totalling over 4,000!
The tax-evasion scheme was initially brought to light following the exposure of Klaus Zumwinkel, head of Germany’s postal service, Deutsche Post, the largest mail service in the EU. Zumwinkel had evaded paying substantial taxes by squirreling away deposits in foundations created by Liechtenstein’s leading bank, the lgt Group. Exposure of the former Deutsche Post head’s financial shenanigans led to the widespread nature of the scheme being brought to light.
However, the tactics used by the bnd, Germany’s secret service, to obtain information that exposed the fraud have brought some angry responses. It is reported that the bnd paid €5 million to an informant for information which broke the scam. In a terse reaction to this tactic, Swiss Bankers’ Association Chairman Pierre Miraboud, during a televised interview, likened the bnd’s methods to those of the Nazi-era secret police, from whence, in fact, the bnd was cloned. He blurted out, “These are methods that unfortunately remind you of Gestapo methods” (Deutsche Welle, February 21).
But when all is said and done, fraud and corruption has literally been a way of life for German corporatists. So what’s new?
Global Integrity, a nonprofit anti-corruption organization, said this in a 2004 report:
Whether in politics, administration or the economy, municipal enterprises, the media or hospitals, one thing remains constant: Corruption in Germany is spreading like cancer. Public officials and servants are being bribed, managers misdirect enormous amounts into their own pockets, and politicians are being “oxygenated”—the insiders’ euphemism for bribery. Corruption is part of today’s German reality, and it extends to the heads of the political landscape. … Whenever German prosecutors and tax agents come across cases of corruption, they inevitably discover traces leading to the political arena. … German politics and corruption have been linked to each other for many years.
Based on this observation, the question is, where will this latest exposure of massive fraud lead to in the political arena within Germany?
Chancellor Merkel was quick to go public with demands that Liechtenstein grant Berlin “insight into German investments in the alpine tax haven” (Agence France Presse, February 20). The German chancellor fears political fallout from the scandal may further damage her already declining popularity with the German electorate. She tried to use some leverage over Liechtenstein (a small German-speaking principality wedged between Germany and Austria) by threatening to withdraw support for its accession to the Schengen passport-free travel zone. Emphasizing the seriousness of the fracas, Merkel declared, “We want to avoid a situation where we have to set an ultimatum” (ibid.).
Chancellor Merkel well remembers the financial scandal that proved Chancellor Helmut Kohl’s undoing. Kohl had used Liechtenstein banks and foundations to launder millions he gained fraudulently. Merkel has tried to create a squeaky clean image for herself while in office. It may have been helpful to have her trusted man at olaf during Germany’s high-profile six-month period in office as president of the EU in the first half of 2007. Certainly, the chancellor needed to keep the lid on any whiff of financial scandal during that very busy period of her leadership of the EU when she sought to accomplish so much, including the signing of the Berlin Declaration and pushing ahead on the EU treaty. However, if the chickens come home to roost with any German politician in this latest tax-fraud scheme, it could lead to the lady chancellor’s undoing.
As it is, quite apart from the EU, high-profile German corporate scandal has seldom been out of the headlines during Merkel’s term in office.
In the widely covered Siemens corporate scandal, which even involved a high-level American investigation, the Economist described the maneuvers of Siemens’s board as Machiavellian. The affair within one of Germany’s top companies was an indictment of corporate governance in Germany, the Economist indicated (April 2007).
Fallout from the vw corporate scandal continues to make headlines three years after it broke. “Klaus Volkert was sentenced to 33 months in jail for his role in the massive corruption scandal that hit Europe’s biggest carmaker, vw, in 2005. A second vw manager received a suspended sentence. Two former vw executives were convicted Friday, February 22, in a bribery scandal that began some three years ago …. In January 2007, former vw chief personnel officer Peter Hartz received a suspended two-year sentence and a €576,000 fine. Another one-time vw works council member, ex-parliamentary deputy Hans-Juergen Uhl, was fined €39,200 in June last year” (Deutsche Welle, February 22).
True—significant corporate scandals have been exposed in the United States in recent years, and, under pressure of current economic woes, there will be more. Yet the American system at least has many checks and balances written into it that tend to expose fraud and corruption, with legitimately imposed penalties. Compare this with a German system in which corruption, per se, does not even exist as a crime on the books.
What is of concern in Germany is that, as Global Integrity indicated, fraud and corruption are an ever-expanding sickness. Of even deeper concern, with the EU bureaucracy being so heavily weighted in favor of the appointment of German technochrats, is that sickness may have been so extensively imported from Germany into Brussels that it has reached the point where it has become an entrenched plague. Fraud and corruption, eating at the very vitals of the EU, have reached the point where the increasingly rotten heart of Europe may be incurable.
In this context, one must consider, by virtue of the proof of history, there is a certain type of mindset within a certain type of German ethnic that too readily meets the specification laid out by German philosopher Friedrich Nietzsche: “The German soul has its passageways and inter-passageways; there are caves, hideouts, and dungeons in it; its disorder has a good deal of the attraction of the mysterious; the German is an expert on secret paths to chaos” (Beyond Good and Evil).
Unless those paths, already firmly established within the European Union, can somehow be blocked, Europe is headed for another round of chaos emanating from its heartland, the great, revived and unified nation of the German people: one final resurrection of that old power so deeply entrenched in European history, the Holy Roman Empire of the German nation.
For more history and predictive analysis on this subject, read our booklet Germany and the Holy Roman Empire.