REPORT on the nomination of Keit Pentus-Rosimannus as a Member of the Court of Auditors

PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the nomination of Keit Pentus-Rosimannus as a Member of the Court of Auditors

(C9-0316/2022 - 2022/0808(NLE))

(Consultation)

The European Parliament,

- having regard to Article 286(2) of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C9-0316/2022),

- having regard to Rule 129 of its Rules of Procedure,

- having regard to the report of the Committee on Budgetary Control (A9-0272/2022),

A. whereas, by letter of 20 September 2022, the Council consulted Parliament on the nomination of Keit Pentus-Rosimannus as a Member of the Court of Auditors;

B. whereas Parliament's Committee on Budgetary Control then proceeded to evaluate Keit Pentus-Rosimannus's credentials, in particular in view of the requirements laid down in Article 286(1) of the Treaty on the Functioning of the European Union; whereas in carrying out that evaluation, the committee received a curriculum vitae from Keit Pentus-Rosimannus, as well as the replies to the written questionnaire that she had been sent;

C. whereas the committee subsequently held a hearing with Keit Pentus-Rosimannus on 8 November 2022, at which she made an opening statement and then answered questions put by the members of the committee;

1. Delivers a favourable opinion on the Council's nomination of Keit Pentus-Rosimannus as a Member of the Court of Auditors;

2. Instructs its President to forward this decision to the Council and, for information, the Court of Auditors, the other institutions of the European Union and the audit institutions of the Member States.

ANNEX 1: CURRICULUM VITÆ OF KEIT PENTUS-ROSIMANNUS

PROFESSIONAL EXPERIENCE

Estonian government 2011-2015; 2021-…

- She has served in five Estonian governments as

o Minister of Environment (2011-2014)

o Minister of Foreign Affairs (2014-2015)

o Minister of Finance (2021-…)

- She lead Estonian Government's negotiations with the EU Commission over the Recovery and Resilience Plan, she has also been in charge of coordinating the final phase of EU long-term budget planning for 2021-2027;

Estonian parliament 2007-2011; 2015-2021

- She was first elected 2007, since then she has been re-elected three times (2011, 2015, 2019);

- She has been serving as a member of finance, European affairs and foreign affairs committees ;

Estonian Prime Minister's office 2005-2007

- the head of staff of the Estonian Prime Minister's office;

EDUCATION

Tallinn Baccalaureate Private School 1995;

Tallinn University BA, MAin public administration and in European Relations 2000;

Tufts University, MA in international law and diplomacy 2020.

OTHER

- Member of NATO's Maritime Unmanned Systems Innovation Advisory Board;

- Member of Imperial Centre for Financial Technology Advisory Board;

- Continuing education at Stockholm Defence University;

- Training programmes by ZEIT Foundation, American Council on Germany, Dräger Stiftung, Marshall Centre European Centre for Security Studies;

- Carter Center

HOBBIES

Reading, running, music.

ANNEX 2: ANSWERS BY KEIT PENTUS-ROSIMANNUS TO THE QUESTIONNAIRE

Professional experience

1. Please list your professional experience in public finance be it in budgetary planning, budget implementation or management or budget control or auditing.

I have been serving Estonian state and the European Union values in public finance since 2003, and I have done that in all levels. First at the municipal level and later as the Minister of Finance, Minister of Foreign Affairs and Minister of Environment. I have dedicated my professional life to the public service and served both, executive and legislative branch. In all those postings I was responsible for budget planning as well as budget implementation, including for various EU funds. This has given me a very good understanding of the budgetary process from a variety of perspectives.

Scrutinising the ministries responsible for transparent and effective use of EU funds was a particular focus of the Estonian Parliament's EU Affairs Committee during the period I was member of the said committee. As relevant as the budget implementation control was the scrutiny of how the laws where implemented.

In the municipal level, between 2003-2005 I served as the head of Tallinn's (Estonian capital) central city district. While being responsible for planning and implementing the city district's budget I insisted on result-oriented and efficient management and control of the resources. My focus was on quantifiable targets and budget discipline.

In 2005-2007 I served as the Head of the Estonian Prime Minister's office. It was the time of the first MFF negotiations for Estonia. My task was to coordinate the work with the responsible ministries and the parliament and prepare the necessary framework and Estonian positions. During the years of fast economic growth, we increased significantly the state reserves, which gave us the necessary budget buffer during very difficult crisis years.

In 2007 I was first elected to the Estonian parliament where I lead the largest party group and was a member of the Committee of Finance and the European Affairs Committee. As President of the Parliamentary Group of the Prime Minister it was my responsibility to oversee the budget planning and scrutinize the Government members as well as big public entities.

In 2009 as the first vice speaker of the Parliament I was part of the special working group tasked to present a budgetary plan to keep government deficit below 3%, as foreseen in the Stability and Growth Pact. I was also responsible for leading the readings of the supplementary budgets during the recession, imposing significant cuts on the Estonian public expenditure. We adopted two negative supplementary budgets in 2009 and despite the -14,1% contraction of the GDP in 2009, Estonia's budget deficit remained under 3% (1,7%). We fulfilled all Maastricht criteria during a very challenging time and were able to join the eurozone in 2011.

2011-2014 I served as the Minister of Environment. In Estonia, the Minister of Environment is also responsible for national climate policy, which became my focus as the Minister. As part of that policy drive, I initiated the first Estonian climate strategy, supervised several strategic energy efficiency projects, and made Estonia the first EU Member State with the e-vehicles charging network covering the whole country. Investments to more environmentally sustainable means led to additional initiatives of the resource planning. As one of the central reforms during my time in office, I introduced a new law of Forest management, making the forest management process more transparent and relevant data openly available. I also participated actively on the EU and international level in preparing the Paris Agreement, in cooperation with likeminded Member States. As a result, I was invited to join the European Resource Efficiency Platform lead by then-Commissioner Janez Potocnik, with the aim to provide high-level guidance to the European Commission, Members States, and private actors on the transition to a more resource-efficient economy. In my position as the Minister of Environment, as well as in all my subsequent Cabinet positions, I was responsible for the budgetary planning and implementation in my area of government.

As a minister of Foreign Affairs, I was responsible for the budgetary process that covered the Estonian foreign service and included development aid planning. After Russia's invasion of Crimea and the Donbas, I initiated (jointly with the Foreign Ministers of the UK, Denmark, and Lithuania) the creation of the EU East Stratcom unit, a new entity in the EU that concentrated on countering disinformation and fake news from Russia.

I started my service as the Minister of Finance in January 2021, at the peak of the COVID19 crisis in Estonia. During less than two years I presented to the parliament four budgets - two annual and two supplementary budgets. The first supplementary budget, in 2021, was a COVID19 crisis budget, offering quick relief for the medical system, labour market and businesses. The budgetary process, amidst the uncertainty and economic turmoil, was extremely challenging, but the relatively conservative budgetary approach proved to be justified, as the Estonian economy recovered quickly.

As in many EU countries, 2022 brought another budgetary crisis. I presented the amended budget to the Parliament, focused on the urgent defence expenditure and the refugee crisis. In September 2022, I finalized the 2023 budgetary process and the next four-year multiannual fiscal planning. Although the security environment is difficult, I found it important to stick to as prudent and restrained budget policy as possible. Estonia's structural deficit will remain 2,6% and our dept burden will not exceed 27% of the GDP during the next four years, being the lowest in the EU. The Estonian Recovery and Resilience Plan that Estonian Government negotiated with the Commission, plays a role in this success.

2. What have been your most significant achievements in your professional career?

I have had the privilege to be involved in Estonian politics in pivotal years. During this time, I have contributed to many important reforms of economic and environmental policy and have always advocated for sound, prudent fiscal strategy. Leading our country through the two extremely difficult last years in a financially responsible way has been an important task but also professionally challenging and rewarding. Keeping the country in good financial health is a demanding task for any finance minister, especially against the backdrop to increase the dept burden and increase expenditure.

Europe in the energy crisis, it feels even more important to highlight my focus on the climate while I served as the Minister of Environment. Under my Ministerial watch we introduced the first Estonian climate strategy, which set the internal targets to reduce the greenhouse gas emissions and supported a significant increase of renewable energy in the Estonian energy portfolio. The process I started ten years ago culminated recently with the decision to accelerate the transition to renewable electricity, with the goal of producing all electricity consumed in Estonia from renewable energy sources by 2030. It has been a big step for a country where 20 years ago almost all of electricity was produced from fossil fuels.

I am very proud to see that my initiative to create the EU Stratcom unit concentrating on countering disinformation and fake news from Russia already in 2014 has been widely supported on international level and moreover proofed to be useful in building resilience against the malicious information war targeting the European citizens.

3. What has been your professional experience of international multicultural and multilinguistic organisations or institutions based outside your home country?

Since 2020 I have been a member of the Innovation Advisory Board of the NATO Maritime Unmanned Systems Initiative. The function of the Innovation Advisory Board is to provide strategic recommendations on the future development of the NATO Maritime Unmanned Systems Initiative. It advises on the integration of different solutions of the maritime unmanned systems of the Allies.

As the Minister of Finance, I was elected vice chair of the board of governors of the European Bank for Reconstruction and Development (EBRD). In May 2022 I had the privilege to chair the board's annual meeting where we focused on how to support the reconstruction of Ukraine and agreed on 2-billion-euro resilience package for that purpose.

As a Member of Parliament, I also worked in International Grand Committee on Disinformation (2018-2019), multinational initiative bringing together representatives from 21 different nations. It is an international forum of technology experts and legislators working on effective strategies for the fight against online disinformation, hate speech, and electoral interference.

As the Minister of Environment, I was asked to join the European Resource Efficiency Platform (2013-2014). The goal of the platform was to provide high-level guidance to the European Commission, Members States and private actors on the transition to a more resource-efficient economy. The Platform brought together politicians, NGOs, entrepreneurs, and academia across the EU and published a manifesto as well as several policy recommendations.

As a legislator, I have always emphasized the importance of direct professional contacts with other parliaments and their relevant committees. Swift and open exchange of information between the legislators is always valuable, but in particular during difficult times.

Above are the main examples of my experiences in multicultural organisations, where I have had good chance to work with the representatives of several nationalities and to reach the decisions in diverse teams. All this has prepared me well to feel comfortable in the international setting with multicultural background.

4. Have you been granted discharge for the management duties you carried out previously, if such a procedure applies?

In Estonia we do not have the exact same procedure as discharge procedure, but the same principle applies to all the government members, who are responsible for budget implementation. Once a year Estonian National Audit Office presents Annual Report to our Parliament who then decides whether to approve it. I have been granted discharge five times for now. The discharge procedure for the years 2021 and 2022 is yet to follow.

5. Which of your previous professional positions were a result of a political nomination?

I was elected by Estonian Parliament to become the First Deputy Speaker of the Parliament.

I was appointed by Estonian President to become the Minister of Finance (January 2021), the Minister of Foreign Affairs (November 2014) and the Minister of Environment (April 2011). In Estonia, the Parliament approves the Prime Minister's candidate, who then presents the government ministers to the President who appoints them.

6. What are the three most important decisions to which you have been party in your professional life?

1. The most heart-warming task was helping to prepare and negotiate the Paris Agreement, the binding international treaty to limit global warming to well below 2 degrees Celsius, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. The agreement in Paris brought a wider international consensus on the urgency of the climate crisis and the need to act, also in countries where the awareness of the impact of climate change had been low.

2. The most critical decisions where related with helping to lead my country through 2008-2009 financial crisis while preserving the prudent budgetary policy line that made possible for Estonia to join the eurozone in 2011.

3. The most resilience demanding decisions were related to being at the forefront of successful crisis management in 2021-2022. It has been my role in the last two years to provide solutions to the COVID, economic and security crises. I spearheaded policies that offered relief to the households and companies, as well as guaranteed the functioning of the medical system that had become under enormous stress, without sacrificing the sustainability of the public finances. As a result, Estonia's economy recovered quickly, and the unemployment level remained relatively low.

After getting over the worst with COVID, 2022 has turned out to be the year of the worst security crisis in the region. We reacted fast to the security threats and time will tell if the rapid decisions to increase our defence budget from 2,2% of the GDP to 3,2% of the GDP by 2024, to invest heavily into conventional defence as well as to the cyber domain and to reinforce our energy security were quick enough. I find those decisions existentially important.

Independence

7. The Treaty stipulates that the Members of the Court of Auditors must be 'completely independent' in the performance of their duties. How would you act on this obligation in the discharge of your prospective duties?

Being independent from any influence that might compromise Court's professional judgement is one of the core values of the ECA. As a Member of the Court of Auditors I will serve the European Union in an unbiased and impartial manner. Those principles are laid down in the Court's Ethical Guidelines as well as in the Treaty and I consider them indisputable.

I will give up all the political positions I hold in Estonia and will dedicate myself solely to the work in the Court of Auditors. As a Member of the ECA I will base the conclusions of my work on objective and reliable facts and evidence.

I will not take any instructions from any Government, Government office or any other public or private institution.

I also see the transparency as a necessary tool to keep the complete independency of the Members of the ECA regularly inspected. All the interests must be declared and public, also all the meetings with the different parties must be registered. I have followed same principles when fulfilling my duty as a minister - all my meetings with the different parties where registered, the topics we discussed where published once in a quarter.

8. Do you or your close relatives (parents, brothers and sisters, legal partner and children) have any business or financial holdings or any other commitments, which might conflict with your prospective duties?

I do not have any business or financial holdings or any other commitments, which might conflict with my prospective duties. Nor am I aware of any possible conflict of interest connected with my relatives. Shall there arise the potential of the latter I will immediately inform the President of the Court as well as abstain from participating in any auditing work related to the decision.

9. Are you prepared to disclose all your financial interests and other commitments to the President of the Court and to make them public?

Yes, without any hesitation. All my financial interests and commitments have been public since 2003 and I will disclose those also in the future.

10. Are you involved in any current legal proceedings? If so, please provide us with details.

I am not.

11. Do you have any active or executive role in politics, if so at what level? Have you held any political position during the last 18 months? If so, please provide us with details.

In January 2021 I was appointed as a Minister of Finance - that is the political executive role I hold before the hearing. I am also the deputy chair of the Estonian Reform party.

I will give up my seat in Parliament and step down from all the political work, should I be appointed to the ECA.

12. Will you step down from any elected office or give up any active function with responsibilities in a political party if you are appointed as a Member of the Court?

I will step down from my ministerial position and give up my seat in the Estonian Parliament. I will step down from all my political duties. I will not participate in political campaigns, nor will I run for any political position.

Becoming a member of ECA means that I will conclude my political career.

13. How would you deal with a major irregularity or even fraud and/or corruption case involving persons in your Member State of origin?

It does not make any difference, whether the irregularity or fraud or corruption case concerns the Member State of my origin or any other Member State. They will be treated the same. Should fraud or corruption suspicion arise or be detected during the auditing work it will be transmitted to OLAF, who is responsible for investigating the fraud and corruption, or to EPPO, depending to the jurisdiction.

I will serve the EU as a whole and not any Member States individually.

Performance of duties

14. What should be the main features of a sound financial management culture in any public service? How could the ECA help to enforce it?

In any public service all the revenue and expenditure must be made in a lawful manner. Beside that primary principle there is a well-known 3E's principle, which I subscribe to. Tax-payer's money must be used in economic, efficient, effective way so that it would serve best their interests.

The Court of Auditors is not in a position to assess the political prioritization of one or another field. Yet, once the legal decision is made to use and invest the EU money to a certain domain, it is the ECA's mandate to provide assurance to the citizens of the EU that the money is used in a lawful and efficient manner as well as give opinion that there is well functioning internal control system in place.

Main features of a sound financial management culture that I would highlight are:

1) Prioritization, clear and measurable targets and objectives;

2) Standardized, well-functioning authorisation of the expenditure;

3) Internal audit system. Rigorous and regular internal auditing helps to determine risks in a timely manner. Once the internal audit system functions well it allows to react quickly, should the need to (re)assess risks arise and it also helps to prevent shortcomings.

4) Transparency of the financial records. Easily accessible, publicly available data that is presented in an understandable format is an important feature of good financial management culture.

The ECA's annual audit is giving assurance on the reliability of the EU accounts as well as on the regularity of the transactions. The ECA's decision to provide not only SoA, but landscape reviews and briefing papers as well as opinions and rapid case reviews has given more options to assess the above-mentioned aspects. Identifying best practices and bringing out audit recommendations are, in my opinion, important possibilities to support the enforcing of sound financial management. The ECA can also use its great moral authority to motivate and enhance clearer, more transparent accounting.

15. Under the Treaty, the Court is required to assist Parliament in exercising its powers of control over the implementation of the budget. How would you further improve the cooperation between the Court and the European Parliament (in particular, its Committee on Budgetary Control) to enhance both the public oversight of the general spending and its value for money?

The European Parliament has vital role in enhancing the public oversight of the spending. It is the Court of Auditor's task to provide the necessary data and information to the Parliament, particularly to the Committee on Budgetary Control. That is also highlighted in the latest Strategy of the ECA and I find it very important.

Regular meetings and exchange of views between the CONT and the ECA have become self-evident. Good cooperation means that the ECA should be present and ready to offer its expertise for the CONT whenever the need arises. The European Parliament´s proposals to the ECA's working program are given high priority - that is an important principle to continue with. The planning phase of the cooperation is also important to avoid information overload of the CONT or other thematic committees of the European Parliament. The impact of the ECA's reports depends largely on how quickly they are presented and can be discussed.

According to the TFEU (Article 278) the ECA is mandated to provide an annual Statement of Assurance. It assesses whether the EU budget was implemented in compliance with the laws and rules. It also gives an opinion on the reliability of the EU's accounts. Beside the SoA and the ECA's annual report the ECAs procedure of special reports, reviews and opinions should give good options to get the needed information at the right time. The information and data should be available for the Parliament in a timely manner, as the relevant data as well as recommendations and findings can be valuable in the decision-making processes. Identifying the best practices as well as giving insights of what works and what does not work well - that is an input the ECA should offer.

I see the European Parliament, particularly CONT, as the most important partner for the ECA. I have always valued the pro-active approach when communicating with important stakeholders in all my previous positions and I am committed to continuing to practice this when appointed to the European Court of Auditors. Finally, an important tool to gain impact of the audit reports and enhance public oversight is well planned and executed public communication where coordination with the parliamentary bodies will significantly amplify this impact.

16. What added value do you think performance auditing brings and how should the findings be incorporated in management procedures?

I see performance auditing as a valuable input and necessary tool in the policymaking and policy-planning process. While the ECA's annual audit has important retrospective focus and gives the assurance of whether the resources have been used lawfully and the accounts are reliable, performance auditing is as important in offering more future oriented insights of whether the processes are functioning well enough to achieve the set targets and goals.

Tax-payers money is always scarce, so evaluating the efficiency and effectiveness of particular program or policy implementation helps to improve the performance, helps to understand what works well and what does not. I find it important that performance audit includes specific recommendations of how to improve the processes, so that the recommendations can be incorporated in management procedures and the Commission (and/or Council) can draw its conclusions and act based on those. Bringing out good practices while evaluating of what and why has turned to be an efficient or/and effective practice is also valuable information, shall there be multiple countries included to the performance audit.

The ECA's new Strategy until 2025 highlights the ECAs dedication to develop methods by seeking to realise additional productivity gains in its performance audit practice, reinforce risk-based approach and give country specific information when adequate. I find it particularly important that the new strategy brings out the need to further improve the impact of the ECAs recommendations to make them more relevant, useful, practical, and cost-effective, and strengthen the follow-up the ECA gives to the stakeholders as well as auditees.

It is also worth noting that the performance audit can be truly useful tool only if the targets and objectives of the auditee's original program are properly set and if the data available is reliable and detailed enough. Should the targets be vague, it is very difficult to offer thorough audit of whether the resources have been used in most efficient and effective way.

During the last years the ECA has focused more on the performance aspects of the EU. That has also given a possibility to react quickly through rapid case reviews or briefing papers so that institutional stakeholders are provided answers they need. On the flip side, while expanding the list of the products has helped to focus more on the performance aspects it is important to keep in mind that the growing volume of the work may not start to affect the quality of the work. Also, engagement with new rapidly emerging topics like financial markets control, data protection, AI and machine learning as well as health and safety demand new skills which may not be promptly present in the Court, which may also lead to lower quality reports and harm in long run the credibility of the audits and the Court itself.

17. How could cooperation between the Court of Auditors, the national audit institutions and the European Parliament (Committee on Budgetary Control) on auditing of the EU budget be improved?

All three institutions are dedicated to the same objective - making sure the use of the public funds is economic, efficient, and effective. Just as the national audit institutions are most important partners for the national parliaments in offering the relevant data, information, rapid reviews in due time, it is the ECA that plays the same role for the European Parliament. The regular cooperation as well as planning joint audits, information sharing and exchange of the findings between those three is necessary premiss for robust contribution to a more resilient, sustainable, efficient European Union that would enhance citizens trust towards the EU.

The cooperation between the National Audit Institutions and the ECA is well functioning in the working level through the Contact Committee. Important aspect in this cooperation is maintaining the independence of both parties and develop the cooperation in mutually respectful manner.

One good example of getting feedback from the National Audit Institutions is ECAs invitation for the National Audit Institutions to review the progress made in implementing its Strategy. Latest International Peer review assessing the implementation of ECA's Strategy for 2018-2020 was finalized in 2020. It included several recommendations and explained key lessons learned for the next strategy period. I find it valuable practice that should continue also during the new strategy period.

An idea brought forward in the peer-review was regarding the ECA's unique coordination capacity to align Member States' and the European Parliament's views on topics to be audited. The potential public impact of the ECA's work depends on one hand of the relevance of audit topic towards the Member State's domestic public agenda and on the other hand of the relevance towards the European Parliament's agenda. If those crosscutting topics are found and eventually audit results well communicated the real impact can be achieved which in turn is the best foundation for the meaningful and sustainable cooperation between institutions.

It is also important to mention that the implementation of the EU funds depends largely on the Member States' and their national budgetary implementation. The National Audit Institutions play vital role in auditing the use of public funds in national level. That is the field where joint audits, and the pro-active sharing of the working programs can help to avoid unnecessary duplication.

As I explained in my previous answers, I find the European Parliament to be the main stakeholder for the European Court of Auditors and clearly the CONT is the most important and direct partner in that. As it is stated in the ECA's new Strategy the Court "must further intensify the outreach activities towards the European Parliament, in particular the CONT, the Committee on Budgets and the sectoral committees." If my nomination to the ECA is approved, I attend to be active supporter of those initiatives.

18. How would you further develop the reporting of the ECA to give the European Parliament all the necessary information on the accuracy of the data provided by the Member States to the European Commission?

The Member States data is delivered to the European Commission so the first control of whether the data is accurate and reliable lays on the Commission. There have been several occasions when the ECA has expressed its discontent with the data provided by the Member States. Although there have been some methodological and technical matters that have contributed to that, there is still constant need to improve the data quality. The ECA has highlighted those concerns and clearly it is important to continue with special recommendations to improve the reporting and data accuracy.

The ECA's Strategy until 2025 draws attention to the need to enhance the use of technology and IT tools. I can only echo that. Although there is currently not yet enough machine-readable data available, there is still more and more digital data that can be put in good use for enhancing the ECA's work. Just as it is stated in the new Strategy for the ECA - the ECA can and should be strong and vocal advocate for the development of digital practices and control of EU policies and programmes. I consider all four lines of work brought out in the new Strategy necessary help to improve the data collection and reliability:

1) Seek to obtain secure and easy access to auditees' data;

2) Foster a digital audit culture and mind-set in the ECA's work

3) Invest in the requisite skills and knowledge across the ECA's staff;

4) Implement new digital audit tools and techniques suitable for audit area, including automated data collection and analysis and also take advantage of the ECA's existing digital capacity.

Other questions

19. Will you withdraw your candidacy if Parliament's opinion on your appointment as Member of the Court is unfavourable?

Yes, I will.

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