Ursula von der Leyen: Elected European Commission president under a cloud of corruption and scandal

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Ursula von der Leyen: Elected European Commission president under a cloud of corruption and scandal

The European Parliament on Tuesday elected Ursula von der Leyen as president of the European Commission — the first woman to hold the EU’s top executive job.

Von der Leyen, the candidate of the center-right European People’s Party and a close ally of Chancellor Angela Merkel, will be the first German to lead the bloc in more than a half-century, since Walter Hallstein served from 1958 to 1967. Center-right nominee becomes first woman to lead EU.

Von der Leyen won 383 votes in a secret ballot, only a little above the absolute majority of 374 she required to be elected. She had the declared backing of the three mainstream, pro-EU groups — the center-right European People’s Party, the Progressive Alliance of Socialists & Democrats, and the centrist-liberal Renew Europe group.

The Greens group, as well as right-wing and left-wing groups, had previously announced their intention to vote against her.

Ursula von der Leyen is starting her new career as European Commission chief in Brussels, but the German defence minister still has questions to answer back home.

An investigative committee of the German parliament — the toughest instrument that German lawmakers can use to probe government misdeeds — is digging into how lucrative contracts from her ministry were awarded to outside consultants without proper oversight, and whether a network of informal personal connections facilitated those deals.

And the lawmakers looking into the case say von der Leyen will still have to face their questions even now she is confirmed as Commission president in the vote in the European Parliament today.

“Whatever job Ms. von der Leyen has in the future won’t change in any way the fact that the committee will subpoena and question her,” said Tobias Lindner, a member of parliament and the security policy spokesperson for the Greens opposition party.

What happened in the past in the defence ministry under her leadership happened — and we will get to the bottom of that

 

The auditors’ main criticism wasn’t that the ministry paid for outside expertise. Rather, it was about the way contracts were awarded.

Von der Leyen and her ministry declined requests for interviews for this story. Last November, she told the German parliament there had been “mistakes” in how external consultants were hired and said “this never should have happened.” But she defended the use of such consultants, saying they had been required to undertake a huge overhaul of the ministry.

Von der Leyen blamed the problems on a mixture of negligence, corner-cutting and mistakes by individuals overwhelmed by their work. But others have put forward a less innocent explanation — that some consultants had privileged access to ministry officials that helped them circumvent rules and win contracts worth millions of euros.

Although there is no suggestion that von der Leyen herself was part of this network, the increased use of external consultants has been a hallmark of her tenure as defense minister.

Interviews with members of the investigative committee, witness testimony and documents obtained by media sources all suggest external consultants have been able to gain growing influence on the inner workings of the defence ministry during the five and a half years that von der Leyen has been in charge.

“From the beginning it was Ms. von der Leyen’s desire and political intention that external consultants would gain influence,” said Matthias Höhn, a member of parliament and the spokesperson on security policy for the left-wing Die Linke party.

When von der Leyen faces the committee, she will likely also face questions about an internal inquiry by her ministry into the affair. In that investigation, “central questions weren’t asked, suspicions weren’t followed up,” said Dennis Rohde, a member of parliament for the center-left Social Democrats (SPD).

“All of this, if you ask me, was a crude attempt to distract from misconduct and cover up for people among the leadership,” Rohde added.

Criticism of the ministry over the scandal has come from multiple opposition parties and the SPD, the junior partner in Germany’s coalition government. Members of von der Leyen’s conservative camp have backed her and the ministry but even some of them have been less than full-throated in their defense.

Here’s the lowdown on what’s become known as the Berateraffäre (consultant scandal):

The scandal

The first time the public heard about the scandal was in the fall of 2018, when internal reports by Germany’s Federal Audit Office were leaked to the media.

The watchdog, which monitors German government cashflows, described dozens of irregularities in the hiring of external consultants by von der Leyen’s defense ministry.

Those consultants played a more significant role than the ministry had publicly claimed, several media reports said: In 2015, for example, auditors estimated that the ministry had spent up to €100 million on external consultants, but only officially declared €2.2 million for the purpose. A year later, the ministry had spent up to €150 million on advisers while declaring only €2.9 million.

The auditors’ main criticism wasn’t that the ministry paid for outside expertise — which security experts say is needed, particularly when it comes to applying new digital technologies. Rather, it was about the way contracts were awarded.

After news of the scandal broke, von der Leyen’s ministry promised measures to prevent further mistakes.

Analyzing 56 out of 375 contracts awarded to consultants during the years 2015 and 2016, the Federal Audit Office found that in the vast majority of cases, the defense ministry did not provide sufficient justification for deciding that external advice was needed; in more than a third of the cases, procedures did not follow the normal rules for awarding contracts.

For example, consultants for a project called “Product Lifecycle Management (PLM)” — examining how best to analyse and use data from the A400M transport aircraft  — were hired using an umbrella IT contract set up for a completely unrelated purpose, circumventing the regular procedure for awarding contracts.

After news of the scandal broke, von der Leyen’s ministry promised measures to prevent further mistakes. But after some high-ranking officials refused to talk to parliamentarians, opposition lawmakers joined together in December to force the establishment of the investigative committee that would allow them to subpoena witnesses.

The ministry

When von der Leyen took over the defence ministry back in December 2013, Germany’s armed forces were a shambles. Military equipment was counted by hand and many records existed only on paper, as von der Leyen told the German parliament last November.

“We’re in the middle of digitalizing a major organisation of a quarter million people,” she said, stressing that “to manage such a task, you need the outside view of things” and that every German government ministry uses external consultants.

Eager to reform the apparatus, von der Leyen — a longtime ally of Chancellor Angela Merkel who had already spent eight years leading two other ministries — discharged the official who oversaw procurement and announced that external advisers would now be involved in overseeing significant projects.

She also hired a consortium of consultants including consultancy KPMG to analyze flagship procurement projects. Their report portrayed a dysfunctional organization, describing some ministry officials as overwhelmed and highlighting procurement contracts that heavily favored the interests of Germany’s arms industry.

Von der Leyen kicked off a far-reaching restructuring process. That gained her respect among some soldiers — but didn’t make her lots of friends in other parts of the military, her ministry and industry, according to officials working under her at the time.

The key players

Such reforms of Germany’s crisis-ridden armed forces might have been overdue — but the way von der Leyen approached the process allowed external consultancies to gain influence in the ministry and the military, according to several members of the Bundestag’s investigative committee.

In the summer of 2014, von der Leyen announced that Katrin Suder, a successful business consultant, would join the ministry in the powerful position of armaments state secretary, overseeing billions of euros in procurement spending and reporting directly to the minister.

The idea behind bringing in Suder — a physicist with a doctorate in computational neuroscience who had spent 14 years climbing the ranks at McKinsey — was to make processes more efficient and to have someone with high-level corporate experience who could go toe-to-toe with arms industry executives.

But the hiring also set off a process that helped external advisers increase their influence, members of the Bundestag’s committee said.

Over the years that followed, contracts were awarded to several consultancies. No company, however, has been under as much scrutiny by lawmakers as global consultancy Accenture.

Von der Leyen’s ministry has been little help in shedding light on the affair, multiple investigative committee members said.

Much attention has focused on the role of Timo Noetzel, a managing director at Accenture and a friend of Suder. The two have known each other since they were colleagues at McKinsey, Noetzel told MPs in June — a fact they had always “been open about,” he said.

And Suder wasn’t Noetzel’s only personal contact at the ministry. He described Erhard Bühler — a general who, as then-head of the ministry’s planning department, helped push for Accenture to be involved in the PLM project — as his “mentor.” Bühler, who is now commander of NATO’s Allied Joint Force Command Brunssum, is also the godfather of Noetzel’s children.

Bühler has said that his personal connection to Noetzel played no role in his professional decisions. But some members of the investigative committee say they are convinced such and similar “buddy networks” helped Accenture and other consultancies land contracts.

Referring to the PLM project, which was covered under an IT umbrella contract, the SPD’s Rohde said that Bühler and two other department leaders in the ministry “wanted Accenture to get the job, and that’s why they impeded competition and initiated a breach of the law.”

Bühler and other ministry officials rejected such accusations in their testimony to MPs. When it comes to the PLM project, for example, Accenture had been the ministry’s first choice because of the company’s experience in the field, Bühler said.

Accenture did not reply to a request for an interview. 

Within four years of von der Leyen taking over at the ministry, Accenture’s earnings from work with Germany’s armed forces rose from €459,000 in 2014 to around €20 million in 2018, according to Spiegel magazine.

An investigation ‘full of gaps’

Von der Leyen’s ministry has been little help in shedding light on the affair, multiple investigative committee members said.

An internal investigation, which began after the auditors’ reports were leaked and was overseen by the ministry’s legal chief Andreas Conradi, was “superficial, full of gaps, contradictory and not sufficient to tackle problems of this scale,” two SPD members of the investigative committee wrote to von der Leyen in a letter dated June 21, 2019, seen by POLITICO.

“We will have to look at the question of why the internal investigation of the ministry was so sloppy, and if that was intentional, which I suspect it was, then whether the aim was to produce an investigative report that would somehow calm down parliament but ideally not reveal anything,” said Lindner of the Greens.

His party has joined forces with other opposition parties and the Social Democrats to call for removing Conradi from the post of the ministry’s attorney of record, which allows him to attend all sessions of the committee.

Henning Otte, the spokesperson for von der Leyen’s conservative bloc on the investigative committee, declined to be interviewed for this article. He has previously expressed a markedly different view from members of other parties on the ministry’s efforts to get to the bottom of the affair, offering praise for “thorough and comprehensive” cooperation with parliament.

Von der Leyen’s role

The committee’s next job will be to find out how much von der Leyen knew about possible misconduct by officials working under her. Lawmakers will continue to subpoena and question key witnesses until the end of the year, including von der Leyen and her former undersecretary Suder, who resigned from her post last year.

At this point, it remains unclear whether von der Leyen was involved in setting up the technical details of contracts with consultants, or how much knowledge she had of the cases now being investigated.

“The fact is that so far neither the internal investigation nor the behavior of her ministry have reflected any great commitment to clear up this matter,” said the SPD’s Rohde. “That’s why we will summon von der Leyen … even if she becomes EU Commission president.”

Höhn of the socialist Die Linke party added that it is “grotesque that so far, there hasn’t been any disciplinary action — not just at leadership level, but anywhere at all.”

“That’s a glaring failure of leadership, all the way to the very top, because it sends a signal to the ministry that it doesn’t matter at all if you

 

 

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