06.14.21

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A Parade of ‘Yes Men’: EPO’s Budget and Finance Committee as Rubber-stamper of the Dictatorship That Pays the Salary

Posted in Europe, Finance, Patents at 11:30 am by Dr. Roy Schestowitz

2016: Budget and Finance Committee of the Administrative Council (EPO) Confirms Exile of the Boards of Appeal
2017: Battistelli’s Big Fat Greek Wedding at the EPO’s Budget and Finance Committee

Yes man
Reference: Yes man

Summary: The lack of oversight at the EPO has long been apparent and it is becoming ever more problematic now that huge sums of money are passed by the EPO’s management to law firms whose sole role is to fight against aggrieved EPO staff

THE EPOnian regime flexes its muscles again. It’s not resembling in any shape or form a democracy!

The Central Staff Committee (CSC) of the EPO published and circulated two documents, one in German and one in German-English (mixed in the text, as part of that text is a transcript). Those documents don’t show anything surprising, unpredictable or shocking, at least not to EPO insiders. It’s more of the same tail-wagging-the-dog, wherein the Office dictator (like Benoît Battistelli, like son, António Campinos) tells his so-called ‘bosses’ to say “yes” to every proposal. In the process the dictator would occasionally distribute national “gifts” (bribes) at the expense of the Office coffers, which are based partly/largely on an improper granting process/guidelines (they’ve long departed from the EPC, which was supposed to govern the EPO). Systemic corruption or worse? Surely the European public is paying for it. It’s paying for it big time (billions of Euros in external costs). As predicted before, the ‘bosses’ would blindly approve more budget to be weaponised against the staff’s budget (Office lawyers against staff’s, potentially draining out their meager savings). Office management will waste almost 6,000,000 Euros just suing their own staff or fighting them (with external lawyers). We wrote about it last month. As MinceR from Hungary put it some minutes ago (in IRC), “too bad those will come out of our pockets…”

But “they have their own budget,” I explained because the EPO is ‘self-funding’. We just pay with settlements when trolls sue” (or products become more expensive because of the patent troll), “which also comes out of our pockets,” as MinceR notes.

“Office management will waste almost 6,000,000 Euros just suing their own staff or fighting them (with external lawyers).”“Report on the 126th BFC [Budget and Finance Committee] meeting” was produced at the end of last week and further disseminated today, noting some of the key findings upfront. “Conducting meetings of the Budget and Finance Committee (BFC) by videoconference has further shortened the already rarely controversial debate of the delegates of the Contracting States in this committee,” they complained. “Thus, despite a full agenda, the 126th meeting, originally scheduled for two days, was already over after six hours.” The text in the publication is similar to this, but they give an outline of the outcome/s as follows:

The most important points for staff were:

  • The Education and childcare benefits reform (CA/7/21): some delegations commented that the reform was still too generous or slightly criticised the long transition periods, or the intended equality of treatment for nationals and non-nationals. All the delegations (except DE and CH) cast a positive vote for the reform, so that the Administrative Council now has a pro forma unanimous positive opinion by the BFC. We assume that the Administrative Council will approve the reform at its upcoming meeting in June
  • Reports on the Reserve Funds for Pensions and Social Security (RFPSS) / review of the 2020 financial year: the results are excellent!
  • Award of contract for outsourcing of ILOAT services (CA/F 11/21): the EPO had a total of EUR 5.85 million (!) approved to obtain external legal advice against staff complaints before the ILOAT. This enormous sum is in stark contradiction to the President’s propagated intention to change the EPO from a culture of litigation into a culture of dialogue.

This regime is just a plastic surgery or an operation on the previous one, boosted by corrupt and bribed-for media coverage. We wrote about it many times before. They’ve managed to convince themselves that communication alone, not substance, was the real problem. They’re still totally rigging the courts (e.g. decisions on European software patents), but instead of kidnapping judges they control them by intimidation; the very fact they’ve already been sent to leased space in Haar is somewhat of a warning shot. Stacking the panels for particular outcomes is the cherry on the cake!

Anyway, without further ado, here’s the full publication (raw and unedited):

Zentraler Personalausschuss
Central Staff Committee
Le Comité Central du Personnel

Munich, 11.06.2021
sc21079cp – 0.2.1/3.1

Report from the 126th meeting of the Budget and Finance Committee on 26 May 2021

Since 2020, all Budget and Finance Committee (BFC) meetings have been held by video conference due to the pandemic. This format has further shortened the already rarely controversial debates of the delegates of the Contracting States in this committee. Thus, despite a full agenda, the 126th meeting, originally scheduled for two days, was already over after six hours including three breaks. The most important points are briefly presented below.

Education and childcare benefits reform (CA/7/21)

The most sensitive item on the agenda from the staff’s point of view was the reform of the education and childcare benefits. First, VP 4 described the old system as unbalanced, outdated, cumbersome to administer, difficult regarding digitalisation, and having limited financial predictability. She then focused on the alleged intensive involvement of staff and social partners in finding a solution. In presenting the reform, she spoke of additional costs for young children, a decrease in costs for school fees and high transition costs, but overall a balanced system in the long term.

The staff representatives pointed out the unequal treatment of the different locations in the reform and emphasised that the reform did not achieve fairness across the salary groups. A constructive counter-proposal from the CSC was not put on the agenda because the President refused to consent to it.

Several delegations commented that the reform was still too generous or slightly criticised the long transition periods. CH and DE criticised in particular the intended equality of treatment for nationals and non-nationals. Compared to the EU, the allowances were too high in their view. These two delegations abstained but all the others cast a positive vote for the reform, so that the Administrative Council now has a pro forma unanimous positive opinion by the BFC.

Reports on the Reserve Funds for Pensions and Social Security (RFPSS)

The fund manager presented a very positive performance of the RFPSS. A performance of 4.3% was achieved in the difficult year 2020. This was 1.3 percentage points above the strategic benchmark. Furthermore, the RFPSS continued to outperform the benchmark on an annualised basis over 5, 10 and 20 years. The market value of the reserve funds was EUR 10.98 billion at the reporting date.

Comments from delegations were correspondingly positive. The staff representatives congratulated the entire fund management team on the excellent result. They referred to the current rising interest rates, which in addition to the outperformance of the RFPSS also mean a significant decrease in pension liabilities.


Award of contracts, inter alia for outsourcing of ILOAT services

In addition to the undisputed contract awards for cleaning services in The Hague, for maintenance of technical installations in Munich and for health insurance administration, for the first time an award of contract related to outsourcing of ILOAT services (CA/F 11/21) was on the agenda for approval, which is cause for concern. The EPO had a total of EUR 5.85 million (!) approved for 36 months to obtain external legal advice against staff complaints before the ILOAT.

The staff representatives criticised this enormous sum, which by far exceeds the expenditure of previous years. In particular, it is in stark contradiction to the President’s propagated intention to change the EPO from a culture of litigation into a culture of dialogue. Furthermore, the staff representatives pointed out that the EPO has significantly more posts for lawyers in the Directorate Employment Law than in the Conflict Resolution Unit.

Only IT and PL raised critical questions about the exceptionally high post for external legal advice. VP 4 countered the criticism by claiming that it was only a framework contract that provided for a maximum amount of money. Furthermore, she flatly disputed the figures presented by the staff representatives – figures taken from the Office’s own reports.1 2 Finally, the BFC approved all contract awards without dissenting votes.

Review of the 2020 financial year

The financial situation of the Office is regularly presented to the BFC from three perspectives. Firstly, the operating and capital income is compared to the operating and capital expenditure and compared to the usually conservative budget. Here the result is an annual surplus of EUR 348.9 million, which is 44% above the budgeted figure. A remarkable result, especially considering that the budget was set before the pandemic.

The annual accounts are then presented in accordance with the International Financial Reporting Standards (IFRS). Since its introduction, the Staff Committee has regularly criticised this approach as unsuitable for the EPO (most recently here). Because of the strong dependence on the current discount rate, the results show great volatilities. A decrease in the interest rate by 0.1 percentage points would mean an increase in defined-benefit obligations by EUR 770.7 million, i.e. more than twice the annual surplus. The IFRS results therefore say more about the assumptions made for interest rates than about the actual financial situation of the EPO. By way of example, according to IFRS, the Office achieved a negative total result of EUR –6.8 billion in 2019 – compared to a positive total result of EUR 752 million in 2020.

Finally, a so-called standardised operating result is presented, which allows comparison over the years by assuming a standardised discount rate of 5%. According to this approach, the result is a positive EUR 259.2 million for 2020.

In its intervention, the staff representatives picked up on some of the comments in the Board of Auditors’ report on the 2020 accounting period (CA/20/21 and CA/20/21 Corr.1). The staff representatives again criticised the IFRS accounting. Finally, they highlighted that the estimates of the financial study and the Base 2 Scenario chosen were far from the actual financial situation at the end of 2020.

_____
1 CA/27/21, page 6: Compared to the year Mr Campinos took office, not only have more internal complaints been filed in the last two years. The number of complaints before the VGIAO has also increased.
2 Organigrams of the Directorate Employment Law and of the Conflict Resolution Unit: There are twenty posts for lawyers in the Directorate Employment Law, and only two in the Conflict Resolution Unit.


Outlook for 2022

At the end of the spring meeting of the BFC, the initial budgetary orientations for the following year are presented regularly. The management expects 173600 patent applications and 114000 published patents for 2022. Compared to this year’s budget, these are changes of +3.4% and –3.4%, respectively. However, the EPO also assumes a disproportionate decrease of 4.0% in the number of filled posts in the examination area. It was announced to the BFC that there will be no new recruitments in 2021 or 2022, except in very exceptional cases.

Summary

The virtual meetings of the Budget and Finance Committee are in notable contrast to the earlier on-site meetings. The debates are much shorter, but some presentations are longer. After the unanimous vote of the BFC, we have to assume that the Administrative Council will approve the reform of the education and childcare benefits at its upcoming meeting. The performance of the reserve funds is excellent.

Your Central Staff Committee


Annex: Interventions by the Staff Representation (manuscripts)

On the education and childcare benefits reform

The EPO presented its plans for a reform of the Education and Childcare allowance which shall increase the fairness between national and non-national staff, provide additional (including financial) advantages, and which should be aligned with the goals of SP2023.

A closer look at these plans unfortunately reveals the opposite.

Goal 1 of SP2023 aims at ‘a working environment that will attract and welcome the brightest minds in Europe, develop their talents, encourage professional development, foster knowledge transfer and collaboration, and offer them first-class working conditions/environment’.

This goal contributes to the EPO’s success as a knowledge-based organisation, which is much appreciated by staff.

However, we must point out that the Office’s plans regarding the education and childcare allowance do not meet the said Goal 1 of SP2023 to develop and attract talent. On the contrary – the planned reform counteracts the intent to foster internal job mobility and to attract external talent.

With this planned reform, a number of problems would be created whereas the financial benefits remained small compared to the implicit costs, the negative psychosocial impact and more social unrest which would add to the current already bad atmosphere at the EPO.

Just to name a few of these problems:
• First: Instead of the allegedly improved fairness between national and non-national staff, we anticipate unequal treatment of staff at the different EPO sites: While many staff in Munich would benefit from this reform due to the favourable local conditions, the other 3 EPO sites would suffer – partly considerable – financial disadvantages.
• With that, the reform as proposed would, secondly, add to the imbalance between the EPO sites to the benefit of the headquarters in Munich. This clearly undermines the concept of the EPO as a European institution with sites in different European countries.
• Third: the current proposal for the reform would hamper job mobility of staff between the different EPO sites, decreasing the ability of the Office to adapt to new situations. What’s more, the reform would definitely not benefit the desired collaborative spirit between the different sites.
• Fourth: We expect the reform to have a particularly strong negative impact on EPO staff in lower job groups and grades. These are disproportionally often women, many of them with children, who frequently work on a part-time basis. The reform would counteract the Office’s attempt to improve the career prospects especially for women and to become an inclusive organisation. By trying to avoid an unbalanced treatment of nationals and non-nationals, the EPO would create a system that discriminates as to Office site, income and gender.

All these negative effects were already addressed by staff representatives in meetings with the Office. In addition, a detailed counterproposal was presented by the Central Staff Committee offering a sound compromise between the needs of EPO staff at all sites and the needs of the Office to overcome the shortcomings of the current system.

Unfortunately, the Office largely adhered to its initial proposal and claims that the current proposal for the reform is already to be considered a compromise. On the contrary, the counterproposal of the Staff Representation was once more largely ignored.


We firmly believe that Social Dialogue is more than just counting the number of meetings with stakeholders in the Office. Social Dialogue is about listening to the other side and looking into their arguments seriously. Only with that, the consultation process in the Office can live up to the expectations of a real Social Dialogue.

We encourage the BFC delegates to form their own opinion in this matter and also consider the counterproposal as presented by the Central Staff Committee.

In fact, a sound reform of the education and childcare allowance will help to meet the Office’s goals and also contribute to the wellbeing of staff and their families, independent of site, gender and salary. What has to be avoided, however, is to create considerable disadvantages for the Office and its staff while the advantages are limited and largely of a financial nature only!

On the award of contracts, inter alia for outsourcing of ILOAT services

5.850.000 Euro, das ist die enorme Summe, die der Amtspräsident sich heute für externe Rechtsanwälte bewilligen lassen will. 5.850.000 Euro stehen dann zur Verfügung – allein für Streitfälle mit den eigenen Bediensteten und allein für solche, die vor dem Verwaltungsgericht der Internationalen Arbeitsorganisation in Genf ausgetragen werden. 5.850.000 Euro, das ist ein Betrag, der die Ausgaben der vergangenen Jahre um ein Vielfaches übersteigt. In der langen Geschichte des Amtes ist es heute das erste Mal, daß der Posten für externe Rechtsberatung für VGIAO-Fälle genehmigungspflichtig ist und Ihnen hier im Haushalts- und Finanzausschuß vorgelegt werden muß. Der Amtspräsident ist angetreten, um eine Streitkultur durch eine Kultur des Dialogs zu ersetzen. Diese Intention findet allerdings keinen Niederschlag in den Zahlen. Im Vergleich zum Jahr des Amtsantritts von Herrn Campinos sind in den letzten beiden Jahren nicht nur mehr interne Beschwerden eingereicht worden. Die Zahl der Klagen vor dem VGIAO hat auch zugenommen. Mit dem heutigen Schritt wird diese Initiative des Amtspräsidenten gänzlich ad absurdum geführt. Als das vorliegende Dokument vor zwei Wochen veröffentlicht wurde, klingelten die Telefone bei der Personalvertretung. Die Kolleginnen und Kollegen waren darüber bestürzt, daß bei den Ausgaben für die Schul- und Betreuungskosten ihrer Kinder gekürzt werden soll, aber Unmengen an Geld für externe Rechtsanwälte zur Verfügung gestellt werden sollen.

In der Direktion Dienstrecht gibt es ohnehin schon 20 Posten für Juristinnen und Juristen, die sich mit individuellen und kollektiven Rechtsangelegenheiten beschäftigen. 5.850.000 Euro sollen nun zusätzlich für Rechtsangelegenheiten vor dem VGIAO eingeplant werden. Wissen Sie, meine Damen und Herren, wie viele Juristinnen und Juristen in der Conflict Resolution Unit beschäftigt sind, die mit der Streitschlichtung beauftragt ist? Laut Organigramm lediglich zwei. Und gibt es hier ein Extrabudget, das Ihnen vorgelegt wird? Nein.

Wenn Sie die 5.850.000 Euro für Rechtsstreitigkeiten heute bewilligen, ist dies aus unserer Sicht ein falsches Signal ans Personal. Selbst wenn es sich bei diesem Betrag nur um eine Obergrenze handelt, wie das Amt sicher gleich betonen wird, so ist doch diese Obergrenze ein verheerendes Zeichen. Ein Zeichen dafür, daß das Amt selbst die Streitkultur gegenüber der Kultur des Dialogs bevorzugt. In allen Gesprächen, die die Personalvertretung mit der Amtsleitung führt, bieten wir inzwischen zu strittigen Themen Kompromißlösungen an. Leider bevorzugt die Amtsleitung, den eigenen Weg durchzudrücken und später die Sache vor Gericht zu klären. Nicht den Weg des Kompromisses, sondern den Weg des Streits unterstützen Sie, wenn Sie nun 5.850.000 Euro für externe Rechtsanwälte bewilligen.

On the review of the 2020 financial year

An den präsentierten Berichten haben wir wenig auszusetzen. Auch wenn, wie im Bericht geschildert: „die meisten Empfehlungen (der Rechnungsprüfer) aus den Vorjahren noch nicht vollständig umgesetzt sind“, scheinen wir auf einem guten Weg zu sein. Fragen zu einzelnen Punkten müssen nicht hier, sondern können hoffentlich in kleinem Kreis diskutiert werden.


Wir weisen insbesondere auf die Bemerkung der Rechnungsprüfer hin, dass sie der Bilanzierungsmethode des Amts für Verpflichtungen in Bezug auf Leistungen nach Beendigung des Arbeitsverhältnisses … zustimmen, verweisen jedoch auf das damit verbundene hohe Maß an Schätzungen. Insgesamt sind wir der Meinung, dass IFRS für die Beurteilung der finanziellen Situation des Amtes nur sehr bedingt geeignet ist.

Aufgefallen im Bericht der Rechnungsprüfer ist uns die Erwähnung, dass im April eine zusätzliche Taskforce „Neue Normalität“ eingesetzt wurde. Die Personalvertretung wurde in diesem Stadium nicht beteiligt, was bedauerlich ist.

Wir möchten Sie daran erinnern, dass in 2019 eine Finanzstudie erstellt und präsentiert wurde. Aufgrund dieser Studie wurden 5 Maßnahmen beschlossen. Weder die Kinder- und Erziehungszulage noch die angekündigte Reform des Pensionssystems waren dabei. Dennoch haben wir den Eindruck, dass es bei den Reformen nur um Einsparungen geht.

Eine der 5 Maßnahmen war die Gehaltsanpassungsmethode, die, wie sich gezeigt hat, die Gehälter nicht einmal ausreichend erhöht, um die Inflation auszugleichen. Für das kommende Jahr ist bereits eine Erhöhung um 0 % angekündigt, während die Inflation in Deutschland mittlerweile eine der höchsten, wenn nicht die höchste in Europa ist.

Zur Qualität der Finanzstudie möchte ich beispielhaft nur eine Zahl hervorheben. Im vom Management gewählten Base 2 Scenario wurde der Bestand des RFPSS Ende 2020 mit 6,8 Milliarden Euro prognostiziert. Tatsächlich sind es 10,3 Milliarden Euro.

Auf der anderen Seite: Am vergangenen Freitag endete in Deutschland eine Frist, in der Betriebsärzte Impfstoff bestellen konnten, um von Anfang an bei den nun zusätzlich erlaubten Impfungen dabei zu sein. Das EPA hat nicht bestellt, da, soweit mir berichtet wurde, die Zustimmung des Präsidenten gefehlt hat. Auf der anderen Seite werden 5,85 Millionen Euro für Rechtsanwälte beantragt.

Der Präsident ist angetreten, den sozialen Frieden wiederherzustellen. So funktioniert das nicht. Entschuldigung, aber Fürsorgepflicht umfasst mehr als die Sorge ums Geld.

Maybe we’ll do a video about this some time later this week. A lot of the above is absolutely outrageous.

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