Feasibility study for the Parliament-proposed grant scheme for cross-border investigative journalism – a comparative analysis of the published version (October 2014) and the last version that the experts who worked on the study had seen and validated much earlier (December 2013)

This study was prepared by Peter Rauschenberger who advises MEP Benedek Jávor on anti-corruption and transparency issues.

1 Background and introduction

In 2009 the European Parliament proposed a research grant scheme for teams of investigative journalists who plan to investigate cases that affect at least two member states, or the EU as a whole. EUR 1.5 million was allocated for this purpose in the EU’s 2010 budget. In 2010 a pilot project was started, a call for proposals was launched, but it was revoked due to an unresolved administrative issue: while the journalists insisted on the strict confidentiality of the proposed investigations, the Commission did not see how this could be squared the requirements of the Financial Regulation. From the next year on, the pilot project was turned into a preparatory action. An external consultant was hired to figure out how the administrative problem could be solved. A feasibility study was drafted in 2013. Yet, the Commission declared it could not implement the program in 2014 due to different administrative difficulties: because of the change of guards in both the Commission and the Parliament, the necessary legislation would be difficult to push through, they said. The programme’s budget line was then dropped from the 2015 EU budget for yet another administrative reason: no legislation has been passed to carry the project on to the next phase, and it could not be continued as a preparatory action, since there is a rule that says that no preparatory action can run for longer than three consecutive years. Quite a strange thing it is to say of a programme which never took off the ground that it has already run too long to be continued. The Commission also has kept saying that the administration of the grant scheme would cost too much. They have made this claim on the ground of the feasibility study they ordered in 2012, and was delivered to them, apparently, in October 2013 at the latest, but which they did not publish by the time these claims were made. In November 2014, MEP Benedek Jávor requested information about the feasibility study from the Director-General of DG COMM, the department of Commission administration in charge of the programme. Director-General Paulger responded that he would send the relevant links to Mr Jávor once the study is published. This never happened. (For a comprehensive summary of the story up to this point see: http://gijn.org/2014/11/17/unanswered-questions-on-the-fate-of-an-investigative-journalism-fund-at-the-european-commission/)

In March 2015 MEP Jávor asked the Commission again to advise him on the status of the feasibility study, this time in the official format of a written question. Shortly after that the Commission eventually published the study. (Note that although the published version is dated misleadingly to October 2014, in reality, it was published only five months later.)

We are of the opinion that it is a highly questionable practice that the Commission negotiates the findings of a feasibility study with a consultant, especially for such a long time. It was all between the Commission and the consultant – a consultant the Commission hires quite regularly, so it has all reasons to align with the Commission’s expectations. The experts who were employed to do the

research and write the study in the first place were left out of this process. The last version of the study the experts saw and verified dates back to December 2013. The Commission and the consultant spent 15 months over the study after that, before it eventually got published.

It wasn’t just lying forgotten in the drawer of some Commission official. If it had been the case, an MEP’s inquiry could have prompted its publication. It was held back for a reason. We suspect that the reason was that the text of the study was being carefully engineered to yield the results the Commission wanted to see. We are also of the opinion that so altering the text of the study DG COMM followed explicit orders from the political leadership of the Commission, which wanted the programme binned.

We think we can substantiate this opinion, i.e. that the study was held back because the Commission wanted its conclusions changed, by comparing the two texts, the text of the December 2013 version, which was the last one validated by the experts, and which was intended to be a final version, and the text of the October 2014 (in fact, Mach 2015) version, which got eventually published. The comparison will show how a generally supportive feasibility study was turned into one that is negative in every possible respect. From the legal analysis to the presentation of cost estimates, every conclusion was changed. As we will see, the factual basis in which these conclusions should be grounded is practically identical to that presented in the earlier version of the study, which drew supportive conclusions from the same facts. The comparison of the two texts shows no sign of any further research that would have been conducted between December 2013 and October 2014 (or March 2015)—consistently with the fact that the experts who previously did the research had not been asked to do any further work after December 2013, and were not informed of the changes. This, in our opinion, constitutes the falsification of the feasibility study, and, as such, is intolerable and constitutes a case of deliberate, and presumably politically motivated maladministration.

2 Methodology

This is how the two versions will be compared in this analysis.

Some, maybe most, readers will get the gist of the study by reading only the passages that sum it up. These are the Abstract, the Executive Summary, and the Overall Conclusions. We present how the tone and, more importantly, the content of these summaries changed from one version to another.

Then we will move to the main body of the study. We will compare the substance of the main findings between the two versions. The consultant was hired to prepare an answer to three main questions. The first is whether there is a need for financial support for cross-border investigative journalism. The second is whether there is a justification for EU intervention. The third is whether there is a way to reconcile the requirements of strict confidentiality (stemming from the nature of investigative journalism), on the one hand, and of financial responsibility in the use of EU funds (as established in the Financial Regulation), on the other, and would the costs of an arrangement that satisfies these criteria be acceptable.

We will cite both texts extensively. Citations from the published “October 2014” version will be in red, citations from the December 2013 version, the one last seen and validated by the experts, will be in green. Sometimes the citations will seem unnecessarily long. It is because we want avoid the accusation that we cherry-picked the passages we quote.

3 Summaries (the Abstract, the Executive Summary, and the Overall Conclusions)

3.1 The Abstract

The abstracts of both versions are quite neutral, they basically outline the scope of the study without much evaluation. The only exception in both versions is that both abstracts comment on the need for public funding.

Whereas the abstract of the December 2013 version was positive that there was a case for financial support, the abstract of the October 2014 version chooses words to describe the need for funding to underplay it as much as possible: the journalists would like the money, but cross-border IJ would go on as well without intervention.

Here is the wording of the earlier version:

A case for EU investment is presented with an outline of possible outcomes under the funding and the non-funding scenarios.

And here is how it transformed for the published, later version:

The Study shows that while investigative journalism will continue to exist without new public funding, the IJ community would appreciate any additional funding source, whether public or private.

3.2 The Executive Summary

The need for funding

The October 2014 version of the Executive Summary contains reflections on the funding problems that IJ encounters due to recent media market changes and trends, but these are put in the most modest way possible. The summary enthusiastically reports of new business models to sustain investigative journalism. The fragility of these models is acknowledged, though, and so is the scarcity of funding for cross-border IJ projects.

The traditional business model of major media outlets that have departments of investigative journalism is challenged by the inherent costs of investigative stories. New business models are emerging. A transitional business model is fostering new collaborations and combines large and small non-profit media organizations specializing in investigative journalism, but perfectly mastering the landscape of public and private funding, being very agile and with controlled costs. Other innovative platforms try to involve consumers (crowd funding), and mix traditional resources (sales to TV channels and media outlets) with those related to online digital distribution and sales. These business models are fragile, though, and their long-term sustainability remains to be demonstrated. […] [F]unds available are sometimes too low to meet the potential demand for cross border investigations. Under these conditions the different operators interviewed are usually supportive of any new financial sources to fund cross border investigative journalism and would welcome an EU intervention.

The comparable paragraph of the December 2013 version of the Executive Summary was much less enthusiastic about the “emerging new business models” for IJ. Instead, it emphasized the increasing role of external sources in the funding of IJ, and the lack of funding as one of the key factors that explain the (poor) state of IJ (where it is in a poor state).

While there is a general trend of decreasing importance of the traditional daily print press, some publications maintain or even increase their readership. Moreover, the decrease of advertisement revenues, which affects the media industry, does not impact all outlets in the same way. The rapidly increasing importance of online media generates new challenges – but equally large opportunities – for the IJ community. In this context, IJ, which was traditionally funded by the media companies, is now increasingly funded by external sources. The sector continues relying, to a large extent, on freelance rather than full-time employed investigative journalists. In most countries, the lack of training, the lack of job opportunities in IJ, and the lack of funding were presented as the main explanations for the state of IJ. Investigative journalists and representative organisations active in this area would therefore generally welcome financial support at EU level. Last, there are very few countries where the main IJ stories are linked to cross-border topics. Interviewees considered that their readers/audiences would probably be interested in having more cross-border stories.

The difficulties that IJ encounters in consequence of the decline of the revenues of more traditional forms of media that provided funding for this costly and work-intensive genre are real. So are the attempts to develop new business models to sustain IJ in these new circumstances. We are not alleging that the relevant paragraph of the executive summary of the new version is made up and unsupported by fact. It is always a question, however, which of the relevant facts are emphasized, and in what manner. At this point, we only record a shift from one version of the text to the other in this respect.

Legal basis and justifiability

The shift pointed out in the previous section is arguably mild. Not so the change of tone of how the question of the legal basis and justifiability of EU intervention in this area is addressed in the Executive Summary.

In the Executive Summary of the December 2013 version the conclusion of the assessment of this question was presented, even if not completely free of reservations, as being largely favourable. The overall conclusion was that, even though the so-called subsidiarity test does not yield a strong case for such intervention, EU financial support would nevertheless be justified by the significant “European added value” it would create, even at low levels of funding. This added value would include a better public understanding of the political machinery of the EU, and more transparency thereof, which would contribute to the creation and strengthening of a European public sphere, and the additional scrutiny would make EU level governance better. The old text was also positive that the intervention would meet the requirement of “proportionality”.

The Study examined whether there is a case for setting up an EU financial support scheme for cross-border IJ. Based on a subsidiarity test, the Study suggests that, while there is no compelling case for building such a support scheme at EU level – since cross-border IJ would continue existing and some alternative financing sources already exist – such a scheme would deliver a potentially positive impact even through low amounts of funding. This field of research is found to be in need of additional funding sources. The justification for EU financial support is underpinned by the European added value that could be expected to follow its implementation:

[…]

• The public – viewers, listeners and readers – would be better informed about other EU countries and better understand each other’s culture, history, etc.

[…]

• It would help to create and strengthen the European public sphere.

• Europe would become more transparent and there would be better cross-border understanding.

• The machinery of supranational governance represented by the EU and its institutions could, ultimately, function more efficiently.

[…] EU financial support for cross-border IJ could be considered as proportional to the extent that the over hundred interviewed journalists and editors mentioned the lack of funding as the main cause of under-developed IJ in their country. However, it should be underlined that, in many MSs, the other reason of low activity level in cross-border IJ was the lack of proper training. In this field, the EU is increasingly active: for instance, the EU finances the Centre for Media Pluralism and Media Freedom, as a project established at the European University Institute in Italy.

It should be noted that this summary of the result of the subsidiarity test is significantly more reserved than how it appears in the main body of the study (see later in Secition 5). It is still completely different though from the way it is presented in the later version. In the Executive Summary of the published version of the study, the legal basis and justifiability of EU action is evaluated in a markedly negative tone:

[T]he study points to strong uncertainties on the legal basis that would allow the EU to act in this specific area. On the one hand, the economies of scale are difficult to establish, even though the study showed some potential positive externalities. On the other hand, implementation by the Member States of a joint scheme funding cross-border investigative journalism (IJ) does not appear to be a credible alternative, due to the differences in the Member States’ tradition and culture regarding IJ. (p. 2)

Later, in the concluding paragraphs of the Executive Summary, even this residual ambiguity is eliminated, and the conclusion is presented as resolutely negative:

[T]he Study could not identify a clear legal justification on which an EU support scheme would be based. It also could not clearly establish the need to act in common, with a robust demonstration of economies of scale at production level.

Administrative overhead

The third theme touched upon in the Executive Summary in both versions is the arrangement that would be necessary to meet the requirements of independence and confidentiality, on the one hand, and the requirements of using the EU’s funds responsibly, as set in the Financial Regulation, on the other. Both versions agree that an intermediary organization (IO) would be required to actually assess the proposals and award the grants. The two versions seem to differ, though, in their predictions on the administrative costs the running of such an arrangement would imply. This difference exists, however, only in the way the cost estimates appear in the two executive summaries. If we take a look at the main body of the study, we will find that the cost estimate is the same in both versions – it is only that it is presented in different tones in the two ESs.

In the published version’s Executive Summary the overhead is “relatively high,” some main numbers are presented, and that’s it:

The budget analysis identifies two distinct phases for the EU funding scheme: a start-up phase which would enable the selection of a limited number of projects (corresponding to about 15 research grants, about 5 publication grants, and 5 prizes) and an operational phase which would enable a more significant selection (a minimum of 30 grant projects and at least 10 prizes). A budget of € 700,000 could be considered for the start-up phase (including € 200,000 for management fees, and the operational phase budget could reach € 1,050,000, including € 250,000 for management fees. The involvement of an external intermediary organization combined with the number of relatively small grants would imply relatively high overhead costs, though. (p. 2)

This is a 23.8% overhead for the operational phase, and 28.6% for the start-up phase. As the start-up phase presumably occurs only once, we may suppose that the administrative overhead rate of the normal operation of the programme at cruising speed is estimated at 23.8%.

This is arguably high. As a minor digression, it worth noting that it is not as high, tough, as the estimated overhead the Commission referred to on multiple occasions before the study was published, based on the unrevealed “draft study”, which they said was bound to be 33%:

“There is a clear risk that the administrative and technical overhead cost for the action would exceed what is considered sound financial management. 20% of direct costs of an operation are normally considered to be the maximum acceptable overhead (re e.g. ESF Regulation (Article 11.3(b) of Regulation (EC) No 1081/2006)). The draft study financed under the 2012 Preparatory Action states that an appropriate scheme would necessarily have 33% overhead costs due to the allocation of numerous relatively small grants through an external intermediary organization to be entrusted with securing journalistic freedom as well as the administration of the scheme.” (Letter of executability, October 2013. Apparently, there is no online version of this letter. We know it contained this about the overhead from Director-General Paulger’s response to MEP Jávor. The exact same statement was, however, repeated in the “First Commission interim report on the implementation of pilot projects and preparatory actions 2014,” which has been published online, so we have a publicly accessible source to refer to. It is even more interesting than the letter of executablility in one aspect: it was published by the Commission at a date later than October 2013, at which we know a much lower overhead cost estimate, which survived to the published version, as we will shortly see, already existed: http://www.europarl.europa.eu/meetdocs/2009_2014/documents/imco/dv/comreportbudget_/comreportbudget_en.pdf)

There is no trace of this 33% figure in either version. In fact both versions of the study contain considerations, on the basis of which the final estimate of the administrative overhead is lowered to about 20%:

The evaluation grid set by the EC would be a decisive factor that would determine how the IO applicants price their offer as well as the length of the IO’s work. If it were a longer-term contract (e.g. 5 years), then public bodies, which manage other grants might be interested in the IO role, and so many universities teaching IJ. It may be reasonably expected that these organisations would charge only their marginal cost, which could be about 20 per cent of the funds to be managed.

(This passage is in black because it appears in both versions: on p. 77 in the published version, and p. 105 in the earlier version. It doesn’t appear in the Executive Summary in either version.)

So neither the published, October 2014, nor the earlier, December 2013 version of the study supports the claim the Commission made on multiple occasions that the overhead cost would be 33%. In fact, the main body of both versions of the study (see Section 6) contains an estimate at 20%,

which—according to the Commission’s letter of executability cited above—is “normally considered to be the maximum acceptable overhead.”

There is another passage about the cost estimate that appears in both versions. This explains that this relatively high overhead is an inevitable consequence of the specific problem that needed to be solved with an arrangement that caters for both the specificities of investigative journalism (the requirement of an arm’s length distance between the funder and the beneficiaries) and the requirements of the Financial Regulation, and that it should be available in the light of the achievements it makes possible.

Due to the characteristics of the possible funding model, as detailed in this Study (recourse to an IO to manage and distribution of many low-value grants through ‘financial support to third parties’), significant overhead costs as a percentage of allocated budget would be inevitable. While this may be considered not to be in line with general principles of sound financial management, such overhead costs have to be considered in the light of the objectives to be achieved and the challenge to respecting both the requirements of independence expressed by investigative journalists and the requirements of the EU FR.

This text appears also in the published version (on p. 78), but it made it to the Executive Summary only in the earlier version (p. 21).

The result of these differences is that although the cost estimates are the same in both versions, the Executive Summary in the published version sounds a lot more bleak in this respect than the Executive Summary of the old version, mainly because in the earlier version the Executive Summary comments on the special circumstances that make higher-than-average overhead costs inevitable, and potentially bearable in the light of the objectives to be achieved, whereas no such supportive comment is included in the published version.

3.3 The Overall Conclusions

It is the Overall Conclusions that provide the best insight into how fundamentally the study’s conclusions have been changed from the version the experts verified to the published version. The relevant parts to compare are pp. 120-1 from the earlier version (10. Conclusions), and p. 81 (10. Overall conclusions of the study) from the published version.

The earlier concluding section was structured into 11 points, whereas the new one is a continuous text of 9 paragraphs. There is no one-to-one correspondence between the earlier one’s points and the later one’s paragraphs. They can be compared, though, if we go through the subject matters they cover.

Is there a need for funding?

In both versions the first topic in the concluding section is the situation of investigative journalism in the EU member states.

The earlier version draws attention to the difficulties the genre encounters in most EU countries: lack of training, jobs and funding for IJ, despite the continued interest from the part of the public:

Currently, relatively few investigative journalists work exclusively as investigative journalists. Many countries work with freelance rather than employed journalists in this field. In most countries, the lack

of training, the lack of job opportunities in IJ, and the lack of funding were presented as the main reasons for this situation. Nevertheless, there is continuous interest in IJ from the public.

By contrast, the published version reiterates the earlier enthusiasm about how the IJ scene is exploring new business models to cope with the changing market circumstances. IJ is presented as a strong marketing tool for media outlets. The fragility of the emerging new funding models is recognized though:

Investigative journalism is a reality in Europe […] The market for IJ is mostly domestic. In these domestic markets, various categories of stakeholders are operating with various business models. These stakeholders are able to invest their own funds (in the case of big media outlets) or to find external funds mostly from donors across Europe. Despite the fact that IJ can be a strong marketing tool for media outlets, not all of the stakeholders can provide their audience with such investigations, though. This is due to the high production costs, the fierce competition between different media, and the sometimes-weak economic models of the news sector. New trends are emerging in the IJ market. New opportunities for distributing IJ stories are created thanks to the online media and the development of new channels all over the EU. Also alternative funding sources, such as crowd-funding have been developed in the last years. However, their long-term sustainability remains to be demonstrated.

What would the impact be?

The second topic is the potential impact of EU funding.

About this the earlier version says that, especially in countries with weaker democratic traditions where the watchdog function of the press is less established, external funding could have a significant positive impact. The scarcity of non-domestic IJ topics is also highlighted, alongside the expectation that external funding would increase the output and impact at this level.

There are very few countries where the main IJ stories are linked to cross-border topics. More cross-border investigations with the cooperation of journalists from several EU MSs could help to raise the level, output and impact of IJ at the national level as well as at the European level. The potentially positive impact of external support for IJ in most of the MSs has been highlighted in this Study. This is especially true in those MSs where the tradition of a free press with its ‘watchdog’ role is less well established, and where democratic institutions are less well entrenched.

The published version mentions the potentially positive impact in terms of the number of journalistic investigations into cross-border issues, but the topic of IJ’s role in establishing the watchdog function of the press, especially in the newer democracies, is not mentioned. Again, the words chosen to describe the need for external funding, or the lack thereof, are that the IJ community would welcome it.

Investigative journalism is present in all MS and there are already quite a number of collaborations between teams based in different MS. However, only a limited number of top IJ stories in the EU media are linked to cross-border topics. More cross-border investigations with the cooperation of journalists and media from several EU MS could help to raise the level of output and the impact of IJ at national level as well as at European level. In this context, the IJ community would welcome additional private or public support for cross-border IJ in the EU.

Would EU intervention be justified?

The third question addressed in the respective concluding sections is the justifiability of EU action. This is the point where the contrast between the two versions is the sharpest.

Points 4 and 5 of the earlier versions Conclusions were fully supportive:

An intervention by the EU aimed at funding cross-border IJ would need to comply with the guiding principles of subsidiarity and proportionality. The potential “European added value” that could be derived from such an EU support could, in turn, help to justify EU intervention in this special field of research. The provision of EU funding would also be in line with the EC policy objective to contribute towards creating a genuine “European media area”.

In theory, any organisation could take the initiative to finance cross-border IJ and to open the funding to all EU MSs. The only organisation, which finances cross-border IJ in Europe received applications for an amount that is 8 times higher than the organisation’s available budget for funding in its October 2013 Call for applications. The collected amount from crowdfunding and the amounts distributed by existing non-State actors are much lower than the amounts capable of making a significant impact to IJ projects. Thus, the estimated budget of a possible EU funding scheme could make a difference to cross-border IJ within the EU.

The published version, however, is completely dismissive. It briefly states that:

Looking especially at possible EU intervention, the Study could not identify a clear legal justification on which an EU support scheme would be based. It also could not clearly establish the need to act in common, with a robust demonstration of economies of scale at production level.

Is there a possible arrangement that would satisfy the Financial Regulation and cater for the special requirements of confidentiality and independence characteristic of IJ?

The next topic is the need for an intermediary organization to actually manage the fund, if there should be one. Here the content of the two versions are roughly the same, so there is no need for extensive quotations. There is one notable difference, though. The earlier version explicitly emphasizes that the requirements of journalistic independence and of the confidentiality of the planned investigations can be harmonized with the Financial Regulation:

EU institutions such as the EC are bound by the FNR. The Study examined the relevant provisions of the FNR, and concludes that the need of the IJ stakeholders could be harmonised with the FNR.

This is important, because the apparent conflict between journalistic independence and financial responsibility was the problem that led to the abandonment of the initial call for proposals in 2010, and the main reason to hire a consultant was to figure out how this could be fixed.

There is no comparable statement in the concluding section of the published version. It follows, however, from what is there in the text that these requirements can be satisfied together, even if with a costly arrangement.

How about the costs?

This leads us to the last important topic covered in the conclusions: the administrative overhead.

About this, the old version simply gives the numbers estimated in the main body of the study:

An estimate of a meaningful amount of financial support which would have the potential to make a genuine impact on the development of serious cross-border journalistic research at EU level, meaningful amounts per research project/media type, have been identified. 700 000 Euros is estimated as a meaningful amount for the start-up phase, while 1.050 million Euros at cruising speed for an 18-month period of 2-3 tender announcements and 1-2 prize events. 800 000 Euros for the award of grants and prizes. Out of this amount, 600 000 Euros could be used on an ‘Investigation support’ scheme, 100 000 Euros on a ‘Publication support’ scheme and 100 000 Euros on Prize. This budget might provide support to minimum 30 investigation grant projects and award minimum 10 prizes. If the number of applications is significantly lower than the allocated budget to the first CfP, it would be worth launching a second grant CfP, and the available funds could be used. The cost of the IO could range between 200 000 – 250 000 Euros.

Unfortunately, it is a bit unclear whether we should think of a sole cycle starting with a start-up phase, and then continued with 18 months of normal operation, with a couple of prize events, or we should think of a programme that runs indefinitely after a trial phase on a continually renewed yearly budget, and if the second is the case, how we should interpret the cost estimate. (The reader might get confused by the “18 month period” now referring to the “cruising speed” phase of the programme, whereas in the Executive Summary the “18 month period” was the start-up phase.) These possible misunderstandings clear up if we look at the sections of the main body of the text that explain the budgetary estimates. As we will see, in both versions the final estimate on the administrative overhead is 20% in the main body of the text. Probably, this should be regarded as the definitive cost estimate, after all.

However, the overall conclusions in the published version, contradicting the substantive sections on the budgetary estimates in the same version, places the cost estimate clearly above 20% (with an evaluative comment, i.e. that it is “relatively high”):

Grants as direct financial contributions, and prizes as a financial contribution given as a reward following a contest, could be the two instruments for support to IJ stakeholders (individuals like freelancers) and legal entities (professional associations, editors and publishers). However, the involvement of an Independent Organisation combined with the number of small grants would entail a relatively high overhead cost, exceeding 20%.

It should be noted that in both versions the cost estimate calculates with a prize besides the grant scheme, which is a proportionally very costly part of the total scheme (EUR 74,000 is the estimate for the cost of the organization of a prize event at which a total of EUR 100,000 would be given out in prizes). The earlier version of the conclusions contains a note which acknowledges that a prize as a financial means to foster non-domestic IJ is less effective than a grant scheme:

A European Cross-border Investigative Journalism Prize could be a high-prestige financial support for the IJ community. As an instrument for financial support that would have the potential to make a genuine impact on the development of serious cross-border journalistic research at EU level, prizes would be less suitable. Grants are more likely to provide the needed incentive to investigative journalistic work, rather than prizes or other support after the investigation. However, despite a potentially lower incentive effect, prizes could be a complementary form of support to cross-border IJ.

There is no comparable remark in the published version.

It is significant, though, because it means that by dropping the prize element, which is proportionally very costly, and, as an incentive, less effective than the grants, the grant scheme itself could be made considerably more cost-effective.

An overall judgement

The only remaining difference to note between the two concluding sections is that whereas there is no evaluative summation of the conclusions at the end of the earlier version, there is one at the end of the published one, and it passes an overall negative judgement on the proposed programme (even if in a euphemistic, though clear enough, manner:

An overall conclusion of this Study is that a support scheme for quality cross-border IJ in the EU could have positive impacts on the number of cross-border IJ stories available to a European audience. However, a number of legal and financial questions should be further investigated before the EC can set up such a scheme.

3.4 Summing up the summaries

The reader who reads only the sections of the two versions of the study that were drafted for those who seek a quick grasp on the main findings—the Abstract, the Executive Summary, and the Overall Conclusions—would be surprised to learn that both versions were written on the ground of the same data obtained in the same research.

The earlier version presents a European investigative journalism scene that has been affected badly by the recent media market changes and struggles with a serious shortage of funding, especially in the countries in which its contribution to the full democratic function of the press would be the most crucial. It presents the proposed EU grant scheme as being justifiable by the general standards of justifiability for an EU action, and as one that would have a significant and important positive impact even at low funding levels. It emphasizes that there is a possible arrangement that would observe the specificities of investigative journalism and would be in conformity in the Financial Regulation. It acknowledges that this arrangement would be relatively costly, but emphasizes that this relatively high cost is inevitable and is counterbalanced by the potential value generated by the programme.

The published version, on the other hand, presents an IJ scene affected by the changes in the media market, but navigating through the challenges with flying colours. External funding would be something that the IJ community would appreciate, but could essentially do without, as well. It presents the proposed EU action as completely unjustifiable. Even if it was justifiable, the arrangement that suits the nature of IJ would entail costs that exceed the limits of what is considered sound financial management anyway.

To be sure, we are not claiming that either of these assessments are right and the other is wrong. We are only claiming that the conclusions of the study have been changed, and that they have been changed very significantly, from the version that the experts who were hired to do the research and write the study saw and approved as a final draft, to the version that eventually got published more than a year later. And we don’t think it is a justifiable practice from the part of the Commission to have the conclusions completely changed and rewritten by the consultant with the exclusion of the experts who worked on it.

Let us now turn to the assessment of the main questions in the main body of the text.

4. The need for external funding in the main text

First we compare how the need for external funding is assessed in the two versions of the study. The sections to look at are Part One, Sections 1 and 2 (pp. 11-37) of the published version, and Sections 2 and 3 (pp. 32-73) of the earlier version.1

4.1 Invoking some earlier work on the subject

The introductory subsection of the published version (Part One, 1.3) recites the conclusions of earlier studies on the subject. Among others, it cites the final report of the “High level group on media freedom and pluralism” (Freiberga Report) of 2013, which includes a recommendation concerning investigative journalism (Recommendation 14). A phrase from this recommendation is quoted, apparently quite randomly, not exactly to the point:

Europe-wide awards should be made available for talented journalists and those having made significant breakthroughs.

This recommendation of the Freiberga Report goes on, however, and calls for investigating possible methods for funding investigative journalism. This part of Recommendation 14 was paraphrased in the earlier version:

The Final report by the High Level Group (HLG) on Media Freedom and Pluralism chaired by Prof. e-Freiberga published in January 2013 also called on the setting up of a study that would look into

possible new forms of funding for quality and investigative journalism.

There is no apparent reason why this part of the recommendation should have been omitted, while it is obviously much more relevant to the topic than the bit that is cited.

Another important earlier work cited is the Parliament-commissioned study of how investigative journalism can contribute to fighting fraud with EU resources (Smit et al. 2012. Deterrence of fraud with EU funds through investigative journalism). This study presents a strong case for the unique potential of IJ to uncover fraud and corruption with EU funds, with an eye on cross-border cases, illustrated by successful examples. The summary of this study’s main findings is quite sketchy in both versions. One of the appendices to the earlier version, however, contains a more attentive synopsis. We don’t know if the published version has such an appendix (some references in the text suggest that it does), for the Commission failed to publish the appendices.

Another significant previous study, Feasibility study for Erasmus for journalists, 2011, is summed up in the two versions in exactly the same way.

4.2 Presentation of the actual findings about the need for funding

1 Unfortunately, there is some inconsistency in the December 2013 version between the numbering of sections in the actual text, and the numbering of sections as they appear in the Table of contents. This comparative analysis refers to section numbers as they appear in the main body of the text, regardless of whether they appear the same way in the Table of contents.

The actual findings on the need for funding presented in Part One, Chapter 1 seem much more straightforward than the evaluative summaries in the Abstract, the Executive Summary and the Overall Conclusions. The general picture of the genre’s economic situation is by and large the same in both versions. The published version is, however, arranged to sound much less bleak, despite the close similarity between the actual information presented in the two versions. We will see shortly that at points this goes as far as making the exact opposite evaluative comments in the published version of those made in the earlier version.

Key topics include the following.

Perception of the situation

Section 1.9 in the published version is a successor of the beginning of section 2.5 of the earlier version. In both versions it is clear that in the perception of the journalists interviewed the lack of funding is the main obstacle to IJ:

As Table 3, above, demonstrates, a lack or scarcity of funding is the major challenge perceived by interviewed journalists in the IJ sector; 91 per cent of the interviewees mentioned this (p. 19). (Appears almost identically in the earlier version (p. 40).)

Economic data

The hard economic data presented (media advertisement spending in member states, its distribution by media sector and growth rate by format, digital advertisement revenue share) are the same in both versions, with some additional forecasts in the published version. (Section 2.1 in the published version, Sub-section 2.5.3 in the earlier version.)

The specific economic characteristics of IJ

These data are not specific to investigative journalism. The specificities of IJ from an economic perspective are presented in the two versions significantly differently. The published version is arranged to sound much more optimistically:

From an economic perspective, the characteristics that define IJ are that it is labour intensive, time consuming, and very often with unpredictable outcomes. According to David Potter of the David and Elaine Potter Foundation in the UK, which finances IJ, ‘one in six investigations may not come to fruition.’ During the recent years of financial crisis, production of investigations has suffered not only because of its specificities, but mainly because parts of the media themselves were suffering. But the three economic models that underlie this activity have not changed too much and journalists and/or editors have adapted their work to economic constraints. But the trend, especially among publishers, is to consider that despite the complexity and risks of this activity, IJ can create an attractive business case in respect of audience, market share, and ads or sponsoring revenues. (Section 2.5, p. 26)

There was no trace of this optimism in the earlier version, and the description of the funding difficulties IJ specifically encounters was much more graphic. The conclusion on how attractive a business case IJ makes was actually reversed in the published version to the contrary of what was presented in the earlier version:

From an economic perspective, there are several characteristics, which define IJ.

IJ is expensive, labour-intensive and time consuming: It is important to emphasise this point. Unlike other forms of journalism that produce daily or weekly content, collecting information for a quality investigation can take from three months to a year. Furthermore, IJ is labour intensive, involving a whole team: journalist(s), editor(s), photographer(s), web designer(s), lawyers, etc.

IJ is unpredictable: Linked to the point above, the exact outcome of an investigation cannot easily be estimated or foreseen. Not all investigations are successful; the costs of failed projects can be significant. According to David Potter of the David and Elaine Potter Foundation in the UK, which finances IJ, one in six investigations may ‘not come to fruition’. Another important resource constraint identified by Drew Sullivan is human capital: “most importantly, investigative journalists must be supported for years as new practitioners learn from veteran journalists and perfect their skills. It can take years to develop a successful investigative organization.”

IJ is complex and not often the most profitable form of journalism: A good investigative story takes months of research and is resource intensive. By adding to this the complexity of the subject, one creates an unattractive business case for IJ when presented to commercial media managers, who must focus on maintaining market share and advertising revenues.

IJ is extremely sensitive to economic crisis: In recent years, the European media environment has changed dramatically. This ongoing state of flux makes high quality IJ a risky investment for many struggling media companies. Achieving a sustainable revenue flow and engaging with the digital media revolution are among the key challenges facing the media. Addressing such challenges has meant shelving many IJ initiatives with IJ suffering from inadequate resource allocation. (Section 2.6, p. 47)

There is a straight contradiction here between the two versions. Either IJ presents an “attractive business case,” as it is stated in the published version, or it presents “an unattractive business case,” as the earlier version has it. Apparently, the data (including data on perceptions, obtained from interviews with stakeholders) are the same. It is hard to see how the same data could support two opposing conclusions. Note that even the vocabulary choices and the grammatical structures used are pretty much the same in the two contradicting statements, as if the consultant was instructed in the meantime to simply delete the “un” before “attractive.”

Trends of market funding for IJ

According to the published version, IJ is having a hard time but will be fine:

Traditionally, funding of mainstream media is based on a variety of commercial activities including selling the content to readers, subscription, advertising and/or business intelligence, conference, etc. With the exception of public radio or television stations in most MS, which get public money, most other radio or TV channels, rely to a significant extent on advertising revenue. In the context of changes faced by the mass media as presented earlier, coupled with the economic difficulties in many EU countries, the budgets allotted by mainstream media for long-term investigative projects are diminishing, according to the interviews with editors and publishers. In some wealthy MS, such as United Kingdom, France, Germany, Sweden, and Denmark, there is widespread evidence that the economy is still producing profitable media enterprises, which can sustain IJ. (Section 2.6, p. 31)

The earlier version had the exact same paragraph (p. 60). The paragraph however, does not end here, in the earlier version, and (as it can be expected) it is accompanied by another paragraph about the less wealthy countries:

[The exact same paragraph, but ending with:] In some wealthy EU MSs, such as United Kingdom, France, Germany, Sweden, Denmark, the economy is still producing profitable media enterprises, which can sustain IJ. However, even though the financial situation of journalists in such countries is generally good, they also complain about the lack of funding to prepare a proper investigation. The survey findings revealed that journalists would apply for external funds if this possibility were offered to them.

On the other hand, in some other EU MSs (Greece, Portugal, Slovakia, Romania, Bulgaria, Hungary, to name a few), the mainstream media hardly supports IJ. The IJ-financing role is now played by non-profit centres, which are referred to by many journalists as the only independent media. While many of these centres and organisations are inexpensive to operate, the lack of a tradition and economic incentives to encourage individual donors deprives them of sustainability. (Section 4.9, p. 60)

We wonder what the reasons might have been to drop the evaluation of the situation in the poorer member states, and keep only the optimistic view on the market prospects of IJ in the wealthier ones.

IJ in search of additional funds

As it is acknowledged in the published version, media companies are looking for additional funds to sustain IJ content:

Some of the IJ centres have already started to devise commercial and other means to supplement donations and grants. Still at a small scale, they experiment with content syndication (i.e. allowing the re-publishing of content against payment), consultancy work, reader donations (i.e. crowd funding), subscriptions and the sale of short e-books. This is the case with TBIJ (UK), CRJI, etc., but the percentage contributed by these sources to the annual revenue is still very low, generally at less than 10 per cent of their annual revenue.

[…]

As has been highlighted above, there are not so many (nor so effective) funding schemes for IJ in the EU MS. The most common way of funding IJ is through the media outlets themselves, which cover most of the costs. If it is very difficult to collect relevant financial information about investments in IJ made by media companies, there is a general comment by the interviews from editors and publishers that IJ is important but costly. And all these media (mostly newspapers) are looking for additional funds and new business models to develop this content on a commercially viable basis. Working with freelancers and with specialised bodies like IJ centres is one of the possible business models. Grants offered by different international or local foundations and charities also play an interesting role. In a number of countries, research grants are distributed to stimulate IJ; these include Belgium (both language groups), the Netherlands, Hungary and Germany. Similar initiatives have been considered on a smaller scale or for shorter periods of time in other countries (Romania, Ireland, Baltic States, etc.). Typically, funds are provided for reporting on issues such as corruption, organised crime, and elections. (Section 2.6, p. 32)

These passages were condensed from the end and the beginning of two consecutive sections of the old version:

Some of the IJ centres have already started to devise commercial and other means to supplement donations and grants. At a still small scale, they experimented with content syndication (i.e. allowing the re-publishing of content against payment), consultancy work, reader donations (i.e. crowd-funding), subscriptions and the sale of short e-books. This is the case of TBIJ (UK), CRJI, etc., but the percentage contributed by these sources to the annual revenue is still very low, it gives less than 10% of their annual revenue. Sustainability remains an ongoing issue as all the centres and organisations are struggling to survive. In this context, as the interviewees so often stressed, there is a need for external financing in order to overcome the current crisis faced by IJ in parts of the EU. Support is needed in order to preserve and further develop the craft of good, independent and critical IJ.

[Here starts a new subsection: 4.9.1. IJ funding schemes in countries with a well-developed IJ culture]

As has been highlighted above, there are not so many (nor so effective) funding schemes for IJ in the EU MSs. The most common way of funding IJ is through the media outlets themselves, which cover most of the costs. In some cases, journalists and/or IJ centres cover some of their expenses when reporting in-depth on cross-border issues.

Grants offered by different international or local foundations and charities also play an interesting role. In a number of countries, research grants are distributed to stimulate IJ; these include Belgium (both language groups), the Netherlands, Hungary and Germany. Similar initiatives have been considered at a smaller scale or for shorter periods of time in other countries (Romania, Ireland, Baltic states, etc.). Typically, funds are provided for reporting on issues such as corruption, organised crime, and elections. (Section 4.9, p. 60, emphasis ours.)

The two texts are almost exactly the same. The only difference is that from the published version the sentences of the earlier version that appear here in bold type have been omitted. It is not unusual that a later version of the same text is more concise than the earlier one. But in this case this omission fits an overall tendency. The passage that have been cut is the one that is the most explicit about the fragility and unsustainability of the existing means of non-market funding for IJ, and about the urgent need for further external funding. The last of the cut sentences actually says that the craft of good and independent IJ itself is in danger. One doesn’t cut such a statement on the ground that it is insignificant or redundant.

The professional situation of investigative journalists

The sections presenting the professional situation of investigative journalists are quite similar in the two versions (Section 2.4 Forms of employment for journalists, in the published version, and Subsection 2.5.5 Professional situation of journalists, in the earlier version). Apparently, the newer version is an edit of the older one.

The difference between the two versions fits the overall tendency. The published version is more concise, some not so optimistic passages describing the shrinking of the labour market for investigative journalism have been cut, and an optimistic ending have been added.

The passages from the earlier version that have been cut include:

[T]he recent economic crisis has significantly affected the media sector across the EU. This impact has been felt most strongly by already struggling print publications and has led to a change in the media labour market. All over Europe, the mainstream print media, traditionally the major sponsor of IJ, is facing a real crisis. Many newspapers have ceased publication in recent years, while many media organisations are starting to reduce spending across the board. IJ is oftentimes one of the first casualties of such cutbacks according to 70 the interviews with editors and publishers.

[…]

With the transition of journalism to new platforms (mobile, internet, free papers, etc.), the work environment for investigative journalists has changed. Journalists are under pressure to produce ‘commercially viable’ articles. With such demands, journalists are less able to devote the necessary time and effort to the production of in-depth reports. (p. 46)

Admittedly, the troublesome nature of the situation is quite clear, however, also form the passages that survived to the published version.

Both versions note that

In this context, the number of non-profit investigative organisations (networks and independent investigative centres) has increased in recent years, to act as a support for this [struggling] sector.

The adjective “struggling” does not appear in the published version, which admittedly is a very minute and insignificant detail, but very graphically illustrates the spirit of the changes that have been applied. In the published version this development is hailed as an opportunity for optimism:

This shows that there is still interest and demand in the media to provide their audience with quality contents including stories of investigative journalism. But this is happening in the framework of a more rigorous management and change environment that causes investigative journalists to adapt their work habits.

This perspective could probably be a factor for promoting cross-border journalism where a team can achieve a faster and more interesting result than an isolated investigative journalist.

The need for funding in member states with weaker democratic traditions

In the older version of the study there is a line of argumentation to support the need for funding that can be reconstructed as follows: (1) The media’s watchdog function is a key element for a healthy democracy, and it can’t function without IJ. (2) This is especially important in the younger and weaker democracies, where democratic values are less entrenched. IJ could have the most important contribution to the development of democracy in these countries. (3) It is precisely these counties in which IJ is the weakest. (4) It is these countries where the recent crisis had the most damaging impact on the funding of IJ, and where the dependence of IJ on external funding is the strongest. (5) It can be expected that applications for support in the grant scheme would come to a large extent from these countries. (6) Unevenness in terms of the development of IJ could be taken into account in the fine-tuning of the selection criteria. Therefore, (7) the grant scheme could make a very significant difference in these countries.

Instead of citing several pages of text from the earlier version, we just refer the reader to the sections where this line of argument can be located. The argument (not exactly in the above order of

the premises) is presented mainly on pp. 53-63 of the old version of the study, in Section 3.72 Typology and analysis of EU MSs in IJ use production and acceptance (pp. 53-7), Section 4 Typology of MSs based on democracy and press freedom ratings (pp. 58-9), Section 4.9 The need for financial support beyond the media's own resources (pp. 59-61), and Section 5.1 The need for financial support (p. 63). The relevant considerations about the selection criteria (premise 6 above) are presented in Section 6.2 (pp. 93-4).

This argument has been completely eliminated, there is no trace of it in the published version. Some references suggest that the data that supported this argument is included in the annexes, but the annexes to the new version are not published.

It is hard to see what justifies the elimination of the argument. Its premises seem empirically true, the non-empirical premises are plausible, the inference from them seems valid, and the conclusion is highly relevant.

The judgement passed on the need for funding

There is no substantial concluding section dedicated to the need of funding in either versions. One very short subsection can be regarded as passing a judgement on the question whether there is a real need for funding beyond what already exists in both versions of the study. These are Section 2.7 Is there a need for additional public funding? in the published version, and Section 5.5 Funding IJ with EU support – is there really a need? in the older version. They are quite different contentwise.

In the published version this interim conclusion reiterates that the news sector is costly, let alone investigative journalism, it gives a very brief glance at the indirect public funding that exists, and draws the conclusion that there is perceived room for further support, but IJ would continue to exist without it:

As described in chapter 2.5, the news sector is a difficult sector with heavy costs to bear, apart from investigative journalism. Table 6, above, does not mention indirect public funding that may support IJ, such as investigations commissioned by public media (mostly TV). Licence fees paid by all EU viewers are considered as public funding for PSB, even if in certain countries like UK, private broadcasters are lobbying to claim a share of the licence fee. In such a landscape (Table 6), one can see that there are a very small number of public funds and a very small amount of money available for these funds, while there is a perceived need and new spaces for IJ stories. The Study concludes that, while Investigative journalism could continue to exist without new public funding, additional funding sources whether public or private would be appreciated by the IJ community. In other words, there might be a space for EU intervention to support cross border IJ in the EU but this support should comply with EU rules. We cover this in the next section of this report. (Section 2.7, p. 37)

In the earlier version, on the other hand, the comparable section reviews the existing organizations that fund IJ in the EU, and emphasizes that there is much more demand for such support than what the limited resources of these organizations make possible, therefore the EU may well step in.

The Annex presents the current organisations that fund IJ across the EU. The key question therefore is whether there is a further need for the EU financial support to cross-border IJ. As the Annex presents, only one of the existing funding schemes is focused on cross-border IJ: Journalismfund.eu. Its last CfP

2 Appears as Section 2.7 in the Table of Contents. (Please refer to the previous footnote.) The section numbers referenced here all appear differently in the Table of Contents of the December 2013 version.

(October 2013) illustrates that there is huge interest within the IJ community in applying. However, the available budget for the fund is much lower than the amounts sought for in applications […] A simple analogy of the above situation is that of high demand but low supply. It can be posited that the EU has much larger financial resources at its disposal than that available in the budgets of non-State actors. The EU could step in to supplement the limited funding, which existing funding schemes possess. (Section 5.5, p. 6.6)

Neither of these sections does justice to what has been unearthed about the situation of investigative journalism in the EU member states and the need for public support beyond the avenues of external funding that already exist. It is clear that both reflect on the same data (Table 6 referenced in the passage quoted from the published version is about the existing funds that support IJ), both note that there is demand for much more funding than what is currently available, and they draw conclusions whose tones are quite different.

5. Legal basis and justification in terms of subsidiarity and proportionality

Both versions of the feasibility study address the issue whether there is a legal basis for EU action in the manner envisaged, and whether it conforms with the principles of subsidiarity and proportionality. Both versions use the Pelkmans test for subsidiarity. The two versions come to conclusions that diametrically oppose each other.

The Pelkmans test for the justifiability if an EU grant scheme to support cross-border IJ is discussed in Section 5.3 of the earlier version (pp. 64-5) and in Section 3 of the published version (pp. 38-42). The Pelkmans test consists of five steps. Step 1 is to identify whether the envisaged measure falls within the area of shared competences. Step 2 establishes whether there is a need to act in common. Step 3 is to establish whether the same goals could credibly be achieved by means other than centralized action, i.e. action at member state level, or through a non-centralized cooperation between member states. Step 4 is not an independent step really, it just checks the results of the previous steps: if 1 and 2 are confirmed, and 3 denied, then the purpose of the envisaged action can be assigned to the EU level. Step 5 is a proportionality test whose objective is to establish if the envisaged action is the least intrusive way to achieve the goals in question. We compare the two versions going through the steps of the test.

5.1 Does it fall within the area of shared competences?

The earlier version was confident, without ambiguity, that support for cross-border investigative journalism falls within the area of shared competences. The argument is simple: investigative journalism is essential for the freedom of the media, and through that, to freedom and democracy in general, therefore it falls within shared competences:

Article 2 of the Treaty states that the Union is founded on the values of respect for democracy and human rights. Additionally, article 11 of the European Charter defines the right to freedom and pluralism of the media as one of these basic rights of every individual. Since human rights are a matter of freedom, security and justice area, they are regulated as shared competences (article 4 of the Treaty on the functioning of the European Union). The field of (free) media therefore is also a matter which falls under shared competences. (p. 64)

In the published version it is not that simple:

The Lisbon Treaty draws up a “non-exhaustive” list of areas where the European Union has shared competences with the Member States (Article 4). Media and journalism is not among the “principal areas” included in this list, so the Treaty does not provide a direct indication that this is an area of shared competence. One could consider, however, that press freedom and by extension its different forms falls under the area of freedom, security and justice; this is an area that is directly linked to the values of respect for democracy and human rights, stated as a founding principle for the European Union (Article 2 of the Treaty of the European Union). However further legal analysis would be required to make sure that this interpretation is correct. (p. 39.)

So the new version apparently considers that the argument given in the old version may be correct, but it remains undecided. It is unclear how this indecision can be afforded. Who should perform the “further legal analysis” mentioned? If it is unclear whether support for cross-border IJ falls within the area of shared competence, then the rest of the study may be completely pointless.

5.2 A need to act in common?

Within the domain of shared competences, “a need to act in common” may be demonstrated if either of the following two applies: there are significant economies of scale, or there are significant positive cross-border externalities. The two versions agree on this matter, so there is no need to quote them: significant economies of scale cannot be demonstrated, but significant positive externalities do exist.

5.3 Could the same results be achieved by other, non-centralized means?

The two versions agree on this point as well, in fact, the two texts are identical here. Achieving similar results through non-centralized cooperation between member states is not a credible alternative.

5.4 Can the envisaged action be assigned to the EU level?

In step 4 of the Pelkmans test we need a ‘yes’ to the first and the second question, and a ‘no’ to the third one to justify the assignment of an action to the EU level. The two versions differ at this point because of the different answers given to the first question. Whereas the earlier version shows confidence that EU funding for cross-border IJ passes the test so far, in the published version, de indecision in the first step is passed on to step 4.

5.5 What about proportionality?

Not much is actually said about proportionality, other than that it is also an issue to consider, in the section under consideration in the earlier version. Form the Executive Summary (see earlier), it seems clear that the earlier version of the study considered the proposed measure to satisfy the requirement of proportionality on the ground that it produces a significant “European added value” (specified there) even at law amounts of funding, i.e. in a non-intrusive manner.

The published version, on the other hand, considers possible actions that it regards to be less intrusive than the proposed funding for cross-border IJ. It admits, however, that these actions wold not yield comparable results:

The central question of proportionality could be summarized as follows: Would there be other less intrusive means than financial support to develop cross-border IJ in the EU? A stronger professional network structure for journalists at the European level appears as one of the needs expressed during the survey in order to achieve a more meaningful level of cross-border IJ. This could for instance be achieved by pairing journalists together across the EU MS. Journalists who come from a MS with a strong IJ tradition would partner with counterparts from MS with a less developed IJ background, and thus promote the dissemination of expertise and ideas, as well as collaboration on common projects. This could be applied to lifelong education or educational initiatives too, especially for mid-career or junior practitioners. The ‘Erasmus for journalists’ initiative94 (see synopsis in Annex I appendix N) addressed very ambitious objectives. The general objective was aimed at the contribution to the creation of a European media sphere (through enhancing the quantity and quality of coverage of European issues in the national media). The primary value of an ‘Erasmus for journalists’ would have been through furthering journalists’ understanding of other MS, their media and cultures. Twinning between young newcomers in the profession with skilled journalists could also be an opportunity to support EU cross-border investigation by mixing teams. As the quest for a relevant business model is central for all stakeholders, twinning could be also a solution to lower labour costs and to achieve more research with the same level of investment. Finally, tools like MAVISE, which can provide professionals with relevant information (e.g. lists of news channels, number of slots dedicated to IJ or other criteria), could be alternative means to support cross-border IJ in the EU. According to the survey results, though, it is unlikely that any of these less intrusive proposals would have the same impact as EU-supported grants and prizes. (pp. 41-2)

So, eventually, the final verdict on proportionality is the same as in the old version. (Some alternatives are considered also in the earlier version of the study, in the sections that immediately follow the section in question. They come to essentially the same conclusion: they are no substitute for a grant scheme.)

5.6 The overall judgement passed on proportionality

To some up, the only significant difference between the two analyses of justifiability is that whereas the earlier version is confident that funding for cross-border IJ falls within the area of shared competences on the ground that it concerns whether the press in the EU is able to exercise its freedom and democratic function to the full also in cross-border and EU matters, the published version only considers that it might be a good argument, but it insists that further legal analysis would be required to confirm it.

Prima facie, it doesn’t appear to be a dramatic difference. However, the two conclusions about the justifiability of the envisaged action differ very radically in the two versions of the text.

Both texts postpone the drawing of the conclusions on justifiability to some extent. In the published version the conclusion is to be fund in Section 4: Conclusions for Part One (p. 42), whereas in the earlier version the conclusion is presented only at the end of the main body of the study, in Section 10: Conclusions (p. 120).

Whereas the earlier version is satisfied that the EU funding for cross-border IJ in the framework of a grant scheme would be a fully justifiable action (please refer to Section 3.3 of the present comparative analysis for the details), the published version is completely negative, way beyond what would be underpinned by the actual analysis presented:

Based on the above analysis, an intervention by the EU aimed at funding cross-border IJ does not comply with the guiding principles of subsidiarity and proportionality. (p. 42)

As we see, on account of some (unexplained) reservations concerning an argument which is presented as potentially valid (but requiring further analysis), the conclusion is reversed in the published version to the opposite of what it was in the earlier version.

It should be noted that if the verdict cited in red from the published version, just above, is correct, then the rest of the study is completely pointless. As we have seen, the authors of the published version should not state this verdict so confidently, because their very own analysis does not ground it. The verdict turns on the issue whether the proposed action falls within the area of shared competences, and in the published version the authors say they don’t know for sure: it may, but ifurther legal analysis would be required to eliminate uncertainty. If this is true, then presumably, instead of hiring a team of consultants to write a full feasibility study, the Commission should have started with hiring a team of lawyers who can produce a definite answer to this one question, for if the answer to this question is negative, then spending public money on the rest of the study was a waste.

6 How much would the management—through an intermediary organization—cost?

As it was discussed earlier, the consultant was hired in the first place to work out a solution to the apparent conflict between the specific requirements of investigative journalism in terms of independence and confidentiality, and the requirements of the financial regulation. Both versions agree (although only the earlier version emphasizes it explicitly) that there is a solution. The envisaged grant scheme should be managed by an intermediary organization which can ensure that an arms-length principle is maintained, and the provisions of the Financial Regulation are respected. In this respect, there is no difference between the two versions.

There is a difference, though, in how the two versions present the management cost that such an arrangement would imply.

In the earlier version the estimation of the management cost is in Sections 8.2-4, on pp. 103-109. The comparable sections of the published version are Sections 7.4-6, on pp. 76-8.

In both versions, the cost estimation starts with establishing the amount of funds to be managed.

[T]he budgetary estimate could be €800,000 on the award of grants and prizes in the operational phase, and half this amount, €400,000, in the start-up phase.

Out of this amount:

• €600,000 could be used in an ‘Investigation support’ grant scheme;

• €100,000 could be allocated to a ‘Publication support’ grant scheme; and

• €100,000 for a European Cross-border IJ prize scheme.

(This text appears in black because it is virtually identical in the two versions. Divide by 2 for the numbers in the start-up phase.)

Both versions turn then to estimate the costs of the intermediary organization (IO). The assumptions are in both versions that:

The IO would only be permitted to charge a management cost (to be defined in its financial offer) without making profit. This cost would possibly be in the form of a fixed cost (one-off costs and monthly recurrent costs). The rate of variable costs could be subject to the number of applications received and awards made at start-up and the operational phase (for grants and prizes).

(Again, it appears identically in both texts.)

In both versions the fixed cost is estimated to be about €80,000 for both the start-up and operational phases of the scheme.

In both versions the variable cost is estimated to be €167,000 in the operational phase, which is the sum of €93,000 for managing the grant applications, and €74,000 for managing the prize scheme.

The published version also contains a separate estimation of the variable cost for the start-up phase:

In the start-up phase, the IO would have a total variable cost of approx. €120,000 (€54,000 for managing grant applications, and €66,000 for managing prize applications). (p. 77)

In the earlier version the estimated variable cost is the same for both the start-up and the operational phase:

If applications were to arrive and grants are awarded by 1-2 announcements of the CfP, the IO would have a variable cost of about 93,000 Euros. This estimated amount does not particularly depend on the number of applications that arrive, so even if twice as many applications arrived in the cruising speed phase than in the start-up phase, the estimated amount would remain approximately the same (or possibly, with a 10-20% increase). (p. 104)

And:

If the IO was required to organise the Prize event (including renting a high-level venue outside EU premises), its cost would be estimated to be 74,000 Euros, at start-up or cruising phase. (p. 104)

Both versions mention that the cost of the prize event would be much lower if the venue was provided by the Commission. (The published version gives an estimate of the cost that could be saved this way at EUR 40,000.)

The published version adds up the numbers so far as follows:

A total of approximately €200,000 could be budgeted to cover the work of the IO during the 18-month scheme implementation period at start-up phase, while a total of max. €250,000 could be envisaged in full operation. (p. 77)

In the earlier version the numbers are added up only in the conclusions, but the result is the same:

The cost of the IO could range between 200 000 – 250 000. Euros (p. 120)

After this, the earlier version offers a very detailed calculation that substantiates these numbers. The published version omits these details. But the results are essentially the same.

Both versions consider than there should be an independent evaluation of the experience of the start-up phase when it is over. Its cost is estimated at €100,000.

If we add up the numbers, we get, in the start-up phase, a total budget of €700,000, of which €200,000 is for management, and €100,000 is for evaluation, and a total budget of €1,050,000 of which €250,000 is for management.

The start-up phase occurs only once, so we might consider the overhead rate in the phase when the programme is already fully operational. The €250,000 overhead estimated for that phase is 23.8% of the total budget.

Both versions consider that (should some conditions be met) the actual overhead will even be somewhat less than this figure, at about 20%:

The evaluation grid set by the EC would be a decisive factor that would determine how the IO applicants price their offer as well as the length of the IO’s work. If it were a longer-term contract (e.g. 5 years), then public bodies, which manage other grants might be interested in the IO role, and so many universities teaching IJ. It may be reasonably expected that these organisations would charge only their marginal cost, which could be about 20 per cent of the funds to be managed.

(This paragraph appears in both versions: on p. 77 in the published version, and p. 105 in the earlier version.)

Both versions add that this relatively high cost is an inevitable consequence of the arrangement that is necessary for respecting both the FR and the independence and confidentiality inherently required by IJ projects, and that it should be evaluated in the light of the goals achieved:

Due to the characteristics of the possible funding model, as detailed in this Study (recourse to an IO to manage and distribution of many low-value grants through ‘financial support to third parties’), significant overhead costs as a percentage of allocated budget would be inevitable. While this may be considered not to be in line with general principles of sound financial management, such overhead costs have to be considered in the light of the objectives to be achieved and the challenge to respecting both the requirements of independence expressed by investigative journalists and the requirements of the EU FR.

This passage appears on p. 78 of the published version (as the final conclusion of the sections on the budgetary estimate), and on p. 21 of the earlier version (in the Executive Summary).

So, on the whole, there is no difference between the two versions in respect of the estimated overhead cost. Both settle on a 20% estimate.

It should be kept in mind that this estimate calculates with a venue rented for €40,000 for the purposes of the prize event, and both versions emphasize that this amount could be saved if the venue was provided by the EC.

It should also be noted that—as it was already mentioned earlier when we discussed the summaries—the older version emphasizes that the prize scheme is less effective tool than the grant scheme, and as it is clear from both versions, it is the most costly of all the envisaged elements of the program: with an €74,000 cost for a total of €100,000 distributed in prizes. If this element was eliminated, that would mean an even more modest overhead rate.

7 Conclusions

As we have seen, there is very little difference in the factual statements that are made in the two versions of the feasibility study. There could hardly be, since they are based on the same research, the same body of hard data obtained, the same opinions and perceptions surveyed, and the very same detailed calculations—performed by the same experts, those who drafted the December 2013 version, and intended it to be the final one, and who first saw the published, “October 2014” version only when it was eventually published in March 2015.

We have also seen that, despite the sameness of factual basis, it is not an overstatement that the conclusions of the study have been completely reversed from one version to the other. Whereas the earlier version contained only largely supportive conclusions about the justifiability and the feasibility of the programme envisaged, the new edition, which was engineered between the Commission and the management of the consulting firms that the Commission hired to prepare the study, with the exclusion of the experts who wrote the previous draft, turned out to be fully negative. The diametrical opposition between the conclusions of the two versions is best illustrated by the comparison of the two concluding chapters in Section 3.3 of the present analysis. The sameness of the factual basis, presented in the sections that compare the main bodies of the two versions, makes this contrast all the more striking.

We leave it to the reader to form a judgement of the credibility of this reversal of the conclusions.

This study was prepared by Peter Rauschenberger who advises MEP Benedek Jávor on anti-corruption and transparency issues.