Scheuer Ministry: Millions for Rails Were Spent on Roads

As the Federal Court of Auditors points out in its "Remarks 2021", the Federal Ministry of Transport, led by the CSU ministers Andreas Scheuer, Alexander Dobrindt, and Peter Ramsauer, diverted high millions from the "Rail Connection Funding Program" to road construction and aviation projects over the years. Of the 286 million euros that the fund comprises, just 110 million euros actually flowed into so-called rail connection projects. 124 million euros went into highways and airlines, and the rest into other projects. This has been done systematically since 2007, with the funds for rail needs being set too high. If they were not called, the funds were used for other purposes. The Ministry of Transport has thus "failed to observe essential principles of budget law," the report complains.

Misappropriation of millions of tax euros

Connecting more industrial and commercial areas to the public rail network could transport more goods by rail instead of by truck on the road, the court notes. This would strengthen rail freight transport and contribute to climate protection. However, from 2007 to 2020, the Federal Ministry of Transport and Digital Infrastructure (BMVI) used almost half of the funds – 124 million euros – to fund highways and airports, which the auditors found to be improper. While legally permissible, it is counterproductive given the federal government's transport and climate protection policy goals, which the rail connection program pursues as part of the "Climate Protection Action Program 2020". The BMVI must prevent such developments.

Funding system with deficiencies

The federal government invests billions of euros annually in maintaining and improving the rail network: from 2020 to 2029, it will be up to 58 billion euros in total. The funds go to rail infrastructure companies, which build, maintain, and operate the federal railways, the auditors note.

"This funding system has serious shortcomings, which the Federal Court of Auditors has pointed out repeatedly in the past and which are reflected in several remarks," the Court of Auditors complains.

It concerns inadequate control and monitoring by the BMVI, incentive problems, and inefficiency. The profits of their rail infrastructure companies were not fully paid out as dividends to the federal government by Deutsche Bahn AG every year, although it is contractually obliged to do so. Since this money is actually intended for replacement investments, the high millions are missing for the expansion and maintenance of the rail network. The BMVI should demand the non-transferred profits from Deutsche Bahn AG and ensure that Deutsche Bahn AG annually pays out the profits intended for the rail network in full.

Laissez-faire approach to the expansion of marshalling yards

Initially 495 million euros were intended to supplement, change or renew control technology, switches, and shunting tracks in marshalling yards. The BMVI inadequately monitored the implementation of this package of measures and did not intervene to correct deviations, the auditors criticize. As a result, the program runtime was extended by eleven years due to delays. Expenditures have so far been almost 150 million euros higher than planned, and an additional nine-figure amount is expected. The only measurable goal, to increase the performance of marshalling yards, was missed by up to 29 percent.

BMVI fails to pursue recovery claims

The BMVI has also been neglecting for years to randomly check the economical use of federal funds for rail network maintenance. Consequently, it forfeits potential recovery claims from the outset, leaving inefficient use of these funds without consequences. In all the audited rail construction projects – seven bridges and one tunnel – the Federal Court of Auditors found planning and execution deficiencies. There were specific indications of grossly negligent actions by the rail infrastructure companies and inefficient actions that resulted in additional expenditures in the millions. The BMVI must finally remedy this, demands the court.

Noise barriers go unchecked

The court also accuses the ministry of lax use of financial resources for building noise barriers. In the last 15 years, 2.2 billion euros have been spent on barriers along federal highways, over a length of 2,500 kilometers. The auditors repeatedly found deficiencies that were "ignored by the highway administration". To the inspectors' surprise, it was discovered that the barriers had not been tested for their effectiveness. This is standard practice in Austria and has significantly improved quality.

Conflicts of interest at the top of Deutsche Bahn

In addition, the court found massive conflicts of interest at the top of Deutsche Bahn. Members of the German Bundestag and various federal employees are or were also supervisory board members of Deutsche Bahn AG (DB AG). Through these dual or multiple functions, the BMVI accepts that conflicting corporate and federal interests are represented by the same person. The federal government must ensure that members of the supervisory boards of Deutsche Bahn AG and its subsidiaries exercise their mandates free of conflicts of interest. This was not the case for several supervisory board members.

"They hold or held competing functions at DB AG as recipients of federal funds and in the federal government as financial backers. Or they had to represent DB AG's competitive interests while also influencing market regulation and competition as federal representatives," the court further criticizes.

Although the federal principles of good corporate governance should counteract even the appearance of possible partiality in decisions, the BMVI neither preventively checked the potential conflicts of interest nor did the affected supervisory board members report the conflicting interests. Neither did Deutsche Bahn AG and its committees ensure the necessary transparency.

"The BMVI must not continue to disregard the principles of good corporate governance. It must resolve existing conflicts of interest and prevent such cases in the future," the auditors urge.

Bundeswehr slows down the expansion of e-mobility in the civilian fleet

The Federal Ministry of Defense (BMVg) also fared poorly with the auditors. It significantly misses the federal government's goals for expanding electromobility. The federal government's sustainability strategy stipulates that at least 20 percent – and in the future even 38.5 percent – of newly procured company cars should be low-emission. The BMVg is far from this goal, with only about 1 percent of new civilian company cars being low-emission. As a result, the CO2 emissions of the fleet are far too high and significantly exceed the maximum value set by the federal government. Even in the future, the BMVg plans to procure only 700 low-emission vehicles annually. Measured against the goal, it should be at least 2,400.

"As the Bundeswehr operates more than half of all federal company cars, the BMVg is primarily responsible for the federal government not meeting its self-imposed sustainability goals," the court criticizes.

Environmental Ministry: Measurable goals for the program are missing

However, there is also room for improvement in the SPD-led Federal Ministry of the Environment. For more than 40 years, the Federal Ministry for the Environment (BMU) has promoted environmental technical systems and processes to avoid or reduce environmental pollution – most recently with an average of 20 million euros per year. However, it has not set measurable goals for the program. Therefore, it cannot assess the effectiveness of the Environmental Innovation Program, the court criticizes. The BMU also did not specify which project components are eligible for innovation funding. Thus, beyond innovative aspects, it funded other plant parts up to complete production facilities. The BMU must promptly revise the funding guidelines, unchanged for almost 25 years, and define what specific goals the Environmental Innovation Program should achieve within a certain period and limit funding to innovative expenditures. Based on the revised funding guidelines, the Federal Court of Auditors expects a comprehensive success review of the Environmental Innovation Program.