Admittedly, even by the standards of an authority, the headline “Selected Aspects of the Budget and Economic Management of the Fraunhofer-Gesellschaft” sounds rather boring. But the content of the document has it all. In more than 60 pages, the Federal Court of Auditors (BRH) accuses the board of the Fraunhofer-Gesellschaft of “numerous violations of internal and external rules”. Especially for travel, company cars, hospitality and events, legal requirements were insufficiently observed, there was a culture of looking the other way, and internal auditing remained largely inactive. The Federal Ministry of Education and Research (BMBF) does not come off well in the report either. As a sponsor of the research company, it has so far not controlled them enough.
Specifically, the Court of Auditors examined the expenses of the Fraunhofer-Gesellschaft between 2016 and 2021, especially those of the three-member board. As early as 2008 and 2016, the auditors had complained about excessive travel expenses, among other things. In practice, however, little has changed in their opinion. “Due to the persistence and the seriousness of the violations,” the Budget Committee of the Bundestag has now also been informed.
For example, a board member spent 663 euros in Austria, although the upper limit for overnight stays in the country was 115 euros. In Rostock, Hanover, Dresden and Munich, a board stayed for more than 300 euros per night. This person, called “Board X” in the report, exceeded the local upper limit on every single trip in 2019 and mainly justified this with a personal “wish”. Overall, additional costs of more than 17,000 euros were incurred due to the generous trips in 2019 alone. The facts were confirmed when the audit was extended to cover the years 2016 to 2021. The Court of Auditors therefore recommends “that the board members reimburse unjustified travel expenses in the years 2016 to 2021 from their own funds”. In addition, the examiners criticize expensive gifts that were given to employees and third parties, “such as silver-plated stud knives, porcelain or cognac at amounts of 200 euros and more”.
Archery for 1600 euros
The hospitality is about even larger sums. “Due to the large number of cases”, the BRH only examined hospitality in the board area “with the participation of board member X”, which was more than 60 euros per person. These alone accounted for 312,676 euros within six years. In 2018, for example, around 102,000 euros were spent on hospitality in which X attended. Club membership was required to use a restaurant, which costs EUR 1,095 a year and was paid for by Fraunhofer at least in 2017. The examiners write that the food and drinks were often in the upper to upper price segment of expensive restaurants. “Furthermore, a relatively high proportion of the costs were spent on alcoholic beverages.” Particularly tricky: Three hospitalitys from X from the highest price category took place with a former management member of the BMBF, who was responsible for awarding grants to the research company at the time.
The Fraunhofer-Gesellschaft, headquartered in Munich, is one of the largest non-university research institutions in Germany. It is financed to two-thirds from income from contract research for the economy and from publicly funded research projects. A third of the money comes from institutional funding, of which the federal government takes on 90 percent. In 2023, the federal budget provides 850 million euros for the institutional funding of the Fraunhofer-Gesellschaft.
According to the Court of Auditors, however, recipients of this subsidy may not put employees in a better position than comparable federal employees. This also applies without restriction to the members of the board of directors of the Fraunhofer-Gesellschaft. According to the BRH, the Fraunhofer-Gesellschaft had denied this: the ban on better opportunities had no direct effect on the relationship between the Fraunhofer-Gesellschaft and its board members, the research institution argued in a statement. In addition, the audit mandate of the Federal Audit Office is limited in this respect.
When asked by the SZ, the Fraunhofer-Gesellschaft now presents the facts differently: “Fraunhofer of course accepts the BRH’s focus on the ban on better conditions.” This was also communicated to the Court of Auditors. Since 2016, the Fraunhofer-Gesellschaft has also started to reimburse the federal government for travel expenses beyond the usual upper limits from its business income – a practice that the BRH also considers inadmissible. Rather, these funds should only be used for statutory expenses, such as research. “This does not include the reimbursement of unlawful travel expenses of the board members.”
The Court of Auditors warns that the misconduct could discredit the science system as a whole
According to the Federal Audit Office, the high costs for events at the management level of the Fraunhofer-Gesellschaft are also striking. For example, between 2016 and 2021, costs of 123,000 euros were incurred for board and executive committee retreats lasting several days alone. These included, for example, a bike ride with a champagne reception or archery (individual costs 1,600 euros). “Companions often took part in the hospitality,” write the examiners. However, no justification for the necessity of the participation of life partners could be found in the documents. According to the Court of Auditors, “principles of efficiency and economy have largely been disregarded”.
Overall, the behavior of Fraunhofer’s top management could “discredit the achievements of the science system as a whole,” writes the BRH in a conclusion. But the BMBF must now “do more justice to its role as a donor”. So far, it has relied primarily on reports from auditors for verification audits, and its own audits have hardly been carried out. This does not sufficiently meet the requirements of budgetary law.
In addition, the ministry had obstructed the auditing activities of the BRH by refusing the release of certain files and access to electronic drives. A spokesman for the Fraunhofer-Gesellschaft said the organization welcomed the BRH’s audit report. “It is an essential building block for recognizing process weaknesses, for continuous improvement and further development.”