COUR DES COMPTES

Summary

of the Public Thematic Report

November 2011

Failures of the Paris Public Transport Stateowned Compagny

works council

Disclaimer

his summary is designed to aid the understanding and

use of the Cour des Comptes report.
Only the report is legally binding on the Cour des Comptes.
The responses of government departments, councils and
other organisations concerned are appended to the report.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1 Composition and role of the works council
2 Governance of the works council

. . . . . . . . . . . . .9

. . . . . . . . . . . . . .11

4 Informing and consulting

employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5 Managing social activities . . . . . . . . . . . . . . . . . .15
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Recommendations . . . . . . . . . . . . . . . . . . . . . .22

Summary of the Public Thematic Report by the Cour des Comptes

3 Accounts of the works council

. . . . . .7

Introduction

1RATP a state-owned public transport operator, responsible for most of the public transport in Paris and its surrounding

Ile-de-France region.

Summary of the Public Thematic Report by the Cour des Comptes

he RATP1 works council exercises two roles under the legislation on Works
Councils: it issues opinions with regard to the economic and employment-related
plans of the RATP as part of its general role in informing and consulting employees; and
it manages various activities for the employees, such as catering services or holiday offers as
part of its role in managing social and cultural activities. It is funded by an RATP subsidy (53M in 2009) and via other income (29M in 2009, chiefly related to financial
contributions by beneficiaries of the social and cultural activities).
Given the scope of these activities, concerning some 45,000 employees of the RATP,
and in accordance with the provisions of the French Financial Jurisdiction Code pertaining to organisations receiving public funding, the Cour des Comptes audited the accounts
and management of the works council. It analysed the governance of this staff representation body, which is managed by employees who are elected through professional ballots at
the RATP, and examined the conditions under which the two roles of the works council
are exercised, with the aim of assessing whether the interests of the companys employees
are upheld.
This public report highlights many serious failures in the management of the social and
cultural activities over the period examined (2004-2010).
Moreover, at the request of the Cour des Comptes, the public prosecutor has submitted a dossier to the Ministry of Justice regarding various aspects that could form the basis
of criminal proceedings.

Composition and role of

the works council

The RATP works council was

established in 1947 and since 1990 has
been made up of one central works
council (the corporate committee)
and of ten local works councils
(the departmental economic and
professional committees) .
Pursuant to Article L. 111-7 of the
Financial Jurisdiction Code, the Cour
des Comptes audited the central works
council and three local committees.
The works council is chaired by the
employer (represented by the Chairman
and Managing Director of the RATP)
and is formed of RATP employees
elected by their peers through professional ballots. It is managed by a secretariat comprising the Secretary and
Treasurer, elected representatives who
work full-time for the works council,
and a Deputy Secretary and Deputy
Treasurer who are elected at the start of
the term of office.
The RATP works council exercises
two roles under French legislation on
Works Councils: a general role of
informing and consulting employees
and a role in managing social and cultural activities.
The first role is the true reason for
the existence of works councils, which

are responsible for ensuring that

employees can express themselves collectively, in order for their interests to
constantly be taken into account in corporate management decisions. Within
the RATP, this role is fulfilled by the
local works councils for questions relevant to the departments they represent
and by the central works council for
issues that relate to the company as a
whole.
The second role involves managing, overseeing or participating in the
management of any social and cultural
activities in companys divisions, chiefly
for the benefit of employees or their
families. This role is exercised solely by
the central works council.
The employer pays an annual subsidy, calculated as 3.11% of the total
RATP payroll (0.3% for informing and
consulting employees and 2.81% for
managing social and cultural activities). A total of 53M was paid as a
subsidy in 2009, which represents
approximately 1,150 per employee
(total RATP workforce of 45,861
employees).

Summary of the Public Thematic Report by the Cour des Comptes

Cour des Comptes

Governance of the works

council

The works council is a staff representation body and, as such, the

Chairmans role is strictly defined by
statute and by case law. Although the
Chairman does not have decision-making or management powers, he nevertheless has the power to oversee the
works council. This power has barely
been exercised. The works council practices do make it difficult to effectively
supervise the body. The accounting is
sent to the RATP late, not long before
the meeting at which they are presented,
and they are very difficult to analyse
because of the inadequacy of the financial information provided.
The role of the elected representatives, in particular the Secretary and
Treasurer, who exercise their functions
on a full-time basis, goes well beyond
setting directions that are then implemented by staff. They interfere in the
day-to-day management of social and
cultural activities, to the extent that
heads of works council departments
were stripped of any scope for management and initiative-taking.
Over the period audited, the managing departments were sidelined from
negotiations with the suppliers selected
by the elected representatives, without
any competitive tendering, contrary to
the internal instructions requiring several contractors to be consulted. Likewise,
the departments were not consulted

with regard to the establishment of

property investment companies, whose
operation now appears to be contrary to
the interests of the works council. The
internal rules for approval of expenditure were often ignored; third party payments were made on basis of oral
instructions from the Treasurer; and
repeated double payments took place
towards various suppliers.
The payroll of the central works
council (450 employees on permanent
contracts; 600 full-time equivalent
employees) has grown in recent years,
despite the stagnation of the activity. An
increasing proportion of the RATP subsidy is absorbed by central works council payroll costs: 52.7% in 2009, compared with 50.7% in 2004.
Failings are reported in staff management, notably increasing tensions
around industrial relations; a high rate of
dismissals and resignations between
2004 and 2010, at a cost of 1.1M in
compensation; a number of strategic
vacancies (in early 2011, positions for a
Chief Executive, Human Resource
Manager, Catering Manager, Technical
Services Manager, Chief Accountant
and Purchasing Officer were all vacant).
In May 2010, the Director of the
Seine-Saint-Denis Labour Inspectorate
reported dangerous conditions for the
physical and mental health of works
council employees. The report referred to

Summary of the Public Thematic Report by the Cour des Comptes

Cour des Comptes

Governance of the
works council

Summary of the Public Thematic Report by the Cour des Comptes

an alert from the occupational health

service (management methods represent
a risk of serious danger to the health of
employees at the RATP central works
council) and gave official notice to the
Secretary of the central works council, as
employer, to take the necessary corrective
measures. By June 2011, the response in
terms of mental health risk prevention
was to prepare a charter for the prevention of psychosocial risks, and to carry
out a survey within the Communications
Department.

10

Governance of the works council is

structurally unbalanced and the HR
management methods used with works
council employees have led to a generalised failure of management of the
RATP works council.

Accounts of the works

council

All private bodies, which now

includes political parties and trades
unions, are obliged by Law to publish
annual financial statements, certified by
statutory auditors. In contrast, under
Article R 2323-37 of the French Labour
Code, works councils are merely
required to establish an annual report
stating the income and expenses
and to communicate it to employees by
posting it on the notice boards used for
trade union communications.
This legal situation is surprising for
organisations, which like the RATP central works council, can employ several
hundred people, manage budgets of
several tens of millions of euros (expenditure of 82M in 2009) and own major
assets (72M declared on the 2009 balance sheet); it is indeed a major anomaly.
In the specific case of RATP central
works council governance, the annual
accounts, drawn up by the Chief
Accountant, with the assistance of an
accountancy firm, were sent directly to
the Treasurer, without a signature by the
Chief Financial Officer, and then were
audited by the same accountancy firm.
The firm issued an annual attestation

with regard to the true and fair nature of

the accounts (not the same as a statutory auditors certification). These
accounts were not published or displayed and were sent only to members
of the works council.
An accountancy firm was commissioned to carry out an audit in February
2011, resulting in many anomalies being
reported, such as the failure to close the
financial year in the accounting software
and failure to declare social security contributions to the Social Security
Collections Office (URSSAF). Delays of
several months were also reported in
data entry operations in the accounting
software, making it very difficult to
audit the dealings of the central works
council.

Summary of the Public Thematic Report by the Cour des Comptes

Cour des Comptes

11

Informing and consulting

employees

There are no major findings to

report with respect to the role of
informing and consulting employees, by
means of issuing opinions on the economic and employment-related plans of
the RATP. However, in the case of the
Management and Joint Services works
council, which received an annual subsidy from the employer for the role of

informing employees of approximately

300,000 on average in the period
2004-2009, the Cour des Comptes
reported that funds were used for purposes other than the corporate object of
the council.

Summary of the Public Thematic Report by the Cour des Comptes

Cour des Comptes

13

Managing social activities

Cour des Comptes investigations

into the works council expenditure on
social and cultural activities were hampered by the lack of official supporting
documents. The Cour des Comptes
wanted to examine goods and services
procurement contracts, in order to audit
compliance with internal rules requiring
multiple suppliers to be consulted for
works contracts over 15,000 and for
general procurement contracts over
7,200. However, very few invitation to
tender files were sent to us (fewer than
20 for the whole period 2004-2010).
Even these few files were incomplete
(no reports certifying the opening of
the proposals and the decision-making
process, tenders and reports on the
analysis of tenders often missing).

Management of
collective catering
services

The central works council makes

and serves approximately 6,000 meals
per day in around thirty restaurants and
around twenty automatic distribution
sites.
A choice has been made to directly
manage the collective catering services,
without using external service providers
or a luncheon voucher system. Despite
the social ambitions of the body, the
prices of meals are not differentiated on

the basis of earnings of RATP employees, a system which the elected representatives describe as too complicated
to implement.
A significant proportion of food
delivered via automatic distribution is
scrapped (26% in 2009), because it is
removed from storage too early, the day
after delivery, rather than on the bestbefore date (3 days after date of production). Over the period 2006-2009,
approximately 290,000 worth of foodstuffs were disposed of two days after
production. Moreover, in a context in
which the elected representatives did
not want to introduce a generalised
credit card payment system despite the
risks to cash couriers, disappearance of
cash was reported at the end of the
process, after takings had been deposited by the cash transportation service.
Hygiene breaches are reported
repeatedly at the Bercy restaurant, which
serves approximately 1,200 meals every
day in full swing. Pests, cockroaches and
mice have been detected since 2007 and
a satisfactory solution has still not been
implemented to ensure food safety for
restaurant users. Safety breaches that
endanger employees (electrical hazards,
temperatures of 40C in the washing-up
room, excessive noise levels) have never
been resolved. On 2 August 2010, the
relevant government department (local
directorate for the protection of the
population) served official notice to the

Summary of the Public Thematic Report by the Cour des Comptes

Cour des Comptes

15

Summary of the Public Thematic Report by the Cour des Comptes

Managing social activities

16

central works council as manager and

operator of the site, highlighting a range
of non-compliances (insufficient
cleanliness, poor management of temperatures and the presence of rodent
and pest excrement, alongside the lack
of staff awareness of poor hygiene
practice are jeopardising the operations
of the establishment. These kitchens are
generally in poor condition). The
works council took four months to
inform the RATP, which owns the
premises, which meant that the work by
RATP on the building and facilities had
not been carried out by the end of 2010.
Approximately one half of all food
supplies, representing a volume of
approximately 5M per year, is purchased from suppliers selected by a purchasing group under a contract with the
works council, and approximately half
from other suppliers. Relations with the
purchasing group and other suppliers
are exclusively managed by the elected
representatives, in particular the
Treasurer. The departments that should
be responsible are sidelined from price
negotiations with the suppliers and do
not have any data with which they can
track and monitor the prices charged to
the works council. All they can do is
occasionally note when prices appear
unusually high.
It is difficult to compare prices,
because of the lack benchmarking tools
within the works council and the limitations of some of the comparative data.
Even so, it is clear that the prices paid to
suppliers are higher, often considerable

higher than market prices. The Cour des

Comptes audit also highlights the fact
that the works council has implemented
a system that clearly allows excessive
prices to be charged.
This observation can be added to
the fact that the managing departments
within the works council are sidelined
and to the failures in the invoice payment process, leading to repeated double payments to some suppliers.

Management of the
holidays activity

The works council offers RATP

employees and their families the opportunity to take holidays in the thirty centres it owns or in the eight centres in
which it owns a share through its shareholdings in property investment companies. It also promotes holiday offers
from commercial or not-for-profit
tourism organisations.

Performance of the
activity

The activity seems to be far from

meeting the social ambitions boasted by
the elected representatives: offering
access to holidays to as many employees as possible and developing social
tourism. Less than 13% of RATP
employees book their holidays through
the works council and of this 13%, a
majority could be described as better-off
employees. The elected representatives
have not accepted any proposals for

services that would have implemented a

pricing policy in line with the corporate
objectives of the works council.

Property investment
companies

The central works council has

invested in various property companies
(SCIs under French Law), and has led to
significant financial mismanagement.
The acquisition of a shareholding in
the company SCI du camping de SaintAygulf and the subsequent purchase of
thirty mobile homes did not cost the
price of 840,000 stated in a document
circulated to encourage this investment,
but actually 1,661,104, which is almost
double the stated price. The mobile
home prices were more than 50% higher than the prices stated by the building
firm in a tender it submitted for another holiday park project. The surcharge
can be estimated at approximately
373,000.
In both cases in which the central
works council itself established property investment companies, the beneficiaries of the transaction were not RATP
employees.
The company SCI du Mont-Lachat
was founded in 2007 as part of a dubious and as yet uncompleted real estate
transaction. The central works council
wanted to sell its property in Houches,
Haute-Savoie, and in 2006 signed an
undertaking to sell the property to a real
estate development company with share
capital of 40,000, which has still not

secured funding for the purchase.

Throughout this period, other potential
buyers of the property were not countenanced. 218,650 was spent on a range
of work, aiming to prevent the planning
permission from expiring. This expenditure was in vain, since the planning permission, which was transferred to the
property company (SCI) whose shareholder is the central works council, and
the former holidays director from the
works council (with a 10 share),
became null in 2010. The sale is not
going anywhere and the stubborn determination of the works council in its
choice of the property developer, with a
refusal to accept repeated offers from
various other potential buyers, is
inexplicable.
In the second case, the works council established the property company
SCI du Pas del Fang in 2008, transferring ownership of the Sainte-Marie
campsite in Pyrenees-Orientales, at
which rehabilitation work had just been
started. The property company (SCI)
was to fund the work and recover the
VAT paid. However, because no agreement was ever signed between the parties the company remained an empty
shell and the works council did not
apply for a VAT refund. The work cost
nearly 9M and was paid for by the
property company (SCI), whose minority shareholder was the lUnion sociale
des socits coopratives de production
(USSCOP), represented by three people
including the Managing Director of the
cooperative SCOP Alpha TP, which car-

Summary of the Public Thematic Report by the Cour des Comptes

Managing social activities

17

Managing social activities

ried out the rehabilitation work at

Sainte-Marie. The property investment
company (SCI) funded this expenditure
through advances paid by the works
council. Meanwhile, some of the work
was paid directly by the works council,
in an extremely confused manner, leading to risks of double payment. There
was no transparency in the process: the
only person with access to the accounts
of the property company (SCI) in the
works council IT system was the Chief
Accountant.

Summary of the Public Thematic Report by the Cour des Comptes

Refurbishment of works
council properties

18

Common practices were observed

in six property refurbishment projects
between 2004 and 2010 examined by the
Cour des Comptes, regardless of the
size or location of the project (seaside,
mountains or countryside). The prices
paid by the works council were higher
than market prices; the work performed
was of poor quality, with shoddy workmanship to the extent that personal
safety was at time jeopardised; some
services were paid for but not
performed.
The two largest such projects, one at
a hotel in Serre-Chevalier in the Alps
and the other at a campsite in the
Pyrenees, at a combined cost of approximately 16M, were carried out by the
same architectural firm which was
selected directly by the elected representatives and paid a total of 1,057,921 for
the two projects and the same construc-

tion company, SCOP Alpha TP, which

appears to have been selected after a
phoney call for tenders process. Alpha
TP was the only bidder offering a tender
with a reduced VAT rate of 5.5% and
was chosen de facto by the elected representatives prior to the call for tenders.
In both cases, the prices charged by
Alpha TP were unusually high.
For the hotel in Serre-Chevalier,
where the refurbishment contract was
placed by the works council in 2005, the
work started before planning permission had been granted and was carried
out very hastily, in order to meet deadlines set by the elected representatives
for an opening in July 2006. Right from
the earliest weeks of operations, many
incidents and failures were reported,
throughout the building, due to poor
workmanship and multiple non-compliances, some of which were particularly
serious. The examination of documents
and on-site investigations by the Cour
des Comptes uncovered safety risks,
chiefly caused by the non-compliance of
electrical systems and the absence of
snow retention bars on the part of the
roof just above the main entrance of
the five-storey hotel. The public prosecutor working for the Cour des
Comptes notified the Prefect of the
Hautes-Alpes
dpartement
in
December 2010. The works council
therefore commissioned a Courtappointed expert to carry out a risk
assessment. The expert issued a report
on 4 March 2011, concluding that there
were material risks and real danger to

life at this hotel with a capacity of

130 guests. The works council decided
to close the centre in December 2010
for precautionary reasons, before the
Mayor of Saint-Chaffrey official
ordered its closure on 12 May 2011.
Although the risks to human life
were prevented by this closure, the question remains as to why the works council did not take action prior to the Cour
des Comptes investigations, despite
being in possession of the evidence and
despite warnings by the managing
departments.
The cost of hotel refurbishment
work, which was 7.1M as at
31 December 2006, cannot now be foreseen, chiefly due to the uncertainties
around the length of closure and the
extent of the work required. The legal
proceedings instigated by the works
council following the Cour des Comptes
audit should clarify the reasons for the
shoddy workmanship, specify the scope
of liability and identify the persons
responsible.
The refurbishment project at the
Sainte-Marie campsite in PyreneesOrientales is a similar story. The amount
charged by Alpha TP for some items of
work was 20% higher than the price
charged for the same services by a contractor working at another holiday centre owned by the works council. A payment of 49,486 was made to a company with the same address as Alpha TP
for a soil survey. 160,000 was paid to a
supplier for landscaping work. A site
visit showed that the greenery was limit-

ed to a few, rather stunted hedges.

Mobile homes were purchased from a
company selling them at prices 13%
higher than those of a competitor that
the works council management departments suggested. Payments were made
for services that were never performed.
The Sainte-Marie campsite opened
in July 2010, despite the fact that human
safety was not assured. A report issued
in December 2010 by an electrical
inspection company included 154 noncompliance observations, including 60
relating to the non-continuity of the
electrical protection system in the
mobile homes. The Sainte-Marie campsite opened in July 2010, despite the fact
that human safety was not assured. The
centre opened in the summer of 2010,
with more than 500 holiday makers
using the centre, despite the campsite
not having the required fire hose system
or the second emergency exit that
should have been created. The work still
had not been completed at the time of
the Cour des Comptes auditors visit in
February 2011.
In total, amount charged for the
work at the Sainte-Marie campsite was
nearly 9M, for the partial refurbishment of the centre and the purchase of
113 mobile homes whose service life is
estimated to be less than 15 years.

Other social and cultural

activities

Since the sixtieth anniversary of the

RATP works council in 2007, the central

Summary of the Public Thematic Report by the Cour des Comptes

Managing social activities

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Summary of the Public Thematic Report by the Cour des Comptes

Managing social activities

20

works council has organised an annual

party in a chateau in the Essonne area,
owned by the CGT-RATP trade union
and managed by the works council. The
cost of this day-long party is on average
447,000. This money is spent by a seconded RATP employee, who reports
only to the elected representatives, follows no procedures, selects the suppliers
on his own, some of which are clearly
overcharging, and does not provide supporting documents for a significant
number of transactions. There is no
cash-counting control to ensure that the
takings collected at the are party properly paid by the Treasurer into the cash
funds of the works council. The context, with erratic movements in the cash
takings recorded in the accounts (ranging from 0 to 26,000 in different
years) certainly raises questions.
A not-for-profit association called
changes et solidarits was founded in
2007 by the works council and is subsidised by it (60,733 in 2010). In particular, the association funds actions in
Cuba, managed by the same seconded
RATP employee who is responsible for
the works councils annual party. The
actions are based around cooperation
with a leisure centre for disabled children called Rancho Luna that was
established in 1976. When asked about
the reasons for choosing Rancho
Luna, the employee in question replied
that the centre is based in the region his
wife come from. He often visits Cuba,
with at least seven trips between 2008
and 2010, funded by the association

changes et solidarits and he purchases a range of equipment for the

Rancho Luna centre from France.
Apparently, some of this equipment has
not been delivered as intended. Other
equipment was purchased in Cuba,
without any proof of purchase provided, such as a fence, whose purchase
price was estimated by the employee as
4,000 in 2009, and then 9,000 a few
months later. The sum in question was
transferred by the association to the
Rancho Luna centre management
structure.

Conclusion

The only failures identified with respect to the local works council, whose only role is to
inform and consult employees on the economic and employment-related plans of the RATP,
were within the Management and Joint Services committee. No particular observations need
to be made following examination of the two other local works councils audited by the Cour
des Comptes: Bus rolling stock and Metro.
The aspects reported concerning the management of social activities by the central works
council are serious in many respects:
a- The works council is not subject to any internal or external control or oversight and is
not organised for rational operations.
b- The fact that there are no obligations regarding accounting and certification of the
accounts has favoured the development of financial irregularities, in a context where internal
rules for approval of expenditure are not complied with and where departmental managers do
not have the appropriate tools to track and monitor the activities they are responsible for.
c- The dereliction of duty observed with respect to the work on holiday centre properties
has at times led to the endangerment of people using the works councils services.
d- The choice of suppliers and the decision to continue working with them despite serious
and reported failures and abnormally high costs billed highlight the issue of selection criteria
which do not meet the best interests of the works committee.
The systematic nature of these failings, regardless of the area of activities audited, suggests that they do not result from unfortunate coincidence or human error. A system of leakage of funds entrusted to the central (corporate) works council seems to exist. Some of the
findings appeared so serious as to justify the instigation of criminal proceedings. The case has
been brought to the attention of the French Ministry of Justice by the Cour des Comptes public prosecutor.
The management of social activities is moreover, in direct contradiction with the declared
social ambitions. There is no differentiation of meal prices on the basis of guests income; the
cost of holidays does vary according to employees earnings, but the better-off employees constitute the majority of holiday-makers, chiefly because the pricing policy has not been revised.

Summary of the Public Thematic Report by the Cour des Comptes

The audit of the accounts and management of the RATP works council highlighted
numerous failings over the period examined (2004-2010), chiefly relating to the central works
council.

21

Recommendations

Summary of the Public Thematic Report by the Cour des Comptes

The Cour des Comptes firstly recommends that the various aspects of
central works council management
should be reviewed and cleared up in a
thorough-going manner. The failures
identified are mostly structural on the
one hand, associated with specific governance issues of the RATP works
council, and also systemic in nature,
associated with billing higher than the
market rates. These observations could
give rise to proceedings that go beyond
the scope of the Cour des Comptes.

22

Secondly, in line with observations

made following the audit of staff representation bodies in the gas and electricity industries, the Cour des
Comptes recommends that general
reforms should be implemented with
respect to accounting and auditing of
works councils:

subject works councils to

accounting law, requiring them to
drawing up annual financial statements
as defined in the French Commercial
Code, including Article 612-1 which
stipulates that private non-commercial
legal entities having an economic activity must, above a certain threshold
established by decree, issue a balance
sheet, a profit-and-loss account and
notes to the accounts on an annual
basis;

draw up an accounting reference
guide for works councils, in the form
of a regulation issued by the ANC
(French
Accounting
Standards
Authority) and jointly approved by the
Ministry of the Economy, Justice
Ministry and Ministry for the Budget;

subject works councils to the

requirement of having their financial
statements certified, above a threshold
that is to be determined, and in accordance to other criteria if necessary, in
the same way as private non-commercial legal entities that have an economic activity;

ensure that the financial statements, activity reports and social
report of the works council are widely
publicised, and send them to the
Chairman of the Works Council with
appropriate notice, such that they can
be examined in depth and discussed
during meetings.

The implementation of these recommendations could be a significant

step towards great transparency in the
operations of large works councils,
including the RATP works council.
The role of these bodies is essential in
ensuring that employees participate in
corporate life and providing high-quality social and cultural services.

Given the stakes for RATP

employees, pensioners and their families with respect to management of the
works council, the Cour des Comptes
will pay great attention to the followup of the recommendations of this
report.