Gradin demands tougher measures to combat fraud

Date: 09/05/1996

ANTI-FRAUD Commissioner Anita Gradin is calling for a tougher line to be taken with governments who fail to protect the European taxpayer's money.

“The Commission should be stronger and stop paying out money if it is not satisfied with the programmes. Under the Structural Funds, we can say that if something is not changed after the first set of payments, we will not hand over the remaining funds,” she said.

The firm approach is designed to ensure EU funding is efficiently used and that finance lost in identified fraud is clawed back. Figures released yesterday (8 May) reveal that only 230 million ecu was recovered from the 1,350 million ecu of Union scams uncovered between 1992 and 1994.

The Commission's report on its 1995 anti-fraud activities reveals that the poor rate of recovery applies as much to EU income as it does to its expenditure. Member states are primarily responsible for chasing the lost funds, but they have failed to collect 95&percent; of the 525 million ecu lost in unclaimed customs duties and 75&percent; of the 823 million ecu embezzled from agricultural and structural funds.

“European taxpayers must know that their money is well taken care of. They will neither accept that the money goes into the wrong pockets, nor that it is not recovered later,” said Gradin yesterday.

Commission investigators discovered 4,758 financial irregularities involving 1.1 billion ecu of EU finances last year - equivalent to 1.4&percent; of the overall 85-billion-ecu budget.

One-tenth of the cases accounted for over half the lost funds and confirmed the view of anti-fraud investigators that the main culprits are sophisticated transnational organised crime rings.

A scam under which thousands of tonnes of sugar destined for Eastern Europe never left Italy, but was used instead for domestic wine production, led to the arrest of 38 people. Another involving imports of butter and milk powder from Eastern Europe cost the EU budget 66 million ecu. A special investigation into tobacco smuggling revealed that national and Union budgets lost almost 400 million ecu from fraud involving 3.7 billion cigarettes last year.

The degree of fraud officially notified to the Commission last year varied from country to country. Luxembourg recorded no cases, while Germany and Italy each identified over 100 million ecu of missing funds.

Gradin also intends to put pressure on member states over their failure to implement a convention on the protection of the Union's financial interests.

Signed by EU governments last July, the convention, which defines fraud for the first time and introduces criminal charges, has not been ratified in a single member state and therefore cannot come into force.