Union’s anti-fraud chief calls for stronger powers

Date: 22/06/2000

By Simon Taylor

THE man leading the EU's fight against fraud is calling for stronger powers to crack down on criminals who steal billions of euro of Union taxpayers' money.

Franz-Hermann Bruener, director-general of the EU's new anti-fraud office OLAF, says his team needs more teeth to investigate value added tax fraud and better access to member states' files. He is also calling for Union-wide anti-fraud rules and common penalties for offenders.

In a report on OLAF's activities since it was set up in June last year, Bruener says the volume of unsolved fraud cases had reached more than €1 billion by May this year, including €759 million in unpaid excise duties.

He argues that although his unit is making a major contribution to clearing up cases, its effectiveness could be vastly improved by new rules to boost cooperation between his team and national authorities.

Bruener says giving OLAF stronger powers to combat tax avoidance would significantly bolster his team's ability to crack down on organised crime. He believes the total revenue lost as a result of VAT fraud could be enormous, pointing to one case alone involving mobile telephones which accounted for €100 million. He argues that his unit "has already proved its usefulness", adding: "The time has therefore come for the legislature to clarify the role of the office."

The OLAF chief's calls for stronger powers comes a week before the European Commission is due to outline its strategy for tackling abuses of EU funds, which will include renewed calls for a European public prosecutor's office. "Establishing the office of European public prosecutor would be a step forward to ensure the coherence of investigations throughout the territory of the European Community," argues the Commission in its draft report.

Breuner paints a familiar picture of increasingly systematic attempts by organised crime groups to defraud EU taxpayers. The report highlights a range of methods used by criminals to steal money from Union coffers, including the counterfeiting of American and European brand cigarettes in China, and declaring agricultural products from China and Iran as coming from countries which benefit from special Union trade concessions such as Turkey.

Bruener argues that OLAF has made a major contribution to the fight against fraud through its work with national authorities across the Union. "Cooperation with the member states is the corner-stone of the fight against fraud in the Community. As has been seen, it generates substantial results that bear witness to its effectiveness," states his report.

But he warns that differences between legal systems and confusion over OLAF's role are preventing the unit from fighting fraud as effectively as it could. " The question of the effectiveness of the judicial response to the office's operational activity is more and more acute. There are 15 different systems of criminal law and it is difficult or even impossible to enforce the principle of effective and equal protection of the Community's financial interests in the member states," he says.

Bruener argues that EU-wide rules are needed to govern all possible offences involving Union finances and the penalties they incur. "The shortcomings and lack of uniformity of the Community anti-fraud legislation and the deficiencies in its applications are striking," states his report.

He also insists that his unit should have better access to information held by national authorities in fraud cases relating to customs infringements and agricultural trade.

The Commission's anti-fraud strategy paper echoes this argument, stating: "The Commission will ensure that the office is in a position to serve as a crossroads for gathering and analysing information and data to become a true observatory of fraud and corruption, so as to supply the logistical support to member states and institutions."

The man leading the EU's fight against fraud is calling for stronger powers to crack down on criminals who steal billions of euro of Union taxpayers' money. Franz-Hermann Bruener, Director-General of the EU's new anti-fraud office OLAF, says his team needs more teeth to investigate value added tax fraud and better access to Member States' files. He is also calling for Union-wide anti-fraud rules and common penalties for offenders.