Auditors highlight Spanish banana aid slip-up

Date: 17/10/02

By David Cronin

SPANISH authorities have granted EU aid to banana growers without checking whether they were eligible to receive the money, according to a new study by the European Court of Auditors.

Almost €1.3 billion was granted to banana producers in Spanish and French dependent territories - such as the Canary Islands, Martinique and Guadeloupe - in 1993-2000.

Under the rules covering the handouts, Madrid and Paris must verify that beneficiaries actually qualify for it. But the auditors uncovered a case where Spain was processing applications, in which 50 of the invoices 'did not provide reliable evidence of the client's identity'.

The auditors have studied the functioning of the EU's so-called 'common organisation of the markets' for bananas. Introduced in 1993, it is designed both to provide stability for the banana market within the EU and to ensure that growers in the African, Caribbean and Pacific bloc have adequate incomes.

The auditors pinpointed several problems with aid for producing the world's most popular fruit after oranges and lemons. For example, it studied France's allocation of interest-free loans worth €13 million to banana producers in Martinique and Guadeloupe in 1997. While the auditors did not quibble with the rationale behind such aid - designed to cushion the blow from falling prices for the fruit on the world market - it found that France had failed to honour its EU treaty obligation of notifying the European Commission of any state aid beforehand.

It also found that the Commission does not have 'sufficient information about the quantity of bananas imported for it to be able to ensure that the management of the [importation] quotas is sound'. The criticism follows a case in Italy, during summer 2000, in which large quantities of Latin-American bananas were shipped into the Union with forged French import licences. 'This made it possible for the importer to bring bananas into the [European] Community throughout this period, without their being subject to quota,' say the auditors.

Responding to the report, the Commission defended the scheme introduced in 1993 as 'it replaced a situation which was extremely diverse, given the existence of 12 different national import regimes' across the 12 states then in the Community.

'The current system has achieved a remarkable stability [in markets],' the Commission added. 'It is widely appreciated for its simplicity by producer third countries [outside the EU] and the Community's other trading partners.'

Spanish authorities have granted EU aid to banana growers without checking whether they were eligible to receive the money, according to a new study by the European Court of Auditors.