Fines dispute threatens budget approval

Date: 13/02/1997

By Rory Watson

THE European Commission will face fierce criticism in Strasbourg next week for failing to take a tougher line in clamping down on member states found guilty of agricultural fraud.

MEPs are particularly outraged that the Commission overruled its own financial controller when deciding to reduce fines originally imposed on Ireland, and that it trimmed almost 100 million ecu off penalties levied on Greece.

They are now threatening to embarrass the Commission by withholding their required seal of approval of the Union's final accounts for 1992 agricultural spending until the institution recruits more anti-fraud inspectors and takes a tougher line against those found guilty of misappropriating EU funds.

A highly critical report prepared by Dutch Liberal member Jan Mulder also expresses alarm at the scale of fraud - 800 million ecu - identified by the Commission during its examination of 1992 farm expenditure, which it then sought to claim back from member states the following year.

Mulder warns that the actual level of fraud may well have been far higher.

The Court of Auditors, asked by the Parliament last year to investigate the 1992 accounts, set a figure of 930 million ecu on the financial irregularities. But even this took no account of export refunds, which, according to the Dutch MEP, suggests that “all in all, the losses to the Community budget can thus be put at over 1 billion ecu”.

But it is the way the Commission went about trying to reclaim the sums wrongly paid out which has attracted the fiercest criticism from MEPs.

A resolution expected to be approved at next week's plenary session of the full Parliament warns: “The amounts of financial corrections to be determined by the Commission should be guided solely by the level of the actual loss to the Community budget and are not negotiable on the basis of other criteria.”

Mulder and his colleagues on the Parliament's budgetary control committee believe that such principles were not followed when the Commission ignored its own financial controller's advice last April and lopped 30.3 million ecu from the fine imposed on Ireland as a penalty for frauds in the beef industry.

The Commission argued that such a reduction was valid because the Irish authorities had confirmed they were ready to make significant improvements in their controls on public intervention stocks and had introduced initial measures to remedy the shortcomings detected.

But this line of reasoning, backed by the evidence of just 21 extra surprise checks by Irish inspectors, failed to satisfy the budgetary control committee.

“There is thus no avoiding the impression in this case that the Commission ultimately yielded to political pressure and was no longer guided in its decision by the magnitude of the loss to the Community's budget,” says Mulder, who adds: “Consequently, it has not only accepted losses to the Community budget, but also disavowed the work of its own services.”

The Liberal MEP is equally critical of the Union's efforts to reclaim misused funds originally directed towards encouraging cotton production in Greece.

The Commission indicated to Athens that the 25&percent; fine it was imposing might be cut to 10&percent; if the country radically improved its control system. The reduction was eventually approved last November.

“The impression that arises in this case is that the Commission refrained from reclaiming almost 100 million ecu in order to persuade Greece to do something that ought to be taken for granted: comply with Community legislation,” says Mulder.

Despite this detailed criticism, the Parliament is unlikely to ask the Commission to reverse its earlier decisions.

But MEPs are threatening to postpone their discharge of the 1992 agricultural accounts until specific improvements have been introduced.

They are demanding that 15 Commission officials be deployed to beef up the task force of agricultural inspectors. They are also insisting that the sums the Commission claws back from member states in future should accurately reflect the amount fiddled from the EU budget and no longer take account of measures which national authorities introduce in response to the original criticism.