Italy and Spain in firing line for farm fines

Date: 14/03/1996

By Michael Mann

ITALY, Spain and Ireland look like being the biggest losers when the European Commission decides how much to fine member states for illegal use of farm payments in the early 1990s.

Agricultural advisers to the 20 Commissioners will meet late into the night tomorrow (15 March) to finalise how much each member state should pay for irregularities in the farm sector between 1990 and 1993. The full Commission will take a formal decision on 20 March.

The Commission is under intense pressure from the member states, particularly Ireland, to reduce the bill, which is likely to total upwards of a billion ecu.

Ireland faces the loss of 116 million ecu for irregularities in its beef industry in 1990-91, despite lobbying by Irish Farm Minister Ivan Yates. Agriculture Commissioner Franz Fischler has so far held out for a strict interpretation of the rules.

Italy will be asked to pay around 400 million ecu, half of which is left over from fines agreed in 1994 for its failure to obey milk quota rules. Although theoretically the procedure only concerns the “clearance of accounts” for 1992, it will include fines for payments made by Rome in 1993 for non-existent stocks of various farm products.

Much of Spain's 200-million-ecu bill also refers to milk quota offences. And both Madrid and Rome have been challenged over misuse of funds in the olive oil sector.

Greece was to have faced fines of up to 160 million ecu - mainly in the cotton and tobacco sectors - but Commission officials say all but three million of this is still under consideration by the conciliation committee set up to look into member state complaints about proposed fines and operating for the first time this year.

France stands to lose around 70 million ecu, including 30 million for irregularities in the beef industry. Most other countries will face fines of less than 10 million ecu each, except Germany, where illegal use of export refunds in eastern Germany will push the bill up to about 20 million.

Budget Commissioner Erkki Liikanen is pressing Fischler to maintain his tough stance, but it is clear that there is not yet a single Commission line on the question.

Some officials believe that although Anti-Fraud Commissioner Anita Gradin supports a tough approach to wrongdoing, Directorate-General XX (financial control) is more concerned to gain a regular involvement in the annual claw-back procedure.

Budget officials fear that in return for a commitment that it will be consulted from stage one, DGXX may turn a blind eye to a politically-motivated decision to reduce some member states' fines.

Liikanen is anxious that the decisions taken can be defended in the European Court of Justice. More importantly, he is determined that the procedure should be in keeping with the policy of “sound and efficient financial management” and be defensible in front of the European Parliament.

The importance of getting the process right has been made more acute by the decision taken at Madrid to extend it to other areas of the EU budget.

“It's still a bit messy at present, with fines referring to several different years. But the fact that the member states make such a fuss is a sign that it's an effective tool,” commented a senior official.

The fines are supposed to be deducted from allocations to the member states in 1996, although some are still pushing for the fines to be paid in instalments.