Warning over failure to tackle farm fraud

Date: 06/09/01

By David Cronin

Lax enforcement of EU rules on agricultural spending has led to marked differences in how farmers are treated across member states, according to the European Court of Auditors.

In a new report, the Union's financial watchdog singled out the German Länder of Bavaria and Lower Saxony as the only two areas in the EU where suspected fraud involving farm subsidies were found to have sparked a significant number of prosecutions.

Auditors visiting five other countries - France, Spain, Portugal, Britain and Ireland - expressed disappointment that few cases were prosecuted, with the result that "an important dissuasive tool is lost".

Their paper follows a probe during 1999 and last year into the so-called integrated administration and control system (IACS), introduced by the European Commission in 1993 in a bid to reduce farm subsidies fraud.

Using specially designed computer applications, the system was used to check how more than €25 billion was spent in 1999. That sum amounted to 64% of money channelled through the EU's flagship agricultural support programme, the European Agricultural Guidance and Guarantee Fund (EAGGF).

Although the auditors described the IACS concept as satisfactory, they said several member states had delayed introducing all its features, despite being required to do so by 1996.

Shortcomings identified included the failure of Scotland and Wales to conduct countrywide checks on suckler cow premiums, France's tendency to leave inspections to officials on short-term contracts and the decision by many Spanish inspectors not to penalise farmers making false claims.

Meanwhile, evidence was found in Portugal to suggest that farmers were claiming aid payments for the same animals twice. Those farmers had sought aid for suckler cows that should have gone to bulls and vice versa, even though the rules state that separate payments are made for animals of each sex.

The auditors have also accused the Commission of not evaluating the system adequately, stating that the last time the Union executive produced a document on the overall implementation of IACS was in July 1998. Furthermore, the Commission's food safety officials approved the databases compiled by each country to comply with IACS on the basis of visits that were deemed too short to be sufficient. "The Commission needs to do more to guide member states so as to ensure that the regulations are properly understood and correctly and consistently applied throughout the Union," the report added. "Member states are often slow in providing necessary information to the Commission. The Commission must identify which information it really needs and issue clear guidance to member states in this regard and, if necessary, put it on a regulatory basis."

In a response to the paper, the Commission said it has not undertaken a detailed cost/benefit analysis of the system. "In view of the extremely high proportion of expenditure to be controlled, the Commission has been more concerned with making the IACS work, rather than with evaluating its cost-effectiveness," the executive added.

Lax enforcement of EU rules on agricultural spending has led to marked differences in how farmers are treated across Member States, according to the European Court of Auditors.