£43 billion of European taxpayers' spending open to fraud
15 November 2007
Statement by Jim Allister MEP:
"The EU's accountants have refused to sign off the EU's accounts for the 13th year in a row. The European Court of Auditors' (ECA) report for 2006 issued a “qualified” opinion on EU expenditure, saying that "errors of legality and regularity still persist in the majority of EU expenditure due to weaknesses in internal control systems both at the Commission and in Member States."
It has been calculated that the areas of expenditure on which the Court has given an adverse opinion account for 57% of the overall budget - or £43.4 billion. As "Open Europe" has said, "This means that of the £10.5 billion given by UK taxpayers to the EU each year, nearly £6 billion is open to fraud."
In its report the European Court of Auditors dismissed the European Commission's attempt to blame national government's for the majority of EU fraud saying, "Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Communities (Article 274 of the Treaty)"
Amazingly, after 13 years of negative audits the EU still hasn’t got its house in order when it comes to sound bookkeeping. The Commission constantly promises budgetary reform, but nothing seems to happen. The new version of the EU Constitution, like the original, will not solve these problems.
Examples of fraud include:-
Nearly a quarter of olive growers in Italy, Spain and Greece had declared at least 5% more olive trees than they owned, in some cases netting "significant" extra EU cash. Greece came in for particular criticism as many of the much needed financial controls have still not been put in place - meaning that 850 million euros per year is paid to Greek farmers under "unsatisfactory control conditions". They also found that some 50% of Greek sultana producers should not have qualified for the subsidies they were receiving.
Structural funds: Structural funding accounted for €32.4 billion of the EU's 2006 budget. The ECA noticed little improvement here, stating that "the situation remains similar to previous years". Of the projects it audited only 31% "were found to be free from error". It warned that there was a "high risk" that the project costs were "overstated" and that there were large numbers of claims for "ineligible expenditure." The report states that there was generally "a lack of evidence to support the calculation of overheads or the staff costs involved.
The ECA also found significant problems in verifying the accounts of the EU's external action and pre-accession aid budgets including "claims of ineligible expenditure and breach of tendering procedures". For example, in Bulgaria the Commission approved a 19.6 million euro payment for a project despite the fact that the Sapard agency had not performed the required checks before its approval, thus relying on unverified information.
It is truly shocking that year on year the hard-earned cash of taxpayers is wasted on scams and swindles under the aegis of EU expenditure. This may be a matter of indifference for net beneficiary member states but for net contributors like the UK it is a huge and needless drain on our resources."
