€2.35bn EU cash is missing
A total of €2.35bn in European taxpayers’ money is missing, presumed lost, the EU’s financial watchdog revealed today.
The sum is part of almost nearly €3.1bn which was distributed wrongly - or fraudulently – in farm subsidies between 1971 and 2002.
But only 17% has been recovered, or at least accounted for and written off, said the European Court of Auditors in a special report published today.
The auditors blame EU governments or slow and weak financial controls on EU cash from the Common Agricultural Policy (CAP), and the Brussels Commission for failing to give the problem high enough priority.
The CAP is worth £30bn-a-year (€43.9bn) - almost half the total EU budget - in subsidies and aid to farmers and the agricultural industry.
Most is dispersed by EU governments themselves, and when money goes missing or is found to have been wrongly paid out, the European Commission must be notified and efforts made to get the money back.
Today’s report reveals a pitifully low recovery rate and a lack of clear responsibilities between the Commission’s anti-fraud office and the member states themselves.
The auditors say 17%, £365m (€534.5m) of the “irregular payments” have been recovered, leaving almost three-quarters “pending”.
The Commission claims the recovery rate is 20%, leaving less cash outstanding.
The British member of the Court of Auditors, David Bostock commented: “Every little helps, but there is still some way to go.”
He told a press conference in Brussels: “Recovery of reported irregular payments is disappointingly partial and slow. This is due to the fact that the system of notification, accounting, recovery and write-offs of irregularities reveals a number of weaknesses both at Commission and member state level.”
The losses amount to less than 1% of the CAP subsidies paid out from the EU budget in the 30 years which the auditors have been studying.
But Mr Bostock said the low recovery rate was serious: “If you are getting less than 50% of your irregular payments back, you ought to be pretty unhappy. You’ll never recover 100%, but 17% does not look very good.”
The actual recovery rate varied hugely between the member states, the auditors found.
By far the biggest incidence of reported irregular payments from the CAP was in Italy, of which only 10% was recovered.
In Ireland, £26.5m (€38.8m) went astray, but 58% has so far been recovered.
Under EU rules individuals or companies deemed to have received irregular payments or not used their CAP handouts in the agreed way, go on a blacklist, if the amounts exceed €100,000 in any one year.
But Mr Bostock said the system rarely worked, because of the risk of legal action if the blacklisted person or company was later found to be innocent.
Mr Bostock commented: “The problem is the danger of putting people on a blacklist in cases where there has been no legal action, because of the different perceptions of the member states. The concept of serious negligence is unknown in some of them, and people can only be blacklisted after they have been found by a court to have committed a wrongdoing.”
He went on: “There are a lot of problems in the recovery of this kind of payment, not least because of the difficulties of having shared responsibility between the member states and the Commission. Having said that, it does not look as if this subject (recovery of irregularly paid money) has been dealt with as enthusiastically by the European Union as a whole as you might have thought it should have been.”
Today’s report recommended improved links between national authorities and Brussels to ensure full details of irregular payments are known. There should also be clearer decisions on who was responsible for recovery – and who should bear the cost of writing off funds when they cannot be recovered.
In its response to today’s report the Commission points out that it has already proposed a system under which the costs of losses will be shared equally between the national treasury concerned and the EU budget if the missing money has not been recovered after four years.
The Commission is also proposing that the full cost is borne by the national authority if it is proved that the loss is due to negligence on the part of the national agency responsible for handing out EU funds.
“We have not yet had a chance to study this proposal in detail, but at first sight it promises to be a positive and bold step in the right direction,” said Mr Bostock.
Meanwhile the search was still on, officially, to trace the missing funds still described as “pending”.
The Commission now has a “recovery taskforce”, although it only deals with missing payments totalling more than €500,000 in any one case. The Commission’s agriculture directorate in Brussels is also involved, as is its in-house anti-fraud unit known as OLAF.
But the auditors do not hold out much hope of recovering more taxpayers’ cash, warning in their report that the involvement of the Commission’s agriculture staff and OLAF in deciding when missing funds are to be written off as irrecoverable, “is a source of confusion and inefficiency”.
