Brussels, 07/02/2008 (Agence Europe) - In Strasbourg on Monday 14 February, the European Parliament will discuss the report by Francesco Musotto (EPP-ED, Italy) reviewing the problems of fraud in the Community budget 2005 and 2006 (see EUROPE 9464 on the European Commission 2006 annual report on fighting fraud and protecting the Communities' financial interests).
The report, adopted by the Parliamentary budgetary control committee on 22 January, says that in the areas of own resources, agricultural expenditure and member states' structural actions, irregularities notified in 2006 totalled €1,143 million (compared with € 1,024 million in 2005 and €982.3 million in 2004). It stresses that the fact that a large number of irregularities are notified to the Commission does not necessarily imply a high level of fraud; it could also show that the supervisory arrangements in place are effective and that there is close cooperation between the member states and the Commission.
The budgetary control committee is convinced that, if a positive statement of assurance (DAS) is ever to be achieved, member states and Community institutions, including the Court of Auditors, must come to a political understanding on a “tolerable error rate”.
Musotto's report details a long list of weaknesses in the fight against irregularities and fraud. It calls on the Commission to indicate, with regard to the own resources sector, what further measures will be taken to put a stop to the fraudulent importing of televisions, cigarettes and counterfeit goods in general. (In this context, the report welcomes the fact that OLAF has been able to open an office in China.) The report considers it “wholly unacceptable” that, for many years, Germany and Spain have not been forwarding information electronically to the Commission on irregularities relating to agricultural expenditure. It urges the Commission to start infringement procedures against these two member states and to withhold 10% of agricultural payments pending the procedure. The Commission is asked to take effective action to reduce the number of irregularities in the rural development, beef and veal, and fruit and vegetable sectors. The report urges the Commission to “take a firm stance” should Greece fail to comply with the action plan for introducing the Integrated Administration and Control System (IACS). It notes that, with regard to structural actions, 84% of all irregularities were recorded in Italy (2006: €228.2 million), Spain (2006: €85.7 million), the United Kingdom (2006: €59.8 million), Portugal (2006: €37.2 million) and Germany (2006: €27.2 million). The report makes further demands of the Commission: - that it attach particular importance to criminal networks specialising in the misappropriation of EU funds; - that it take the appropriate action, possibly including infringement procedures, against those member states which fail to assist the Commission in carrying out on-the-spot checks; - that it suspend interim payments to member states in the event of serious irregularities; - that it assist member states in using OLAF's Anti-fraud Information System/Ciginfo.
Revision of the OLAF Regulation. The budgetary control committee reminds the Commission that the EP has recommended that “OLAF's investigatory powers be grouped together in a single regulation”. It calls on OLAF to submit, as a matter of urgency, an analysis of the interoperability of the different legal bases granting investigative powers to it with a view to possibly incorporating the findings of this analysis into the future revision of the OLAF Regulation.
VAT Fraud. The budgetary control committee is “extremely concerned” at financial losses caused by so-called “carousel” transactions. The report notes, for example, that the German Economic Research Institute puts lost national VAT revenue for 2003 to 2005 at between €17 billion and €18 billion per year; that, extrapolating across the board, member states estimate that they lose about 10% of their VAT revenue each year; and that one third of these losses are attributed to cross-border “carousel” fraud. The report welcomes the Commission's 2007 communication on some of the key elements which contribute to the establishment of the VAT anti-fraud strategy within the European Union. It regrets that the Council has yet to adopt a position on the proposal for a regulation on mutual administrative assistance for the protection of the financial interests of the Community against fraud and any other illegal activities (a regulation adopted by the Parliament on first reading on 23 June 2005). The EP will call on its president to contact the Council presidency to try to “make progress on this issue”. (L.C.)