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Thursday, July 23, 2009

Down the plug hole

Last week the European Commission published its annual "Fight Against Fraud" report 2008 (and annexes - see here and here).

It tells us about the "financial irregularities" in the €130bn yearly budget - in other words, the amount of taxpayers' money that has gone AWOL through either suspected fraud or loss.

It is basically accepted that a chunk of money (amounting to hundreds of millions) will go missing every year as a result of the hundreds of different people involved in executing the big EU projects such as the controversial Structural and Cohesion Funds, Agriculture Funds, and the so-called 'Pre-Accession' Funds, which go towards helping aspiring EU member states jump through EU hoops.

As usual with these types of documents, the report is long-winded and generally made to read as confusingly as possible. It's not designed to be read - especially not by journalists - as the Commission naturally doesn't want to draw too much attention to the hundreds of millions of euros lost every single year as a result of its byzantine policies.

However, it is possible to pull out some interesting snippets. In summary:

  • The overall number of irregularities for expenditure has increased from 6, 047 in 2007 to 6, 595 in 2008, although the estimated financial impact of irregularites decreased from €1 024 million in 2007 to €783.2 million in 2008.

  • Not all irregularities have to be reported. In Agriculture, for instance, Member States must inform the Commission of all irregularities involving an amount of over €10 000. This threshold was introduced on 1 January 2007, having been increased from €4,000. The number of reported irregularities in 2008 was a third of the number of those before 2007 - but clearly comparisons with previous years are useless.

  • The report acknoweldges that "a rather large amount of subsidies is below €10,000", meaning that many, if not most irregularities have, since 1 January 2007, been going unnoticed. Raising the bar for what constitutes an 'irregularity' seems like a clever way to ignore the problem, rather than decrease the amoun of money actually going missing.

  • In monetary terms, Italy reported the highest amounts affected by irregularities in the agriculture category - more than EUR 54 million, followed by Spain which reported a total amount of approximately EUR 15 million. Italy reported 1 case for the sector "fruits and vegetables" in which the total amount affected was approximately EUR 25 million.
  • Italy was responsible for more than 50% of reported budget irregularities regarding agriculture.

  • In terms of recovering incorrectly paid monies, in agriculture alone, €125 million was recovered during 2008 by the Member States from beneficiaries. € 32 million was declared “irrecoverable” during 2008.

  • A whopping € 1.254 billion in agriculture funds remained outstanding at the end of 2008 "at the level of the beneficiaries”

  • In terms of the regional funds, which are intended to help Europe's poorer regions catch up with the richer ones, the total amount affected by irregularities in 2008 was about EUR 585.2 million, EUR 528.9 million of which was from the Structural Funds and EUR 56.3 million from the Cohesion Fund.

  • Apart from a decrease this year, the cost of the reported irregularities is going up, with Spain, the UK and Italy reporting the most irregularities

The Commission likes to pin most of the blame on the member states for the loss of money. But there's no hiding from the fact that the Commission is the chief project manager of these enormous and unweildy policies. If the money wasn't first being filtered through the EU bureaucracy, before being distributed by member state governments, wouldn't there be a far smaller margin for error? As Derk Jan Eppink, a former senior Commission official (now a Belgian MEP) told an Open Europe audience a few years ago:

"The Commission is a good lawmaker but a bad projects-manager."

1 comment:

Anonymous said...

It's a shame that the unelected democratically deficient commissars can't get their own house in order, so is this just a cover up for their own shortcomings in the corruption arena.