EU must be joking: EC clamps down on fraud

Theresa May has agreed with the EC on proposals to prevent fraud against the EU. The problem is that no one seems to care about the EU’s own fraud and incompetence

Could OLAF be put to use on the EU's
Simon Miller
On 7 June 2013 16:14

Fresh from its latest attempt at destroying London as a world financial centre with its grab at the Libor, the European Commission had a tête-à-tête with Justice and Home Affairs Ministers about financial crime committed against the European Union.

To be fair, fraud is a very serious business. OLAF, the EC’s own fraud busters, have completed 3,500 investigations since it was set up in 1999 and have recovered around €1.1bn of EU money recovered and jailed 335 individuals. And in the latest figures available, expenditure irregularities reported as fraudulent cost €295m in 2011 while irregularities not reported as fraudulent cost €1.2bn. Meanwhile, revenues irregularities reported as fraudulent involved €109m while those not reported as fraudulent involved €278m.

In terms of national budgets, and indeed the EU itself, this money is not a lot but considering that the EU budget is going to cost us an extra billion or so next year, all savings in paying for this monstrous carbuncle would be nice.

So you might say it’s positive to see Theresa May and Chris Grayling sign up this week to fight fraud against the Union’s financial interests by means of criminal law. The proposal says that it aims to deter fraudsters, improve the prosecution and sanctioning of crimes against the EU budget, and facilitate the recovery of misused EU funds thereby increasing the protection of EU taxpayers’ money.

The proposed directive provides common definitions of a number of offences against the EU budget, “such as fraud, and other fraud related crimes such as active and passive corruption, the misappropriation of funds, money laundering and minimum rules on prescription periods.” Imprisonment is the punishment for the most serious cases.

And…I’m sorry, I can’t go on. The idea of this venal, corrupt, and Napoleonic institution trying to prevent fraud is laughable.

For a start, the likes of Germany and the UK get criticised because their prosecutions are too low; especially with the UK, this may be a case of incompetence, but nowhere does the EC contemplate that there may be an (albeit slim) possibility that there just aren’t as many cases in the richer nations.

Secondly, this is a laughable rather than laudable notion to pursue because of the EU itself. The EC is displaying signs of the Labour Party’s ‘do as we say not as we do’ attitude. For 18 years, that’s eighteen years, the EU budget has not been signed off because of “irregularities”. The total spend in 2011 of €127.2bn saw an increase of €580m in the amount of erroneous spending to €4.96bn. The European Court of Auditors found that controls over 86 percent of the EU budget were only “partially effective”.

Breaking this down, rural development, environment, fisheries and health saw an estimated error rate of 7.7 percent at €1.02bn, while regional policy, energy (surprise) and transport saw a 6 percent error with erroneous spending at €2bn. Agricultural was actually half of that with an estimated error rate of 2.9 percent, or €1.27bn.

See how this works? Germany and the UK get criticised for their controls but everything’s hunky-dory for the EU isn’t it? Just like tax evasion is absolutely fine for Miliband and crew.

The problem is that they don’t really care. If they did then OLAF would be investigating the EC’s own staff. If they really cared about expenditure and incompetence they would take account of what the Court of Auditors consistently complains about every November when, once again, it refuses to sign off the budget.

In November when talking with The Daily Telegraph, Vitor Caldeira, the ECA's chairman, conclude: “With Europe's public finances under severe pressure, there remains scope to spend EU money more efficiently and in a better targeted manner. Member states must agree on better rules for how EU money is spent, and member states and the commission must enforce them properly. In this way, the EU budget could be used more efficiently and effectively to deliver greater added value for citizens." 

And that is the key: member states and the commission. The Court demands that there must be better rules and better enforcement of how EU money is spent but there is no impetus when you have a bureaucratic powerhouse dictating terms.

The problem is that the commission genuinely sees itself on equal footing, if not more important than the nation states. In its mission to create Europa it manipulates, obfuscates, and bribes its way through the member states to get what it wants – and our politicians let them.

Of course, those of us who believe in a free Europe – an area of freely trading nations and friends – hope that with democratic and economic pressures growing that there could finally be a death nail to le grand projet.

Unfortunately, the desperation to complete this relic of 1960s politics could overwhelm any sensible attempt to get Europe out of the mire and it is here that we could find out where the fraudulent behaviour ultimately lies.

Simon Miller is a contributing editor to The Commentator. Follow him on Twitter @simontm71

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