October 25, 2006

 

New EU members prove imaginative in claiming EU subsidies

 

 

Livestock farmers in Slovenia, only two years after joining the EU, have been proving as imaginative as Italian olive growers when claiming Brussels subsidies.

 

Inspectors found that half the cattle the Slovene farmers claimed to own, and which entitled them to special EU cow and beef grants, did not actually exist. A quarter of their sheep and goats were equally invisible.

 

Such discrepancies, equally strong among the older members of the EU, cost almost about 2 per cent of the agriculture budget.

 

Nine payments worth EUR2 billion to olive oil producers in Spain, Greece and Italy last year were either inflated or wrong, according to the annual report of the European Court of Auditors, the EU spending watchdog.

 

Last year, Poland was forced to warn farmers to adhere to decent farming practices though under EU law, they could have been fined almost EUR 1 million. In Greece, farmers' unions input agricultural data into insecure computer systems that can be modified externally.

 

After investigating how the EUR105-billion EU budget was spent last year across a range of policy areas, the auditors identified "a material level of error in underlying transactions and weak internal control systems". As a result, for the 12th year in succession, they refused to sign off the accounts, giving them only qualified approval.

 

They did, however, note that in the year 2005, the Commission moved to an accruals-based accounting system that should make the flow of EU funds more transparent.

 

The auditors also concluded that administrative expenditure on EU staff and premises and aid to new member states before they joined the union was "legal and regular". They welcomed the new integrated control system applied to large parts of the Common Agricultural Policy and was proving effective in stamping out fraud.

 

The underlying reason for most errors was that beneficiaries - farmers, local authorities, project managers--claimed more than their right to do so, said Hubert Weber, the Court of Auditors'president. They did so, he added, either through neglect, error or attempt to defraud to which Siim Kallas, the administrative, audit and anti-fraud commissioner, reacted angrily.

 

He pointed to a German project, where the auditors rejected all the expenditure involved, although they had examined only 5 per cent of it.

 

The work of detecting errors by auditors was normal, he said. What was not normal in the case was that the errors in filling formulas fed high-profile political judgment. Everything was mixed into one pot, he pointed out.

 

He also pointed out that the auditors failed to attach sufficient importance to the Commission practice of clawing back from national budgets any EU funding, especially farm payments, that had been spent fraudulently or incorrectly

 

These beliefs were disputed by David Bostock, the British member at the court, pointing out that that simply transferred the financial burden.

 

The effect was to shift the cost of disallowed transactions from the European taxpayer to the national taxpayer, he said.