EU still losing hundreds of millions each year to fraud
Watchdog names and shames Romania, Bulgaria and Hungary as false claims reach €670m
MORE than £670 million of EU spending was lost to fraud last year, new figures show.
But officials implicated in misappropriated funds are being allowed to keep their jobs.
The false claims were concentrated in Romania, Bulgaria and Hungary, the European Anti-Fraud Office (OLAF) said. It is a slight decline from €901 million (£691 million) last year, but is still a major jump from €284 million (£217 million) in 2012.
Examples of fraud included €1.3 million of EU agricultural aid to modernise a vegetable chilling plant in Bulgaria. Investigators found the equipment supplier and the factory owner were the same Italian citizen, who had “substantially inflated” the price of the machinery.
In another case, €2 million of aid was sent to an ecology project in Africa the operators of which were billing different international donors for the same work by supplying “systematically false information”.
In another case, an official involving in awarding European Investment Bank funds to a Romanian health project rigged the bidding process in exchange for a kickback of five per cent from contractors.
The figures also show that around €900,000 was lost in 2015 to dishonest EU staff. However, four in 10 EU officials found to have been implicated in wrongdoing were not punished and only a handful were dismissed, the report revealed.
Between January 2013 and December 2015, 58 “disciplinary recommendations” were issued to bodies such as the European Council, the Court of Justice and the European Commission.
Of these, just 18 resulted in “action taken” while in 14 cases it was ruled that “no case is made”. Another 26 cases are pending.
Of those punished, in six cases people were fired, while two were demoted. Twelve written warnings were issued.
Officials denied that the institutions are turning a blind eye to wrongdoing, saying many of the dropped cases related to people whose contracts ex- pired before they were punished. The figures also show that national prosecutors are failing to crackdown on EU fraud. Out of 317 cases sent to prosecutors, 148 resulted in indictments – a rate of 47 per cent.
“We do sense that the national prosecutors do not prioritise cases where there is a damage to EU interest at the same level as national interests,” said Petra Kneuer, the director of investigations.
Giovanni Kessler, the head of the agency, said he did not believe there was widespread corruption, however, and that a sharp increase in fraud detected after 2013 showed his agency was making its mark in encouraging people to report concerns.
Mr Kessler backs the creation of a prosecutors’ office for the EU which could have greater powers than OLAF to investigate. Governments have resisted that idea, however.
A spokesman for the European Commission said: “We have zero tolerance for fraud against the EU budget. OLAF’s work is part and parcel of the efforts to uncover and prevent fraud in the mem- ber states and to get money returned to the taxpayers.
“The EU budget is primarily spent by the authorities in the member states.
“Let us, therefore, be clear: it is primarily the member states’ responsibility to ensure that the EU budget is spent flawlessly in their territories.
“Consequently, the Commission is working – and will continue working – with member states to help them address the recommendation of OLAF to have the money recovered to the EU budget.”
Mr Kessler is locked in a personal legal battle with the EU authorities after the European Commission lifted his immunity from prosecution.
He faces two years in prison under Belgian law, over allegations that he breached wiretapping rules by listening to a recorded telephone conversation.
It was part of an investigation into the influence of the tobacco lobby on John Dalli, the health commissioner who resigned over allegations of impropriety.
Mr Kessler said it was the “wrong decision” to strip his immunity and said it would harm the work of the anti-fraud watchdog.