|Vol.7, No.35, 27.9.01, p6
SUSPECTED irregularities, involving more than €100 million in refunds paid to EU food exporters, have been highlighted in a new report by the Union's Court of Auditors.
Among the worst was the delivery to North Korea of 3,200 tons of Danish feta cheese which was past its sell-by date and the transport of meat through Jordan to circumvent the UN trade embargo on Iraq.
About €5 billion is awarded to exporters of farm produce each year as compensation for the difference between international and Union prices.
Contending that "payment of export refunds is not justified where the operation is not a normal commercial transaction", the Court argued that the Danish feta cheese case did not meet the criteria.
Although the expiry date for packaged feta is usually 18 months after manufacture, the Court found that the shipment to North Korea had been produced in early 1996 but was not exported until December 1998. The exporter was paid €2.2 million in refunds, but the amount invoiced was less than €1 million.
The shipment was earmarked for distribution by a North Korean committee for arresting flood damage.
"The fact that the feta had exceeded its normal expiry date by more than 12 months, that this was the only sale of feta to North Korea in recent years and that the refund was more than double the invoiced value suggests that this was not a normal commercial transaction designed to penetrate a market," the auditors said.
"It had no real economic purpose and was effected solely to obtain a payment from the Community. Refunds should not have been paid because the product was not marketable under normal terms."
The auditors also reported that a 1998 probe by the European Commission's former anti-fraud unit UCLAF found that export refunds of around €80 million were paid for dubious shipments to Jordan. The exporters often used forged documentation to divert the produce from Jordan to Iraq. While Germany, Italy and the Netherlands have taken steps to recover money from their exporters, the auditors found that France, Ireland, Denmark and Belgium had not.
"Member states' follow-up action is unsatisfactory," the auditors added, noting that the new EU anti-fraud office OLAF does not have the power to insist on recovery of the money.
The Commission responded that the present system is "fully justified" as it "plays an important role in stabilising the internal market of the EU".
Spending "on export refunds has been substantially reduced over the past decade and this trend is continuing," it added.
Suspected irregularities, involving more than €100 million in refunds paid to EU food exporters, have been highlighted in a new report by the Union's Court of Auditors.
|Economic and Financial Affairs