Fresh accusations of incompetence and fraud

Date: 12/10/1995

By Ole Ryborg

BOTH national authorities and the European Commission come in for trenchant criticism over their handling of EU finances last year in the latest annual investigation by the EU's Court of Auditors. The allegations range from maladministration to examples of direct fraud.

The attacks are contained in the auditors' draft report entitled “Observations concerning the financial year 1994” obtained by European Voice.

Examples of direct fraud highlighted in the report, now being studied by the Commission, concern allegations of negligence in different member states. Most of these are concentrated in the collection of customs duties - traditionally one of the main sources of EU income - on goods imported into the Union.

The auditors estimate that frauds and irregularities in this area came to

505 million ecu last year, equivalent to some 4&percent; of the revenue generated from import duties.

The draft report points to ways in which member states may exploit weaknesses in the EU system to their own advantage. Even when failures to collect customs duties are discovered, national authorities may decide not to reclaim the missing payments.

In another example of mismanagement, underestimates of Gross National Product by countries like Greece, Ireland, Luxembourg and Portugal would, under the fourth budgetary resource based on ability to pay, reduce their contributions to the EU budget.

While member countries come in for heavy criticism, the 499-page draft report also includes a long list of examples of maladministration at the European Commission. Policies on fruit and vegetables are singled out, with the Court of Auditors concluding that in Greece, for example, a number of farmers only grow such produce in order to take it off the market - generally to be destroyed - to obtain EU funding.

The report gives the impression that environmental policies run by the Commission are badly managed. The LIFE program is “understaffed”, the auditors say, claiming that officials do not have the necessary knowledge to judge applications submitted under the programme. Another environmental example quoted concerns the Island of Gomera. Despite being on UNESCO's world heritage list, EU aid was given for six infrastructure projects.

The trans-frontier regional programme Interreg comes under fire from the EU financial watchdog.

Designed for cross-border projects, the programme still gave money to finance the Cabeze del Buye bypass in Spain situated more than 200 kilometres from the border.

The social fund is criticised for aid given to Greece for projects to train young job seekers and unemployed. The money was instead used for training civil servants. Nor does the Commission's management of its external relations programmes escape the auditors' criticism. They maintain that out of a

14-million-ecu package of studies designed to boost investment in Bulgarian agriculture, only one actually achieved its aim.

In 1994, no payments at all were made, according to the draft report, from the PHARE democracy program designed to encourage democratic and judicial reform in Central and Eastern Europe.

The auditors point to examples of EU officials travelling at taxpayer's expense to far-flung meetings with agendas which are difficult to justify. At one meeting in Morocco, says the report, no agenda or minutes were available. Another concerns a seminar in Mauritius organised by DGVIII, the Directorate General for development, where two cars were rented two weeks in advance and for four days after the seminar at Commission expense, but without any justification.

The Commission and member states are now studying the draft report and preparing their replies to the allegations it contains before it is officially published later this year.