Tourism probe reveals losses run into millions

Date: 17/07/1997

By Rory Watson

A European Commission inquiry has revealed that up to 4.5 million ecu may have been paid out mistakenly or fraudulently to EU-funded tourism projects over a six-year period.

The scale of mismanagement has emerged after an exhaustive six-month internal investigation into the Commission's tourism department following the dismissal of two officials, who now face the prospect of criminal proceedings.

The exact figure could be even higher as Commission investigators are still combing through up to 100 tourism projects funded with almost 7 million ecu from EU coffers between 1989 and 1995. Most date back to 1990 and, faced with incomplete files, officials are unlikely to complete the task of fitting all the pieces together before the end of the year.

The Commission's own anti-fraud unit, UCLAF, is carrying out further investigations into almost 70 individuals and organisations to establish if they formed part of an organised network which siphoned off EU funds in the early Nineties.

With court cases against those involved looming in at least three member states - France, Belgium and Greece - the Commission is also trying to recoup the missing money. It has already clawed back 350,000 ecu of the 1.6 million ecu of recovery orders it has sent out and has cancelled some payments which had earlier been promised amid doubts about the viability of the projects involved.

The results of the findings have been sent to two of the most consistent critics of the institution's management of tourism policy: the Court of Auditors and the European Parliament.

Tourism Commissioner Christos Papoutsis, who ordered the internal investigation, will also present full details of the inquiry to the Parliament's budgetary control committee next Tuesday (22 July). He is likely to face some tough questioning from MEPs, who last year warned that they would freeze 10&percent; of Commissioners' salaries if they were not satisfied with the outcome of the investigation.

“What we have had has been a seven-year process of fudge and evasion and if the report does not come up to scratch the Parliament will have to pursue the matter,” said British Conservative MEP Edward McMillan-Scott, who has long been a critic of the Commission's handling of the affair.

“The European Parliament has put the Commission on the spot and MEPs will have to decide if the report has handled the two central issues as well as learning the lessons of what took place. What is important is to examine how the Commission handled the affair from the beginning in its dealings with the Court of Auditors, the Parliament and the police, and how it responds to my original allegations of fraud.”

Having sifted through all 718 separate tourism activities funded by the Union to the tune of 31.4 million ecu between 1989 and 1995, Commission officials have given a clean bill of health to the vast majority of projects.

The remainder, involving 4.5 million ecu, has been divided into two categories: schemes where there may have been genuine oversights or some mismanagement and some 60 other cases where there is a strong suspicion of wrongdoing.

Throughout its investigation, the Commission has been careful to talk of irregularities rather than fraud. “Irregularities cover any situation where there might have been a loss to the Union budget. Fraud, however, is where someone does it deliberately and it can be proved in court. That can be difficult to establish,” warned one lawyer.

The inquiry, the most thorough ever carried out by the Commission, was originally sparked by criticism of the 1990 European Year of Tourism after the Court of Auditors discovered that many promotional activities undertaken in France were not being properly monitored.