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EU budget fraud may be much larger than reported


ibis

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Interesting report from the House of Lords, suggesting that EU budget fraud may be up to 12 times larger than officially accounted, due to a "lack of enthusiasm displayed by the member states in reporting fraud" and a "lack of uniformity in the definition of fraud" in the 80% of EU money they're responsible for managing.

The suggested figure is "up to €5 billion", compared to the €400 million or so reported by OLAF. The lack of action by member states prevents efforts by the Commission to grasp the full extent of the problem.

Report available here: http://www.publications.parliament.uk/pa/ld201213/ldselect/ldeucom/158/158.pdf

The report is just a wee bit critical of the UK's approach, both to fraud within its own management of EU funds:

The UK Government assured us that they take all fraud, including fraud against the EU’s budget, very seriously but we were unable to ascertain whether any Government department or agency in the UK takes overall responsibility for this issue. No one was able to tell us with any confidence how much known EU fraud is perpetrated from within these shores, despite the fact that the individual Member States are required to tell the relevant EU authorities when they uncover these offences.

We received evidence of significant levels of VAT fraud, which the Government initially argued was outside the scope of our inquiry.
and of the attitude to OLAF:

In our assessment of OLAF’s role in the fight against fraud against the EU’s budget, we found that there are a number of limitations on its effectiveness, such as budgetary restrictions which force OLAF to be selective about the cases of EU fraud that it pursues; or the tangled web between Europol, Eurojust and OLAF which contributes to the lack of a coordinated response to fraud on the EU’s budget. While we are of the view that the decision to prosecute must remain a national matter, Member States must also recognise that if OLAF is seen as a body whose recommendations are never followed up, it will remain hamstrung in its ability to protect the EU’s financial interests.
but you'd hardly know that from the Telegraph coverage:

Peers on the European Union Select Committee found fraud against the taxpayer could be up to 12 times worse than Brussels officials will admit.

The committee said it believes frauds ranging from cigarette smuggling to bribery and corruption "never see the light of day" because the EU has failed to grasp the scale of the problem. This is because some member states are reluctant to report suspected cases and others fall through the gaps of a "tangled web" of EU investigation agencies.
 
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Dame_Enda

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When you centralise power in unelected officials, you get more corruption. I know we voted to do this, but we didn't have a crystal ball. (I personally voted no in the last 3 votes and yes in the previous 3).

The EU is to Irish politics what Israel is to US politics. Criticism is anathema (except in SF and Independents). On a continental scale, this leads to abuses as they know they can get away with it.
 

kvran

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The simplest solution is more power for OLAF expanded competence for the court of auditors. The Commission has limited power to actually follow the money into member states but it does manage to claw a lot of the money back through means such as delaying payments until money has been accounted for but a more formal system would be better. Its an area where cash fines for member states makes perfect sense.

I also don't see the issue between Europol, Eurojust and OLAF. They all work closely together and are coordinated by SCIFA and JHA DG. They all have different manadates.


The telegraph seems confused . . .what does cigarette smuggling have to do with EU budget?
 

goosebump

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When you centralise power in unelected officials, you get more corruption. I know we voted to do this, but we didn't have a crystal ball. (I personally voted no in the last 3 votes and yes in the previous 3).

The EU is to Irish politics what Israel is to US politics. Criticism is anathema (except in SF and Independents). On a continental scale, this leads to abuses as they know they can get away with it.

Suggestion:

Read the OP as well as the Thread subject.

Always helps.
 

Passer-by

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When you centralise power in unelected officials, you get more corruption. I know we voted to do this, but we didn't have a crystal ball. (I personally voted no in the last 3 votes and yes in the previous 3).

The EU is to Irish politics what Israel is to US politics. Criticism is anathema (except in SF and Independents). On a continental scale, this leads to abuses as they know they can get away with it.
Try reading what the OP posted. The complaint by the House of Lords's was that the spending by member states - a decentralised activity - is where the fraud is occurring and it is the member states that are failing in their (decentralised) obligation to control this fraud. The House of Lord's isn't commenting on the central EU institutions at all.
 

SilverSpurs

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Interesting report from the House of Lords, suggesting that EU budget fraud may be up to 12 times larger than officially accounted, due to a "lack of enthusiasm displayed by the member states in reporting fraud" and a "lack of uniformity in the definition of fraud" in the 80% of EU money they're responsible for managing.

The suggested figure is "up to €5 billion", compared to the €400 million or so reported by OLAF. The lack of action by member states prevents efforts by the Commission to grasp the full extent of the problem.

Report available here: http://www.publications.parliament.uk/pa/ld201213/ldselect/ldeucom/158/158.pdf

The report is just a wee bit critical of the UK's approach, both to fraud within its own management of EU funds:



and of the attitude to OLAF:



but you'd hardly know that from the Telegraph coverage:
Perhaps the european parliament should refuse to sign off on the budget. It would go some way to showing it can be trusted with increased powers and is not just a dumping ground for failed politicians. Perhaps the EU institutions should hold back future payments etc.
Nice try anyway ibis to blame everything bad on the member states.
 

Passer-by

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The telegraph seems confused . . .what does cigarette smuggling have to do with EU budget?
Given the hole the member states have left in the EU's budget this year, Barrosso and VanRompuy have had to resort to cigarette smuggling to balance the books. :D
 

Spanner Island

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No sh!t Sherlock...

I'd only be surprised if it was found that there WASN'T massive fraud going on in the EU with OUR money...
 

kvran

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Perhaps the european parliament should refuse to sign off on the budget. It would go some way to showing it can be trusted with increased powers and is not just a dumping ground for failed politicians. Perhaps the EU institutions should hold back future payments etc.
Nice try anyway ibis to blame everything bad on the member states.
Please open the report, Ctrl F and type in Parliament. They do a lot with their limited power. When the whole Commission resigned over fraud, it was because of the EP. They're operating in an envirnoment hostile to whistle blowers and large scale fraud investigations. Many MEPs and Member states are generally uncooperative.

It wouldnt be responsible to freeze funds to numerous organisations and projects. Collective punishment is always wrong.

Also under current rule you can't freeze a budget, you can stop a new one but the current one would cotinue adjusted for inflation.
 

Howya

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The simplest solution is more power for OLAF expanded competence for the court of auditors. The Commission has limited power to actually follow the money into member states but it does manage to claw a lot of the money back through means such as delaying payments until money has been accounted for but a more formal system would be better. Its an area where cash fines for member states makes perfect sense.

I also don't see the issue between Europol, Eurojust and OLAF. They all work closely together and are coordinated by SCIFA and JHA DG. They all have different manadates.


The telegraph seems confused . . .what does cigarette smuggling have to do with EU budget?
Wasn't our own Kevin Cardiff appointed to the Court of Auditors - he of the infamous €3.6bn error in our national debt? Fills me with confidence that fraudsters will be caught....not.
 

kvran

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Wasn't our own Kevin Cardiff appointed to the Court of Auditors - he of the infamous €3.6bn error in our national debt? Fills me with confidence that fraudsters will be caught....not.
A reflection on the quality of Irish governance more than the court of auditors. The court of auditors has genuine independence that's why they refuse to sign off on the EU budget year after year. If only it was backed up by powers of investigation, ability to initate infringement proceedings etc.
 

dagenict

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dagenict
I would like to reply to this thread in irish .Post it to the EU Com, but our 30 irish interpetors would be to busy, to tran's. it
 

ibis

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Some entertaining but predictable reflex posts here.

Perhaps the european parliament should refuse to sign off on the budget. It would go some way to showing it can be trusted with increased powers and is not just a dumping ground for failed politicians. Perhaps the EU institutions should hold back future payments etc.
Nice try anyway ibis to blame everything bad on the member states.
But I'm not - the House of Lords is. No doubt, like the Telegraph, you'd be happier to gloss over that point as far as possible, but that's what the report's findings are.
 

ibis

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A reflection on the quality of Irish governance more than the court of auditors. The court of auditors has genuine independence that's why they refuse to sign off on the EU budget year after year. If only it was backed up by powers of investigation, ability to initate infringement proceedings etc.
And, in turn, the reason the audit report is qualified every year is primarily issues with the 80% of money handled by the member states. That's not really surprising given the state of auditing in most member states - including ourselves - which leads to little surprises like finding €3.6 billion down the back of the DoF sofa.
 

EUrJokingMeRight

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Fair enough but as the EU does not even produce its own audited accounts and has not done so for over a decade then mary the ps secretary and oleg the polish builder will keep having to working longer and harder for less money so more of their tax money can be unaccounted for by Enda and the EU.

You masochists love this admit it.

You really hate yourselves and love voting for the pan euro fraud by unelected arbiters of austerity while they wallow in the fruits of your labour.

yes to jobs, yes to recovery..vote yes if you're a few cents short of a euro.

Their possibly coming for your bank deposits in AIB soon...
 

ibis

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Blimey:

Comparison with UK figures

The National Fraud Authority (NFA), an executive agency of the Home Office which is tasked with leading and coordinating anti-fraud action in the UK, estimated that the current level of fraud suffered by the UK public sector amounts to approximately £20.3 billion per annum. In 2011 the total Government revenue in the UK was £589 billion and the NFA’s estimate suggests that 3.4 per cent of the UK’s total budget was lost to fraud.
So fraud in the EU budget might be as much as £4 billion over 27 countries and different national systems (UK portion would be £400 million), while fraud in the UK budget, one country, one system, is £20.3 billion?

I wonder which one the UK's eurosceptics will see as more important...and while we're on that subject, welfare fraud alone in Ireland appears to be estimated at somewhere around €475-870 million:

In 2011, the total budget for social welfare is estimated at €19,797 million, which equates to approximately 40% of gross government expenditure.

The Department of Social Protection in Ireland estimates that the level of fraud and error in the social welfare system ranges between 2.4% - 4.4% of total annual welfare expenditure.
Ireland's "share" of EU fraud would be about €50 million by the House of Lords estimate (1% of €5 billion) - and indeed our Comptroller's report records a level of €23 million in detected fraud for 2011, so it seems likely that we're doing quite well on the detection front, detecting about half of what's probably happening on our watch. We may even be detecting all of it, if we assume that some countries may have more than their strictly numerical share of fraud.
 
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hiding behind a poster

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No sh!t Sherlock...

I'd only be surprised if it was found that there WASN'T massive fraud going on in the EU with OUR money...
Without wishing to oversimplify it, the report is more along the lines of there being massive fraud going on in the member states with the EU's money.
 

Passer-by

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Fair enough but as the EU does not even produce its own audited accounts and has not done so for over a decade.
The EU Court of Auditor's website contain audited accounts for the EU - it really isn't that hard to use Google to look up this sort of stuff if you just give it a try...
 

ibis

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Without wishing to oversimplify it, the report is more along the lines of there being massive fraud going on in the member states with the EU's money.
Heh. In fact, the Lords' estimate of EU fraud is based on taking the UK figure of 3.4% and applying it to the EU budget:

If we accept the Commissioner’s analysis and apply it to the EU’s budget, using as a benchmark the NFA’s estimate of fraud in the UK of 3.4 per cent, we arrive at a total for fraud on the EU’s budget, based on 2011 figures, of €4.82 billion. This figure is over ten times more than the figure of €404 million unearthed by the Commission in its annual report; it is almost more than two and a half times greater than Rosalind Wright’s estimate of €2 billion which she qualified as a “substantial underestimate”.
To be honest, I'm not sure that's actually a great methodology...
 
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