According to the Treaty on the Functioning of the European Union (Artcile 325), each year, the European Commission must report, to the European Parliament and to the Council, on how it is working with the Member States to combat fraud and ensure sound management of EU funds.

The Commission reported that established or suspected fraud against the EU budget worth €309.1 million in 2013. While the financial impact is down, the number of cases has increased.

In February 2015, the Budgetary Control Committee of the European Parliament adopted its report on the 2013 Commission report. It focuses on both fraudulent and non-fraudulent irregularities and highlights the 76% increase in the number of fraud cases in spending, and a recovery rate for fraud cases that is low, 23.74%. The high number of non-fraudulent irregularities is also pointed out, which were up 16% in 2013, even if their financial impact fell 38%.

On 10 March 2015, MEPs debated on the report in plenary.

Conformément au Traité sur le fonctionnement de l’Union européenne (Article 325), chaque année, la Commission européenne est tenue de remettre un rapport, au Parlement européen et au Conseil, sur la façon dont elle coopère avec les États membres pour lutter contre la fraude et garantir une bonne gestion des fonds de l’Union.

La Commission a fait savoir que, pour 2013, les cas de fraude présumée ou établie portant atteinte au budget de l’Union atteignaient 309,1 millions d’euros. Si l’incidence financière est moindre par rapport à 2012, le nombre de cas a progressé.

En février 2015, la commission du contrôle budgétaire a adopté son rapport concernant le rapport 2013 de la Commission. Celui-ci s’intéresse aux irrégularités frauduleuses et non frauduleuses. Il souligne également l’augmentation de 76 % du nombre d’irrégularités signalées comme frauduleuses concernant les dépenses de l’Union ainsi qu’un taux de recouvrement extrêmement bas, 23,4 %. Le niveau élevé d’irrégularités non frauduleuses, qui ont progressé de 16 % en 2013, est aussi mis en évidence, même si leur incidence financière a diminué de 38 %.

Le 10 mars 2015, les députés européens ont débattu sur ce rapport en séance plénière. (cf.infra)

Charline Quillérou

Pour en savoir plus

Rapport de la Commission au Parlement européen et au Conseil

<http://ec.europa.eu/anti_fraud/documents/reports-commission/2013/1_act_part1_fr.pdf>

Report from the Commission to the European Parliament and the Council

<http://ec.europa.eu/anti_fraud/documents/reports-commission/2013/1_act_part1_en.pdf>

Office européen de lutte anti-fraude

<http://ec.europa.eu/anti_fraud/policy/preventing-fraud/index_fr.htm>

European Anti-fraud office

<http://ec.europa.eu/anti_fraud/policy/preventing-fraud/index_en.htm>

Vidéo des débats

<http://www.europarl.europa.eu/ep-live/fr/plenary/video?debate=1426000270262>

Video of the debates

<http://www.europarl.europa.eu/ep-live/en/plenary/video?debate=1426000270262>

EP Plenary session – 10 March 2015
Annual Report 2013 on the protection of the EU’s financial interests – Fight against fraud –

Report Georgi PIRINSKI (S&D,BG)

• PIRINSKI, Georgi (rapporteur)

Every Member State makes its proportional contribution to the EU budget.

The report was adopted with unanimity but different views emerged in the course of the discussions : which is the most appropriate approach to defending the EU budget ? It is traditionally considered that emphasis should be put on restrictions and sanctions. The problem is that irregularities are of different kinds: some result from corruption, fraud or criminal offences and others result from mistakes, unfamiliarity with the rules or too complex regulations. Sanctions have to be combined with active support for Member States so that they are able to prevent fraud.

Out of the total of 2.14 billion euro financial infringement, the largest share 1.84 billion euro, results from non fraudulent infringements. The amount of fraud is 309 million euro.

Concerning the interruption and suspension of payments in cohesion policy, the report calls on the Commission to strictly pursue its policies in applying such measures. In the present version, it does not take into account the basic elements regarding the preventive role of such measures as a mean to avoiding infringements. Article 325 TFEU focuses on the preventive side of measures for the defence of the financial interests of the EU.

It is essential that Member States report to the Commission cases of fraud and non fraudulent irregularities. It is on the basis of such information that problems can be identified and solutions elaborated in order to prevent similar problems in the future. Information on fraud and irregularities should not be used for naming and shaming countries. On the contrary Member States owe to be encouraged to report, to detect and to prevent fraud and irregularities, to sanction and to correct them, to overcome the deficiencies and shortcomings of their control systems.

If it emerges that certain States have difficulties, it is up to European bodies and other Member States to provide assistance (best practices, exchange of experiences, coordination, and training)

• GEORGIEVA, Kristalina (Commission)

Both the Parliament and the Commission should fight fraud to gaining our citizens’ trust in our work. For a number of recommendations of the report, we are already pursuing a positive follow-up.

On irregularities reporting, we agree with your conclusion that we have to make a clear distinction between fraud and errors. Zero tolerance to fraud unquestionably, but regarding errors, invest in preventive actions, in simplification and also in harmonization across all expenditure categories, this is the work we are undertaking in a newly established group of Commissioners that are dealing with the spending areas.

With regard to our cohesion policy, we also agree with your emphasis on building up preventive actions, and also taking stock as requested by the Parliament on whether the new architecture of the cohesion policy further prevent and reduces the risk of irregularities.

We have been very carefully reading the report’s views on public procurement. We recognise that it is still vulnerable to irregularities, to fraud, to corruption and in this case we welcome the support you are giving to the transposition process of the new public procurement directive. It is an opportunity for Member States to improve and it is also an opportunity for us, in the EU institutions, to carry forward the related changes for the financial regulation that are currently under negotiations, and I hope we will conclude these negotiations quickly.

We recognise that anti-corruption in our institutions is paramount for that reason we will include an assessment of the implementation of the internal anti-corruption policies in the second EU anti-corruption report that is due in 2016.

With regard to OLAF, we are working to create an environment enabling OLAF and our supervisory committee to function. OLAF has been quite open to approach the supervisory committee. We are also looking into how we can further and strengthen the independence of the supervisory committee, in their human resources and budget management policies.

We welcome the point that has been made by the report on the European Public Prosecutor’s Office and the PIF Directive. We appreciate your support, we are grateful for it; we need a European Public Prosecutor’s Office that is able to add value to the protection of the EU financial interests. We want to be ambitious and we want to have an institutional set up that produces significantly better outcomes in our fight against fraud and corruption.

• ARIMONT, Pascal

We must situate that EU taxpayers money is properly spent. Every single cent must be used properly. This is a very important concern for my political group. The fraud is damaging the EU as a whole. This is something that has to be looked into. This is something particularly important for the cohesion policy, the use of structural funds. This is the area where most irregularities are found.

We need clear and objective criteria for fraud in all Member States.

For real fraud, the anti-fraud strategy in the Member States must include external checks and the idea of the European prosecutor is useful.

You mentioned public procurement, there were irregularities there. Now, the framework of the EU on public procurement should help with that. EU legislation should be transposed as soon as possible.

• MACOVEI, Monica

In this report, we tried to bring forward very important matters for the protection of the EU’s financial interests which is the protection of our money, the money of each and every European citizen. This is our money all in the same place regardless whether you are Romanian, German or from any other Member State. We need to protect the money of our citizens. We are not talking about the EU’s financial interests in an abstract way; this is the money that comes from our citizens. It is important to understand that. If the protection of the European money is well in one Member State but not so well in another, everyone suffers because the money is all in one place. It does not mean that if there is fraud in 10 Member States it is not a problem because the rest of us are doing a good job. We want to put focus on efficient combating of fraud.

Fraud and irregularities are different. It is not the first time we have asked for this, irregularities are administrative and fraud is a criminal matter.

I am glad that the European prosecutor was approved and I hope that now that we have rules for combating fraud, the EU will be efficient.

Debate between the representatives of political groups

• GRÄSSLE, Ingeborg

I would like to agree with the people that have thanked OLAF and also for what has been achieved now.

We have a problem with data. We need to have a good fight against fraud, we need to tackle that. We also need to look at the measures; we need to ensure that we have reliable measures. A comprehensive approach is needed.

• AYALA SENDER, Inés

Sometimes we do not look at the income side of the budget, just the payments. There are some issues of concern there since 2013 we have not been sufficiently demanding that in some areas improvements could be made.

OLAF has had some success, recovery of 68 million worth of counterfeited kilos of cocaine. We must recall that OLAF has done something well.

The IT system for control also has some shortcomings and we hope that in the new procedure this will be different.

The non fraudulent area which is the largest figure here usually is due to a lack of knowledge of the rules, the rules are too complex. I hope that the new regulation will solve this problem.

• CZARNECKI, Ryszard

The European taxpayer is very much interested in what way the European funds are being used. Now we hear that 2 billion euro have been spent in an irregular way. I am happy to hear that it results from non fraudulent irregularities but we are witnessing the increase of these irregularities by 63%. From the point of view of the taxpayer, it is not very important what the details are, what is important is that the money is eventually lost.

OLAF has a lot of success to its name. On the other hand, we must make sure that we support the idea of the streamlining of its activity. I’d like to praise OLAF for its cooperation with the Member States. This is a much needed cooperation.

There is a question of political will of the Member States when it comes to combating corruption. The picture is quite unequal in that respect. We should ask whether the government is actually tackling corruption, and walk the talk not only talk the talk.

Blue card: The figure, 2 billion euro, includes corruption as well. Do you agree (and your group) with establishing the European prosecutor who can act in European countries ?

I am not convinced with another institution which is going to limit the competences and powers of already existing institutions such as OLAF for that matter, whether this is actually a good idea. We need to use the existing instruments better.

• THEURER, Michael

We must move towards a goals oriented expenditure. Our taxpayers expect proper expenditure and that is what is going to happen in the future.

We (with my group) insist that the Commission use the tools available to it so that payments are cut off when there are mistakes. 80% of the EU budget is shared responsibility and managed by the Member States. The correctives have to force the Member States to pay a closer look at how they are spending money.

Not all irregularities are intentional but there is fraud, crime, and that is something that must be investigated. OLAF plays an important role but there is going to be a proper supervision. We need a European prosecutor.

If I may focus on the problem of tax evasion, over a billion euro is lost every year through tax evasion or tax avoidance. That is why we call for this special committee on LuxLeaks. We, the European Parliament, have to be in the vanguard in investigating this.

Blue card: Do you agree with me there is absolutely no mandate across Europe for European prosecutor’s office ?

Here the EU has no competences but the key question is whether certain competences should be taken back on internal security issues. But now we have cross-border criminals and that means more international cooperation. It is going to be within the law and the European prosecutor would be a good instrument and I would urge you and the UK to get on board with this idea.

• ANDERSON, Martina

It is important to safeguard public expenditure, particularly in this era of austerity. The financial framework 2014-2020 represents the first cut to the EU seven-year-budget in 57 years.

I am glad to see the recognition of the need for more administration capacity and detection of fraudulent activity. The EU needs to train and resource people.

I have serious concerns about the establishment of the European Public Prosecutor’s Office. The rationale for the development of the EU criminal law is to combat transnational crime. Intention is of course to be welcomed but it is a problem to undermine the existent judicial systems of individual Member States to protect the interests of the EU. Article 26.1 is potentially controversial as it could undermine the common law system and justice as a whole.

• JÁVOR, Benedek

The Green group supports the current text of the report adopted in the committee which also includes our critical approach concerning OLAF. We support it particularly on the fight against corruption as one of the main battlefield to be made in order to defend the EU’s financial interests to ensure a high level of confidence in the EU institutions and to secure the minimum risk of the taxpayers’ money.

We are happy that this report highlights also the threat of cross-border fraud that jeopardizes not only the national but also the EU budget.

We need an adequate regulation on whistleblower protection in numerous countries. The quality of whistleblower protection is very poor and in many cases, the procedure in Hungary is conducted against the whistleblowers themselves instead of the reported corruptive cases.

Lastly, I would like to stress the importance of the need for the European public prosecutor’s office, we need to fight further for the establishment of an independent and efficient institution like that. We have to convince not only the Council but also the European citizens that this is the interest of taxpayers, the interest of all European citizens.

• VALLI, Marco

What we have to do is to avoid fraud. We all agree across the group.

I would like to talk about the management of money. Projects that are going to be funded under the Juncker plan for instance, we have to be very careful that they are not going to fund other projects, gas storage or non sustainable works.

On the structural funds as well we have ensured transparency, that Member States have ownership of their own money. Every single cent that is paid by the European social fund has to ensure job creation.

• SCHAFFHAUSER, Jean-Luc

The European Union is a source of fraud. Fraudulent irregularities that have been detected without even talking about undetected are 309 million euro. 160 million are from the cohesion fund. Can we combat fraud if we allow the money to circulate without proper controls ?

This text refers to the public prosecutor. We have to remember the sovereignty of our justice systems.

• ZDECHOVSKÝ, Tomáš

Transparency and integrity are values that we should respect and they are an important part of a quality of life. They are as important as freedom, as democracy. For the European Union to work effectively, it is necessary to support these values.

The financial interests of the European Union are threatened by corruption, money laundering, frauds and other illegal activities. Here it is important not just to criticise the European Commission and the EU as a whole but to look at the problems in the Member States themselves. They should take the responsibility and if they don’t accept the responsibility, the European Commission must be strong enough to stop providing them with EU funds.

Blue card :

I don’t think that for the European Union to work effectively, it should have no money at its disposal. It is important if the EU wants to be a strong group of nations to have their own finance. It must have its own financial policy.

• VAUGHAN, Derek

Quite often we focus on expenditure but I also think we should not forget the revenue collected either. The EU and Member States lose about 10 billion euro a year as a result of cigarette smuggling alone. When times are economically and financially difficult, it’s absolutely vital that we get every euro we can to invest that money in jobs and growth.

I welcome all the measures taken to tackle this problem. For example the partnership agreement with tobacco companies, also the EU signing the UN protocol on illicit trade in tobacco.

• SULÍK, Richard

In Slovakia, corruption is present in every single project financed by the EU funds. The fact that political representatives are involved in such fraud, not only in Slovakia but in many other countries, is general knowledge.

We don’t have adequate inquiries and OLAF has been paralysed. In the past year I have filled 13 applications with OLAF and I can tell you that they are hibernating. If you are serious about combating corruption in association with the European funds, do away with those funds, they are not giving any use. The idea of the EU is not reallocating funds in a socialist way but is about the Single market.

• ŠOLTES, Igor

We are facing cases of fraud. More and more cases are brought every year. The support for the European Union is growing but also the knowledge and level of fraud. We will have to work on greater transparency, on preventive measures, we will have to work on simplifying legislations and of course on making reasonable legislation.

Regarding the European Prosecutor’s Office I think we should not foster any illusions on this will save Europe from corruption, so before opting for this we need to weight things very well because the worst thing to do would be to set up an office that is not going to have clear competences and no assistance.

• ARNOTT, Jonathan

In the report we see that the number of fraudulent irregularities is up by 30% since 2012. We are talking here about incidences of fraud which cannot, should not and must not be swept under the carpet. We still have no criteria, no benchmark.

I believe the problem is actually the nature of taking decisions so far away from the citizen. Brussels is too remote from the citizens to be accountable.

• SARVAMAA, Petri

The report is pretty critical about the ways in which we can improve the spending of the EU’s budget.

OLAF role in preventing fraud is essential but the way it operates is in urgent need of improvement. It’s clear that the independence of OLAF is something we must continue to respect. Potential need of more reliable information about what OLAF is doing so that we can decide what it’s doing to boost the efficiency of its investigations.

The European Commission has to be tough. Stopping payments is a pretty tough measure but it’s a necessary one because it improves the proper use of EU money.

• BALČYTIS, Zigmantas

A lot more attention should be paid on control and proper use of the funds of the EU so that we would have a correct system.

We have the continuous problem that Member States do not provide the exhaustive and compatible data on irregularities. We do not know clearly how Member States are implementing the recommendations by OLAF. We do not have the sanctions with the recommendations followed. The Commission should take its responsibilities.

• TOMAŠIĆ, Ruža

We must accept that the European political elite and decision makers have brought about the current alarming state of affairs. Many European governments have been unfortunately unable to strike a balance between creating stable revenues and reducing the financial burden on citizens and businesses which are consequently in a difficult situation.

The budgetary funds allocated by politicians frequently according to non transparent criteria will always attract fraudsters. The solution does not lie in improving control but in tax reduction decentralisation.

• ŠKRLEC, Davor

Fraud is not a problem only in Central and Eastern European Member States but all across the EU. The high level of abuse of public money is a problem of technical nature caused by continuous neglect of the importance of the administrative capacity and training.

It should be said that while the total number of irregularities has increased, their amount in absolute term has decreased.

We should stress the role of anti-fraud coordination services, we should request that they would be harmonized and standardized across the EU. I believe that we should keep the integrity of the cohesion policy to keep it credible and successful.

• D’AMATO, Rosa

Some comments have to be made on the report. First of all, the fact that it is the first time the cohesion policy is the second highest number of fraud in budget expenditure. We think we have to be very vigilant about this.

There have been 321 fraudulent irregularities and over 100 non fraudulent irregularities. These are very worrying numbers when you remember that the objective of this project is, or should be, to try to overcome regional differences. Italy, Romania, Bulgaria, Poland are one of the countries with the highest irregularities. In 2013, for the cohesion fund alone it was 72 attempted frauds. We have to discover these frauds but we also have to look at how far criminals and corruption have infiltrated our systems, but also think about the control systems.

Blue card: Do you agree that if we simplify the procedures it would be very helpful ?

Yes. In the less developed regions as we call them, there are cases of fraud. The region development programme has been blocked once again. In those regions which need the funds the most. We have to understand why the authorities don’t work properly. We want the Commission to have greater control over these regions as well.

• CHINNICI, Caterina

This report should be looked at in the context of the PIF convention and the fight against fraud.

We are seeing some encouraging results, we are seeing some improvements, more and more investigations, the time required for a recommendation is being cut but the percentage of funds that have been illegally used and not recovered is still extremely high.

We need to also ensure that we have this European Public Prosecutor’s Office as soon as possible because that will help us. We need to ensure that we speed up the decision making processes as well, to ensure that the financial interests of the Union really are protected and I mean the money of the taxpayers.

Blue card: The debate is on the protection of the European’s interests, not on corruption. Don’t you think we are losing much more money on the legal and official products when 95% of the money spent is wasted and harmful to the European economy ?

We can’t separate the protection of the community’s financial interests from the fight against fraud and crime.

• WOJCIECHOWSKI, Janusz

We all care about defending the financial interests of the EU but this is also about integrity in everyday life. Clarity is the key word here. Every money that is spent must be transparent. We need to know why we are supported by the European funds. Unfortunately, the situation is different in practice. I tried to find the trace of money that we spent combating certain problems in Poland.

I hope that clarity and transparency will be the key words for the future, one of the best tools to combat and tackle corruption.

• BATTEN, Gerard

The EU has been trying unsuccessfully to fight fraud for many years.

The exact amount of fraud is unknown but must run into billions. The two biggest areas of the budget open to fraud are the Cohesion fund and the Common Agricultural Policy. The countries with the highest number of irregularities are Italy, Romania, Bulgaria, Poland, Denmark and Greece. Few surprises there. If we give money to countries that are constitutionally corrupted, they are not treated as criminals and take full advantage of it.

Fortunately there I can do something about it, voting to leave the EU by voting Ukip on the 2nd of May.

• BAREKOV, Nikolay

The opposition to the European Prosecutor’s Office has to be aware that the lack of such prosecution office means tolerating crime, which means that the EU tolerates crime against itself.

The influence of the 28 Member States has to be lower on the future European Prosecutor’s Office.

• MACH, Petr

The EU funds are taxpayers’ money and it’s very serious. I only fear that the European Commission and most of the majority of the European Parliament refuses to see the cause of the problem which is believing that the money is redistributed via the European Union. Why the money cannot remains in the hands of the states, municipalities, to pay for roads etc. ? Why it does not remain in the pockets of the citizens so that they can decide what they want ? Let’s get rid of the funds to get rid of the corruption.

• PITERA, Julia

A good spending from the EU budget must be something that we particularly care about. If we care about the future of this Union. Well spent public money is a better way of building the trust in the European Union institutions.

We must make sure that the measures are in place. What is of concern is the claw-back indicators. These indicators did increase in 2013 which clearly identifies the scale of determination of the institutions in place. There is a need to analyse where do these irregularities come from.

• CAPUTO, Nicola

The fight against fraud, together with corruption is a priority for the institutions at a European and national level. Given the problems with the system, it is a moral, legal challenge to try to ensure that we overcome irregularities that affect the European system. I am convinced that we still need in our structures the institutions to form a common front and to ensure that legislation in the Member States is enforced. We need a simplification of rules and procedures and also to involve the authorities who manage these funds. We also need to look at public tenders and this is important because of national economies recovery. We need to go beyond and fight against the fraud.[…]

• GEORGIEVA, Kristalina

We have a huge obligation toward people. To use the money wisely and to account to every penny they give to us. The fact is that fraud actually has gone a bit down on the expenditure side to 0.90% versus 0.21% the year before. We have to continue relentlessly to push this evil out of the territory of our European project.

We have to simplify the rules not only because we would have less errors but also because then we can have true transparency. Transparency is our best friend in fighting fraud and corruption. That is the reason why we look to the Parliament as a partner in simplification.

On the revenue side, the trend is on the opposite direction. Fraud has gone a little up to 0.29%. It is a crime not to be tolerated.

Prevention is better than cure. But we also have to act when wrong doing takes place and I believe that if we have a European Prosecutor’s Office, with the right mandate, it will make us more effective. It’s very important that we trust our own office in the data that it provides

• PIRINSKI, Georgi

We have to pay all due account to statistics. The amount of money subject to irregularities represents 1.34% of the overall expenditures which means that over 98% of expenditures have been disbursed correctly. As far as resources are concerned, 1.86% is subject to irregularities. In 2013, the volume of irregularities has decreased by 30% and fraud by 21%.