Billions of euros in EU funds are being siphoned by fraudsters

The EU tries hard to clamp down on fraud affecting European businesses and consumers, but is also vulnerable to fraud itself – losing an estimated €8.8bn ($10bn) between 2002 and 2016.

The figure comes from a new report from the European Court of Auditors, which also found that around €2.6bn of these public funds appropriated from the European Commission had been recovered by the EU’s fraud office OLAF over that period.

There are concerns that the fraud figure may be an underestimate, however, according to the report. Meanwhile, OLAF’s administrative investigations have led to prosecution in fewer than half (45 per cent) of cases, and resulted in recovery of less than a third of the missing funds. Officially, detected fraud in EU spending in 2017 amounted to €390.7m, or 0.29  per cent of total payments from the EU budget.

 “We found that the Commission lacks comprehensive information on the scale, nature and causes of fraud,” says the ECA, adding that a lack of cooperation between EU member states is a factor. “Its official statistics on detected fraud are not complete and it has so far not carried out any assessment of undetected fraud.”

While some information is available on fraud patterns and schemes used in different sectors, there is no detailed analysis to identify what causes some recipients of EU money to behave fraudulently, and this stymies the Commission’s efforts to tackle the issue, it notes.

There have been some steps in the right direction, including the proposed creation next year of a European Public Prosecutor Office (EPPO) with powers to prosecute crimes against the EU’s financial interests in 22 member states. However, it is reliant on member states for detection and investigation, and some with high levels of corruption may not participate in that process.

Other issues highlighted in the report is that there is a lower threshold for reporting fraud of €10,000, and for agriculture and the European social fund there are many payments below that level.

Among the ECA’s recommendations are that the Commission should extend the role of OLAF, giving it a strategic and oversight role in EU anti-fraud action with responsibility to implement policy and coordinating and monitoring anti-fraud activities in member states.

It should also try to get a clearer picture on fraud by making sure that information on fraud investigations are reported in a timely manner by all competent authorities and by improving its data-gathering on fraud and corruption.

Fraud should be clearly referred to in the portfolio of one EU Commissioner, and a new strategy should be drawn up to replace the Commission Antifraud Strategy (CAFS), which has not been updated since 2011.

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