The Committee on Budgetary Control adopted an own-initiative report by Gilles PARGNEAUX (S&D, FR) on the annual report 2016 on the protection of the EU’s financial interests – Fight against fraud.
Member States and the Commission have shared responsibility for implementing approximately 74 % of the Union’s budget for 2016.
Members welcomed that the total number of fraudulent and non-fraudulent irregularities reported in 2016 (19 080 cases) was 15 % lower than in 2015 (22 349 cases) and their value had decreased by 8 % (from EUR 3.21 billion in 2015 to EUR 2.97 billion in 2016).
Members deplored the fact that not all Member States have adopted national anti-fraud strategies and that there is still a gap between the Member States in the reporting process. The Commission is invited to continue its efforts to help Member States to step up the level and quality of inspections and share best practices in combating fraud.
The report welcomed the adoption of the Directive on the fight against fraud to the Union’s financial interests by means of criminal law (the PIF Directive), which includes cross-border VAT fraud involving total damages of at least EUR 10 million.
It also welcomed the decision of 20 Member States to proceed with the establishment of the European Public Prosecutor's Office through enhanced cooperation. In this context, it called for effective cooperation among Member States, the EPPO, OLAF and Eurojust.
Revenue - own resources: Members expressed concern about losses due to the VAT gap and fraud relating to EU VAT, which amounted to EUR 159.5 billion in 2015. They emphasised that the problems related to cross-border VAT fraud demand strong, coordinated and speedy measures. The Commission is urged to speed up its procedures to present its proposals for a definitive VAT system as provided for in the action plan.
Tobacco smuggling into the European Union has intensified in recent years and is estimated to result in an annual loss of EUR 10 billion in public revenue to the EU and Member States’ budget. The latter should improve their efforts to combat these illegal activities.
Members deplored the disparities in the customs checks carried out within the EU and the large amounts involved in fraud affecting the own resource collection system. They called on the Commission to strengthen the common policy on customs checks by providing for genuine harmonisation with a view to improving the collection of traditional own resources and to ensure the EU’s security and economic interests, focusing in particular on efforts to combat trade in illicit and counterfeit products.
Expenditure: Members regretted that this is the fourth year in which the irregularities reported as fraudulent in direct management increased in number and value (EUR 0.78 million in 2015 and EUR 6.25 million in 2016).They called on the Commission to present by the end of 2018 a specific plan to reduce fraud in this area.
The report noted that the number of reported fraudulent and non-fraudulent irregularities concerning the European Agricultural Fund for Rural Development (EAFRD), while decreasing from 3 250 cases in 2015 to 2 676 cases in 2016, is still twice as high as in 2012, but wished to highlight that the amounts concerned in 2016 are only 8 % higher than in 2012.
The 8 497 fraudulent and non-fraudulent irregularities linked to cohesion policy and fisheries in 2016 represented a 22 % decrease compared to 2015, but are still 25 % higher than the average for the last five years.
The level of irregularities due to non-compliance with public procurement rules remains high. The Commission is invited to develop a database of irregularities, capable of providing a basis for meaningful analysis in a comprehensive way of the frequency, seriousness and causes of public procurement errors.
In view of the problems highlighted, the report suggested taking the following measures:
Improving controls: Members called for firmer measures against fraudulent irregularities and that non-fraudulent irregularities should be eliminated using administrative measures, in particular by introducing more transparent and simpler requirements.
In particular, a system enabling the authorities to exchange information would facilitate the cross-checking of accounting records for transactions between two or more Member States in order to prevent cross-border fraud in respect of the structural and investment funds.
Prevention: the report called for the strengthening of the implementation of the Early Detection and Exclusion System (EDES) and Anti-Fraud Information System (AFIS) and for the completion of the national antifraud strategies.
The Commission is invited to:
OLAF investigations: Members deplored the fact that despite numerous OLAF recommendations and investigations, the prosecution rate is only 30 % in the Member States and the judicial authorities of some Member States do not regard OLAF’s recommendations on the misspending of EU money as a priority.
Also deploring the fact that around 50 % of OLAF cases are dismissed by national judicial authorities, Members called on the Member States, the Commission and OLAF to lay down conditions for the admissibility of evidence provided by OLAF.