Protection of the Communities' financial interests - Fight against fraud - Annual Report 2008 (debate) 
President
The last item is the report by Mr Cozzolino, on behalf of the Committee on Budgetary Control, on the protection of the Communities' financial interests and the fight against fraud - Annual report 2008.
Andrea Cozzolino
Mr President, ladies and gentlemen, at a time when the Treaty of Lisbon is giving Europe a more incisive role in the lives of millions of Europeans, the challenge of transparency and legality is crucial. Hence the report that we are presenting is the result of a highly coordinated effort. The work was confined, first and foremost, to the scenario outlined by the Court of Auditors, whereby the financial impact of irregularities fell from more than EUR 1 billion in 2007 to EUR 783 million in 2008.
The fall concerns all spending areas except direct expenditure and pre-accession funds. Areas of major concern still exist in relation to the Structural Funds too. However, absolute amounts and values alone do not tell us where the urgent problems are hidden and where the situation is under control. Our analyses and meetings over recent months have led us to prioritise two requirements. Firstly, the urgent need to make the Member States more responsible for identifying fraud and irregularities, and for sharing the information needed to combat fraud, waste and distortions in expenditure and in the collection of taxes.
Secondly, the importance of presenting proposals and working hypotheses in order to make it easier to implement measures in the Member States, with administrative procedures and management strategies that give priority to the quality of the projects and to their impact on the living and working conditions of European citizens.
In order to achieve these objectives, we propose that Parliament insist on certain priorities: firstly, we propose that OLAF draw up 27 profiles, analysing with due care and attention the strategies followed by each individual Member State in combating fraud and irregularities in the use of European resources, with a precise map of the authorities responsible for performing checks in each individual country and data on the quantity and quality of the checks performed and on their effects.
Secondly, reducing the number of irregularities and significantly improving the regulations. We are embarking on a legislative and regulatory simplification programme, intended in particular for the Structural Funds. Moreover, the fight against corruption, financial crime and breaches of public procurement rules must be stepped up. In this year's report we have made progress on this point with the support of the entire committee. Thanks to an intense, concerted effort, proposals have been drafted on the main problems in this area. From the relationship between the EU and tax havens, to the databases on beneficiaries of European funds, the report makes a practical contribution to increasing the transparency of expenditure and to strengthening the anti-fraud and anti-corruption strategies.
Lastly, with regard to OLAF, it is crucially important to guarantee its full operational independence, the full cooperation of the Member States and an appropriate human resources strategy, which it most definitely needs. We must keep the debate alive and kicking in Europe so as to establish the role of a single European Prosecutor.
To conclude, I believe it is vitally important to fight together for the transparent and efficient management of European resources. In this regard we must ensure that the problems that do exist are not exploited in any way in order to call into question instruments of fundamental importance to the European project, such as cohesion policy and development aid. Rather, we must look clearly at the problems, at the distortions that still exist in the various European spending areas and use these data to take new, determined steps forward, thereby making the management of our finances more efficient and transparent.
I believe that, by making this effort, the various European institutions really will make progress in the construction of a Europe that is stronger, more integrated and able to better satisfy the needs of Europeans.
Elena Băsescu
- (RO) I think that European funds must be made accessible to citizens in a fair, transparent manner. One feasible method for possibly eradicating corruption in public procurement is to introduce a transparent system in the form of an online tender system.
According to the Commission's report, the declining financial impact of irregularities in 2008 indicates that some of the legislative and institutional measures aimed at discouraging fraud were implemented successfully by Member States. Greater financial control is still required, along with effective legislation for combating tax fraud, especially relating to VAT.
The protection of the European Union's financial interests is a priority for the Romanian Government as well. As part of this, the Fight Against Fraud Department was set up. It provides the single point of contact in Romania with OLAF for European funds.
Monica Luisa Macovei
Mr President, as EPP shadow rapporteur I would like to start by expressing my gratitude to the rapporteur and to the other colleagues from the political groups for their excellent cooperation. We paid particular attention to increasing transparency and better rules for public procurement, as this is the area most vulnerable to fraud and corruption which distort the market and increase the prices paid by consumers.
Moreover, beneficiaries of EU funds from all Member States should be published on one website and based on the same criteria. I also called for the mutual recognition of disqualifications, such as the exclusion of fraudulent offenders from acting as chief executives. OLAF's activities should be supported; we ask for statistics and reasons in cases where national authorities did not file indictments following reports by OLAF, which happens in 73% of the cases initiated by OLAF.
The report also proposes to ban companies which operate through offshore havens from concluding business agreements with companies residing in the Union if their offshore location has unilaterally delayed the adoption of cooperation agreements with the Union.
Let me conclude by saying that the Union must treat fraud and corruption as interlinked and as a matter of priority.
Seán Kelly
Mr President, I think it is not an exaggeration to say that the current economic crisis was brought about by a moderate crisis initially, a moderate crisis that saw greed triumph over generosity, corruption triumph over integrity and self-interest triumph over solidarity; and until we get back to generosity, integrity and solidarity being at the heart of corporate and government affairs we will never get out of the trouble we are in at the minute.
I agree totally with every effort made to fight fraud. I have seen programmes in Ireland showing people who were claiming social welfare in the Republic of Ireland, Northern Ireland and England every week, people flying in to Cork airport and out again having claimed social welfare. The worst of all was the banks - Allied Irish Bank and Irish Nationwide - playing ping-pong with accounting practices to hide their true situation.
This has landed us in terrible trouble in Ireland, and every effort must go to ensure that fraud is stopped. The message has to go out loud and clear that it is going to be pursued and dealt with very strongly at European level and at every level.
John Dalli
Member of the Commission. - Mr President, honourable Members, on behalf of my colleague, Commissioner Šemeta, I would firstly like to thank the rapporteur for his constructive report and the proposals put forward for improving the protection of the Union's financial interests.
The Commission appreciates that Parliament strongly underlines the joint responsibility of the EU institutions and the Member States in this respect. Let me just make a couple of remarks.
Regarding the reporting of irregularities by the Member States, OLAF has established a new web-based reporting system called IMS: Irregularities Management System. This has brought about considerable improvements in the reporting of irregularities by Member States, including those which you criticise in your report. The Structural Funds is an area of particular concern both for the Parliament and the Commission. The Commission has taken strong actions to remedy weaknesses in the most affected areas and programmes in the framework of the action plan for structural actions in 2008, including a vast simplification exercise.
With his fellow commissioners, my colleague Commissioner Šemeta, will pursue efforts aiming at reducing further the error rate in cohesion policy. The Commission will assist and monitor the Member States for the closure of the 2000-2006 programmes and will make sure that the management and control systems under the new programming period will deliver their benefit. Moreover, the Commission will liaise with the Member States' authorities to ensure that they fully assume their responsibility in shared management as reinforced by the new provisions in the Lisbon Treaty.
Considerable progress has been achieved concerning transparency about the beneficiaries of EU funds. In the area of agriculture the Council has agreed that publication of the beneficiaries of funds is the responsibility of the Member States. The information has to be made available on a single website in each Member State, in line with the principle of shared management. To provide an overview and facilitate access to the Member States' websites, the links to these websites are linked on the Europa web page.
I come now to OLAF. I thank the rapporteur for the strong support he explicitly states for the work of OLAF. My colleague Commissioner Šemeta fully agrees that the office should concentrate on its core tasks of conducting investigations, although OLAF also has other important duties to fulfil, in particular in the area of fraud prevention. He also agrees that the focus for OLAF should be on the more important cases and that small-scale fraud should be handled by other bodies.
In 2008 OLAF revised the financial follow-up procedures relating to OLAF cases by establishing de minimis thresholds. Commissioner Šemeta has taken good note of your comments on the need for OLAF to work together with the internal audit services, which he fully shares. OLAF and IAS have been cooperating closely since 2003. They exchange information and provide each other with specific training to improve their respective staff knowledge on issues of mutual interest. OLAF is willing to cooperate still more closely with the IAS.
Regarding procedural rights, the new OLAF manual adopted in December 2009, which has been transmitted to Parliament, already provides comprehensive guidance for OLAF investigators. More detailed rules on procedural rights will be included in the legislative proposal for revision of the OLAF regulation. In this respect the Commission would also recall that the reflection paper on the legislative reform of OLAF will be submitted to Parliament and the Council before the summer break.
Commissioner Šemeta looks forward to presenting this paper to the Committee on Budgetary Control at its meeting in July. Finally, he looks forward very much to working with Parliament as an ally in the task of improving the efficiency of OLAF and the protection of EU taxpayers' money.
President
The debate is closed.
The vote will take place tomorrow.
Written statements (Rule 149)
Alain Cadec  
The fight against fraud is a crucial challenge that the European Union and the Member States must take up. The importance of the public funds pledged under the heading of cohesion policy demands the utmost vigilance given the potential for misappropriation of those funds. The credibility of the Structural Funds among Europeans is at stake. In this connection, I welcome the efforts made by the European Commission and the European Anti-Fraud Office (OLAF) to combat fraud more effectively. As the rapporteur points out, the financial impact of irregularities on structural actions has decreased significantly. Furthermore, the increase in the number of irregularities reported to the Commission testifies to the progress of the fraud prevention systems. It is important for the Commission and the Member States to continue this fight as rigorously as possible. However, it is also essential not to discourage potential beneficiaries of the Structural Funds with overly harsh restrictions. Intentional fraud is one thing; a lack of precision when organising projects is quite another. While the former must be considered as a criminal activity, it is important to simplify the procedures in order to limit the impact of the latter.
Tamás Deutsch  
in writing. - (HU) The crisis unfolding in some countries of the euro area presents an unprecedented warning to European decision makers to unconditionally protect public funds and the Community's finances. The economy and the international markets react with exceptional sensitivity to any measure taken by the European Union, such as, for instance, the rescue packages adopted in recent days. Entire national economies could be threatened if crisis management is not handled appropriately and on a European level. Therefore I would not be exaggerating when I say that the eyes of the whole world are on our finance ministers and on the European institutions. To this day, the governments of certain Member States, by pursuing their personal interests and functioning like oligarchies, have brought their own economies to the brink of bankruptcy and made any future prospects unattainable for entrepreneurs, families and qualified young people. Because of this we can only welcome the rapporteur's intention to increase the accountability of Member States. Today this is one of the key issues for successful crisis management. Rigorous monitoring, in order to end the era of corrupt governments, is more important than ever in this critical period.
Franz Obermayr  
in writing. - (DE) The report on the fight against fraud indicates a fundamentally positive development. From 2007 to 2008 there was a reduction in the negative financial effects of irregularities in all sectors. However, this was not the case with regard to pre-accession aid. Here the negative effects have increased by 90.6%. In this regard, I would point out that since 2002 the EU has been providing financial support for Turkey's 'efforts' towards EU accession, with successively higher amounts being paid out each year. For the period 2007 to 2013, Turkey will receive the sum of EUR 4.84 billion. This is the case even though the Commission is aware that Turkey is making nowhere near the required amount of progress in respect of the accession criteria. The money is continuing to flow nevertheless and in ever higher amounts. The most recent special report by the European Court of Auditors states, in addition, that with regard to the accession aid for Turkey in particular the money is being invested without sufficiently explicit objectives and benchmarks. Without a clear strategy, money is being used with no specific plan and in an unconstructive way. We must put an end to this madness.
