Recovery of Community funds (debate) 
President
The next item is the report by Paulo Casaca, on behalf of the Committee on Budgetary Control, on the recovery of Community funds.
Paulo Casaca 
rapporteur. - (PT) Mr President, Commissioner, if we are to recover the amounts missing from the Community budget, what is needed is suitable determination, paperwork, transparency, stringency, proportionality and harmonisation of the rules and procedures. Sadly, we are a long way off achieving that.
The European institutions must not shut themselves away in a world of rules and regulations, far removed from reality. For this reason, this report on the recovery of Community funds takes as its starting point a specific example: never before have we had a bigger sum to recover - it is put at almost EUR 100 million - and the circumstances surrounding the missing money are worse still.
This concerns a crime perpetrated by a criminal organisation that has enjoyed the collusion of any number of European companies, and, following the investigation and cooperation on the part of the Italian authorities, the European bodies were notified of the details of the case. The Guardia de finanzia held an investigation into the illegal import of butter by firms controlled by the Naples Camorra, the adulteration of that butter with unrendered beef fat, vegetable oils and a chemical known as lipostrol, the sale of tens of thousands of tonnes of the finished product to various European companies and lastly the use of this product for the fraudulent use of export refunds and disposal subsidies for pastry goods. The findings of this investigation were then passed on to the relevant Community and national authorities.
Seven years after the Italian investigation, and what has happened? In one of the Member States concerned, the authorities only decided to launch an inquiry four years after the original Italian report came out, and none of the estimated missing EUR 40 million has been recovered. In another Member State, the inquiry has not even got off the ground, so none of the EUR 50 million-plus has been recovered. In a third Member State, the problem was deemed merely administrative and the original fines have been cut and the amounts involved almost nominal.
Outside Italy, where, on the basis of a national initiative, dozens of people were arrested for murder, illegal possession of weapons and association to commit offences, and where complex legal processes are ongoing, there is no realistic expectation of securing any convictions in the countries concerned or of the Community money being recovered. Everything indicates that the whole process will lapse.
Owing to legal confidentiality, most of the national authorities responsible for food safety have not, as yet, been notified of this fraud. While the Community and national authorities act with such a lack of determination and coordination in addressing a crime of this magnitude, countless cases have come to light, in which, under discretionary powers granted in the cause of recovering Community funds, the authorities have hounded honest farmers to return money, without any substantive justification and for procedural reasons that are not always genuine, and this has often left the farmers in a state of poverty. For these farmers the principles of the presumption of innocence, the right to be informed of the nature of an accusation, proportionality and the guarantee of adequate resources to mount a defence are not worth the paper they are written on. The crux of the matter is that Article 280 of the Treaty is being ignored. The notion of cooperation between the Commission and the Member States for protecting the Community's financial interests is pie in the sky. The effective and equivalent protection of these interests for the citizens is not being delivered.
Against this backdrop, root and branch changes must be carried out, be it by redefining the functions of Eurojust, by establishing a European Public Prosecutor or by some other means. We need a European initiative that ensures that cooperation on justice, with a view to protecting the Community's financial interests, is backed up by action, and is not mere rhetoric, as has happened in this case, the biggest of its kind in the area of Community finance.
Dalia Grybauskaitė
Mr President, I would like to thank Mr Casaca for a very good, interesting and useful report. It takes account of direct management, which is mainly the responsibility of the Commission, and shared management, which the Commission shares with the Member States.
Regarding recoveries in direct management, the Commission thanks the rapporteur for his support in the current revision of financial regulation which we have already placed on the table, in particular the proposals aiming to establish a uniform time limit of five years, and of course the level of privilege for Community entitlement to fiscal claims in national law which, to our regret, the Council was reluctant to support.
Regarding recoveries in shared management, the Commission agrees with the emphasis placed on the responsibility of the Member States, since this accounts for the biggest part of Community expenditure. The Commission shares the rapporteur's analysis concerning the low level of recoveries by some Member States. In one particular case, the sum involved is EUR 95 million.
However, I would like to mention that this Commission has laid special emphasis on recovery. Between 2003 and 2006, the Commission was able to reduce recovery amounts from EUR 553 million to only EUR 160 million by September this year. The specific case of the 95 million is the subject of a criminal investigation in the court of one Member State and another is involved in the problem. So in fact less than EUR 100 million have to be recovered in the near future, and EUR 95 million after the investigation has been completed.
We are very satisfied with the report as a whole. We are working with Parliament, especially the rapporteur on the Financial Regulation. We are cooperating closely with the Committee on Budgets on that. We shall give a proper response to your report and your recommendations in writing.
Ingeborg Gräßle
on behalf of the PPE-DE Group. - (DE) Mr President, Commissioner, ladies and gentlemen, let me start by extending my group's thanks to the rapporteur for a really very interesting and also important report, for there is still a lot wrong with the way in which the funds to which the Community is entitled are recovered, particularly in the way in which the Member States go about it, and it is certainly very regrettable that the Council is conspicuous by its absence today.
We can see that more progress has been made since you, Commissioner, took the matter in hand, but I do believe that we will still have to get seriously stuck in to improvements in specific areas over the coming months, particularly in agricultural policy, which is at the heart of the whole recovery issue, and where much is still not as it should be, with 70% of old claims dating back to the period from 1971 to 2002. We are talking here about EUR 3.1 billion, 70% of which has still not yet been recovered. The present situation is pretty shameful. The total recovered amounts to less than one fifth of the EUR 6 billion outstanding in 2002.
The President of the Court of Auditors said recently - and may I say, Mr President, that I object to the timing of this debate, since a very important report is being presented to the Committee on Budgetary Control at this very moment - that recovery was proceeding at an increasing sluggish pace and that the penalties are wholly unsuitable. The problem lies with the Member States; I believe that all of us here in this House are on the same side and will, come what may, raise the parity of tax demands and claims for the repayment of funds as an issue in the deliberations on the Financial Regulation, for we regard this as vitally important.
It is also important that there should be more support for the auditors who work where these things happen, particularly those who work for national authorities, for they face the possibility of being punished for their own department's failings, and so they need our special protection.
There is another problem within the Commission itself. Until recently, it was impossible to ascertain just how much was currently outstanding, and I hope that the improved accounting procedures will improve matters. I will close by saying that we will ensure that this issue stays on the agenda.
Jeffrey Titford
on behalf of the IND/DEM Group. - Mr President, I believe this report is a long and drawn-out justification for the creation of a European public prosecutor. Indeed, judging by Mr Casaca's tone, he is positively affronted to find that the law of a Member State should ever prevail over the Commission: heaven forbid! According to this document, to get round the problem we should create a law officer with authority to overrule the laws of Member States. This is to be done 'in the interests of a more joined-up procedure', and the other vital reason quoted is to help reduce complexity.
As a staunch defender of the national state, I strongly oppose the creation of a European public prosecutor and anyone in this Chamber who sincerely believes in democracy rather than just paying it lip service should oppose it too. I particularly call upon MEPs from my country to stand with me in defence of British law.
Andreas Mölzer
(DE) Mr President, it is evident that many regard the squandering of EU funds as a minor offence, for there seems to be no other explanation for the fact that, over the past thirty years or so, irregular payments were made amounting to EUR 3.1 billion, only 17% of which has been recovered. Inadequate monitoring procedures and non-compliance with EU rules and regulations appear to be the order of the day.
It is bad enough that billions of euros in EU funds should disappear into fictitious accounts, but when, even in the rare cases where irregular payments are brought to light, the recovery of them is bungled or proceeded with so slowly that the culprits go to ground and the money disappears, it becomes clear that the European Union is suffering from something very like organised negligence.
It is intolerable that there should be repeated instances of the negligent use of EU funds - and, moreover, in the same Member States - without someone having to take the consequences. Where Member States fail to do everything possible to recover missing funds within a maximum of two years, I believe that those Member States should themselves make good the loss.
Simon Busuttil
Mr President, EU money that is lost or unaccounted for often hits the headlines. It is a pity that the work done to prevent money being lost in the first place - and to recover funds that are lost - is all too often too technical, too tedious to be reported at all, let alone hit the headlines. However, efforts to recover funds are being made and should be supported, although, as the rapporteur clearly points out, more needs to be done.
In particular, more needs to be done on the recovery of funds where there is shared management. We need to rely on the full cooperation of the national authorities to help us succeed. Sometimes I get the feeling that, as long as we are talking about Community funds, national authorities are not quite so keen to do their part. In effect they are saying: 'Our responsibility is the national budget, and that is it'. However, that is not it. When EU money is spent at national level, it is clear that national authorities are actively involved. National authorities also bear a strong responsibility for ensuring that Community funds are not spent erroneously, irregularly, or even fraudulently. If they are, then action is taken to recover them.
The report rightly calls for Member States to stand up and be counted, to do their part, to better organise themselves and to cooperate more with the Commission so that the recovery of funds is effective and becomes a deterrent in itself.
Markus Pieper
(DE) Mr President, Commissioner, ladies and gentlemen, I very much welcome Mr Casaca's report, and, as a member of the Committee on Regional Development, I have to say how very embarrassing I find the dramatic increase in frauds and irregularities.
The financial impact on structural policy measures went up from EUR 480 million in 2003 to EUR 694 million in 2004, the last reported year, in which a good 70% of the misspent funds were attributable to structural policy. To that we must also add a grey area. If we are less than fully able to get back the money wrongly paid out - as this own-initiative report says we are - then that shows the EU in a bad light. It is no small thing to have outstanding debts totalling EUR 3 billion.
This is not, however, just about the financial loss to the EU. If the recovery of these funds is less than efficient, others will be encouraged to misuse money granted in aid. Whether money has been obtained by deliberate fraud or paid out in error, the recovery of it must run smoothly and efficiently, and even if the procedure may appear disproportionate in individual cases, the Member States must apply it, so I call on them to proceed with greater rigour and coordinate their public prosecutors' offices accordingly, while also asking them to make room for the European anti-fraud authority OLAF to become more involved in the proceedings. As for the Commission, I call on it to do more to make the misuse of subsidies a cause of public disgrace.
Europe needs transparency, and so does its system of grants and subsidies. Where funds are used for purposes other than those for which they were originally intended, we have to put a stop to it, and for that we need more openness. I thank the rapporteur for helping to bring that about.
Mairead McGuinness
Mr President, I should like to thank the rapporteur for the almost forensic work he has put into this report. Apart from the obvious loss of money, which is very serious from an EU point of view, the public perception of fraud is quite large and to some extent it is unfair and detracts from the very good work that the European Union budget does throughout Member States. We should remember that by concentrating on the problem that is there. Unfortunately, the public blames this anonymous European Union, when the problem is much closer to home in their individual Member States. That message needs to go out very clearly too.
It is unacceptable that there is so much money outstanding - some EUR 3.5 billion is owed as of June 2002. A great deal of money in the agriculture sector has just not been recovered because of the difficulties with Member States not cooperating.
The reform of the common agricultural policy in 2003 should see an improvement in the position in relation to agriculture: the introduction of the single farm payment, its close links to cross-compliance measures, will ensure that money is only paid out when it should be. I have a niggling worry that because of past failures in agriculture, we are coming down very heavily in policing cross-compliance. I have farmers come to me saying that they get no notice of inspections and are faced with significant penalties for very minor mistakes. That is going too far, and we need to be careful not to push too far in that direction, because while it is very easy to tackle and trace EUR 5, EUR 5 billion seems to slip through the net. I am pleased that Commissioner Fischer Boel has said she will look at less draconian implementation, while at the same time ensuring we meet the rules.
We do need to get the money back. But I would like to end by making the point that the talk, and hopefully the work towards better regulation, should improve this position. The past is not a pretty picture. Let us hope the future is a nicer one.
President
The debate is closed.
The vote will take place on Tuesday at 12 noon.
Written Statement (Ru1e 142)
Véronique Mathieu
(FR) It has to be said that the recovery of Community funds, following irregularities or fraud, remains insufficient. The financial regulation needs to be applied more rigidly, and revised.
Thus, Parliament believes that the simplification of the recovery procedures and better coordination between the Commission services and those competent at national level constitute a crucial line of work. The main problem is that no national authority is totally responsible for the quality and supervision of the national controls even though 80% of the responsibility for executing the Community budget falls to the Member States, because they jointly manage it. The complex nature of the mechanisms thus prompts the media to hold the Commission responsible for the problems associated with illegal operations and, hence, even for the recovery of funds, even though these problems lie above all at Member State level.
Enhanced cooperation between OLAF, Eurojust and Europol, a broader application of the recovery procedure through the use of legal channels and a request by Parliament for the Commission to lay down a regulatory framework for the financial handling of irregularities and for it to regularly present a report, via the Directorate-General, on the state of the recovery procedure, are all so many important measures that will make the procedures more transparent and effective.
