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Wednesday, September 20, 2017
Date Posted:

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EU: (3) Defrauding the taxpayer and embezzling our money

The European Union
Professor Arthur Noble

The scandal of Eurofraud

British taxpayers are squandering masses into the EU, described by MP Bill Cash as a "bottomless, fraudulent pit". Wastage and scandal through widespread bureaucratic mismanagement and incompetence cost well in excess of £6 billion annually, about one-tenth of the total EU budget. The UK emerges most creditably from the catalogue of crookery and ineptitude uncovered by the massive Reports of the EU's Court of Auditors.

Rotten to the core

The agro-mafiosi countries of southern Europe (Spain, Italy, France and Greece) are exposed as the most blatant swindlers, although even Germany and Denmark are by no means blameless. Singled out are the calamity of the EU's wine policy, which annually hands out £900 million to create a "wine lake" of 19 billion bottles, and the tobacco and sugar scandals, which cost £300 million and £1.2 million respectively.

Court of Auditors Reports

In 1989 the EU Court of Auditors cited incompetent financial management resulting in failure both to detect fraud and to act after detection, and allowing fraudsters who robbed the Community to continue in business. There were huge payments for non-existent durum wheat and sub-standard olive oil and for services never in fact produced.

The 1993 Report noted "little or no improvement", especially in relation to the two largest budget heads – Agriculture (EAGGF) and Structural Funds.

The 1994 Report emphasised the continuing "lack of political will in the Community to take remedial action, with the result that the integrity of the Community's financial statements is in doubt". It criticised the persisting "worrying absence of indignation at the amount of fraud and mismanagement in the Community's finances", describing the Commission's new anti-fraud strategy as "inadequate" – "an action plan with no plans for action".

The House of Lords Report

In July, 1994, the House of Lords Select Committee on the European Communities published its Report on Financial Control and Fraud in the Community, with Evidence, its fourth since 1989. The Report castigates in turn the Commission, the Council, the Parliament and, ironically, the very body that is itself responsible for monitoring fraud – the Court of Auditors.

A rotten Commission

Under Article 205 of the original EEC Treaty, it is the Commission that "shall implement the budget [...] on its own responsibility". It is castigated for doing "too little to ensure that Community funds are not committed without satisfactory prior approval". It operates under a control system which "absolves almost everyone else from responsibility for good financial management and value for money", resulting in "a perverse system" which gives financial managers "a total alibi for their financial responsibilities".

A rotten Council

The Council demonstrates "unwillingness to take strong measures", mainly because its decisions are taken in a primarily political context, between Member States under pressure from national legislatures and interest groups more interested in getting their share of funds than in matters of accountancy and accountability.

A rotten Court of Auditors

According to Article 206a of the Treaty, the function of the Court of Auditors is to "examine the accounts of all revenue and expenditure of the Community". Hence it is the EU's own internal fraud investigator. The Report calls for its role and audit coverage to be examined by "outside experts" whose "independent advice" would redress the "public scandal" of "grievous losses through fraud and irregularity".

A rotten European Parliament

Poor attendance in the Chamber when the President of the Court presents his report suggests that "most MEPs' interest in the scrutiny of Community spending is minimal". The evidence also suggests that some Member States' internal control systems are unable to meet the required standards, and that the quality of their reporting has been judged unsatisfactory, which amounts to an accusation of deliberate cover-ups by certain countries, notably Roman Catholic ones.

Roman Catholic Countries the leading Fraudsters

Protestant countries such as the UK and Denmark have been foremost in their criticism of EU financial irregularity. One blatant example was the vast Italian meat fraud which cost the EU budget well over ECU 43 million in lost import duties. Nearly 200 people were investigated and 50 arrested for taking part in a scheme importing meat into the EU without the payment of customs duties. Another example is the tactic of France, which, despite its National Assembly's robust resolution to combat fraud, has consistently invoked its own computer privacy laws to deny information to investigatory bodies.

A fraudulent system breeding fraud

The difficulty in combating fraud is inherent in the fraudulent European system itself. If honest Member States push fraud prevention too hard, it damages their negotiating positions in other policy areas, while the numerous EU policies requiring redistribution of income between rich and poor Member States encourages an underlying attitude that some fraud does not matter so long as funds go to the right countries or are consistent with the underlying thrust of policy.

The crowning 'glory' of Eurofraud – mass resignation of the EU Commissioners

A damning report by independent investigators into fraud, nepotism and mismanagement within the Commission led to the mass resignation of all 20 European Commissioners! The report concluded that it was difficult to find anyone with even the slightest sense of responsibility for what had happened. While no commissioner was accused of lining his or her own pockets, but they were collectively accused of having lost control of a bureaucracy that did enrich others. In the end they decided to jump before they were pushed.

A number of prominent commissioners were named in the report, which details a culture of favouritism and mishandling of taxpayers' money. It is sprinkled with words like 'complacency', 'incompetence' and 'arrogance'. Commission President Jacques Santer faced allegations of fraud; former French Prime Minister Edith Cression of favouritism; Portugese Commissioner Joao de Deus Pinheiro of nepotism; Spanish Commission Vice-President Manuel Martin of slow response to fraud in an EU project; German Commissioner Monika Wulf-Mathies of inappropriate procedures in appointing an associate; Commission ex-President Jacques Delors of failing to follow up fraud allegations in the Commission's Security Serrice.

The allegations surfaced with an official Paul van Buitenen – himself suspended for breaking staff rules – sent information to the European Parliament highlighting "incompetence and unwillingness of the administration to deal efficiently with fraud and irregularities".

Do you want to be in this kind of Europe?

The British Government has consistently capitulated to demands for an increase in the UK's contribution to the EU budget! It is honest British taxpayers and traders who are subsidising this massive Eurofraud and who bear the brunt of the huge sums lost to it. The situation is getting worse. We must say a decisive 'no' to this European farce.


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