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IP/02/1606

Brussels, 5 November 2002

Commission to recover EUR 86.36 million of CAP expenditure from the Member States

Following a decision of the European Commission, a total of € 86.36 million of EU farm money misspent by Member States is to be claimed back. The money is to be recovered because of inadequate control procedures or non-compliance with EU rules on agricultural expenditure. While Member States are responsible for paying out and checking virtually all expenditure under the Common Agricultural Policy (CAP), the Commission is required to ensure that Member States have made correct use of the funds. This audit procedure is a vital instrument for controlling CAP expenditure, permitting the recovery of sums paid out without sufficient guarantees as to the legitimacy of the payments made or the reliability of the control and verification system in the Member State concerned.

Commenting on the decision, Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries said 'Our message to the Member States is simple: Spend taxpayers money properly or we claim it back. With the agriculture audit system we have a unique system to enforce this principle and to recover funds which are misspent.'

Main financial corrections

Under the present decision, funds are recovered from the following Member States: Austria, Denmark, France, Greece, Italy, the Netherlands, Portugal, Spain and the United Kingdom. The most significant individual recoveries are:

  • € 36.7 million charged to Greece concerning the deficient control system in the animal premia sector and for shortcomings in the aid paid to orange growers.

  • € 27.4 million charged to Spain for not carrying out key and secondary checks in the arable sector, unsatisfactory control in the olive oil sector and in the animal premia sector.

  • € 14.1 million charged to France concerning anomalies found in the special premium for bovines and the suckler cow premium. The acceptance of certain cereal stocks and the storage conditions in certain warehouses also did not comply with Community legislation.

Full details by Member States (annex I) and by sector (annexe II) of the sums to be recovered can be found in the tables attached. Annex III shows sums recovered since 1995.

Background : How the system works

    Member States responsible for payments and recoveries

    The Member States are responsible for making practically all the payments, charging all the levies and recovering all undue payments within the framework of the EAGGF (European Agricultural Guidance and Guarantee Fund) Guarantee Section.

    The clearance of accounts procedure requires the Commission to ensure, primarily by means of on-the-spot inspections, that the Member States have made correct use of the funds placed at their disposal by the EAGGF. The Commission carries out over 200 inspections in the Member States each year.

    Use of aerial and satellite photography and data bases

    The Commission works with the Member States to ensure that the paying agencies thoroughly check all claims before they are paid and that the paying agencies' accounts and procedures are audited each year in accordance with internationally recognised standards. The Commission also actively assists all the Member States to put in place an integrated control system using the most advanced techniques to check fields by aerial or satellite photography and to cross-check claims in computer data bases.

    Recovery of funds

    Where, despite these efforts, the Commission finds that the control procedures in a Member State are wanting or do not conform to the EU rules, it recovers the amount misspent from the Member State concerned. If the systems put in place by a Member State prove unsatisfactory, the Commission refuses to finance all or part of the expenditure involved.

    1995 reform of the system for recovering misspent sums

    The system was overhauled in 1995 with the aim of making it more efficient. It is now based on two separate procedures.

    The first is purely financial, focusing on audits by Commission staff (based on the certification of accounts proposed by independent bodies) relating to the correctness and completeness of the accounts and the paying agencies' compliance with the European Union's standards. This procedure must be completed by 30 April each year.

    The second relates to inspections by the Commission and involves the recovery of all or part of the expenditure claimed for the previous 24 months if it is found that payments do not conform to the EU rules.

    Amounts may be recovered in specific cases where anomalies or systematic failings are found. If the losses for the Community cannot be calculated precisely, the recovery may be set at 2%, 5%, 10% or 25% of the expenditure in question, or even more. There is thus a strong incentive for the Member States to improve the quality of their monitoring and audit systems.

    Member States' right of reply and the Conciliation Body

    The Member States have the right of reply and the right to a fair hearing. There is first an exchange of information between the Member States and the Commission, followed by a discussion and an informal bilateral meeting. Before the clearance decision is taken, the procedure provides for all the significant corrections to be examined by a panel of independent experts ensuring that the Member States' arguments are heard. Finally, the Member States have the right to appeal to the European Court of Justice.

    If the requisite improvements have not been made, the Commission uses all the means at its disposal to bring the Member States to comply with the EU rules and, in flagrant cases, refuses to finance in full the monthly advances declared by the Member States.

    Annexes: I to III.

Annex I

Clearance of accounts of EAGGF - Guarantee

    Decision 11: Principle corrections by Member state

amount in

mio EURO
AUSTRIA
Public storage, buying-in price of cereals not
in accordance with Reg. 689/920,1
DENMARK
Public storage, correction to annual declaration + non-compliance with Reg. 689/920,08
FRANCE
Public storage, non-compliance with Reg. 99/1799 and
storage conditions are not acceptable3,2
Financial audit, incomplete administrative checks and financial errors
detected10,9
GREECE
Fruit & vegetables, inadequate checks2,4
Animal premiums, inadequate control systems34,3
ITALY
Public storage, missing stocks sold without credit to EAGGF1,3
Fruit & vegetables, non compliance of Reg. 97/659 and 96/22000,1
THE NETHERLANDS
Animal premiums, inadequate control system 3,8
PORTUGAL
Rural development, absence of cross-checks0,9
SPAIN
Animal premiums, inadequate control systems 10,3
Arable crops, various inadequate controls9,5
Milk production, annulment of decision 99/187/EC by Court of Justice-8,1
Olive oil, no fulfilment of the cultivation register 45,5
Olive oil, annulment of decision 99/186/EC by Court of Justice-29,8
UNITED KINGDOM
Rural development, weakness in implementation of
agri-environment schemes1,9
TOTAL86,3

Annex II

Clearance of accounts of EAGGF - Guarantee

    Decision 11: Principle corrections by Sector

amount in

mio EURO
FRUIT & VEGETABLES2,4
PUBLIC STORAGE4,6
ANIMAL PREMIA48,4
MILK PRODUCTION-8,0
ARABLE CROPS9,5
OLIVE OIL45,5
-29,8
RURAL DEVELOPMENT2,8
FINANCIAL AUDIT10,9
TOTAL86,3

Annex III.1

Summary of corrections (in mio EURO)

BY MEMBER STATE

financial year concerned1991total19921992total19931993total1994total19951995Sub total
date decision20/12/1994199510/04/199620/11/1996199623/04/199730/07/199719976/05/199819983/02/199928/07/19991999
BELGIUM2,62,63,23,210,210,210,210,20,7 0,7
GERMANY137,4137,420,010,430,426,126,121,821,84,717,922,6
DENMARK0,20,24,34,30,10,14,64,60,21,21,4
SPAIN459,5459,5201,04,5205,5101,251,6152,89,79,7128,854,8183,6
FRANCE13,513,574,474,457,623,481,078,578,597,9 97,9
GREECE116,2116,22,439,742,158,258,214,714,738,134,973
IRELAND7,17,187,287,22,92,94,54,52,53,45,9
ITALY778,5778,5386,012,9398,9250,814,2265,099,399,347,534,381,8
LUXEMBOURG0,00,0 0,00,30,300
NETHERLANDS-0,8-0,8-2,7-2,77,77,79,09,018,7 18,7
PORTUGAL1,01,04,24,24,64,65,15,114,92,117
FINLAND 0,00,00,00
SWEDEN 0,00,00,0 0
UNITED KINGDOM3,13,18,18,119,621,641,250,050,049,5 49,5
AUSTRIA 0,00,00,00
TOTAL1518,31518,3788,167,5855,6539,0110,8649,8307,7307,7403,5148,6552,1
total expenditure declared 31361,030.050,332579,231838,1
percentage corrected4,842,851,990,97

Annex III.2

Summary of corrections (in mio EURO)

BY MEMBER STATE

financial year concernedad hoc 1ad hoc 2ad hoc 3total1995ad hoc 4ad hoc 5compl. 1995fin. Audit 99totalad hoc 6ad hoc 7ad hoc 8totalad hoc 9ad hoc 10ad hoc 11total
date decision3/02/19994/05/199928/07/199919991/03/20001/03/200010/07/200020005/02/200111/07/200112/12/200120012002
BELGIUM0,20,90,41,61,23,22,22,22,22,2
GERMANY1,79,433,721,919,241,121,93,024,90,0
DENMARK0,62,00,130,130,200,00,080,08
SPAIN34,415,6233,61,117,218,3331,423,6355,08,727,436,1
FRANCE9,00,4107,3102,9128,7231,624,415,840,23,6-16,314,11,4
GREECE23,87,9104,79,188,31,298,60,4107,0107,42,0103,536,7142,2
IRELAND1,97,86,413,41,521,31,40,11,53,93,9
ITALY6,127,3115,238,537,422,2 98,117,84,5264,2286,540,113,41,454,9
LUXEMBOURG 0,01,31,30,00,40,4
NETHERLANDS0,218,90,42,63,000,00,020,33,824,1
PORTUGAL10,927,921,97,20,429,51,80,42,25,31,10,97,3
FINLAND0,04,34,30,00,20,2
SWEDEN0,30,30,50,50,30,32,02,0
UNITED KINGDOM14,632,58,9105,521,019,52,142,60,5-13,7-13,20,518,71,921,1
AUSTRIA0,00,00,80,80,00,10,1
TOTAL89,632,583,6757,838,5228,7350,81,25,2624,4399,9142,9264,2807,066,9142,786,3295,9
total expenditure declared 34311,236259,239528,7
percentage corrected2,211,722,04

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