Brussels, 14 July 2010
Protection of the EU's financial interests: Commission publishes annual report
Today the European Commission published its Annual Report on the Protection of the EU's Financial Interests and the Fight against Fraud. This report outlines important measures taken by the Commission and Member States in 2009 to prevent, detect and tackle irregularities and fraud. It gives a statistical overview of all the irregularities notified to the Commission by Member States in 2009, including cases where fraud is suspected, and details the recovery of EU funds. The report notes an improvement in Member States' compliance in reporting irregularities compared to previous years and points out recommendations on how to further improve the protection of EU taxpayers' money. This year's report also deals with two special topics, namely cooperation between the Commission and Member States in on-the-spot checks, and measures taken by Member States for the recovery of irregular amounts.
Algirdas Šemeta, Commissioner for Taxation, Customs, Audit and Anti-Fraud, said: "This report reflects two cornerstones of sound financial management: transparency and responsibility. The Commission and national authorities share responsibility for safeguarding EU funds. It is of utmost importance that Member States report any suspicions of irregularities and fraud quickly, and that they fully assume their role in ensuring effective follow-up. The findings in today's report will point us towards areas where further work needs to be done, and help to ensure that EU taxpayers' money is properly protected."
According to the Annual Report, the number of reported cases of irregularities in the areas of own resources and direct expenditure fell significantly in 2009 compared to 2008. In other areas, such as agriculture, cohesion policy and pre-accession funds, however, there was a general rise in the number of reported irregularities, including suspected fraud cases. This can be due to a number of factors. Often, it can be an indication that the controls and anti-fraud systems in place are working better and that more cases are being reported. Under EU legislation, all errors found in relation to EU funds have to be corrected and funds must be recovered if not used according to the rules.
The protection of EU financial interests and the fight against fraud goes beyond European borders, and the Commission is active in pushing for further international cooperation in this area. Some of the measures highlighted in today's report include international negotiations on anti-corruption and anti-fraud agreements, intensive work to tackle cigarette smuggling and the deployment of a new database to help prevent and detect breaches in agriculture and customs legislation which could affect EU revenues.
Irregularities and suspected fraud notified per sector in 2009
Own Resources: The number of cases of irregularities reported fell by 23% in 2009, compared to 2008, and the estimated amount affected by irregularities fell by 8.5%. Suspected fraud made up 19% of all reported irregularities in own resources, accounting for around EUR 99 million.
Agriculture: The number of cases of irregularities reported rose by 43% in 2009. The estimated amount affected totals EUR 125 million. Of the total allocations to agriculture in 2009, 0.03% is suspected to have been affected by fraud. The increase in reported irregularities can be linked to the implementation of the Irregularity Management System (IMS), which allows more users than before to notify suspected problems.
Cohesion Policy: The number of cases of irregularities reported rose by 23% in 2009. The estimated amount affected totals EUR 1.22 billion. Of the total allocations in 2009, 0.23% is suspected to have been affected by fraud. The rise in reported irregularities in 2009 compared to 2008 can be largely explained by an increase in checks and audits as the 2000-06 programming period comes to a close.
Pre-accession funds: The number of cases of irregularities reported by the 14 countries which receive pre-accession funds rose by 35% in 2009. The estimated amount affected totals EUR 117 million. Of the total pre-accession allocations in 2009, 0.38% is suspected to have been affected by fraud. There was a significant increase in the amounts to be recovered (+135%), with the EU-funded programme for agricultural development in candidate countries, SAPARD, accounting for the highest proportion of this figure.
Direct Expenditure: The number of cases of irregularities reported fell by 24% in 2009. The estimated amount affected by irregularities totals EUR 27.5 million, of which around EUR 1.5 million is linked to suspected cases of fraud. The Commission has so far recovered EUR 15.5 million of the irregular amounts.
(See table in Annex for detailed breakdown of cases in each area)
EU law requires Member States to notify the Commission of cases of fraud and other irregularities that are detrimental to financial interests in all areas of EU activity. However, the picture provided by the statistics is not necessarily complete since the Commission depends on the communication of irregularities by Member States. By their nature, the figures given in the report are approximate and preliminary. As a precaution, where the precise amount affected by the irregularity has not yet been determined, the figure given often relates to the scheme as a whole. It is also important to distinguish between fraud and irregularities. Fraud is defined as an irregularity committed intentionally and constituting a criminal act. The real financial impact of fraud can only be measured at the end of legal proceedings.
Also today, OLAF produced its own Annual Activity Report, outlining results of its independent operational work in 2009.
Number of reported irregularities and estimated financial impact in 2009