COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(93) 141 final 
Brussels, 20 April 1993 
ANNUAL REPORT FROM THE COMMISSION 
on the fight against fraud 
- 1992 Report and Action Programme for 1993 -
2 -
CONTENTS 
INTRODUCTION 
TITLE 1: DEVELOPMENTS IN 1992 6 
SECTION I - FRAUD AND IRREGULARITIES: REPORTS AND 
ENQUIRIES IN 1992 6 
1. Reporting fraud and irregularities 6 
1.1 Cases of fraud or irregularity reported in accordance 
with regulations 8 
1.2 Summary 9 
1.3 Planned changes to procedures for reporting cases of 
fraud and irregularities 13 
2. Enquiries into fraud and irregularities 14 
2.1 Mutual assistance - administrative cooperation visits 14 
2.2 Enquiries concerning the EAGGF Guarantee Section 18 
2.3 Transnational import/export fraud enquiries 24 
3. Recovery 25 
SECTION II - WORK PROGRAMME: PROGRESS ON THE 1992 PRIORITIES 26 
1. Simplification of agricultural legislation, including 
the refunds nomenclature 27 
2. Controls 28 
2.1 Control methods, including the targeting of 
high-r isk areas 28 
2.2 Reform of the CAP: integrated administration and 
control system 32 
2.3 Control structures and specific control techniques 
in the agricultural sector 33 
3. Ex-ante examination of the anti-fraud aspects of legis- 36 
I at ive proposals 
- 3 -
4. Data-processing structures 36 
5. Administrative cooperation on indirect taxation 37 
6. Cooperation with non-member countries 38 
7. Seminars and exchanges of national officials 39 
8. Legal protection of the Community's financial interests 40 
SECTION III - FINANCING OF THE FRAUD PREVENTION POLICY 42 
1. Execution of the 1992 budget 42 
2. Presentation of the 1993 budget 44 
TITLE II - ACTION PROGRAMME FOR 1993 45 
I. Prevent ion 
I I. Coopérât ion 51 
III. Counteract ion 55 
CONCLUSION 56 
Annexes 
1. The missions of UCLAF 
2. Organization chart 
3. EAGGF Guarantee 
3.1 Recovery operations in 1992 
3.2 Number of irregularities notified and amounts 
recovered since outset 
4. Financing of the fraud prevention policy 
4.1 Measures financed in 1992 
4.2 Budget 1993 
- 4 -
INTRODUCTION 
In the 1992 report on the fight against fraud (the fourth such annual 
report), covering an important transitional year, the Commission 
deliberately concentrated on the key elements in its anti-fraud campaign 
rather than trying to raise the level of awareness of the general issues as 
it was felt that this had already been adequately done by the previous 
reports. However, the report did follow the precedent set in previous years 
of dividing the part on the progress made into two sections: one on reports 
on fraud and irregularities and on-the-spot enquiries (Title I, Section I) 
and the other on implementation of the 1989 work programme (Title I, 
Section II).1 Since the programme has for the most part already been 
implemented, the Commission has produced a new action programme for 1993, 
which will be updated annually (see Title II). 
The most important points dealt with in the report are as follows: 
results of recent enquiries and checks in the Member States and non-
member countries; 
further progress on simplification of agricultural regulations; 
adoption, as part of the reform of the CAP, of Regulation 
(EEC) No 3508/92 establishing an integrated administration and control 
system for certain Community aid schemes arid Regulation (EEC) 
No 3887/92 laying down the relevant detailed rules; 
adoption of Regulation (EEC) No 593/92 amending Regulation (EEC) 
No 2262/84 laying down special measures in respect of olive oil; 
adoption of Regulation (EEC) No 2913/92 establishing the Community 
Customs Code and certain implementing decisions; 
adoption of Regulation (EEC) No 218/92 on administrative cooperation 
in the field of indirect taxation and Directive 92/12/EEC on excise 
dut ies-, 
increase in the number of seminars and exchange programmes for 
national civil servants; 
more systematic targeting according to the level of risk; 
use of remote sensing in almost every Member State; 
progress regarding cooperation with non-member countries; 
The funding of the anti-fraud policy is dealt with in Title 
Sect ion III. 
- 5 -
the IRENE database in operational mode and the implementation of the 
first phase of the customs information system, SID; and 
analysis of the question of how to protect the Community's financial 
interests in the light of the resolution adopted by the Council 
(Justice) on 13 November 1991. 
The other Community institutions demonstrated considerable interest in 
anti-fraud measures in 1992. 
On 14 and 15 July 1992, the parliamentary Committee on Budgetary 
Control held detailed discussions on anti-fraud measures, as in 
previous years, and welcomed the third Commission report.1 Prior to 
this, in discussions on the discharge for 1990, Parliament asked the 
Commission for information on the organization of anti-fraud 
activities and on the upgrading of the functions of the Unit for the 
Coordination of Fraud Prevention (UCLAF) in such a way as to maximize 
its role, authority and autonomy.2 The Commission complied with 
Parliament's requests and duly redefined UCLAF's powers by its 
decision of 4 November 1992,3 which was presented to the 
parliamentary Committee on Budgetary Control on 1 December 1992 and 
which is reproduced, together with an organization chart, in Annexes 1 
and 2. 
Taking note of the third report, the Council of 28 September 1992 
(ECOFIN) welcomed the continuing efforts with regard to investigations 
carried out and progress achieved on the work programme and noted with 
satisfaction the progress made towards achieving the objectives 
adopted in 1991. Following the detailed discussions held by the 
Council on the report, a new political impetus was given when a high-
level ad hoc working party on the fight against fraud was set up with 
the task of producing a report for the Council meeting of 23 November 
(ECOFIN). The report reaffirmed the importance of continuing the fight 
against fraud, particularly in view of the provisions in the 
Maastricht Treaty in this field. The Council identified a number of 
priority areas for 1992, viz.: further simplification of agricultural 
legislation and, in particular, the nomenclature with regard to export 
funds; improved ex-ante examination of the anti-fraud aspects of 
legislative proposals; extension of the principle of targeting on the 
basis of risk; seminars and exchanges for national agents responsible 
for the administrât ion and internal management of the CAP; discussions 
with the Member States on the question of incentives; and the adoption 
of a regulation on the notification of frauds against the structural 
Funds. 
See "The fight against fraud: report on work done and progress 
achieved in 1991" - SEC(92) 943 final of 26 May 1992. 
See, inter alia, point 68 of the resolution containing the comments 
which form part of the Parliament Decision of 18 November 1992 giving 
discharge to the Commission in respect of the implementation of the 
general budget of the European Communities for the 1990 financial year 
as regards sections I to IV (OJ L 19, 28.1.1993). 
SEC(92) 2045 final of 4 November 1992. 
6 -
The stakes are high in the fight against fraud and the Community must 
respond as effectively as possible to the new challenges facing it, i.e. 
the running of the single market, implementation of the European Economic 
Area, the need to open up to the East, reform of the CAP and, of course, 
European Union. 
TITLE I: DEVELOPMENTS IN 1992 
SECTION I - FRAUD AND IRREGULARITIES: REPORTS AND ENQUIRIES IN 1992 
This Section deals with the Member States' reports and the enquiries 
carried out by the Commission and the Member States concerning fraud and 
irregularities. The growing number of reports and enquiries is an 
indication of the amount of work done by the Commission and the Member 
States, which bear the primary responsibility for fraud prevention. 
1. Reporting fraud and irregularities 
In the interests of clarity, all reported cases of fraud and irregularity 
are recorded in a single table, despite the fact that the relevant 
legislation1 (Regulation (EEC, Euratom) No 1552/89 and Regulations (EEC) 
No 595/91, No 4253/882 and No 1468/81) distinguish not only between cases 
involving revenue and expenditure but also between a number of other 
categor ies. 
Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 
implementing Decision 88/376/EEC, Euratom on the system of the 
Communities' own resources (OJ L 155, 7.6.1989); Council Regulation 
(EEC) No 595/91 concerning irregularities and the recovery of sums 
wrongly paid in connection with the financing of the common 
agricultural policy and the organization of an information system in 
this field and repealing Regulation (EEC) No 283/72 (OJ L 67, 
14.3.1991); Council Regulation (EEC) No 4253/88 of 19 December 1988 
laying down provisions for Implementing Regulation (EEC) No 2052/88 as 
regards coordination of the activities of the different Structural 
Funds between themselves and with the operations of the European 
Investment Bank and the other existing financial instruments 
(OJ L 374, 31.12.1988); Council Regulation (EEC) No 1468/81 of 
19 May 1981 on mutual assistance between the administrative 
authorities of the Member States and cooperation between the latter 
and the Commission to ensure the correct application of the law on 
customs or agricultural matters (OJ L 144, 2.6.1981). 
The remarks on the structural Funds take account of the reporting 
instructions laid down in the Code of Conduct - see point 1.2.3 of 
this Sect ion. 
7 -
Some reports cover known cases of fraud and irregularity involving 
sums in excess of a given amount, which differs from regulation to 
regulation (Regulations No 1552/89, No 595/91 (Articles 3 and 5) and 
No 4253/88), while others cover suspected cases which may or may not 
have financial implications (Regulations No 1468/81 and 595/91 
(Art icle 4)). 
Some reports are written by the Member States alone and sent only to 
the Commission (Regulations No 1552/89, No 595/91 (Articles 3 and 5) 
and No 4253/88), while others are co-written by the Commission and are 
sent to the Member States directly (Regulations No 1468/81 and 
595/91 (Article 4)). 
The amounts recovered must be stated in some cases (Regulations 
No 595/91 (Articles 3 and 5) and No 4253/88), but not in others 
(Regulation No 1552/89). In some cases, the question does not arise, 
given the nature of the report (Regulations No 1468/81 and No 595/91 
(Art icle 4)). 
The frequency and the deadline for communication is different for each 
report (every six months, with no fixed deadline under Regulation 
No 1552/89; within two months of the end of each four-month period 
under Regulation No 4253/88; within two months of every quarter under 
Regulation No 595/91 (Articles 3 and 5); and under Regulations 
No 1468/81 and No 595/91 (Article 4), there is no set period or 
deadl ine). 
1.1. CASES OF FRAUO OR IRREGULARITY REPORTED IN ACCORDANCE WITH REGULATIONS (1) 
Member 
Stote 
BE 
DA 
DE 
EL 
ES 
FR 
IR 
IT 
LU 
NL 
PO 
UK 
TOTAL A) Own resources 
Art. 6(3) Reg. (EEC, Euratom) No 1SS2/89 
(coses Involving ECU 10 000+) 
1991 - 2nd half 
Number of 
coses 
23 
15 
53 
32 
21 
69 
2 
17 
0 
3 
10 
98 
343 ECU 
ml 11 Ion 
1.01 
0.49 
67.30 
1.18 
1.28 
8.55 
0.25 
3.62 
0 
0.07 
0.69 
12.13 
96.6 1992 - 1st half 
Number of 
cases 
45 
— 
221 
— 
32 
68 
2 
30 
0 
7 
2 
70 
477 ECU 
mi 11 ion 
2.45 
— 
16.71 
— 
0.61 
5.69 
0.73 
20.13 
0 
1.20 
0.03 
7.95 
55,5 TOTAL 
Number of 
cases 
68 
15 
274 
32 
53 
137 
4 
47 
0 
10 
12 
168 
820 ECU 
mi 11 Ion 
3.46 
0,49 
84.01 
1,18 
1.89 
14.2* 
0.98 
23.75 
0 
1.27 
0.72 
20.08 
152.1 B) EAGCF - Guarantee section 
Art. 3 ond 5 Reg. (EEC) No 595/91 
(cases involving ECU 4 000+) 
1992 
Number of 
coses 
48 
32 
100 
56 
66 
108 
24 
366 
0 
88 
10 
132 
1030 ECU 
mi 11 ion 
2.51 
1.37 
7,95 
1.46 
4,44 
4.81 
0,81 
79,49 
0 
7.5 
0.85 
6,57 
117.8 ECU million 
recovered 
0,35 
0 
1.27 
0.28 
0.37 
1,45 
0.01 
1.24 
0 
2.95 
0.09 
1.83 
9.9 (2) C) Structural funds 
Art. 23(1) Reg. (EEC) No 4253/88 
(coses involving ECU 4 000+) 
1992 
Number of 
cases 
-
6 
1 
0 
-
-
-
1 
0 
0 
-
0 
8 ECU 
mi 11 ion 
-
0.02 
0.18 
0 
-
-
-
0 
0 
0 
-
0 
0.20 ECU ml 11 Ion 
recovered 
-
0 
0 
0 
-
-
-
0 
0 
0 
-
0 
0 Member 
State 
+ COM­
MISSION 
BE 
DA 
DE 
EL 
ES 
FR 
IR 
IT 
LU 
NL 
PO 
UK 
COM 
TOTAL Mutuol assistance 
Art. 14/14o 
Reg. (EEC) No 1468/81 
1992 
Number of 
coses 
11 
1 
8 
2 
2 
12 
5 
8 
-
13 
2 
10 
52 
126 (3) of which 
own res. 
11 
1 
8 
2 
1 
11 
4 
8 
-
12 
2 
9 
35 
104 M.A. Art 
4/R(EEC) 
595/91 
1992 
Number 
of coses 
2 
-
-
-
-
-
-
-
-
-
-
1 
3 
6 I 
CO 
I 
(1) In the table: 
a) a zero indicates thot the reports recorded zero cases of froud or irregulority 
b) o dash indicates that no reports were sent 
(2) Amount recovered in coses reported ( ECU 117,8 million); a totol of ECU 13,8 million were recovered in 1992 - see Annex 3.1 for breok-down by sector ond by period. 
(3) Including 87 new cases ond 39 supplementary reports 
- 9 -
1.2. Summary 
1,2,1 Own resources 
The following conclusions can be drawn from the reports which were sent to 
the Commission in accordance with Article 6(3) of Regulation No 1552/89 
between its entry into force and the first half of 1992, a period 
comprising six half years: 
- the distribution of fraud cases and irregularities is uneven: the UK 
accounts for around 26% of the total number of cases, compared with 
around 5% for Italy, and Germany alone accounts for around 45% of the 
total amount in question, although a large part of that 
(ECU 67.3 million) is accounted for by one case in the second half of 
1991 involving false declarations of origin for consignments of alcohol, 
submitted over a five-year period; 
- the majority of cases concern tariff headings (25% of all cases), the 
value of the goods (22%) and the origin (13%); and 
- despite the efforts made by the national administrations over the period 
concerned, the reports are still incomplete, with the result that the 
breakdown of cases by category of goods, country of origin and customs 
arrangements is still of limited value (the category of goods was not 
stated in 25% of the cases, the origin in 50% and the customs 
arrangements in around 2§&),^ 
1.2.2 EAGGF - Guarantee Section 
A total of 1030 cases of irregularities involving ECU 117,8 million were 
reported in 1992, comparée} with 600 cases involving ECU 135 million^2*. 
At first glance, it would seem that the number of cases had increased 
significantly while the overall amount involved had remained more or less 
the same and that the rate, of recovery of sums wrongly paid was still very 
low (ECU 9,9 million out of a total of ECU 117,8 million). 
However, it should be pointed out that, in 1992, Italy reported 366 cases 
involving a total of |ÇU 79,5 million. Irregularities detected by the 
olive oil agency accounted for a large part of this figure. The other 
Member States with an olive oil agency do not report such irregularities. 
1 The initial findings have been sent to the Advisory Committee on Own 
Resources and C0C0LAF. 
(2) Including an amount of Ecu 67,8 million for Italy in the cereals 
sector reported retrospectively. 
- 10 -
Apart from olive oil (369 cases and ECU 75,2 million), the sectors with the 
highest concentration of cases are milk products (153 cases and 
ECU 7,4 million), cereals (100 cases and ECU 7,4 mi I I ion),and beaf and 
veal (95 cases and ECU 7,6 million). 
At the meetings of the committee on irregularities and EAGGF mutual 
assistance, statistics showing the trends in the number of cases for each 
sector and the amounts involved were distributed and discussed. At each 
meeting, the Commission voiced its suspicion that the Member States 
reported only some of the cases they detected and stressed its 
dissatisfaction with this state of affairs. 
The same committee also discussed more specific issues relating to 
irregularities, such as: 
the number and scale of irregularities in each sector-, 
- detection methods (40% of the cases in the period 1988-91 were detected 
through post-payment administrative checks and a further 35% through 
rout ine checks) ; 
- the time taken to report cases - if the Member States delay reporting 
irregularities to the Commission, then it may be up to two years before 
the Commission is able to warn other Member States to watch out for new 
types of fraud when carrying out their own checks; 
the relationship between EAGGF expenditure and irregularities in the 
most important sectors. 
1.2.3 Structural Funds 
On 13 November 1991, the Court of Justice annulled the Code of Conduct 
laying down implementing provisions for Article 23(1) of Regulation 
No 4253/88, one of which was that Member States must report all 
irregularities involving sums in excess of ECU 4 000 every four months.1 
Despite the Court's ruling, the vCommission asked the Member States to 
continue sending their reports, as this was still a requirement under 
Article 23(1) of the Regulation. 
The situation at 31 December 1992 differs from one Member State to another. 
Half of them have continued to report irregularities (DA, DE, EL, IT, LU, 
NL and UK). Of these seven, only two (DA and DE) have reported cases with 
financial implications. 
In order to remedy this unsatisfactory state of affairs, the Commission 
plans to introduce binding rules to require Member States to report 
irregularities relating to the structural Funds. 
1 Case 303/90 - French Republic v Commission of the European Communities 
- 11 -
Despite the lack of reports, 1991 has been a fruitful year in terms of 
fraud detection. The Commission has assisted the national legal 
authorities . For example: 
- where the European Social Fund was concerned, the Italian authorities 
asked the Commission to assist by allowing its officials to give 
evidence and providing documents for consultation in connection with a 
number of arrests for irregularities in Lombardy involving inflated or 
entirely fictitious claims for expenditure on the leasing of computer 
equipment and vocational training between 1989 and 1991; 
- the Commission offered assistance to the Italian authorities after a 
series of arrests in the second half of 1992 in connection with 
irregularities in the procedure for selecting projects for the 1991 
tranche of the multi-fund operational programme for Abruzzi 
(infringement of regional law regarding the publication of the list of 
eligible beneficiaries); 
- the Commission has plans to send delegations to these regions in 1993 to 
audit the operational programmes. 
The figures for cases involving the Social Fund reported by Portugal under 
the old regulations1 are as follows: 
- for the period 1986-89, Portugal reported 339 cases of suspected 
irregularities under Article 7 of Decision 83/673/EEC involving a total 
of ECU 125 million (146 closed cases concerning initial advances and 
final payments amounting to ECU 49.8 million and 193 unresolved cases 
involving initial advances amounting to ECU 75.2 million). The 
Commission decided to Join civil actions to 29 criminal actions of which 
it had been notified by the Portuguese courts. 
In 248 cases, relating to the same period, the Portuguese authorities 
issued requests for final payments amounting to ECU 18.1 million. This 
was done not because of suspected irregularities but simply to provide 
maximum coverage against the risk of fraud. 
- A working party comprising representatives from the Commission and the 
Member States has been set up to consider how these cases should be 
handled. 
1.2.4 Mutual assistance 
The following major cases (in terms of the amount involved or the nature of 
the fraud) were reported in accordance with Regulation (EEC) No 1468/81.2 
1 These cases are not included in the table on page 8. 
2 The Commission, in cooperation with the Member States, has introduced 
a system of half-yearly progress reports on enquiries involving mutual 
assistance, with a view to more efficient handling of cases and, in 
particular, better coordination with the half-yearly reports provided 
for under Regulation No 1552/89. 
- 12 -
Industrial goods 
Cooperation between the British and Irish customs authorities led to the 
detection of a fraud involving the importation of integrated circuits 
into Ireland via the United Kingdom under the inward processing 
arrangements: a number of related companies had operated price-fixing 
systems to avoid having to pay duty on the full value of the goods. The 
value of the unpaid duties was put at around ECU 4.5 million. 
Other reports concern suspected cases of irregular implementation of 
generalized preferences and/or evasion of anti-dumping duties on 
electronic products (car radios, other radios, cassette recorders, 
CD-players etc) 
Cigarettes 
Following the reports in 1990 informing the Commission of the existence 
of fraud rings which were importing cigarettes into Italy, enquiries by 
the Italian authorities, in cooperation with the Polish and Czech 
customs authorities, revealed further cases of fraud. A total of almost 
ECU 3.9 million in own resources had been evaded. 
A joint enquiry by the Belgian and Portuguese authorities also uncovered 
irregular transactions concerning cigarettes: T1 documents had been 
falsified and the transport documents had been addressed to a fictitious 
person in Lisbon. The total amount of unpaid duties (customs and excise 
duties, special taxes and VAT) for the goods in the two lorries that 
were seized has been valued at almost ECU 2.6 million. 
Text ile products 
The French customs authorities established that goods (pullovers, 
cardigans and skirts) allegedly made by Jamaican companies and 
accompanied by what appeared to be Jamaican EUR 1 documents, had in fact 
been sold by companies in Hong Kong, which had also issued the invoices 
for them. The unpaid duties for France alone were estimated at around 
ECU 1.5 mi I I ion. 
There were a number of other cases concerning textile imports, covered 
by EUR 1 documents apparently issued in Zimbabwe and Lesotho which might 
involve the irregular implementation of the system of ACP preferences 
and the circumvention of quantitative restrictions applicable to the 
actual country of origin (generally China) under the MFA. 
Fishery products 
Irregularities were detected in the implementation of the preferences 
provided for in the bilateral agreement between the Community and 
Norway, concerning, in particular, the species of cod imported into the 
Community. The unpaid duties amounted to some ECU 1.3 million. 
- 13 -
1.3 Planned changes to procedures for reporting cases of fraud and 
irregularities 
The Commission has proposed amendments to Regulations No 1552/89 and 
No 1468/81. The main objectives of the proposals concerning fraud are as 
fol lows: 
to improve the Member States' reporting procedures provided for in 
Regulation No 1552/89 in such a way as to ensure: 
a) more detail and a greater degree of consistency in information 
on cases involving sums in excess of ECU 10 000 and, in 
particular, better targeting according to the level of risk; 
b) greater efficiency in recovering amounts where fraud or 
irregularities are detected, particularly in cases with major 
financial implications for own resources;1 and 
to improve the quality of information given to the Commission in 
accordance with Regulation No 1468/81 where this might help to 
prevent or put a stop to fraudulent practices and to ensure rapid 
and systematic exchanges of information at Community and national 
level via SID, the customs information system. 
Furthermore, the Commission will ensure that legislation creating new 
financial instruments makes provision for anti-fraud measures, including 
reports from the Member States to the Commission, as does the proposal 
for a regulation establishing a cohesion fund.2 
In addition, following the annulment of the Code of Conduct,3 the 
Commission will adopt rules for the reporting of irregularities when it 
amends the regulations governing the structural Funds. 
Belgium, Portugal and the UK have already made improvements 
facilitating recovery. 
Proposal for a Council Regulation (EEC) establishing a cohesion 
financial instrument and revised draft proposal for a Council 
Regulation (EEC) establishing a Cohesion Fund - C0M(92) 599 final of 
23 December 1992. 
See point 1.2.3 of this Section. 
- 14 -
2. Enquiries into fraud and irregularities 
2.1. Mutual assistance - administrative cooperation visits 
Joint enquiries are conducted in third countries by Commission 
staff and representatives from the Member States (which together 
form a Community delegation) and the relevant authorities in the 
country in question. The aim of such enquiries is to gather the 
evidence to prove cases of suspected fraud in relation to goods 
imported into the Community.1 The Commission is very pleased with 
the great amount of help it has received from the authorities in 
the countries concerned in combating fraud and irregularities and 
wishes to stress that the countries concerned are free from all 
suspicion. 
2.1.1 This Section deals with the most important administrative 
cooperation visits to non-EEC countries for each category of goods. 
Agricultural goods 
Livestock, meat and cereals in Poland 
A number of visits have been made to Poland in accordance with the 
protocol on mutual assistance in customs matters attached to the Interim 
Agreement which entered into force on 1 March 1992. The visits were made 
as part of the enquiries into cases of fraud involving the importation 
of livestock, meat and cereals into the Community. Often the goods in 
question had been placed under the Community transit procedure and were 
supposed merely to transit the Community on their way to another 
non-member country, often in North Africa (e.g. Ceuta or Morocco). A 
number of different fraud networks were involved in various types of 
irregularity (e.g. failure to discharge T1 transit documents, discharge 
of transit documents bearing forged stamps, recording of values and 
weights lower than the actual ones, use of forged veterinary 
certificates, incorrect description of goods, etc.). In every case, the 
purpose of the fraud was to evade customs duties, particularly Community 
import levies. An estimated ECU 25 million in own resources are thought 
to be at stake, including ECU 15 million in three different frauds 
involving cattle. Prosecutions have been brought in the Netherlands in 
these cases and two people from one of the networks have already been 
sentenced to four years' imprisonment and fined HFI 3.2 million. 
Another two have been sentenced to 3 years' imprisonment. Legal action 
is also being taken in other Member States. 
Only the relevant national authorities are legally empowered to visit 
the firms concerned and inspect their accounts and administrative 
records. 
- 15 -
Fishery products 
Preferential origin of shelled shrimps imported from Iceland 
The purpose of this visit was to investigate a case where the 
preferential arrangements provided for in the bilateral Agreement with 
Iceland had been incorrectly applied to imports into the Community. The 
enquiry confirmed that a certain quantity of shelled shrimps, covered by 
EUR.1 documents or declarations from suppliers stating the shrimps were 
eligible for preferential treatment, had first been imported into 
Iceland from non-EEC countries and did not qualify for preferential 
treatment under the Agreement as shrimps originating in Iceland. The 
amount of own resources to be recovered is estimated at ECU 3.5 million. 
Preferential origin of preserved tuna from Seychelles 
A visit was also made to Seychelles to investigate a case of imports of 
preserved tuna, covered by EUR.1 documents claiming preferential 
treatment under the Lomé Convention. The on-the-spot enquiry revealed 
that a certain proportion of the tuna had been caught by boats which did 
not meet the EEC/ACP/COT nationality conditions laid down by the EEC-ACP 
Agreement. The amount of own resources at stake has been put at 
ECU 1 mi I I ion. 
Text ile products 
Transshipment of textile products in Hong Kong 
It was confirmed during a visit to Hong Kong that textile products had 
been transshipped and that forged documents had been submitted for 
imports into the Community, including forged GSP certificates of origin 
which had apparently been issued by other countries (Malaysia and the 
Philippines). Following a supplementary visit to the Philippines, the 
authorities there confirmed that 102 GSP certificates of origin were 
invalid, which translates into ECU 0.28 million in evaded duties. 
The purpose of the fraud was primarily to circumvent quantitative 
restrictions on textile products originating in certain countries under 
the MFA (the value of the goods involved amounted to ECU 6.6 million) 
and, in some cases, to gain undue preferential treatment (GSP or ACP). 
- 16 -
Preferential treatment of textile products from Bangladesh 
This visit provided confirmation that a number of GSP certificates 
of origin, apparently issued in Bangladesh, had been forged and 
used to gain generalized preferences for textile products 
originating in China and to circumvent quantitative restrictions on 
these products. The amount of own resources evaded has been 
estimated at ECU 10 million. 
Industrial products 
Video cassettes in Hong Kong and Macao 
A visit was made to Hong Kong and Macao to investigate an 
application for generalized preferences for video cassettes 
imported into the Community. The enquiry uncovered evidence showing 
that Macao had issued GSP certificates of origin on the basis of 
false information given by the exporter concerning the value and 
the origin of components and that production had been transferred 
to Macao in order to avoid anti-dumping duties on the same products 
originating in Hong Kong and China. 
Current estimates put the amount of evaded duties at some 
ECU 20 mi I I ion. 
Preferential origin of televisions in India 
A visit was also made to India as part of an enquiry into the 
importation of televisions into the Community under the GSP. The 
enquiry confirmed that the products did not qualify for 
preferential treatment (because of the origin of some of the 
components); the Indian authorities withdrew 145 GSP certificates 
of origin for imports into the Community. An estimated 
ECU 1.3 million in own resources are to be recovered. The enquiry 
is continuing (a further 35 certificates will probably be 
wi thdrawn). 
2.1.2 In addition, there are ongoing cases from previous years. These are 
described in brief below. 
Preserved fish imported under a different heading (boni to) 
A visit was made to Thailand in 1991 during which the Community 
applied for post-clearance verification of 5 000 GSP certificates 
of origin. The Thai authorities' initial response was not 
3) 
- 17 -
satisfactory under the provisions of Regulation (EEC) No 693/881 
relating to administrative cooperation, and the Commission was 
therefore forced to consider suspending generalized preferences. 
Subsequently, however, the authorities gave a more satisfactory 
response. 
Preserved tuna imported from Mauritius, Fiji and the Solomon Isles. 
Although the three countries concerned did not contest the facts 
revealed by the joint enquiries into whether or not the products in 
question qualified for preferential treatment under the relevant 
regulations, they all requested that no action should be taken to 
recover duties from importers who submitted irregular EUR.1 
certificates. For two of the countries, the Community could reduce 
the quantity of goods on which customs duties are to be recovered 
by granting special derogations for imports of preserved tuna 
produced in a given period, provided it is possible to identify the 
consignments to which the derogations could legitimately apply and 
the derogations have not already been used up. Duties on imports 
over and above the quantities covered by the derogations or on 
imports to which they do not apply must of course be recovered. The 
own resources to be recovered total ECU 8 million for the three 
countries, disregarding derogations. 
Agricultural products brought into the Community from the countries 
of central and eastern Europe under transit arrangements:2 
In addition to the enquiries conducted by the relevant departments 
in the Member States and coordinated by the Commission, the latter 
decided on certain legislative and administrative accompanying 
measures: 
the rules governing Community transit arrangements have been 
amended to include the products in question in the list of 
sensitive products (rules on comprehensive flat-rate guarantees 
have been tightened and the Community may now forbid the use of 
the global guarantee)^; 
1 Commission Regulation (EEC) No 693/88 of 4 March 1988 on the 
definition of the concept of originating products for purposes of the 
application of tariff preferences granted by the European Economic 
Community in respect of certain products from developing countries, 
OJ L 77, 22.3.88. 
2 See point 2.1.1 under agricultural products. 
3 Regulation (EEC) No 2560/92 of 2 September 1992 amending Regulation 
(EEC) No 1062/87, OJ L 257 of 3 September 1992; replaced, with effect 
from 1 January 1993, by Regulation (EEC) No 3712/92 of 
21 December 1992 amending Regulation (EEC) No 1214/92, OJ L 378, 
23.12.92. 
18 -
an early-warning system has been introduced, involving the 
office of departure at the Community's external border and the 
office given as the office of destination or the office at the 
point of exit from the Community in another Member State. Under 
this system, which uses the SCENT network, prior identification 
of consignments which are liable to be diverted enables the 
country of destination within the Community to raise the alarm 
without delay if the consignment fails to arrive. Enquiries 
aimed at locating the goods and the people responsible for 
diverting them can be started immediately. 
2.2 Enquiries concerning the EAGGF Guarantee Section 
In addition to fact-finding missions, the Commission is empowered 
to carry out checks and enquiries under Article 9 of 
Regulation (EEC) No 729/701 and Article 6 of Regulation (EEC) 
No 595/912 
2.2.1 A great number of enquiries were carried out in 1992. The most 
important are described below. 
Aids for cotton production in Greece 
Higher production figures than forecast in the 1991/92 marketing 
year prompted the Commission to carry out a number of enquiries 
in cooperation with the Greek authorities. Certain facts came to 
light which revealed that there were isolated cases of fraud. 
The whole sector is now being examined and supplementary 
enquiries will be held in 1993. 
Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing 
of the common agricultural policy, OJ L 94, 28.4.1970. 
See point 1 of this Section. 
- 19 -
Abandonment premium for areas under vines 
Large discrepancies were found between the figures for the 
permanent abandonment of wine-growing areas in Taranto in 
accordance with Regulations (EEC) No 1442/88 and No 2729/881 
and the figures in the vineyard register. The discrepancies 
usually concerned vines which had not been grubbed up or land 
not used for wine-growing. The case is in its final stages. 
Tobacco 
Following an initiative taken by the Court of Auditors, and with 
its cooperation, an enquiry was held in Spain into Bur ley E and 
Bur ley F tobaccos (substitution of one variety for another). No 
irregularity was detected. A new enquiry has been launched into 
suspected cases of fraud for which the Commission already has 
evidence concerning the exportation of tobacco to non-member 
countries. 
Food aid for Bulgaria 
In accordance with Regulation (EEC) 2321/91,2 emergency food 
aid has been granted to Bulgaria. In response to evidence that 
the milk powder sent as aid to Bulgaria was being sold in 
another country, the Commission held an enquiry in Egypt. The 
enquiry revealed that at least 740 tonnes of the milk powder had 
been diverted to Egypt, where it was being sold. 
The Commission has not as yet received an official reply from 
the Egyptian authorities. However, according to the Agency for 
International Assistance (the Bulgarian organization in charge 
of distribution), this is an isolated case. 
Council Regulation (EEC) No 1442/88 of 24 May 1988 on the granting, 
for the 1988/89 to 1995/96 wine years, of permanent abandonment 
premiums in respect of wine-growing areas, OJ L 132, 28.5.1988; 
Commission Regulation (EEC) No 2729/88 of 31 August 1988 laying down 
detailed rules for the application of Regulation (EEC) No 1442/88, 
OJ L 241, 1.9.1988. 
Commission Regulation (EEC) No 2321/91 of 31 July 1991 laying down 
detailed rules for urgent action for the supply of butter and skimmed 
milk powder to Bulgaria and amending Regulation (EEC) No 569/88, 
OJ L 213, 1.8.1991. 
- 20 -
Special sales of beef to the former Soviet Union 
Separate enquiries in the United Kingdom, Ireland and Italy 
revealed that 200 tonnes of a 10 000 tonne consignment of Irish 
beef, intended for export to the USSR after processing in Italy 
in accordance with Regulation (EEC) No 2911/911, had been 
diverted to the UK, without being processed. Stamps were found 
on certain cuts indicating that the meat had come from the 
appointed supplier's refrigerated warehouses. The Irish 
authorities confirmed that these stamps were authentic. The 
Italian authorities let it be known that charges had been 
pressed in connection with the case. It is not yet possible to 
put a firm figure on the amount at stake. 
Exportation of animals declared as pure-bred breeding animals to 
Poland 
There has been a spectacular increase in exports from Germany 
(and to a lesser extent the Netherlands) to Poland of cattle 
declared as pure-bred breeding animals. On such animals a 
flat-rate refund is paid, which is higher than the rate for 
cattle for slaughter. In the light of these facts, checks were 
carried out in the Member States concerned. These have led the 
authorities to conclude that hardly any of the animals in 
question are pure-bred breeding animals. 
In Germany and the Netherlands, the authorities have confirmed 
that fraud has been committed in a number of cases and these 
have been reported to the Commission. However, the Commission 
feels that these two Member States have not done enough to 
prevent fraud. In fact, their excessively loose interpretation 
of the relevant regulations is clearly one of the main reasons 
for this flow of exports to Poland. 
As a result, the matter will have to be dealt with as part of 
the clearance of the EAGGF accounts. The effect of these imports 
on the level of agricultural spending will therefore be assessed 
as part of the preparatory work prior to clearance. 
Furthermore, the conditions under which refunds are granted for 
breeding stock have been clarified by Regulation (EEC) 
No 2342/92.2 
Commission Regulation (EEC) No 2911/91 of 2 October 1991 on the sale 
by the procedure laid down in Regulation (EEC) No 2539/84 of beef held 
by certain intervention agencies and intended for export after 
processing to the Soviet Union, amending Regulation (EEC) No 569/88 
and repealing Regulation (EEC) No 673/91, OJ L 276, 3.10.1991 
Commission Regulation (EEC) No 2342/92 of 7 August 1992 on imports of 
pure-bred breeding animals of the bovine species from third countries 
and granting of export refunds thereon and repealing Regulation (EEC) 
No 1544/79, OJ L 227, 11.8.1992. 
- 21 
Food aid for the former Soviet Union (ECU 250 million under 
Regulation (EEC) No 598/91)1 
A contract has been concluded with an agency for the management 
and monitoring of the programme. In Russia and Belarus, the 
Commission has also been checking on both certain ONGs which are 
distributing the aid and on the monitoring agency itself. It has 
emerged that an Italian tenderer supplied 4 200 tonnes of 
preserved beef, intended for a number of southern republics. 
While 3 123 tonnes have already reached the bodies responsible 
for distributing the food, a certain number of cans were found 
to be substandard and were either destroyed on the spot or sent 
back to Italy. The matter is still being examined with a view to 
establishing who bears the responsibility - the national 
intervention agency, the supplier or both. 
Public storage of beef 
The scope of the enquiry into public storage, launched in 1990, 
has been enlarged to include France, the United Kingdom and 
Denmark. Anomalies have been detected in France and the UK: the 
information is still being processed but will soon be ready. The 
enquiry in Denmark will continue in early 1993. 
2.2.2 In addition to these enquiries, work is progressing on some of 
the major enquiries from previous years. Progress is summarized 
in the table below. 
Council Regulation (EEC) No 598/91 of 5 March 1991 on urgent action 
for the supply of agricultural products intended for the people of the 
Soviet Union, OJ L 67, 14.3.1991. 
Subject ond period Known finoncicl irrpoct Other r error k s 
of enquiry (cleoronce of qccounts for 1989) 
Citrus fruit (1989) Italy - correction: LIT 7 646.790 million 
Withdrawals of fruit and Italy - Quality control and checks on producers' 
vegetobies (1990) organizations. Finonciol implications to be ossessed 
Germony: no irregulority detected 
Storage of dried gropes Greece - correction: ORA 97.690 mi I I ion 
(1990) 
Production of durum wheat Greece - correction: ORA 269.995 million 
(1989) 
Cereals (durum wheat, soft t toi y - quality control - finonciol implications to be 
wheat) into intervention assessed 
(1990) Germony - no irregulority detected 
Public storoge of beef Ireland and Italy - financial implications to be 
(1990-91) ossessed 
United Kingdom ond France - finol stage ond biloterol 
discussions 
Privote storoge of beef Germony - correction: DM 5.826 million Verification arrangements odopted 
(1989) I re Iond - correction: IRL 3.656 mi 11 Ion (Régulât ion (EEC) No 2965/89) 
Ewe premiums (1989-90) Spain - correction: PTA 1 315.813 million Portugal called on to anend its verification system 
Greece - correction: DRA 651.170 million 
United Kingdom - correction UKL 5.592 million rv) 
rv) 
I i 
Withdrowol of pigmeot 3e I g i uri - quantity ond quality control one checks on 
following epidemic of swine origin - finonciol implications to be ossessed 
fever in Belgium (1990) 
Variable premium for United Kingdom judgment of the Court of Justice of the 
sloughter (sheep ond EC of 10 March 1992 - adoption of Commission Regulation 
gootmeot) (1989) (EEC) No 1992/92. New oppeol 
Exportation of beef 1) Mouritius - recovery in progress 
to: 
1) Mouritius (1990) 2) Zimbabwe - Zoire — recovery in progress in Fronce 
2) Zimbat>we-Zoi re (1990) ond Ireland: finonciol implications to be ossessed 
for Germony, the Netherlands ond the UK 
3) Yugoslavia and lebonon 3) Yugoslavia ond Lebonon - recovery in progress in 
(1991) Germony ond the Netherlands 
4) Ivory Coost (1991) 4) Ivory Coost - lean meat content of boned meot laid 
down in nomenclature (50% minimum); national 
physical checks to be reinforced 
Placing into intervention of Netherlands - finonciol implications to be ossessed 
butter (NIZ0) (1989) 
no ui 
- 24 -
2.3 Transnational import/export fraud enquiries 
International networks are responsible for certain frauds committed to the 
detriment of Community finances (both receipts and expenditure). Large sums 
of money are at stake and such cases require careful monitoring. This means 
close cooperation between departments within the Commission and between the 
Commission and the relevant authorities both in the Member States and in 
non-member countries. 
An account of these coordinated enquiries in 1992 is given below. 
2.3.1 01ive oiI 
Fraud cases have come to light concerning olive oil imported from 
non-member countries or traded between Member States. The amount of 
agricultural levies evaded by the presentation in Italy of false 
T2Ls indicating that the oil originated in Greece is currently 
estimated at ECU 12.4 mi I I ion. A further ECU 8.7 mi I I ion in 
Community consumption aid is thought to have been fraudulently 
obtained. Administrative and legal proceedings have been started in 
the Member States concerned with a view to recovering the amount in 
question and prosecuting those responsible. 
2.3.2 Milk powder 
A number of enquiries were launched in 1991, the findings of which 
are summarized below. 
An administrative cooperation visit was made to Russia and 
Ukraine in June 1992, with a view to checking whether 
37 000 tonnes of skimmed milk powder, exported in the first 
place from Germany to Austria, where it was temporarily placed 
in a customs warehouse, had actually been released for 
consumption in the former Soviet Union. 
Claims that the milk had been sold in the former Soviet Union, 
on the basis of which export refunds were paid, were found to be 
false: it emerged that two years after it had been exported, the 
milk powder was still in a customs warehouse. 
The total to be recovered amounts to ECU 44 million. 
Visits were made to Italy and Austria in September and 
November 1992 to investigate the importation into Italy from 
Austria of a skimmed-miIk-based food preparation, to be used in 
the production of animal feed. 
The enquiry in Austria confirmed that the milk powders imported 
from eastern Europe for use in the feed had a protein content of 
32% or more and that, since the final product contained 
8.33% dry matter, its protein content could not be less than 
2.5%. 
(4) 
- 25 -
It has been established that, from January 1988 to 
14 August 1991, variable duties should have been paid on the 
feed imported into Italy, since its protein content was higher 
than 2.5%. A total of ECU 40 million is to be recovered. 
In addition, the visits revealed the need for changes in the 
rules concerning aid for skimmed milk,1 to ensure that 
competition is not distorted. 
Recovery 
The present situation with regard to the recovery of duties evaded 
or aid wrongly paid, cannot be described as satisfactory. This goes 
both for cases which have been reported (a requirement under 
certain regulations)2 and those discovered during on-the-spot 
enqui r ies.3 
The situation has come about as the result of procedures which are 
not easy to change radically and the poor quality of the reports to 
the Commission, which could easily be improved. 
3.1 Procedures 
The Member States are responsible for recovering evaded own 
resources and wrongly paid Community subsidies through their 
national legal systems. Consequently, recovery is subject to the 
constraints imposed by those systems. 
In a fraud case, each individual element must be identified 
precisely, each debtor must be notified of the amount he owes, time 
must be allowed for appeals. All of these considerations, added to 
the possibility of periods of limitation expiring or debtors being 
insolvent, make for follow-up operations which extend over several 
years and which cannot really be speeded up without changing some 
of the fundamental principles on which the national legal systems 
are based. 
1 Commission Regulation (EEC) No 1725/79 of 26 July 1979 on the rules 
for granting aid to skimmed milk processed into compound feedingstuffs 
and skimmed milk powder intended for feed for calves. 
2 See point 1 of this Section. 
3 See point 2 of this Section. 
- 26 -
3.2 Reporting to the Commission 
The information the Commission receives is often incomplete for the 
following reasons: 
- there is no rule requiring the Member States to report on the 
recovery of own resources and no link between reports of fraud 
and irregularity (Regulation No 1552/89) and the arrangements 
for mutual assistance (Regulation No 1468/81); 
-• there has been no provision for a reporting procedure on cases 
relating to the structural funds since the Code of Conduct was 
annulled by the Court of Justice;1 and 
- there has been a lack of systematic reporting on the follow-up 
to the enquiries carried out in the Member States and non-member 
countr ies. 
The Commission has proposed the adoption of new legislation or the 
amendment of existing regulations to ensure it is kept fully 
informed,2 and Financial Control is drafting its first report on 
the recovery of funds in cases of fraud and irregularity. This 
should help to bring to light the difficulties experienced and the 
lessons to be learnt. 
Improving data-processing structures, and processing data using 
existing systems^ should help to improve matters. A 
sector-by-sector breakdown has been provided of the total recovered 
in duly reported cases of fraud or irregularity relating to the 
EAGGF (see Annexes 3.1 and 3.2), as requested by Parliament in its 
decision giving discharge for 1990.4 
SECTION M - WORK PROGRAMME: PROGRESS ON THE 1992 PRIORITIES 
The bulk of the Commission's 1989 programme for combating fraud has now 
been largely completed, thanks to its continuation in 1992 and the 
substantial progress achieved. This Section takes stock of the most 
significant work done. 
1 See point 1.2.3 of this Section. 
2 See point 1.3 of this Section. 
3 See point 4 of Section II 
4 See reference to decision in introduction (OJ L 19, 28.1.1993). 
- 27 -
1. Simplification of agricultural legislation, including the refunds 
nomenclature 
The Lachaux working party, which is now reaching the end of its term, has 
put forward a large number of proposals for simplification. The Commission 
intends to renew its three-year term of office in 1993. 
The action taken on the working party's initial proposals has varied from 
one sector to another. 
The proposals put forward in December 1990 concerning measures to encourage 
the sale of butter to certain sectors of the food industry were incorporated 
to some extent into Commission Regulation (EEC) No 1157/91.1 
As regards the refund on the use of starch, the Commission plans to follow 
the working party's recommendation that users should no longer be obliged to 
state in their certificate applications which product they intend to 
manufacture from starch. 
As regards the export refund nomenclature products obtained by the primary 
or secondary processing of cereals, no further distinction is now made 
between uses in the petfood sector, as recommended by the working party. 
The Commission is also considering the abolition of criteria relating to 
milk or starch content so that it can bring together certain Combined 
Nomenclature subheadings on which the same rate of refund is payable (this 
could reduce the present number of codes by more than two-thirds). At this 
stage, however, the distinction based on the type of cereals incorporated is 
to be retained. 
The Commission has incorporated the working party's main recommendations on 
milk quotas into its proposals for the reform of the CAP. In the case of 
the compensatory payment scheme for sheep, the Commission has proposed a new 
definition of the "eligible ewe", although this definition does not entirely 
coincide with that proposed by the working party. 
Although the Commission did not follow the working party's recommendation 
that a new document (EEC 5) should be introduced to replace the T5 control 
copy, it has adopted the suggestion that the T5 should circulate only 
between the inspection body and the payment agency. 
1 OJ No L 112, 4.5.1991. 
- 28 -
Commission staff are also considering the working party's recommendations 
concerning: 
table wine and quality wine produced in specific regions, as part of a 
wider study on the operation of the market organization in wine; 
intervention measures in the beef sector, and in particular the setting 
of a single price irrespective of the quality of the carcases offered for 
intervention, provided that such carcases meet the minimum approved 
quality requirement; 
- the premium per hectare of forage area, irrespective of the type of 
livestock production; this would replace the various existing premiums 
paid per head of livestock and per unit of farmland; 
- the production subsidy arrangements for olive oil; the subsidy for 
"small" and "large" producers would be calculated on the same basis. 
Lastly, the working party plans to submit new recommendations concerning the 
fol lowing: 
- withdrawals of fruit and vegetables from the market; 
- export refund nomenclature in the milk sector-, 
- procedures for the granting of export refunds; 
- distribution of school milk. 
2. Controls 
2.1 Control methods, including the targeting of high-risk areas 
If controls are to be effective, consideration must be given to risk 
analysis techniques. 
Constructive discussions are regularly held within the various Committees1 
with a view to drawing the necessary conclusions from practical experience 
at national level and from the statistics provided by data-processing 
techniques. Work is also being done to improve the targeting of the 
Commission's own resources controls towards high-risk areas. 
In the customs context, several seminars have been held on risk analysis2 
and a practical guide on targeted controls is now being prepared. 
These include the Customs Questions Committee, the Committee for Mutual 
Assistance, the Advisory Committee on Own Resources, the working parties 
on irregularities and mutual assistance in the EAGGF context and on 
Regulation (EEC) No 4045/89, and the Committee for the Coordination of 
Action against Fraud (COCOLAF). 
Some Member States have also been gratified by the progress achieved 
within the Council's high level ad hoc working party on fraud prevention. 
Cf. point 7 of this Section. 
29 -
In the agricultural sector, there have been significant changes. 
Member States have reacted very positively to the EAGGF's moves to provide 
information on the various aspects of risk analysis, such as exchanges of 
views on past experience, the production of documents outlining the subject 
and the applications of risk analysis at sectoral level, particularly in the 
context of exports. 
Risk analysis is now mandatory under the integrated administration and 
control system for certain Community aid schemes.1 Article 6(4) of 
Regulation (EEC) No 3887/92: 
- stipulates that aid applications subjected to on-the-spot checking are to 
be selected on the basis of a risk analysis and an element of 
representativeness of the aid applications submitted; 
lists the factors which the risk analysis must take into account. 
The Commission departments and the competent bodies in the Member States are 
currently giving consideration to amendments to the relevant legislation, at 
the request of certain Member States who would like to see greater 
flexibility so that their national resources can be redeployed in the 
optimum manner to cope with the actual risk at local level. 
2.1.1 Post-payment administrative controls (EAGGF Guarantee Section)2 
When Directive 77/435/EEC was replaced by Regulation (EEC) No 4045/89 on 
post-payment administrative controls, one of the aims was to concentrate 
checks on high-risk sectors and on the undertakings receiving most aid (all 
undertakings receiving over ECU 200 000 per year must be checked every two 
years). Now that Member States submit annual national programmes 
incorporating these two criteria, progress has been made towards the closer 
targeting of fraud and the concentration of necessarily limited resources on 
those sectors and companies which present the highest risk of fraud. 
1 Cf point 2.2. of this Section. 
2 Council Regulation (EEC) No 4045/89 of 21 December 1989 on scrutiny by 
Member States of transactions forming part of the system of financing by 
the Guarantee Section of EAGGF and repealing Directive 77/435/EEC: 
OJ L 338, 30.12.1989. 
30 -
The importance of post-payment scrutiny and its role in the detection of 
fraud is now self-evident. If proof were needed, it is immediately obvious 
from the statistics forwarded to the Commission (source: Regulations (EEC) 
Nos 283/72 and 595/91): 
Member State 
B 
DA 
DE 
EL 
ES 
F 
IRL 
I 
L 
NL 
P 
UK 
EEC total Number of cases 
Cases 
not ified 
(A) 
36 
99 
291 
35 
140 
407 
39 
499 
1 
347 
70 
592 
2556 Cases 
not if ied 
(B) 
6 
21 
196 
15 
76 
256 
7 
258 
1 
143 
7 
30 
1016 (A/B) 
17 % 
21 % 
67 % 
43 % 
54 % 
63 % 
18 % 
52 % 
100 % 
41 % 
10 % 
5 % 
40 % Amounts involved (ECU million 
Cases 
not i f ied 
(A) 
3.4 
16,4 
90,9 
0,9 
3,9 
19,4 
3,5 
332,9 
23,7 
1.3 
18,1 
514,4 Cases 
not i f ied 
(B) 
0,8 
3,1 
85,2 
0,6 
2,7 
13,8 
0,1 
209,7 
19,2 
0,2 
1.6 
337 (A/B) 
24% 
19 % 
94 % 
67 % 
69 % 
71 % 
3 % 
63 % 
81 % 
15 % 
9 % 
66 % 
(A) Total number of cases notified (all methods of detection) 
(B) Total number of cases notified which were detected 
post-payment scrutiny. solely by 
Thus, over 40% of the irregularities notified to the Commission have been 
detected by post-payment scrutiny. Such cases represent 66% of the amounts 
involved. 
The Commission 
I ines. therefore intends to press for wider checks along these 
Under Article 7 of the Regulation and in cooperation with the Member States, 
it has taken the necessary initiatives to obtain accurate and adequate 
information concerning those undertakings which benefit most from aid 
schemes and concerning the financial circuits used. The aim is to prevent 
fraud arising from the growing internationalization of trade, which is often 
used as a technical device to conceal the true objective of certain 
transactions qualifying for Community aid. 
- 31 -
At the end of 1992, following an initial evaluation of the implementation of 
Regulation (EEC) No 4045/89,1 the Commission asked the Member States to 
complete a detailed questionnaire on this subject. Throughout 1992 it 
emphasized the importance of the criteria to be applied when drawing up 
scrutiny programmes, which must be based on a prior analysis of the risk 
involved, and requested Member States to provide a written account of their 
procedures. 
2.1.2 Physical checks and audits of export transactions 
Pursuant to Article 7(2) of Regulation (EEC) No 386/902 a report to the 
Council was drawn up.3 This report stressed the need for the Commission 
to monitor developments so that, after two years' experience with the final 
system (at the end of 1993), appropriate measures could be taken to improve 
the system of controls. 
At this stage, however, the Commission considers that: 
the minimum percentage to be checked (5%) is not in itself incompatible 
with an approach based on risk analysis, provided that Member States 
continue to select the cases actually scrutinized and determine the 
qualitative intensity of such scrutiny on the basis of an appropriate 
risk analysis, both within and beyond the said 5%; 
- no sector can automatically be considered as free of any risk of fraud. 
1 Report from the Commission on the implementation during the period from 
1 January 1990 to 30 June 1991 of Council Regulation (EEC) No 4045/89: 
SEC(92) 2361 of 16.12.1992. 
2 Council Regulation (EEC) No 386/90 of 12 February 1990 on the monitoring 
carried out at the time of export of agricultural products receiving 
refunds or other amounts: 0J L 42, 16.2.1990. 
3 Report on the application of Regulation (EEC) No 386/90 on the monitoring 
carried out at the time of export of agricultural products receiving 
refunds or other amounts: C0M(93) 13 final of 25 January 1993. 
- 32 -
2.1.3 Clearance of EAGGF Guarantee Section accounts 
The administrative and physical checks made by Member States before the 
payment of aid are the first line of defence against fraud and 
i rregular i t ies. 
Following the recommendations of a working party set up by the Commission to 
examine in depth the procedure for the clearance of EAGGF Guarantee Section 
accounts (the Belle Group), this procedure is now being reformed: 
- so that greater attention can be paid to improving the systems of 
national controls through the numerous national payment agencies; 
- so that more thorough investigations can be made into whether the 
national inspection bodies are carrying out proper and adequate controls 
prior to payment and so that the necessary improvements can be requested 
in good t ime. 
Most of these reforms have already been introduced for the purposes of the 
1992 clearance. 
2.2 Reform of the CAP: integrated administration and control system 
Council Regulation (EEC) No 3508/92 of 27 November 1992 establishing an 
integrated administration and control system for certain Community aid 
schemes1 provides essentially for the following: 
the integrated system is to apply both to crop production and livestock 
product ion-,2 
the integrated system is to be based on computer data, using an 
alpha-numeric system to identify parcels of farmland and to identify and 
record livestock; aid applications will be subject to an integrated 
system of controls (on-the-spot administrative checks and, if necessary, 
verification by remote sensing from the air or from space); 
5) 1 OJ No L 355, 5.11.1992. 
2 - Support scheme for producers of certain arable crops introduced by 
Council Regulation (EEC) No 1765/92 of 30 June 1992: OJ L 181, 
1.7.1992; amended by Commission Regulation (EEC) No 2467/92 of 
25 August 1992: OJ L 246, 27.8.1992. 
- Premium schemes for-. 
(a) beef producers (Council Regulation (EEC) No 805/68 of 
27 June 1968: OJ L 148, 28.6.1968; as last amended by Council 
Regulation (EEC) No 2068/92 of 30 June 1992: OJ L 215, 30.7.1992); 
(b) sheepmeat producers (Council Regulation (EEC) No 3013/89 of 
25 September 1989: 0J L 289, 7.10.1989; as last amended by Counci I 
Regulation (EEC) No 2069/92 of 30 June 1992: OJ L 215, 30.7.1992). 
- Specific measures for hill farming and farming in certain 
less-favoured areas (Council Regulation (EEC) No 2328/91 of 
15 July 1991: 0J L 218, 6.8.1991; as last amended by Council 
Regulation (EEC) No 2082/92 of 30 June 1992: OJ L 215, 30.7.1992). 
- 33 
for a three year period beginning in 1992 the Community will co-finance 
up to 50% of Member States' expenditure on data-processing and control 
structures ; 
- Member States are free to extend one or more aspects of the integrated 
system to those Community aid schemes which are not subject to the 
Régulât ion. 
On 23 December 1992 the Commission adopted Jetai led rules1 for the 
implementation of this Regulation. 
In line with the reform of the CAP this Regulation takes the integrated 
approach. 
By integrating all the available data relating to areas, livestock ind 
producers, the control body is able to carry out a very thorough scrutiny. 
This means that many more irregularities and discrepancies are discovered at 
the time when the aid applications are submitted and reduces the number of 
items which have to be checked on the spot. Since the scrutiny operations 
can be computerized, the checks are more effective and the cost is more 
acceptable. 
This approach to the management of aid applications should also shorten the 
time that farmers have to wait for the payment of aid. The integrated 
treatment of applications for different types of production aid will also 
simplify the paper work required of the farmer. 
2.3 Control structures and specific control techniques in the agricultural 
sector 
2.3.1 Olive oil agencies 
It should be pointed out that Council Regulation (EEC) No 593/922 extended 
the competence of the olive oil agencies by giving them responsibi I ity for 
checking all Community aid paid to the sector with the exception of export 
refunds. This Regulation also extended for a further five years the 
Community's 50% co-financing of the agencies' actual expenditure. 
2.3.2 Handbook on proofs of arrival at destination (differentiated refunds) 
Given the large sums involved and with a view to the prevention of fraud, 
the Commission instructed a private company to collect all the documents and 
stamps used in non-member countries as proof that goods receiving 
differentiated refunds had arrived at their destination and to provide a 
complete overview of customs import procedures in some 70 non-member 
Commission Regulation (EEC) No 3887/92 of 23 December 1992 laying down 
detailed rules for applying the integrated administration and control 
system for certain Community aid schemes: OJ L 391, 31.12.1992. 
Council Regulation (EEC) No 593/92 of 3 March 1992 amending 
Regulation (EEC) No 2262/84 laying down special measures in respect of 
olive oil: OJ L 64, 10.3.92. 
- 34 -
countries of destination. following on-the-spot work in the countries 
concerned, the company produced a handbook of proofs of arrival at 
destination (differentiated refunds), which has been distributed to the 
Member States and to the Commission departments concerned. 
2.3.3 Community control bodies 
Following their initial missions in 1991 pursuant to Council Regulation 
(EEC) No 2048/89 laying down general rules on controls in the wine sector,1 
the Commission's special inspectors continued with their work (mainly checks 
on registers, grubbing and distillation operations), which was expanded to 
include the provision of assistance and the investigation of specific 
matters. 
On 5 November 1992 the Commission presented a report on these activities 
over the period from 1 May 1991 to 30 April 1992.2 This report threw 
light on several fraudulent practices, revealing for example that wines 
originating in Italy had been watered down in France and Germany and that 
some Italian wines contained methyIisothiocyanate. 
An inspectorate has also been set up for fruit and vegetables. The 
inspectors' work is chiefly concerned with the standardization of fruit and 
vegetables and their role is "advisory" rather than "preventive". At the 
same time, however, checks made on withdrawals of fruit and vegetables have 
revealed that in many cases the products withdrawn do not meet quality 
standards. 
The temporary status of the staff employed as inspectors (annual contracts 
for auxiliary staff) may jeopardize the effectiveness of their work. 
2.3.4 Remote sensing 
In 1992 the temporary set-aside scheme for arable land and the new 
arrangements in the oilseeds sector were monitored by remote sensing 
techniques adopted jointly by the Member States concerned in response to a 
Commission initiative, namely: 
- selection and computerization of files by the national administrations; 
- collection and treatment of satellite images (combined where necessary 
with aerial photographs); 
- superimposition of the cadastral limits (or equivalent references) of the 
parcels declared; 
- photo-interpretation of the images (by firms selected via a tendering 
procedure) and classification in each case; 
- on-the-spot verification of unacceptable cases by the national 
administration and confirmation of the photo-interpretation. 
1 OJ L 202, 14.7.1989. 
2 Report from the Commission to the Council and the European Parliament on 
the activities of the body of specific officials of the Commission for 
controls in the wine sector: SEC(92) 2014 final, 5.11.1992. 
- 35 -
The 
fol number 
OWS: of applications checked in this way may be broken down as 
Member State Set-aside Oilseeds 
BE 45 153 
DA 14 1.502 
DE 804 180 
EL 100 517 
ES 1.050 4.204 
FR 56 49 
IR 39 161 
IT — 5.432 
LU 
NL — 99 
PO 20 182 
UK 47 736 
TOTAL 2.175 13.215 
In 1992 the Commission financed the total cost of this operation; the data 
are still incomplete but clearly show that remote sensing gives better 
results than traditional methods of verification and that its use has a 
deterrent effect. 
To round off the 1992 programme a two-day seminar for the Member States and 
the management of the specialized companies was held in Brussels in 
November. All the Member States except Luxembourg have since decided to 
continue with remote sensing techniques in 1993, within the framework of the 
integrated administration and control system for certain Community aid 
schemes.1 
At the same time, technical research is continuing: documents based on 
satellite images or aerial photographs may replace the land register for the 
declaration of plots under cultivation; use may be made of radar satellite 
images which are not affected by cloud cover, and so on. 
1 Cf point 2.2 of this Section. 
- 36 -
3. Ex-ante examination of the anti-fraud aspects of legislative proposals 
Since 1990 the Commission departments responsible for the management of 
expenditure and for financial control in the agricultural and fisheries 
sectors have been assessing the susceptibility of proposed legislation to 
fraud, with the systematic introduction of control measures and/or 
penalties. Any proposed legislation which may affect own resources is also 
scrutinized by the departments concerned to ascertain whether fraud 
prevention measures have been incorporated. 
In 1992 an anti-fraud heading1 was included in the financial statement 
which must accompany any draft legislation that may have budgetary 
consequences. Internal guidelines drawn up to facilitate the preparation 
of this heading (Annex III to the budgetary circular concerning the 
statement of estimates and the preliminary draft budget for 1993) stipulate 
that the department concerned must specify what control measures are to be 
applied internally and, if necessary, vis-à-vis third parties. 
Thanks to these guidelines, some progress has been made as regards the 
information to be given in the financial statements. 
Consideration is now being given to optimizing these checks on proposed 
legislation, with a view to striking the correct balance between the ends 
pursued and the means employed. The Commission's Financial Controller 
should be able to assess whether the procedures described in the anti-fraud 
heading make provision for the proper monitoring and assessment of the 
measure in terms of its financial acceptability and whether these procedures 
will enable them to carry out the appropriate checks. 
4. Data-processing structures 
Quite apart from recent developments in the data-processing networks 
handling indirect taxation (VAT Information Exchange System - VIES), 
attention should be drawn to changes in the data bases used in the fraud 
prevention context: 
. IRENE 
The IRENE data base ( IRregularities, ENquiries, Exploitation) has been 
operational since 1 December 1992. This base now covers agriculture, 
own resources, mutual assistance and the Structural Funds. In most 
cases the management of the data from the Member States is computerized. 
The data are easily transferable to PCs for graphical or statistical 
processing. 
Heading 8 of the "Financial Consequences" section of the financial 
statement provided for in Article 3 of Council Regulation 
(Euratom/ECSC/EEC) No 610/90 of 13 March 1990 amending the Financial 
Regulation applicable to the general budget of the European Communities: 
OJ L 70, 16.3.1990. This Article stipulates that "any proposal or 
communication submitted by the Commission to the Council which may have 
budgetary consequences ... must include a financial statement." 
- 37 
. DAF 
The development of the DAF (Documentation ant i fraude) data base has 
entered a phase where the cooperation of the Member States will be 
required to supplement the information collected so far. All 
Member States have responded positively and a number of visits are now 
being made. 
. SCENT 
The Commission and the Member States have continued their joint operation 
of SCENT (transmission of messages relating to irregularities detected or 
suspected, questioning of data bases and statistical research). Users 
have been able to consult a help desk at the Commission. 
. SID 
The SID (Système d'information douanière) is a computerized network which 
will eventually cover all areas of customs cooperation involving 
Community rules (in progress) or non-Community rules (drugs, etc. -
already operational). By the end of 1992 there were 70 terminals in the 
Member States connected to SID. In its initial phase the SID network is 
being used for the electronic transmission of data via standardized 
screens. The system is being established and brought into operation in 
close collaboration with the national authorities; the Commission's SID 
help desk is available to users should they have any questions or 
problems. 
The Commission has organized training courses for users working for 
national bodies (ten Member States in 1992). 
5. Administrative cooperation on indirect taxation 
On 27 January 1992 the Council adopted Regulation (EEC) No 218/92 on 
administrative cooperation in the field of indirect taxation (VAT).1 
This Regulation lays down the ways in which national administrative 
authorities responsible for the application of laws on value-added tax are 
to cooperate with each other and with the Commission. 
Information concerning intra-Community transactions is to be exchanged 
through the VIES (VAT Information Exchange System), the purpose of which is 
to monitor declared sales and purchases between Member States, account being 
taken of the changes arising from the abolition of internal Community 
frontiers on 1 January 1993. 
1 OJ L 24, 1.2.1992. 
- 38 
Two Articles of the Regulation explicitly mention fraud prevention: 
- Article 4 § 3 whereby, solely for the purpose of preventing tax fraud, 
the competent authorities in each Member State may obtain directly and 
without delay the following information, whenever this is deemed 
necessary for the checks on the intra-Community acquisition of goods: 
(a) the VAT registration numbers of the persons who supplied the goods; 
(b) tho total value of the goods supplied by each such person. 
- Article 11, whereby the Commission is to pool Member States' experience, 
in particular that regarding new means of tax avoidance or tax evasion, 
with the aim of improving the arrangements for administrative 
cooper at ion. 
On 25 February the Council adopted Directive 92/12/EEC on the general 
arrangements for products subject to excise duty,1 which replaces the 
control system by declarations and strengthens the legal basis for the 
prevention of fraud in this area. 
To supplement VIES, which covers only transactions declared to the tax 
authorities, a computerized network (SCENT FISCAL) is being set up to detect 
those operations which have not been declared at all and are therefore 
particularly susceptible to fraud, including the evasion of excise duty. 
6. Cooperation with non-member countries 
The Community intends to develop, in cooperation with its trading partners, 
a legal framework for mutual assistance in customs matters, with a view to 
facilitating the detection and prevention of fraud within the Community. 
In 1992 the main developments in the countries of Eastern and Central Europe 
(including the Baltic countries) were the following: 
the entry into force on 1 March 1992 of the interim agreements concluded 
with Poland, Hungary and the Czech and Slovak Republic, each including a 
protocol on mutual assistance (Protocol No 6); 
- the signing on 11 May 1992 of the EEC-Albania Agreement on commercial and 
economic cooperation, which contains provision for administrative 
cooperation on the detection and prevention of customs fraud (entry into 
force: 1 January 1993); 
1 Council Directive 92/12/EEC of 25 February 1992 on the general 
arrangements for products subject to excise duty and on the holding, 
movement and monitoring of such products: OJ L 76, 23.3.1992. 
- 39 -
- the signing with the Baltic States, on 11 May 1992, of agreements similar 
to that concluded with Albania; 
the negotiation of Interim Agreements with Romania and Bulgaria, each 
including a protocol on mutual assistance. 
An interim agreement on trade and cooperation (including a protocol on 
mutual assistance) came into force with the Republic of San Marino on 
1 December 1992. 
The Agreement on the European Economic Area (EEA), which is to be reviewed 
to take account of the negative outcome of the Swiss referendum, also 
includes a protocol on mutual assistance. 
In 1992 some framework agreements on customs cooperation with non-European 
countries came into force (Paraguay, Uruguay) or were initialled or signed 
(Andean Pact, Brazil, Macao and India). 
7. Seminars and exchanges of national officials 
* Further seminars on the Community's fraud prevention policy were held in 
Warnemunde (June 1992: 250 participants) and in KiIlarney (October 1992: 
200 participants) to acquaint German and Irish officials with various 
aspects of the said policy. 
• Alongside these highly specialized seminars, others were held on the 
financing, management and supervision of the structural Funds in 
Newcastle (March 1992), Dresden (September 1992) and Copenhagen 
(June 1992). The latter seminar dealt with the Community funds in 
greater detail, with special reference to the EAGGF Guarantee Section. 
In November 1992 a seminar on remote sensing was held in Brussels. 
•Alongside these Commission initiatives, the associations of European 
lawyers, which now cover all Member States (associations having recently 
been established in Greece and Luxembourg), have been holding training 
courses (one-day courses for magistrates) and seminars for lawyers on the 
legal protection of the Community's financial interests. In 1992 sixteen 
such seminars and meetings were held, covering both practical and 
theoretical matters. 
« Matthaeus programme 
Pursuant to Article 10 of the Council Decision of 20 June 1991 on the 
adoption of the Matthaeus programme,1 the Commission presented its 
report on the first year of the programme's implementation.2 
In 1992 the main developments were: 
1 0J L 187, 13.7.1991; see also the Commission Decision of 
13 December 1991 on a Community action programme for the initial training 
of customs officials. 
2 Commission Report on the Matthaeus programme in 1991: SEC(92)735 final, 
15.4.1992. 
- 40 -
- a slight increase in the number of exchanges (420 officials instead of 
403), with special emphasis on the exchange of instructors; 
- the holding of 18 seminars on general or specific questions related to 
fraud prevention, including risk analysis for the targeting of customs 
controls, methods of checking the preferential origin of fishery 
products, audit systems and investigation methods in cases of fraud 
relating to anti-dumping duties; 
- the new training programmes for experienced officials. 
*The Interfisc programme: 
A Community action programme on the training of officials dealing with 
indirect taxation should shortly be adopted by the Council, one of the 
aims being to ensure that the abolition of internal frontiers does not 
give rise to fraud or tax evasion. 
This programme would follow on from the pilot scheme started in 1991 and 
1992 (seminars and exchanges of national officials), with the addition of 
joint training programmes and the organization of language courses. 
» A programme for the exchange of officials also exists in the agricultural 
sector (EAGGF Guarantee Section) and enables the staff of the payment 
agency in one Member State to take an active part in the work of a 
payment agency in another Member State. By the end of 1992 a total of 
37 staff had been exchanged in this way. 
8. Legal protection of the Community's financial interests 
Member States are required to deal with infringements of Community law in 
the same way as infringements of national law. Further checks have been 
made on Member States' compliance with the principles laid down in the Court 
of Justice's ruling in Case 68/88, and in particular the principle of 
analagous treatment as set forth in the Treaty on European Union.1 
Article 209a of Title II, Article 78i of Title III and Article 183a of 
Title IV. 
41 -
Targeted checks on how the national courts deal with frauds to the detriment 
of the Community's financial interests have now been carried out in all 
Member States except Luxembourg and the conclusions that have emerged have 
gradually been incorporated into the anti-fraud documentation (DAF 
database).1 
The legal protection of the Community's financial interests has also been 
the subject of several studies. 
(a) A working party has been set up to consider what practical 
consequences should be drawn from the study on penalties for 
infringements of customs law. 
(b) The study on national systems of administrative and criminal penalties 
was completed in late 1992. 
Its findings included the following: 
- administrative penalties may be defined in terms of the 
administrative nature of the authority imposing the penalty, the 
infringement of a rule of law, the deterrent purpose of the penalty 
and its impact on the person or property concerned; 
- the principle of legality is the principle most widely recognized 
among the Member States; 
- the concept of fraus legis could usefully be introduced in those 
Member States where it is not recognized; 
- the principle of proportionality as recognized by the Court of 
Justice should ensure that the combination of a national penalty 
with a Community penalty does not result in an excessively heavy 
sanction. 
With regard to administrative penalties, attention should be drawn to the 
Court of Justice's ruling in Case 240/902 which recognized for the 
purposes of the CAP:3 
the Community's competence to provide in its legislation for 
administrative penalties such as the temporary exclusion of a farmer 
from an aid scheme; 
- the Commission's competence to provide for administrative penalties 
(such as the abovementioned temporary exclusion or a surcharge 
calculated on the amount of aid overpaid) provided that such executive 
powers had been delegated by the Council. In this context the Court 
recalled its ruling in Kôster4 to the effect that the imposition of 
penalties came within the Commission's powers if the Council had not 
reserved such powers to itself. 
1 Cf. point 4 of this Section. 
2 Judgment of 27 October 1992 in Case 240/90 Germany v Commission. 
3 The action brought by Germany related to Commission Regulation (EEC) 
No 3007/84 of 26 October 1984 laying down detailed rules for the 
application of the premium for producers of sheepmeat (OJ L 283 of 1984) 
and Council Regulation (EEC) No 3013/89 of 25 September 1989 on the 
common organization of the market in sheepmeat and goatmeat (OJ L 289 of 
1989). 
4 Judgment of 17 December 1970 in Case 25/70. 
- 42 -
In the light of this judgment and the recommendations of those conducting 
the abovementioned study, the Commission is now reconsidering its proposal 
for a Council regulation on the checks and penalties applicable under the 
common agricultural and fisheries policy.1 
(c) A comparative study is now being conducted, as requested by the 
Ministers of Justice on 13 November 1991,2 into Member States' legal 
and administrative provisions concerning fraud committed to the 
detriment of the Community budget. A working party consisting of 
academics and other experts in this field was set up and given the 
task of answering a list of questions drawn up by the Commission. 
Draft reports on each Member State were submitted in December; once 
they are finalized during the second phase of the study, comprehensive 
reports will be drawn up on those areas where fraud is committed 
against the Community budget. These reports will contain 
recommendations and the Commission will present the results of the 
study in mid-1993. 
SECTION III - FINANCING OF THE FRAUD PREVENTION POLICY 
1. Execution of the 1992 budget 
In 1992 the fraud prevention appropriations amounted to ECU 76 556 000, 
which was a similar allocation to that in previous years. The bulk of these 
appropriations was allocated directly to the Member States, either to 
finance the improvement of national control structures in the agricultural 
sector (particularly under Regulations (EÈC) Nos 4045/89, 307/92, 2392/86 
and 593/92) or to subsidize certain forms of training (exchanges of national 
officials, information seminars). 
As at 31 December the percentage of appropriations committed was 94.18%. 
Details of how the 1992 appropriations were used are given in Annex 4.1. 
The following headings call for specific comments: 
Item 3531 (Controls, studies, analyses in connection with the fight 
against fraud): the national bodies have not used all the sums to which 
they were entitled for expenditure under Regulation (EEC) No 4045/89 on 
scrutiny by Member States of transactions forming part of the system of 
financing by the EAGGF Guarantee Section.3 
1 As last amended by C0M(91)378 final: 0J C 294, 13.11.1991 
2 0J C 328, 17.12.1991. 
3 Cf. point 2.1.1 of Section II of this Title. 
- 43 -
Since the said Regulation came into force, the Commission has 
consistently urged Member States to make full and correct use of the 
funds placed at their disposal to increase staff numbers, raise training 
levels and expand their technical facilties and has shown flexibility in 
accepting that data-processing allocations which should have been used 
entirely during the first year of the Regulation may be spread over 
several years. In practice, however, the rate of utilization of such 
appropriations is still low and is rising only very gradually. For 
example, only 42% of appropriations for the remuneration of additional 
staff (Article 13) was used in 1990, rising to 59.23% in 1991. These 
average figures conceal wide national differences, ranging from very low 
utilization (EL, UK) to full utilization (DA, ES, FR, IT). Although 
Member States have consistently complained about training (Article 14), 
the rate of utilization of the appropriations for this purpose tells a 
different story (only 23% used in 1990 and only 20% in 1991). 
The Commission will continue to monitor closely these rates of 
utilization and the ways in which Member States use the appropriations 
made available to them under this Regulation. 
- Article A-355 (European documentation, coordination and study network to 
control cross-border crime and fraud): given the lack of interest shown 
by the Member States, there has been very little Community cofinancing, 
with the result that ECU 372 000 were transferred to Item A-3530 (mainly 
for the comparative study requested by the Council on 13 November 1991). 
Item A-4531 (Controls, studies, analyses in connection with the fight 
against fraud): ECU 623 000 were transferred to this heading by the 
budget authority to boost the capacity for intervention of the 
Secretariat-General's fraud prevention unit (UCLAF). Following this 
transfer and other Commission decisions, ten national experts are to be 
recruited on secondment over the first few months of 1993. 
- Article B1-360 (Measures to combat fraud affecting the EAGGF Guarantee 
Section): where Regulation (EEC) No 307/911 is concerned, the overall 
rate of utilization of the Community contribution is expected to improve 
in 1992, having been only 36% in 1991. Total estimated expenditure by 
the Member States amounts to some ECU 11 million, which would correspond 
to 54% of the total appropriations placed at their disposal, i.e. 
ECU 20 mi I I ion (Art icle 1 : ECU 10 mi I I ion for exports of agr iculturaI 
products and non-Annex II products; Article 2: ECU 10 million for other 
measures). 
1 Council Regulation (EEC) No 307/91 of 4 February 1991 on reinforcing the 
monitoring of certain expenditure chargeable to the EAGGF Guarantee 
Section. OJ L 37, 9.2.1991. 
- 44 
These provisional figures indicate that the rates of utilization in the 
various Member States no longer differ so widely. Some countries such as 
Greece, Ireland, Italy and Portugal, where the rate was very low in 1991, 
are planning substantial increases which will bring their rate of 
utilization closer to that of the other Member States, whilst there has 
been little change in the position of the countries where high 
percentages were recorded in 1991. Moreover, whereas expenditure under 
Article 1 accounted for the majority of Community financing in 1991, the 
tendency in 1992 would seem to be for Member States to make wider use of 
the appropriations available for Article 2. 
As regards Regulation (EEC) No 595/91,1 complete statistics are not yet 
available on the arrangement whereby Member States may retain 20% of the 
sums recovered following the notification of irregularities but the 
initial figures will be known once Member States' expenditure for 1992 
has been calculated. 
Item B2-5110 (Measures to control and combat fraud): the appropriations 
available to Member States under Regulation (EEC) No 2392/86 establishing 
a Community vineyard register have been seriously underutilized.2 
2. Presentation of the 1993 budget 
Details of the fraud prevention appropriations entered in the 1993 budget 
are shown in Annex 4.2. Although the sums allocated appear to be much the 
same as in 1992 (ECU 76.5 mi I I ion in 1992; ECU 73.2 million in 1993), the 
actual situation is quite different: 
(1) The budget authority's decision to abolish the mini-budget headings 
means that the ECU 7.5 mi I I ion entered in the 1992 budget for such 
purposes no longer figures in the new presentation of the fraud 
prevention appropriations. 
(2) Article B1-360 is allocated ECU 22 million but is to be supplemented 
in the course of the financial year by a reserve of ECU 60 million 
entered in Chapter BO-40 (for the integrated administration and 
control system set up by Regulation (EEC) No 3508/92). 
1 Cf. point 1 of Section I of this Title. 
2 Council Regulation (EEC) No 2392/86 of 24 July 1986 establishing a 
Community vineyard register: OJ L 208, 31.7.1986. 
- 45 -
TITLE II - ACTION PROGRAMME FOR 1993 
1. In 1993 the single market will be fully established and the Community's 
internal frontiers will disappear. Trade between the Community and its 
immediate neighbours will be increasingly liberalized with the 
implementation of the Agreement on the European Economic Area and 
association agreements with the countries of Central and Eastern Europe. 
When the Treaty on European Union enters into force, it will open the way 
for major measures to improve economic and structural cohesion between the 
Member States. 
However, these historic developments and the new possibilities they open up 
also carry the risk that some of the considerable financial resources 
devoted to implementing these policies might be misappropriated and fall 
into unscrupulous hands. To counter this new threat, it is essential that 
all those responsible for combating fraud maintain and indeed step up their 
vigilance. 
First in line are the Member States. Their primary task is to monitor 
Community revenue and expenditure, to report on fraud and irregularities, 
to take action against fraudsters and to recover amounts evaded. 
Responsibility for fulfilling these obligations lies with their financial 
departments, the courts or, in some cases, the legislature. 
And then there are the Community institutions. In its capacity as guardian 
of the Treaty and executor of the budget, the Commission plays a vital role 
in coordinating and monitoring action taken by the Member States, in 
particular to combat widespread cross-border, fraud, while keeping a check 
on its own operations and prompting and supporting the activities of the 
Member States. The role of the Court of Auditors in this field is 
self-evident. But Parliament and the Council must also continue to play a 
full part in this important process as legislator and budget authority and, 
in Parliament's case, as the body exercising democratic control. 
- 46 -
2. The 45-point multiannual programme drawn up in 1989, which has served 
as a guideline for action over the last three years, has been largely 
implemented and can now be closed with a positive record of achievement. 
To meet a fresh set of challenges and in response to a request from the 
Council of 28 September 1992, the Commission is now presenting a new action 
programme for 1993, which will take the form of a rolling programme. 
However, this new programme retains the three main objectives of 
prevention, cooperation and counteraction, which form the basis for a 
series of practical measures. Some of these measures, in areas where 
constant vigilance is required, were already included in the previous work 
programme, while others are linked to recent developments and are included 
for the first time. In all, the 1993 programme contains 33 specific but 
interdependent measures. 
3. None of these measures should be overlooked if significant progress is 
to be made in combating fraud. Nevertheless, special priority must be 
given to certain areas, as indeed the Council has requested. 
3.1 On the prevention front, there are three types of measures which should 
be highlighted: 
The mandate of the Lachaux working party on the simplification of 
legislation will be renewed. Its task is to review agricultural 
legislation with a view to reducing the risk of fraud and improving the 
efficiency of control measures. Work will also continue on simplifying the 
export refund nomenclature. 
Ex ante controls will be extended to fields other than agriculture and 
fisheries, where satisfactory results have already been achieved. In the 
agricultural sector the Commission will monitor closely the introduction of 
the integrated administration and control system for certain Community aid 
schemes in the context of the reform of the CAP. 
The Commission will make an effective contribution to the development and 
dissemination of risk-analysis techniques applied by the Member States to 
assist them in their control duties. The Commission's own departments will 
also make more use of these techniques when drawing up their programme of 
audits and investigations. 
- 47 -
3.2 In the field of cooperation, strong emphasis will be placed on the 
stepping-up of mutual assistance through the introduction of a customs 
information service (SID). 
Cooperation between the Commission and the Community's trading partners 
should improve as a result of the application and conclusion of mutual 
assistance agreements. 
In the planning of seminars the Commission will pay particular attention to 
training for those in charge of the management and administration of the 
CAP. 
3.3 As regards counteraction, the Commission will assess the results of the 
comparative study of the laws, regulations and administrative provisions of 
the Member States on action against fraudulent practices affecting the 
Community budget and draw the necessary conclusions as regards legislation. 
It is presently considering what legislative action to take in response to 
the study on administrative penalties. 
The Commission will take steps to highlight any shortcomings in the 
recovery of entitlements which have been evaded or aid paid in error and 
will put forward appropriate solutions to improve the recovery of amounts 
lost to fraud. 
4. In 1993 important decisions will have to be taken on the structural 
Funds. The Commission will lay before the Council a proposal for a 
Regulation amending the structural Funds Regulation from 1 January 1994. 
It will also set in motion plans for a special financial instrument to act 
as a forerunner of the Cohesion Fund until the provisions of the Maastricht 
Treaty are implemented. 
The Commission will see to it that its proposals in this field contain 
adequate legal bases to allow it to take the necessary anti-fraud measures, 
in particular as regards the systematic notification of information 
(establishment of irregularities and subsequent administrative and legal 
action). In so doing it will lay a sound basis for more intensive action 
against fraud in this field, which accounts for an ever-greater share of 
the budget. 
5. Besides the abovementioned measures, the Commission will continue its 
efforts to strengthen cooperation between the Member States - a vital 
factor in the fight against fraud. At the same time it will not neglect 
the role conferred on it by the Treaty and by its financial 
responsibilities, which it exercises under Parliament's supervision, to 
complement national anti-fraud measures by coordinated enquiries, in 
particular when controls have to be extended across frontiers and national 
authorities have limited scope for intervention. 
- 48 
ANT I-FRAUD POLICY 
ACTION PROGRAMME 
- 1993 -
Object ive Measures 
Prevent ion 
Simpli f icat ion of 
I eg is I at ion 
Tightening of 
controls 1 .1 Expert working party reviewing 
agricultural legislation 
Proposals to be drafted by 
31 March 1993 on: 
- withdrawals in the fruit and 
vegetables sector 
- export refund nomenclature for 
milk products 
- distribution of milk to schools 
- procedure for granting export 
refunds 
Decision on renewing the group's 
mandate from 31 March 1993 
1 -2 Rationalization of differentiated 
refund arrangements 
- Review of several sectors, 
in particular milk products 
1.3 Customs Code 
- Ensure that implementing measures 
are adopted in 1993 (July) 
2.1 Harmonization of the rules on 
CAP controls 
- Proposal for a Council Regulation on 
checks and penalties to be reviewed 
in the Iight of the judgment of the 
Court of Justice of 27.10.1992 in 
Case 240/90 
- Conclusions to be drawn from the study 
on administrative penalties 
2.2 Physical checks - minimum threshold 
- Commission report to be discussed by 
the Council; conclusions to be drawn 
49 -
Object ive Measures 
2.3 Tightening of controls on destina­
tion for the payment of differentiated 
export refunds 
- Arrangements for Community recognition 
of surveillance firms to be drawn up 
by 31 December 1994 
2.4 Tightening of ex post controls on 
operations financed by the EAGGF 
Guarantee Sect ion 
- Commission report on Reg. No 4045/89 
to be discussed by the Council 
- Detailed review of rules for 
implementing Reg. No 4045/89 
. problems arising from the growing 
internationalization of transactions 
. access to accounting data 
. risk analysis 
2.5 Specialized team in the wine sector 
- Discussion of Commission report, 
conclusions to be drawn 
2.6 Establishment of an integrated 
administration and control system for 
certain Community aid schemes in the 
reform of the CAP 
- System to be set up by the Member 
States 
- Monitoring by the Commission 
- Full application by the Member States 
by the beginning of 1996 
2.7 Application of risk-analysis 
techniques 
- Manual to be drawn up for national 
customs off icials 
- 50 -
Object ive Measures 
3. Improving the 
controllabiIi ty of 
leg is I at ion Further discussions in the Committee 
on Irregularities (EAGGF Guarantee 
Section) and the working party on 
Regulation No 4045/89 
Preparation of an "audit package" for 
ex post controls 
Application of risk analysis to be 
extended to other sectors 
2.8 Establishment of inspection 
agencies in the tobacco sector 
- Application of Council Regulation 
(EEC) No 2075/92 and Commission Regu­
lation (EEC) No 85/93 providing for 
the establishment of control agencies 
in the tobacco sector. Agencies to 
be established by each Member State 
which produces tobacco. 
Monitoring by the Commission 
3.1 Introduction of a system to assess 
the susceptibility to fraud of proposed 
legislat ion 
- Extension of ex ante controls to 
sectors other than agriculture and 
fisheries 
- Better use of the financial 
statement accompanying draft 
legislat ion 
- 51 -
Object ive Measures 
I. Coopérât ion 
Improving channels 
of communication 4.1 Detailed rules for implementing 
Article 23(1) of Reg. No 4253/88 -
Notification - structural Funds 
- Transmission to the Council of a 
proposal for a Regulation creating 
a legal base to enable the Commission 
to adopt implementing rules: 
first half of 1993 
- Drafting of implementing rules: 
second half of 1993 
4.2 Clarification of the provisions of 
Reg. No 1552/89 
- Adoption of a Regulation amending 
Regulation No 1552/89, in particular 
Article 6 on notification to the 
Commission 
- Drawing-up of a standard form for 
not if icat ions 
4.3 Development of IRENE database 
- Assessment of statistical quality 
and development of risk analysis 
4.4 Development of DAF database 
- Final collection, analysis and prepa­
ration of data in the form of reports 
for all the Member States for entry 
in the first version of the DAF base 
- Creation of computerized DAF system 
4.5 SCENT 
- Improvement of system (installation 
of SCENT 2.0) 
- Further training for users 
- Connection of SCENT terminals to 
telecopier systems 
- 52 -
Object ive Measures 
Closer cooperation 
wi th nat ional 
departments and 
between these 
departments 4.6 Computerized systems in the tax 
field 
4.6.1. VIES (information for control 
purposes) 
- System to be made operational 
- Training for users 
4.6.2. SCENT - tax section (information 
on fraud) 
- Introduction in the form of a pilot 
scheme in the second half of 1993 
- Training for users 
4.7 SID (Customs information system) 
- Installation of more terminals in the 
Member States 
- Further training for users and 
instructors in the Member States 
- Introduction of Phase 2: creation of 
a legal base to allow exchanged 
information to be entered in a 
database (see point 5.1) 
4.8 Computerization of transit 
procedures 
- Assessment of pilot scheme on compu­
terization and clearance of Communi­
ty/common transit operations 
- Extension of pilot scheme to 
18 EEC and EFTA countries 
5.1 Development of mutual assistance 
and administrative cooperation 
Adoption by the Council of a Regula­
tion updating the mechanisms of 
Reg. No 1468/81 to improve the methods 
of assistance and cooperation at 
Community level 
- 53 -
Object ive Measures 
6. Training and 
exchanges of 
officials 6.1. Organization of seminars 
- General seminars: 
- Italy: first half of 1993 
- Denmark: second half of 1993 
- Portugal: first half of 1993 
- Special seminars: 
- Fraud investigation methods 
in the textile sector (Sep. 1993) 
- Fraud in customs/VAT/excise duties 
(Dec. 1993) 
- Structural Funds and the CAP 
- Legal protection of the Community's 
financial interests 
Seminars in Rome (April 1993) and 
Brussels (Nov. 1993) and a series 
of training courses in the Member 
States 
- Own resources aspects of VAT 
recovery and inspection procedures 
(2 seminars) 
- Own resources aspects of procedures 
for the recovery, entry in the 
accounts and inspection of 
traditional own resources 
6.2. Training and exchanges for offi­
cials working in the agricultural area 
- Special information courses for 
officials working on the CAP 
- Exchange programme for staff of 
disbursing agencies in the Member 
States to be continued and stepped up 
6.3 Training and exchanges for 
customs and tax officials 
- Continued training under the 
MATTHAEUS and "Interfisc" programmes 
- 54 -
Object ive Measures 
7. Closer cooperation 
between the Commu­
nity and non-member 
countr ies 7.1 Agreements with non-member 
countries on mutual assistance in 
customs administration 
- Implementation of mutual assistance 
provisions of the EEA Agreement 
(once it has entered into force) 
- Implementation of mutual assistance 
provisions of agreements with the 
Bait ic States 
- Conclusion and implementation of 
mutual assistance provisions of 
agreements with Romania and Bulgaria 
- Negotiation, on the basis of 
directives adopted by the Council, 
of agreements with Slovenia and some 
of the Community's trading partners 
(Canada, USA, Japan, South Korea, 
Hong Kong) 
7.2 Technical assistance measures for 
non-member countries in the customs 
field 
- Further measures to help the 
countries of Central and Eastern 
Europe and the former Soviet Union to 
introduce modern customs legislation 
similar to Community legislation or 
to apply appropriate techniques of 
combating illicit forms of trade 
- Further training measures designed 
to disseminate knowledge of customs 
techniques (China, Thailand and the 
ACP countries) 
7-3 Training courses on specific 
Community schemes affecting non-member 
countries (intended for administrations, 
commercial organizations, businesses) 
- Continuous programme of GSP seminars 
(CIS, Vietnam, etc.) 
- Seminars in the ACP countries on the 
rules of origin and administrative 
cooperation under the Lomé Convention 
55 -
Object ive Measures 
III. Counteract ion 
8. Additional 
protection for the 
Community's financial 
interests 8.1 Comparative study of the laws, 
regulations and administrative 
provisions of the Member States on 
fraudulent practices affecting the 
Community budget 
- Transmission of summary reports -
30 March 1993 
- Submission of final report - June 
- Conclusions - second half of 1993 1993 
8.2 Study on penalties for infringements 
of Community customs law 
- Follow-up with the Member States 
in the Customs Questions Committee 
8-3 Study on the Member States' systems 
for administrative and criminal 
penalt ies 
- Conclusions to be drawn 
8.4 Weight given to evidence from 
Commission staff 
- Study of the use made in national 
courts of reports and evidence drawn 
up or assembled by Commission staff 
during inspections and investigations 
8.5 Conditions of access to schemes 
affecting the Community budget 
- Subordination of the right to receive 
subsidies or the right of access to 
import arrangements (in particular 
preferential arrangements) to 
conditions relating to the eligibility 
of recipients 
8.6 Financial monitoring of fraud cases 
- More intensive use of information 
from the Member States 
- Measures to improve the financial 
monitoring of fraud cases 
- 56 
CONCLUSION 
Anti-fraud policy is by its very nature a long-term policy which requires a 
constant effort. 
The Community is faced with international challenges which require 
different responses throughout the world and bring with them the danger of 
fraud. Meanwhile, the advent of the single market increases the need for 
the Member States - assisted by the Commission - to act together to combat 
fraud and irregularities in trade both within the Community and with 
non-member countries. In these circumstances, the Community must be more 
vigilant and more active than ever, working in partnership with the Member 
States. 
In 1992 further progress was made in combating fraud, both in on-the-spot 
inspections (investigations into cross-border import/export frauds) and in 
the implementation of the work programme laid down in 1989. 
The bulk of the programme has now been carried out and the Commission is 
presenting a new action programme for 1993 with particular emphasis on: 
- improving and simplifying legislation in the various areas of the 
Community's financial operations; 
- the organization of seminars and exchange programmes for national 
officials, in particular in the customs and agricultural sectors; 
- the development of administrative co-operation with Member States, in 
particular by means of data processing networks; 
- combating fraud affecting VAT and excise duties-, 
- the dissemination of techniques and methods of risk analysis; 
- the financial monitoring of fraud cases; 
- the implementation of the integrated administration and control system 
following the reform of the CAP; 
- assessing the implications of the various studies on the legal protection 
of the Community's financial interests. 
The Commission will also continue to give top priority to on-the-spot 
inspections and investigations in cooperation with national authorities. 
Such are the achievements and plans that the Commission now presents to its 
institutional partners. 

si 
ANNEX 1 
THE MISSIONS OF UCLAF 
The Commission stresses the importance which it attaches to the 
continuation of the fight against fraud in co-operation with Parliament, 
the Council and the Member States, using the most effective means available 
and heightening awareness amongst the services concerned. 
1. The missions 
In order to enhance the role it plays in coordinating, guiding and 
stimulating action to combat fraud, in particular in the high-risk sectors, 
UCLAF 
1.1 prepares, adopts and monitors, in conjunction with the 
Directorates-General concerned, the programming of all operations 
extending beyond the responsibility of a single Directorate-General 
and concerned with preventing and combating fraud; 
1.2 initiates, in concerted manner, the investigations and inquiries it 
judges necessary in the fight against fraud, in conjunction with the 
Directorates-General concerned; 
NB The tasks and responsibilities of UCLAF do not affect or interfere 
with the specific responsibilities, independence and autonomy of 
opinion of the Financial Controller in his functions as set out in the 
Financial Regulation and the Commission Regulation of 11 December 1986 
(86/610/EEC, Euratom, ECSC - OJ L 360, 19.12.1986). 
sg 
1.3 organises and co-ordinates targeted inquiries and investigations which 
go beyond the competence of a single Directorate General, in 
accordance with the guidelines recommended by the European 
Parliament (•*-), given that such operations cover both own resources 
and expenditure in trade in agricultural products; 
1.4 takes charge, together with the departments concerned, of cases of 
fraud and irregularities involving different types of financial 
instruments covering the activities of more than one 
Directorate-General; 
1.5 takes part in the controls and inquiries organized in their 
particular areas of activity by the anti-fraud teams of 
Directorates-General authorizing or managing expenditure. 
To ensure that the missions mentioned at 1.2, 1.3 and 1.4 are carried out, 
UCLAF will where necessary set up ad hoc interdepartmental teams. 
In performing its missions, UCLAF makes systematic use of risk-analysis 
methods and techniques. To achieve this, UCLAF uses all the legal bases 
available to Commission departments authorizing or managing expenditure, 
acting in concert with the latter. The legal base(s) is (are) chosen in 
each individual case to suit the specific situation. 
(1) These guidelines were set out in special report No 2/92 of the Court 
of Auditors on the audit of export refunds paid to selected major 
traders in the milk products sector (OJ C 101, 22 April 1992). 
-*> 9 
2. More specific action 
Apart from its general planning, organization, coordination and 
representation role in the fight against fraud, UCLAF, in conjunction with 
the Directorates-General responsible, also undertakes 
awareness-raising and training measures for officials of the Member 
States involved in the fight against fraud, under a programme drawn up 
jointly with the national authorities; 
evaluation and dissemination of the results, in the form of periodic 
reports, to keep the other institutions and the Member States 
regularly informed; 
any special tasks which might be of benefit to all departments 
concerned by the fight against fraud, such as legal protection of the 
financial interests of the Community. 
ORGANIZATION OF FRAUD PREVENTION ACTIVITIES 
OG VI.G.4 
Detection and prevention 
of fraud against EAGGF. 
Adoption of appropriate 
Community measures. 
Monitoring the application 
of such measures by 
Member States. 
Control arrangements. 
Special enquiries | COMMISSION | 
I SECRETARIAT GENERAL) 
COMMITTEE OF DIRECTORS (1) 
chaired by the Director of UCLAF 
-Consistency of policy on fraud 
prevention 
- Quarterly meetings SG/UCLAF 
. general coordination 
. preparation of the work programme 
. multisectoral operations 
. participation in enquiries 
conducted by DGs 
1 1 1 
MEETING OF HEADS OF UNIT (1) j 
chaired by the Director of UCLAF | 
- Implementation of policy on fraud prevention! 
- Programming of measures to be taken | 
- Monthly meetings | 
DG XIX.B.4 
Drafting and application 
of legislation. Fraud 
prevention In the field 
of own resources. 
Accounting and recovery 
procedures in cases of 
fraud involving own 
resources. DG XX/1 
Monitoring of fraud 
(own resources, 
structural Funds). 
Horizontal aspects | DG XXI.A.2 
|Detect ion and prevention 
|of fraud in the customs 
|or indirect taxation 
|context (VAT, excise 
|duties). Administrative 
(coopération. 
(Coordination of measures 
|and participation in 
(enquiries relating to 
|customs matters or 
|indirect taxation. 
(1) UCLAF and DGs V, VI, XVI, XIX, XX and XXI. 
(2) Correspondents of DGs or departments with no fraud prevention unit. H 0 
I I 
|Other departments or DGs 
|Control units 
(Financial units or 
|UCLAF correspondents (2) 
(ECU AT 1902 RATE) EACCF - GUARANTEE SECTION (1992) 
NUMBER OF IRREGULARITIES NOTIFIED ANO AMOUNTS RECOVERED SINCE OUTSET 
Yoor of notification 
Soctor 
X) CDCAU MO RICE 
11 SUGAR AND ISOGLUCOSE 
12 OILS MO FATS 
13 PROTEIN PRODUCTS 
14 FIBRE PLANTS.SILKNCRM5 
19 FRUITS AM) VEGETABLES 
16 WIN: 
17 TOBACCO 
18 OTHER CROPS 
20 MILK MO MILK PRODUCTS 
21 BEEF AND VtAL 
22 SHEEPMEAT MO GOATMEAT 
23 PICMEAT 
24 EGOS AW) POULTRY 
29N0NAMCX II PRODUCTS 
27 ACM 
2BMCAO 
2» OTHER EAŒF/JUAR.UEAS. 
TOTAL < 1998 
A 8 
6 
1 
2 
12 
6 
7 
34 0.332 
0.0B2 
0.014 
0.139 
0.343 
0.134 
1.043 1989 
A B 
4 
4 0.029 
0.029 1986 
A 8 
1 
2 
1 
2 
6 0.007 
0.018 
0 
1.063 
1.089 1987 
A B 
1 
2 
3 0.004 
0.066 
0.070 1988 
A B 
2 
1 
3 0.004 
0.004 
0.009 198» 
A 8 
3 
4 
3 
1 
2 
13 0.021 
0.122 
0.119 
0.014 
0.058 
0.330 1990 
A B 
2 
1 
15 
5 
1 
2 
26 0.026 
0.006 
-0.041 
0.007 
0.019 
0.060 
0.077 1991 
A 8 
9 
4 
2 
7 
5 
9 
10 
2 
4 
7 
3 
SB 0.152 
0.063 
0.033 
0.112 
0.063 
0.442 
0.031 
0.008 
0.162 
0.101 
0.096 
1.283 1992 
A B 
32 
19 
55 
28 
5 
1 
31 
21 
8 
4 
3 
7 
1 
2 
17 
234 1.886 
0.773 
1.264 
1.192 
0.364 
0.025 
2.459 
0.878 
0.061 
0.063 
0.459 
0.105 
0.239 
0.048 
0.100 
9.914 TOTAL 
A 
45 
23 
60 
35 
6 
13 
74 
48 
10 
6 
8 
15 
1 
16 
17 
377 a 
2.396 
0.856 
1.314 
1.303 
0.446 
0.142 
3.125 
2.441 
0.069 
0.129 
0.640 
0.220 
0.238 
0.396 
0.100 
13.813 
A : nmbrnr of OOMO 
B : oioaiti rocovorod (ECU •000 000) > 
LAJ 
ECU AT 1992 RATE EAGOF - GUARANTEE SECTION (1992) 
NUMBER OF IRREGULARITIES NOTIFIED AND AMOUNTS RECOVERED SINCE OUTSET 
(NUMBER OF CASES ANO AMOUNTS RECOVERED) 
Yeor of notlfIcotion 
Sector 
10 CEREALS AM) RICE 
11 SUGAR ANO I90DLUXSE 
12 OILS AND FATS 
13 PROTEIN PRODUCTS 
14 FIBRE PLANTS.SILKWJRMS 
15 FRUITS AM) VSGETABLES 
16 WINE 
17 TOBACCO 
18 OT>£R CROPS < 1985 
A 8 
• 192 
•• 16.362 
9 
0.353 
36 
0.639 
2 
0.169 
1 
0,003 
62 
27,152 
32 
0,221 
1 
0.003 
5 
0,012 . 124 
••7,999 
4 
0,050 
21 
0,271 
1 
0,136 
1 
0,003 
15 
2,071 
22 
1.213 
5 
0,012 1985 
A B 
8 
0,030 
12 
0,941 
27 
7,464 
3 
0,066 
11 
4,707 
48 
0.292 6 
0,030 
11 
0,161 
3 
0.015 
3 
0,086 
1 
0.033 
29 
0,067 1966 
A B 
8 
0,896 
6 
0,0*6 
18 
3,754 
32 
8,485 
57 
0.405 
4 
0.009 6 
0,893 
6 
0,046 
4 
0,044 
10 
0,504 
34 
0,187 
4 
0,009 1987 
A 8 
16 
0,166 
6 
0,046 
73 
8,992 
8 
0,081 
61 
61,433 
48 
0,807 
2 
0.066 
7 
0,055 8 
0,100 
5 
0,046 
4 
0.147 
2 
0,022 
5 
0,252 
40 
0.735 
7 
0,055 1968 
A B 
11 
1,532 
7 
0.106 
5 
0.115 
12 
0,174 
72 
89.729 
18 
0.336 5 
0.027 
5 
0,105 
3 
0,008 
8 
0.115 
21 
1,572 
14 
0,223 1989 
A B 
43 
1,113 
25 
0,976 
129 
44,057 
20 
2,096 
31 
31.193 
39 
0.621 
4 
0.429 
1 
0,003 16 
0,401 
21 
0,956 
31 
1,105 
9 
0,600 
6 
0.501 
35 
0,539 1990 
A B 
34 
1,750 
21 
0,454 
62 
30,390 
25 
2,716 
2 
0,325 
41 
40.515 
36 
0.455 16 
0.258 
20 
0,399 
20 
1,640 
18 
0,961 
12 
0,343 
28 
0,211 1991 
A B 
48 
77,151 
16 
0,327 
34 
13.977 
39 
3,138 
38 
17.916 
27 
0,281 
2 
0,067 
2 
0,068 10 
0.193 
13 
0,290 
6 
1.257 
25 
2,486 
4 
0,809 
22 
0.276 1992 
A 8 
100 
7,368 
33 
1,195 
369 
75,188 
67 
4,755 
15 
0.004 
27 
6,969 
3 
0.058 
4 
0 
4 
0,886 32 
1.686 
19 
0,773 
55 
1,264 
28 
1,192 
5 
0,364 
1 
0.025 TOTAL 
A 
460 
106,369 
135 
4,443 
773 
184.577 
176 
13.213 
18 
0.332 
375 
288,098 
308 
3.476 
13 
0,555 
23 
1,032 B 
223 
11,788 
104 
2,625 
147 
5.751 
94 
5,596 
1 
0,003 
79 
6,449 
225 
2,477 
16 
0.075 0^ 
» : rwttoer of cose* 
•• : Amount» recovered (ECU '000 000) 
A : Coses notified 
8 : Amounts recovered 
3> 
D 
D 
Yeor of not 1 flection 
Sector 
20 MILK AM) MILK PRODUCTS 
21 BEEF AM) VEAL 
22 SHEEPMEAT AM) GOATMEAT 
23 PIGMÎAT 
24 EGGS AM). POULTRY 
25 NON ANNEX 11 PRODUCTS 
27 ACAS 
28M>S 
29 OTHER EAGGF 
GUAR.MEASURES 
40 FISH PRODUCTS 
89 SPECIAL AIDS 
99 NON SPECIFIED SECTORS 
TOTAL < 1985 
A 8 
1127 
36,124 
124 
6,681 
8 
0,022 
56 
0,414 
6 
0.142 
28 
1,025 
20 
0,680 
318 
14,042 
2 
0,006 
5 
0.801 
8 
0,102 
2042 
104.953 769 
12.695 
81 
1.808 
3 
0.006 
33 
0.312 
5 
0.136 
24 
0,235 
12 
0.263 
177 
4.209 
2 
0.006 
3 
0.066 
6 
0,097 
1308 
30,602 1985 
A B 
237 
2,760 
26 
4,215 
8 
0,761 
2 
0,177 
7 
0,038 
24 
0.720 
1 
0.255 
1 
0 
415 
22.446 188 
1.647 
14 
0,788 
3 
0,009 
2 
0,177 
6 
0,028 
15 
0,221 
1 
0,255 
282 
3,518 1986 
A B 
165 
6,179 
46 
3,901 
28 
1,687 
1 
0.003 
11 
0.470 
9 
3.054 
385 
26.889 120 
1.710 
26 
1,497 
10 
0,031 
1 
0,003 
10 
0,470 
8 
0.188 
239 
5.582 1987 
A B 
99 
2.961 
139 
6.003 
21 
0.071 
20 
0,350 
4 
0,004 
8 
0,079 
4 
0.011 
1 
0,002 
1 
0.003 
518 
81.120 61 
0,811 
87 
1,005 
7 
0.031 
13 
0.200 
1 
0.004 
7 
0.079 
3 
0.011 
1 
0.002 
1 
0.003 
252 
3.502 1988 
A 8 
73 
2,382 
123 
48,356 
23 
0.245 
14 
0,535 
5 
0.082 
4 
0,124 
16 
0,207 
2 
0.008 
1 
0,031 
386 
143,962 58 
1.484 
68 
0.495 
11 
0,181 
7 
0,037 
1 
0.003 
4 
0,124 
6 
0,088 
2 
0,008 
1 
0.031 
214 
4,501 1969 
A 8 
118 
12.768 
233 
48,241 
52 
1.095 
13 
1.122 
4 
0,449 
16 
0,139 
1 
0.015 
14 
5,409 
1 
0.021 
1 
0.004 
745 
149.741 75 
6.112 
123 
4.979 
32 
0.389 
6 
0.021 
2 
0.449 
15 
0.139 
1 
0,015 
7 
0,079 
1 
0,021 
1 
0.004 
381 
16,308 1990 
A B 
210 
17.286 
188 
29.553 
93 
1,435 
14 
0.174 
8 
1.077 
15 
1,693 
35 
0,488 
14 
0,784 
1 
0,001 
6 
1,539 
825 
130.635 78 
3,817 
138 
0,430 
11 
0.158 
12 
0,174 
6 
0.555 
11 
1,182 
34 
0,467 
11 
0.189 
1 
0.001 
1 
0,047 
417 
10.832 1991 
A B 
130 
8,901 
106 
8.010 
26 
0.118 
32 
2.593 
15 
0.460 
39 
1.440 
14 
0,291 
11 
0.289 
19 
0.143 
600 
135,170 37 
1.619 
65 
1,687 
10 
0.037 
4 
0,022 
8 
0,250 
17 
0.434 
8 
0,124 
4 
0.098 
3 
0.025 
236 
9.608 1992 
A B 
153 
7.420 
95 
7.619 
28 
0,204 
36 
1,402 
22 
1,302 
25 
2,459 
3 
0.310 
20 
0,390 
24 
0.280 
1 
0,005 
1 
0 
1.030 
117,814 31 
2.459 
21 
0.878 
8 
0.061 
4 
0.063 
3 
0.459 
7 
0.105 
1 
0,238 
2 
0,048 
17 
0.100 
234 
9.914 TOTAL 
A 
2312 
96.754 
1032 
162,576 
251 
3,190 
221 
9.040 B 
1417 
32,354 
623 
13,567 
82 
0.863 
92 
0.870 
67 I 29 
3.696 2,035 
I 
153 
7,467 
73 
1,785 
430 
24,905 
45 
0,430 
12 
1.092 
1 
0 
18 
1,678 
6946 
914,706 1 
101 
2,797 
56 
1.106 
233 
5.130 
22 
0.132 
9 
0,367 
10 
0,181 
3563 
94,368 z 
• : Nwtoer of coses 
•» : Arounts recovered (ECU '000 000) 
A : Coses notified 
8 : Amount» recovered 
MEASURES FINANCED WITH 1992 BUDGET APPROPRIATIONS 
I 1 I I 1 1 
| | Chapiter | | | 1992 | 
| Port | Article | Title | Measures financed | 1 1 1 
| | Item | | (Appropriations | Appropriations! % | 
||| | |avaitable (•) | committed | | 
| A | 2554 (Conferences, congresses and |- Seminars + operating costs | 280.000 | 279.511 | 99,82 | 
| | (meetings in connection with the | | | | | 
| | (activities of the associations of | till 
| | (European lawyers for the | I I I I 
| | (protection of the financial | I I I I 
| | (interests of the Community | till 
j A j 3530 |Unit for the Coordination of j j 418.000 j 412.352 j 98,64 j 
| | |Fraud Prevention (UCLAF) | | | | | 
| | | (-Comparative study (Justice Council 13.11.91) : Contracts! | 180.000 | | 
|.|| |- Technical assistance to CIS ... | | 83.000 | | 
||| |- Seminars | | 60.703 | | 
III |- Meetings (including COCOLAF) j j 66.149 | | 
||| |- Taking and analysis of samples | | 22.500 | | 
| A | 3531 (Controls, studies, analyses in | | 5.032.000 | 4.933.388 | 98,04 | 
| | (connection with the fight against | | | | | 
| ( |fraud |- R. 4045/89 (strengthening of national controls: EAGGF | | 3.965.701 | | 
||| | Guarantee) | | | | 
||| |- Seminars, conferences | | 632.132 | | 
||| |- Data-processing (DAF) | | 142.555 | | 
||| |- Enquiries in non-EEC countries: participation of | | 135.000 | | 
||| | national officials | | 58.000 | | 
||| |- Studies | | 58.000 | | 
| A | 354 |Tax harmonization and computerized! | | | | 
j j jcustoms network for fraud j j 2.860.000 j 2.852.175 | 99,72 | 
| | (prevention | | | — | | 
III |- SCENT (including SCENT/SID assistance) | | 649.990 | | 
j j j j- RTC | j 370.900 | | 
||| j- TARIC 2 | | 1.288.000 | j 
jjl |- Transit study (phase 2) | | 110.000 | | 
||| |- Miscellaneous | | 433.285 | | (T 
m x 
(*) The appropriations available are the some as those entered in the budget except in the case of headings A 3530/A 3535/A 3531/A 4531 and A 2554 (where 
tronsfers were effected), B1 360 (partial utilizotion of the ECU 15 million entered in Chapter B 040) and B2 5110. 
I I 1 1 1 1 
| | Chapiter | | | 1992 | 
| Part | Article | Title | Measures financed | 1 1 1 
| | Item | | |Appropriât ions | Appropriations! % | 
||| | |avai table (*) | committed | | 
| A | 355 |European documentation, | till 
| | (coordination and study network to | | 378.000 | 315.000 | 83,33 | 
| | |control cross-border crime and |- Advance (preparatory work to establish the network) | | | | 
j j jfraud j jj 70.000 j j 
||| |- Feasibility study on a network to prevent drug addiction| | | | 
||| | and urban crime (1) | | 200.000 | | 
||| |- Study on police cooperation (1) | | 45.000 | | 
| A | 4530 (Expenditure in support of | | 154.000 | 151.466 | | 
| j j UCLAF j j j j 98.35 j 
||| |- Missions | | 100.000 | | 
jjj |- Staff | j 51.466 j | 
| A j 4531 |Support expenditure j j 3.740.000 j 3.692.852 j 98.73 j 
j j j A 3531 I I I I I 
||| |- Data-processing, hardware | | 303.386 | | 
j j | j- Staff (incl. extra staff for UCLAF) j j 1.913.118 j | 
| | | |- Missions, controls | | 1.142.932 | | 
||| |- Studies, working parties on agricultural legislation | | 306.900 | | 
|| | |- Miscellaneous | | 26.516 | | 
III I 111 
| A | 454 |Support expenditure |- Staff, equipment, data-processing, missions | 3.640.000 | 3.636.420 | 99.90 | 
j j |A 354 j | j | j Co 
(*) The appropriations available are the same as those entered in the budget except in the case of headings A 3530/A 3535/A 3531/A 4531 and A 2554 (where 
transfers were effected), B1 360 (part ial ut iIizat ion of the ECU 15 mi I I ion entered in Chapter B 040) and B2 5110. 
(1) These measures are not designed to combat fraud against the Community budget. 
I 1 1 1 1 1 
| | Chapiter | | | 1992 | 
| Part | Article | Title | Measures financed | 1 1 ] 
| | Item | | (Appropriations |Appropriations | % | 
||| | (available (*) (committed | | 
j B 1 | 360 |Measures to combat fraud | j 26.000.000 j 23.119.910 j 88.92 | 
| | | affecting the EAGGF Guarantee | | | | | 
| | |Section |- R. 307/91 (tightening of national controls: EAGGF | | 20.000.000 | | 
||| | Guarantee Section) | | | | 
jjj j- R. 595/91 (repealing R. 283/72) j I - I I 
||| |- Remote sensing (controls + feasibility study) | | 3.119.910 | | 
| B 2 | 5110 |Measures to control and combat | | 25.833.127 | 24.790.183 | 95,96| 
| | | fraud | | | | | 
| | | |- Olive oil agencies | | 12.700.000 | | 
j j j j- R. 2392/86 (Vineyard register) j j 11.976.183 j j 
|| | |- Miscellaneous | | 114.000 | | 
| B 5 | 3051 |CommunIty action programme | | 2.427.000 | 2.427.000 | 100 | 
| | (concerning vocational training | | | | | 
| | |for customs officials (Matthaeus |- Matthaeus | | 1.662.000 | | 
| | |programme) and tax officials |- Interfisc | | 230.000 | | 
||| |- Seminars | | 535.000 | | 
| B 8 | 2510 |Support expenditure |- Expenditure in support of the vineyard register | 364.000 | 362.478 | 99,58 | 
j j |B2 5110. | | | | j 
| B 8 | 5351 |Support expenditure |- Expenditure in support of the Matthaeus programme and | 273.000 | 271.999 | 99,63 | 
| | |B5 3051 | the programme for tax officials | | | | 
| TOTAL III I 71.399.127 | 67.244.734| 94,18 j 
(*) The appropriations available are the same as those entered in the budget except in the case of headings A 3530/A 3535/A 3531/A 4531 and A 2554 (where 
transfers were effected), B1 360 (partial utilization of the ECU 15 million entered in Chapter B 040) and B2 5110. 
€1 
ANNEX 4.2 
BUDGET ITEMS / THE FIGHT AGAINST FRAID 
I tern Title 1993 appropriations 
TOTAL 73.242.000] 
Part A 
A 2554 Conferences, congresses and meetings in connection 200.000 
with the activities of the association of European 
lawyers for the protection of the financial 
interests of the Community 
A 3530 Unit for the Coordination of Fraud Prevention 99.000 
A 3531 Controls, studies, analyses in connection with 4.341.000 
the fight against fraud 
A 3532 Action to combat fraud involving textiles (TAFI) 500.000 
A 355 European documentation, coordination and 375.000 
study network to control cross—border crime and 
fraud 
1 Excluding support appropriations (disappearance of mini-budgets) 
Part B €S 
B1-360 Measures to combat fraud affecting the European 
Agricultural Guidance and Guarantee Fund, 
Guarantee Section 22.000.000 
B2-102 Measures to combat fraud affecting the European 
Agricultural Guidance and Guarantee Fund, 
Guidance Section - agriculture P.M. 
B2-111 Measures to combat fraud affecting the European 
Agricultural Guidance and Guarantee Fund, 
Guidance Section — fisheries P.M. 
B2-121 Measures to combat fraud affecting the European 
Regional Development Fund P.M. 
B2-131 Measures to combat fraud affecting the 
European Social Fund P.M. 
B2-5110 Measures to control and combat fraud 
B5-3051 Community action programme concerning vocational 
training for customs officials (Matthaeus 
programme) and tax officials 33.500.000 
2.427.000 
B5-3052 Networks covering indirect taxation and 
customs 9.800.000 
An appropriation of ECU 60 million has been entered in Chapter BO-40 
for Community co-financing of the integrated administration and control 
system in 1993. 

ISSN 0254-1475 
COM(93) 141 final 
DOCUMENTS 
EN 09 
Catalogue number : CB-CO-93-166-EN-C 
ISBN 92-77-54411-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg