WRITTEN QUESTION E-3286/01

by Paulo Casaca (PSE) to the Commission

(27 November 2001)

Subject: CAP financial adjustments

From the reply to my written question E-2107/01(1) I have finally been able to deduce beyond any doubt that the Commission has not carried out any financial adjustments in respect of the improper payment by the Dutch authorities of subsidies to facilitate sales of skimmed-milk powder, despite the fact that the Court of Auditors had detected payments made by those authorities in respect of 3 350 kg of skimmed-milk powder, an analysis of which (carried out prior to the payments) revealed that it had been adulterated.

However, in its reply to paragraph 70 of the Court of Auditors report No 4, the Commission states its intention that Portugal should be required to make financial adjustments for having failed to carry out computerised cross-referencing of files relating to subsidies paid in respect of suckling cows and male bovines on its own initiative, but only when it was suggested that it should do so.

The two cases cannot be regarded as equally serious since, in the first case, it is not possible to prove that the subsidised quantities were not adulterated, as there is no guarantee that the quantities adulterated were not greatly in excess of the quantities actually detected. In the second case, however, comprehensive verification is not only possible but was actually carried out, for which reason the Commission would have been expected to take the opposite course of action to the one it followed.

What exactly is the legal basis for the Commission's actions? Does the Commission not think that it is being much more strict with regard to the direct payments made to farmers covered by the IACS than with regard to subsidies paid to trading and industrial companies in the form of sales and export refunds? Does it not consider that these double standards distort competition to the advantage of major economic groups (which are the main beneficiaries of the second type of subsidy) and at the expense of farmers (who are the beneficiaries of the first type of subsidy)?

(1) OJ C 40 E, 14.2.2002, p. 187.

Answer given by Mr Fischler on behalf of the Commission

(8 January 2002)

The Honourable Member refers to previous questions with regard to the follow-up of the Court of Auditors findings concerning the use of skimmed milk as animal feed in the Netherlands. The Honourable Member deduces that the Commission made no financial adjustment in respect of a quantity of 3 350 kilograms (kg) of skimmed milk powder. This is correct. As previously stated, the aid in question (NLG 5 136,89) has already been credited to the European Agricultural Guidance and Guarantee Fund (EAGGF) in December 1997. There is therefore no financial correction to be imposed on the Netherlands.

A comparison cannot be made with the Court of Auditors finding for Portugal with regard to failure to carry out computerised cross-referencing. In fact the financial corrections decided for Portugal in respect of the suckler cow and male bovine premium schemes were due to a whole series of weaknesses concerning the general control system, and established by the Commission audit conducted in 1998. Furthermore, the Honourable Member implies that the Commission acted only when it was suggested by the Court, but this is not at all the case since this clearance of accounts audit had already given rise to a refusal of Community financing in the Commission Decision of 5 July 2000(1) long before the remarks of the Court became known.

Contrary to the audit evidence found in Portugal, the Dutch matter concerning skimmed milk was an isolated case. The Court did not suggest that this was a widespread problem and, considering that the expenditure involved represented a minuscule portion of the national total under the measure (0,002 %), it would be inappropriate and disproportionate to apply a correction in this case for systems failure. The appropriate action is recovery of the aid incorrectly paid, and, as stated, the Dutch authorities had already recovered and credited the sum concerned.

The Commission wishes to state that the same standards for imposition of financial corrections apply in all sectors under the clearance of accounts for EAGGF expenditure.

(1) 2000/449/EC: Commission Decision of 5 July 2000 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), OJ L 180, 19.7.2000.