WRITTEN QUESTION E-1591/96 by Gerhard Botz (PSE) to the Commission (24 June 1996)

Subject: Commission's procedures in investigating cases of fraud under the ESF

Can the Commission indicate what general measures it takes if, in the course of its checks in the Member States, it encounters cases of fraud in the allocation of appropriations from the ESF?

In addition to general measures, can it give its views on the following details:

Can sanctions be imposed on the Member State concerned in such cases?

If so, what sanctions can be imposed, what criteria are involved and how long do the sanctions apply?

If investigations extend over a longer period, can it cause delays in payment in the programmes concerned, even if the national partners have already removed the causes for the suspicion of fraud?

What is the Commission doing to bring the investigation procedure to a conclusion more quickly than in the past?

Answer given by Mr Flynn on behalf of the Commission (23 September 1996)

When, in the context of an on-the-spot check on the basis of Article 23(2) of Regulation (EEC) No 4253/88 ((OJ EC No L 374, 31.12.1988. )), the Commission discovers fraud in the use of appropriations from the European Social Fund, it invokes Article 24 of this Regulation. Article 24 allows the Commission to reduce, suspend or cancel assistance in respect of the action or measure concerned. The Member State concerned is obliged to recover the sums unduly paid. Where applicable, interest on account of late payment may be charged on these sums. Pursuant to Article 23 the Member State shoulders secondary liability for reimbursement unless it can prove that it was not responsible for the irregularity.

The Commission invites the Member State to institute legal proceedings in accordance with the national procedures in force. It works together with the Member State and keeps abreast of the court proceedings. The Commission has no control over the duration of these procedures.

At operational level, when the Commission suspects fraud it may freeze all payments and it for the Commission to decide to release payments after receiving proof from the Member State that the suspicion was unwarranted.

The Commission may at any time carry out an on-the-spot check of its own. This audit may be made by the unit that manages the measure, by financial control or by the fraud prevention unit (UCLAF).

Pursuant to Article 169 of the EC Treaty, the Commission may bring the matter before the Court of Justice if it considers that a Member State has failed to fulfil an obligation under the Treaty. Pursuant to Article 171 the Member State must take the necessary measures to comply with the judgment of the Court of Justice.

If the Member State concerned has not taken the necessary measures to comply with the judgment of the Court of Justice within the time limit laid down by the Commission, the latter may again bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances. The Court may then impose a lump sum or penalty payment on the Member State.

As indicated in its fight againt fraud programme for 1996 ((COM(96) 17 final. )), and as a follow-up to the Madrid European Council, the Commission is examining the possibility of extending the financial correction system to the Structural Funds. This examination is taking place in the context of the work relating to good financial management (SEM 2000).