WRITTEN QUESTION E-3079/02

by Erik Meijer (GUE/NGL) to the Commission

(28 October 2002)

Subject: Winding up of the investigation into international involvement in fraud with subsidies for flax growing in Spain and introduction of measures to avoid a repetition

1. Does the Commission recall that in the fraud involving subsidies for the cultivation of flax in Spain not only Spanish enterprises were implicated but also firms established in Belgium and Portugal, and that these firms played an important role in obscuring as far as possible the relationship between production, transportation, processing, marketing and subsidies?

2. The report of the European Anti-Fraud Office (OLAF) referred to in the Commission's answer to my question E-0243/01(1) was forwarded to Parliament and the Commission on 19 March 2001; has there since been a more in-depth investigation of the firms from outside Spain mentioned in paragraph 1 and their activities?

3. Has such an investigation now been concluded? If not, when will findings be available to allow conclusions to be drawn as to how such activities can be prevented from occurring in the future?

4. What lessons can be learnt from this investigation, or what lessons have since been drawn by the Commission, to prevent a repetition of this kind of fraud in the future?

5. Is the Commission aware of other cases in which EU subsidies have been obtained by obscuring the links between firms and organising trade and transportation across the EU's internal borders in a way that allows the measures to check whether subsidies have been properly allocated to be evaded in practice?

6. What further measures is the Commission taking, if appropriate, to prevent complex and obscure situations of this kind, which can lead to subsidies from the EU's financial resources being granted unlawfully, from arising again?

(1) OJ C 187 E, 3.7.2001, p. 205.

Answer given by Ms Schreyer on behalf of the Commission

(7 January 2003)

1. to 3. According to information supplied by the European Anti-fraud Office (OLAF), firms established in a number of Member States are indeed referred to in OLAF's final report on its investigation in Spain. OLAF carried out a separate but related investigation into the arrangements applied to flax in Portugal, the final report on which was sent to Portugal and the Commission on 26 March 2002. The authorities involved in the two Member States have started a judicial investigation into the points raised. The OLAF investigation established that no subsidies were paid in Belgium.

With regard to the administrative and financial aspects of the arrangements for the flax industry in Spain, the Commission wrote to the Spanish authorities informing them that there would be a financial correction. It asked the Portuguese authorities to inform it of the measures taken to counteract the cases of fraud detected by OLAF. The reply from Portugal is under review.

4. In response to the problems in the industry, the Commission sent the Council a proposal for the reform of the common organisation of the market in flax and hemp, which was adopted in July 2000. The new arrangements came into force for the 2001/2002 marketing year and the situation of the industry has improved accordingly.

5. The Commission, in partnership with the other Community institutions and the Member States, is keen to ensure permanent, efficient and effective control over the wide range of Community subsidies.

Where cases or situations such as they are described by the Honourable Member arise, the appropriate machinery is in place to draw the competent authorities' attention to them and ensure monitoring by the Member State or the Community (or both).

6. In the common agricultural policy context, Regulation (EEC) No 4045/89(1), recently amended, reinforced the provisions in cases where Member States carry out common measures involving mutual assistance between them.

All the rules and regulations relating to the clearance of EAGGF Guarantee Section accounts enable the Commission, where possible, to detect and prevent the situations described by the Honourable Member.

Moreover, in its policy of protecting the Community's financial interests and combating fraud, the Commission endeavours to make up for any inadequacy, improve the regulatory framework and adapt it to changing circumstances. In order to fraud-proof new legislation, intervention by OLAF at an early stage in he drafting of legislative proposals is planned. Lastly, the Commission also strives to help Member States to detect and correct irregularities.

(1) 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 the European Agricultural Guidance and Guarantee Fund and repealing Directive 77/435/EEC OJ L 388, 30.12.1989.