Annual Report 2000 - Protection of the Communities' Financial Interests and the Fight Against Fraud
Date: 2001-05-23
Institutions: European Commission
Subjects: EU financing, activity report, financial policy, fraud against the EU, market protection

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.5.2001
COM (2001) 255 final/2

CORRIGENDUM
Dernier paragraphe de l’introduction avec une note de bas de page.
Points : 12.1., 12.2., 12.3.
Décalage dans la numérotation des notes de bas de page.
CORCERNE : FR, DE et EN.

ANNUAL REPORT 2000

PROTECTION OF THE COMMUNITIES’ FINANCIAL INTERESTS
AND THE FIGHT AGAINST FRAUD

(presented by the Commission)

ANNUAL REPORT 2000

PROTECTION OF THE COMMUNITIES’ FINANCIAL INTERESTS
AND THE FIGHT AGAINST FRAUD

(presented by the Commission)

2

TABLE OF CONTENTS

Title I: The activities of the Community............................................................................... 10

1.

THE PROTECTION OF FINANCIAL INTERESTS: THE DEVELOPMENT OF THE
HORIZONTAL LEGAL FRAMEWORK............................................................................ 10

1.1.

Legal instruments ................................................................................................... 10

1.1.1.

Preventing money-laundering ................................................................................. 10

1.1.2. Currency counterfeiting .......................................................................................... 11

1.1.3. Counterfeit goods and piracy .................................................................................. 12

1.1.4.

Public procurement ................................................................................................ 12

1.2.

Judicial instruments................................................................................................ 12

1.2.1.

Proposal to establish the office of European Public Prosecutor for the
protection of the Community’s financial interests ................................................... 13

1.2.2.

Judicial cooperation in penal matters ...................................................................... 14

1.3.

Crime prevention.................................................................................................... 14

2.

PROTECTION OF THE COMMUNITY’S FINANCIAL INTERESTS: NOTEWORTHY
DEVELOPMENTS IN THE SECTORAL FIELDS ................................................................ 15

2.1.

Customs duties and indirect taxation....................................................................... 15

2.1.1. Customs arrangements............................................................................................ 15

2.1.2.

Indirect taxation ..................................................................................................... 16

2.2.

2.3.

Traditional own resources....................................................................................... 17

Agriculture ............................................................................................................. 17

2.3.1.

The banana import rules ......................................................................................... 17

2.3.2. Decisions on clearance of accounts......................................................................... 17

2.4.

2.5.

2.6.

2.7.

Structural measures ................................................................................................ 18

Direct expenditure .................................................................................................. 18

Intersectoral measures: recasting the Financial Regulation...................................... 19

Implementation of Commission reform .................................................................. 19

2.7.1.

The improvement of financial management and control.......................................... 20

2.7.2.

The protection of the Community’s financial interests in the White Paper .............. 21

3.

THE OPERATION OF OLAF ........................................................................................ 22

3

3.1.

3.2.

3.3.

3.4.

4.

A new structure ...................................................................................................... 22

The power of investigation of the European Anti-fraud Office................................ 23

An overall anti-fraud strategy ................................................................................. 23

Reporting ............................................................................................................... 24

COOPERATION AND PARTNERSHIP ............................................................................ 25

4.1.

With the Member States ......................................................................................... 25

4.1.1. Cooperation with internal audit services in the field of traditional own

resources ................................................................................................................ 25

4.1.2. Operational cooperation ......................................................................................... 26

4.1.2.1. Illicit trafficking in products containing butter........................................................ 26

4.1.2.2. Illegal dollar banana imports in the Community under cover of false import

licences .................................................................................................................. 26

4.1.2.3. The fight against cigarette fraud ............................................................................. 27

4.1.2.4. Coordinating investigations in the Structural funds................................................. 28

4.2.

Mutual assistance with the countries applying for accession ................................... 29

4.2.1. Administrative cooperation..................................................................................... 29

4.2.2. Operational cooperation ......................................................................................... 29

4.3.

Mutual assistance with non-member countries........................................................ 30

4.3.1. Draft cooperation agreement with Switzerland to fight against fraud and the
other illegal activities to the detriment of the financial interests of the
Communities, of the Member States and of Switzerland ......................................... 30

4.3.2. Mutual administrative assistance in customs matters with Russia............................ 31

Title II: Measures adopted by the Member States with a view to protecting the
Community’s financial interests (1 May 1999 - 31 December 2000) .................................... 32

5.

5.1.

5.2.

5.3.

6.

6.1.

6.2.

6.3.

7.

MAIN CHANGES ON THE LEGISLATIVE AND ADMINISTRATIVE LEVELS ........................ 34

Own resources........................................................................................................ 34

Agricultural expenditure......................................................................................... 36

Structural Funds and Cohesion Fund ...................................................................... 39

MAIN CHANGES IN THE ORGANISATION OF CONTROL SERVICES ................................. 43

Own resources........................................................................................................ 43

Agricultural expenditure......................................................................................... 46

Structural Funds and Cohesion Fund ...................................................................... 49

COOPERATION BETWEEN COMPETENT AUTHORITIES.................................................. 52

4

7.1.

7.2.

7.3.

8.

8.1.

8.2.

8.3.

9.

9.1.

9.2.

9.3.

10.

Own resources........................................................................................................ 52

Agricultural expenditure......................................................................................... 55

Structural Funds and Cohesion Fund ...................................................................... 56

THE RECOVERY ISSUE.............................................................................................. 57

Own resources........................................................................................................ 57

Agricultural expenditure......................................................................................... 59

Structural Funds and Cohesion Fund ...................................................................... 61

HIGHLIGHTS OF THE FIGHT AGAINST FRAUD ............................................................. 63

Own resources........................................................................................................ 63

Agricultural expenditure......................................................................................... 65

Structural Funds and Cohesion Fund ...................................................................... 68

ADDITIONAL TEXTS ON PROTECTING THE COMMUNITY’S FINANCIAL INTERESTS ........ 70

10.1.

Key elements and the state of ratification of the 1995 Convention and its
Protocols ................................................................................................................ 70

10.2. Measures adopted implementing the Convention and its Protocols ......................... 74

Title III: Statistics and analyses............................................................................................ 77

11.

12.

FRAUDS AND IRREGULARITIES...................................................................... 77

THE SITUATION IN 2000 .................................................................................... 78

12.1.

The overall level of fraud and other irregularities ................................................... 78

12.2.

Cases of fraud communicated by the Member States .............................................. 78

12.3.

Cases under investigation by OLAF ....................................................................... 79

13.

TRENDS................................................................................................................ 79

13.1.

The field of traditional own resources..................................................................... 80

13.1.1.

Introduction............................................................................................................ 80

13.1.2. Analysis of data communicated by the Member States ........................................... 81

13.1.3. Conclusion ............................................................................................................. 83

13.2.

Agricultural expenditure (EAGGF Guarantee)........................................................ 83

13.3.

The field of structural measures.............................................................................. 84

13.4.

Direct expenditure .................................................................................................. 84

14.

FINANCIAL FOLLOW-UP................................................................................... 85

14.1.

Determining factors................................................................................................ 85

5

14.2.

Recovery ................................................................................................................ 85

14.2.1. Traditional own resources....................................................................................... 86

14.2.2. EAGGF Guarantee Expenditure ............................................................................. 88

14.2.3. Structural measures ................................................................................................ 88

ANNEXES .......................................................................................................................... 90

ANNEX 1 ............................................................................................................................ 91

ANNEX 2 ............................................................................................................................ 92

ANNEX 3 ............................................................................................................................ 93

ANNEX 4 ............................................................................................................................ 94

ANNEX 5 ............................................................................................................................ 95

ANNEX 6 ............................................................................................................................ 96

ANNEX 7 ............................................................................................................................ 97

ANNEX 8 ............................................................................................................................ 98

ANNEX 9 ............................................................................................................................ 99

ANNEX 10 ........................................................................................................................ 100

ANNEX 11 ........................................................................................................................ 101

6

INTRODUCTION

Henceforth, the new article 280, paragraph 5 of the EC Treaty makes the Community
and the Member States jointly responsible for the fight against fraud and other illegal
activities detrimental to the Communities’ financial interests. This annual report1
consequently dedicates an important part to the measures taken by the Member States
in this area.

Regarding the operational aspects of the fight against fraud2, these will be presented
in a specific report for the period after June 2000 and published in the second half of
2001, so that the Commission will be able to refer to it in its own yearly report.

The Commission’s 2000 annual report, which is the second on the new treaty base,
therefore summarises in its first part the Community initiatives concerning protection
of the financial interests (significant legislative developments including instruments
coming under Title VI of the Amsterdam treaty and sectoral legislation). It reports in
its second part on measures taken by the Member States in 1999-2000 and covers in a
third and final part the statistical information communicated by the Member States,
under the terms of sectoral regulations, on their activities in the fight against fraud in
the main Community policies.

A first part covers the legislative and horizontal regulatory initiatives, and then the
sectoral legislation. For the former, the report mentions in particular initiatives in
2000 to strengthen the penal judicial dimension, more particular those linked to the
objective of establishing an area of freedom, security and justice. This part also covers
the implementation of the White paper on reform in its aspects concerning the
protection of financial interests. The operation of the Office, in its reporting activities
and in its role amid the institutions, is raised specifically also to illustrate the manner
in which it sets up vertical cooperation activities with the competent national
authorities (article 280, paragraph 3 of the Treaty) and technical and operational
assistance.

This part also covers some of the actions undertaken by the Community in partnership
with the main actors in the protection of financial interests and the fight against fraud :
concrete examples are given to illustrate what operational cooperation on the ground
with the Member States and the accession candidate and third countries may be in
aiming for effective and equivalent protection of the Union’s finances against fraud
and any other illegal activity.

A second part draws the consequences of the ratification of the Amsterdam Treaty
and the implementation of the new article 280, paragraph 5 which provides also for
the activity of the Member States to be reported. For the first time, the Commission
report summarises the resources implemented in 1999 and 2000 by the Member States
for the protection of the Communities’ financial interests, on the basis of a concerted

1

2

The new mechanism was the subject of an overall presentation in the annual report on
protecting the Communities’
fraud for 1999
(COM(2000) 718 final) adopted on 08.11.2000
A first activity report by the European Anti-fraud office (1st June 1999-31st May 2000) was
adopted on 23.05.2000. This report is published annually from the date of the establishment of
the Office (1st June 1999).

interests and the fight against

financial

7

working methodology. The Member States effectively assume,
responsibilities conferred on them by the Treaty.

in practice,

the

A third part contains an analysis of the data gathered from the Member States
resulting from the Community’s investigation activity to identify the main trends in
fraudulent activity or irregular practices as well as the overall results in terms of
recovery and financial follow up. In this context it is important to recall that the
detection and follow up of cases of fraud and other irregularities committed against
the Communities’ financial interests must be carried out by the Member States and the
Commission in close cooperation.

The year 2000 marks a new development in the level of irregularities, including fraud
established by the Member States or suspected by OLAF. The figures however must
be interpreted in a cautious manner given the heterogeneous character of the data
given by the Member States. After a period of stabilisation, the amounts involved are
on the increase in several areas. Regarding EAGGF–Guarantee expenditure and
traditional own resources (respectively, 474.5 million euros and 534,5 million euro,
equivalent to 1,17% of EAGGF-Guarantee budget and 3,5% of the Community’s
Traditional own resources3), the doubling in the sums is explained in part by the
impact of some very significant cases. In the area of the structural funds, where the
amounts show a slight decrease (114.2 million euros, 0,45% of the budget concerned),
the increase in the number of cases indicates the increased effectiveness of checks.
The direct expenditure sector, with a total of 170 million euros and 148 cases (1,33%
of the budget concerned), shows a strong increase (both in amounts and number),
particularly for external policies : this reflects the priority accorded by the Office to
this area of activity. Moreover, the observations concerning recovery by the Member
States provide the opportunity to raise the mediocre development in the results and to
present the initiatives under way and the ways towards a better follow up and greater
efficiency in this activity.

3

The budgetary percentages as indicated refer to the sectoral budget concerned, for resources
and for expenditure. The traditional own resources as indicated are the amounts paid by the
Member States for 2000, minus the collection costs. Traditional own resources represented
15.3% of total resources in 2000.

8

Title I: The activities of the Community

1.

THE PROTECTION OF FINANCIAL INTERESTS: THE DEVELOPMENT OF THE
HORIZONTAL LEGAL FRAMEWORK

1.1.

Legal instruments

Following intensive legislative activity to protect financial
interests and
combat fraud in 1999, there were mainly initiatives in related matters in
2000.

legislation, pending
There was indeed little change in the horizontal
ratification of the main third-pillar instruments by the Member States.4 On
the other hand, the Commission adopted several new instruments to protect
financial interests and combat fraud, corruption and other illegal activities,
including economic and financial crime, directly or indirectly jeopardising
those interests.

1.1.1.

Preventing money-laundering

interests,

the Community’s financial

Community fraud often appears to be a precursor to money-laundering.
Experience has shown that the money-gathering circuits that are detected are
in reality shared with fraudulent activities linked to other forms of crime. To
the importance of mutual
protect
administrative cooperation information interchanges with national authorities
with power to deal with suspect financial transactions has regularly been
stressed. In this context, the Commission proposal for a Parliament and
Council Directive5 amending Directive 91/308/EEC of 10 June 1991 on the
prevention of the use of the financial system for the purposes of money-
laundering contained a specific provision allowing the Commission (OLAF)
to cooperate and exchange information with the authorities of the Member
States
responsible for combating laundering in cases affecting the
Community’s financial interests.

regards

the obligations of

A political agreement on the proposal has been reached in the Council,
notably as
and
intermediaries and the definition of the concept of “criminal activity”. In its
common position of 30 November 2000, the Council had not accepted the
original provision on cooperation with the Commission; however in its
conclusions of 17 October 20006, it declared that it was aware of the practical
value of an information exchange mechanism and asked the Commission to
present a new proposal.

financial professionals

4

5

6

Convention on the protection of the European Communities’ financial interests of 26 July
1995 and its protocols.
COM(1999) 352 final, OJ C 177, 27.6.2000.
Conclusions of the Ecofin/JHA Council of 17.10.2000, notably point 9, part B.

9

1.1.2. Currency counterfeiting

Following its communication to the Council, the European Parliament and
the European Central Bank of 22 July 1998 on the protection of the euro and
the fight against counterfeiting,7 the Commission presented a proposal for a
Council Regulation on the protection of the euro against counterfeiting on 26
July 2000.8

The proposal covered:

–

–

–

–

–

gathering and accessing technical data and the obligations to transmit
false euro notes and coins for identification;

the obligations of credit establishments and other establishments
involved in exchanging different currencies;

the establishment of an anti-counterfeiting unit in Europol, responsible
in particular for managing an operational and strategic information
system;

information relating to cases of
the national centralisation of
counterfeiting and the reporting obligation via the Europol national unit
(and the nature of the information covered);

questions of cooperation and mutual assistance,
including the
establishment of an early warning system and cooperation with non-
member countries.

The proposal was considered by the Council’s Anti-fraud Working Party
under the French Presidency, and a political agreement was then reached.9
Although the Commission’s proposed provisions on relations between
national police authorities and Europol were not retained, Europol will give
them its support on the ground in accordance with its general remit10 and the
Europol Convention.11

The purpose of the Regulation is to ensure that all activities are situated
within a comprehensive and multidisciplinary approach reflecting the
dimension of the single currency and the complementary roles of each
institution or body and the Member States. Coordination is organised with
the establishment of a steering group representing the various institutional

7

8

9

10

11

COM (1998) 474 final.
See Commission annual report for 1999 on the protection of the Communities’ financial
interests and the fight against fraud: COM (2000) 718 final. Proposal: COM (2000) 492 final
of 26.7.2000, OJ C 337E of 28.11.2000.
ECOFIN Council, 12 February 2001. The Commission welcomed the fact
the main
components of its proposition were included in the draft Regulation on which that agreement
was reached.
Council Decision of 29 April 1999 extending Europol’s mandate to the fight against currency
counterfeiting and falsification of means of payment; OJ C 149, 28.5.1999.
Council Act of 26 July 1995 drawing up the Convention on the basis of Article K.3 of the EU
Treaty on the establishment of a European Police Office; OJ C 316, 27.11.1995.

10

partners
continuation of work with national experts.

(Commission, European Central Bank, Europol)

and

the

1.1.3. Counterfeit goods and piracy

On 30 November the Commission adopted a communication,12 together with
a plan of action, on the Follow-up to the Green Paper on combating
counterfeiting and piracy in the single market,13 in response to a Resolution
passed by the European Parliament on 4 May. This Green Paper recalls that
economic crime jeopardises intellectual property (industrial, agricultural and
commercial counterfeiting, Community trade mark) and thereby engenders
deflections of business in the internal market. It also affects the distribution
of the tax effort made by the Member States via the “fourth resource”, which
is based on national wealth accounts. The economic impact of goods
counterfeiting cannot be underestimated.14

The action plan aims to supplement measures to check counterfeit and
pirated goods at the Union’s external borders to meet the needs of the single
market15, as well as measures taken to combat counterfeiting and piracy in
relations with non-member countries and under multilateral agreements. In
particular, provision is made for the Commission to consider in the medium
term the value of
cooperation
mechanisms with the Member States, possibly based on those that exist in
other areas, wherever Community interests are at stake.

establishing specific

administrative

1.1.4.

Public procurement

In the particularly sensitive area of public procurement, the Commission
wishes above all to reinforce preventive measures. It accordingly adopted a
proposal for a Parliament and Council Directive on 30 August 200016 which
contains, among other things, a compulsory mechanism for excluding
tenderers who have been convicted of conspiracy, corruption or fraud against
the Community’s financial interests, and an optional mechanism to exclude
“untrustworthy” economic operators.

1.2.

Judicial instruments

Many initiatives that came to fruition in 2000 for stronger legislative and
judicial cooperation between the Member States in criminal matters will
support the protection of the Community’s financial interests.

12

13

14

15

16

COM(2000) 789.
COM(1998) 569.
The estimated value of counterfeit goods seized by customs in 2000 exceeds 1,3 billion euro.
Council Regulation (EC) No 3295/94 of 22 December 1994 laying down measures to prohibit
the release for free circulation, export, re-export or entry for a suspensive procedure of
counterfeit and pirated goods (OJ L 341, 30.12.1994).
Proposal for a directive on the coordination of procedures for the award of public supply
contracts, public service contracts and public works contracts (COM (2000) 275 final,
30.8.2000).

11

1.2.1.

Proposal to establish the office of European Public Prosecutor for the
protection of the Community’s financial interests

to make a success of enlargement”,

On 29 September 2000, as announced in its opinion of 26 January 2000
the
“Adapting the institutions
Commission adopted a communication proposing the establishment of the
office of European Public Prosecutor for the protection of the Community’s
financial interests.17 The proposal is based on detailed preparatory work done
by a group of experts in criminal law that had produced the more general
proposal known as the Corpus juris.18 With this proposal the Commission is
reaffirming the political priority attached to the fight against fraud and thus
meeting the concerns expressed by the European Parliament in its Resolution
of 14 April 2000 on the Intergovernmental Conference.

The Commission proposes a new Article in the EC Treaty providing simply
for a legal basis for the establishment of the European Pubic Prosecutor with
powers strictly confined to the protection of the Community’s financial
interests as defined by Article 280. This reflects the philosophy of the
Amsterdam Treaty which, for the first time, made the Community and the
Member States jointly responsible for the protection of the Community’s
financial interests.

The Commission considers that establishing the European Public Prosecutor
is necessary for the effective criminal-law protection of the Community’s
financial interests, for which it has a special responsibility under the Treaties.
The establishment of the European Anti-fraud Office (OLAF) did indeed
facilitate the detection of acts detrimental to the Community’s financial
interests throughout the Union. But prosecution in the criminal courts on the
basis of OLAF’s findings still encounters the ongoing limits to judicial
cooperation between Member States.

The Prosecutor would be responsible for detecting and prosecuting violations
of Community interests in the national courts, but would not supersede the
national courts, particularly at the judgment stage. On the contrary, the aim is
to help them do their job by presenting them with the facts detected across
Union territory and thus removing the barriers raised by the fact that law
enforcement is spread over fifteen – soon more – Member States, each with
its own rules and procedures.

The Intergovernmental Conference did not adopt this proposal, so on 31
January 2001 the Commission announced19 that it would prepare a Green
Paper to relaunch the debate on its proposal to establish a European Public
Prosecutor, in view of its reconsideration at the next IGC. The Commission
still considers that, in the absence of a legal base, modification of the Treaty
will be necessary.20 As requested by the European Parliament, the White

17

18

19

20

COM (2000) 608.
Corpus juris introducing penal provisions for the protection of the financial interests of the
European Union (group chaired by Ms Delmas-Marty). Paris: Economica, 1997.
Commission Work Programme for 2001 (COM (2001) 28).
See Mrs Schreyer’s intervention before the European Parliament, in reply to its Resolution of
14.03.2001 on the Commission’s annual report for 1999.

12

Paper will especially deepen the Commission’s reflections on the tasks and
functioning of the public prosecutor with regard to the protection of the
Community’s financial interests. It is to be adopted before the end of 2001, in
view of the Laeken European Council. In the course of 2002, consultations
will be launched with interested parties on the largest possible basis.

1.2.2.

Judicial cooperation in penal matters

The European Council that was held on 15 and 16 October 1999 in Tampere,
at a special meeting devoted to the area of freedom, security and justice,
called inter alia on the Council to adopt a legal instrument allowing for a
European judicial cooperation unit (Eurojust) to be established by the end of
2001. The Commission contributed to the negotiations for the draft Council
decision on Eurojust with a communication adopted on 22 November 2000
(COM (2000) 746 final). Here the Commission specifies that with regard to
criminality affecting the Community’s financial interests, it will be necessary
to establish close cooperation between OLAF and Eurojust to ensure that
each brings its value added, in accordance with its mission and its field of
competence.

The Tampere European Council also addressed the question of mutual
recognition as regards judicial cooperation, a question which had already
been discussed at the Cardiff European Council, in 1998. On 26 July 2000,
the Commission adopted a communication21 calling for the adoption of an
arrangement for mutual recognition of final judgments in criminal matters
between the Member States of the European Union. The aim was to initiate
judicial cooperation is
in an area where traditional
detailed discussions,
characterised by the slow, complex and uncertain principle of the “request”
(between non-obliged sovereign States)22. The communication proposes to
find answers to a number of related questions (mutual recognition of
judgments imposing fines in general, measures concerning the criminal
record of a person, the forfeiture of rights, substitute sentences and judicial
review, confiscation of assets after sequestration, for example).

1.3.

Crime prevention

More generally, the Commission believes that the anti-fraud strategy should
be supplemented by a general crime prevention approach. To this end, it
adopted a communication on 29 November 2000 (COM(2000) 786 final) on
crime prevention in the European Union, which proposes a European strategy
consisting of developing crime prevention in European Union policies,
improving familiarity with the phenomena of crime and networking all those
active in prevention (public bodies, enforcement and judicial authorities,
members of the business world and civil society).

The implementation of this strategy should, among other things, enjoy
European Union financial support, for which the Commission proposes a

21

22

Commission Communication of 26 July 2000 (COM(2000) 495).
This communication was supplemented by a Commission and Council work programme on
mutual recognition, adopted in December 2000 (OJ C12 of 15.01.01).

13

Council Decision establishing a programme of encouragement, exchanges,
training and cooperation in the field of crime prevention (Hippokrates).

2.

PROTECTION OF THE COMMUNITY’S FINANCIAL INTERESTS: NOTEWORTHY
DEVELOPMENTS IN THE SECTORAL FIELDS

2.1.

Customs duties and indirect taxation

2.1.1. Customs arrangements

Customs transit is one of the pillars of integration in Europe and is of vital
interest to European companies. It enables goods to move with temporary
suspension of the duties and levies normally applicable to goods imported
into the European Community or moving between the Community and its
partners.23 For the countries of Central and Eastern Europe, access to the
common transit procedure plays a key role in their pre-accession strategy. In
recent years the financial impact of frauds in the context of transit operations
has meant considerable losses for the national budgets and Community.

To boost the reliability of transit procedures, the Customs Code was first
amended to make transit operations secure (control of the end of the
operations, procedures for recovery of the debt).24 The reform as a whole
aims to reduce both the risks attached to persons responsible for the transit
operations (reliability criteria for giving operators the benefit of
the
simplified procedure) and the risks attached to goods moving under cover of
a transit declaration, with suspension of duties and levies (amount of the
guarantee must match the financial risk attached to goods).

The other aspect of this reform is the computerisation of customs transit procedures.
The establishment of the European plan for a computerised network for the
management and monitoring of movements of goods in transit is based on
multinational administrative cooperation. The New Computerised Transit
System (NCTS) was launched in May 2000 and will be extended gradually,
both geographically and functionally, to all the Member States and to the
countries which are contracting parties to the common transit convention of
20 May 1987.25

On 16 November 2000, an agreement was reached in the Council on a
revision of the Customs Code26 to facilitate computerisation of the customs

23

24

25

26

The European Free Trade Area and the Visegrad countries (Poland, Czech Republic, Slovakia,
Hungary, in the framework of the Common Transit Convention) are currently concerned, as
are the 64 countries that are currently parties to the TIR Convention.
Parliament and Council Regulation (EC) No 955/1999 of 13 April 1999 amending Council
Regulation (EEC) No 2913/92 with regard to the external transit procedure (OJ L 119,
7.5.1999), supplemented by amendments to the provisions implementing the Customs Code
(Commission Regulation (EC) No 2787/2000 of 15 December 2000 - OJ L330 of 27.12.2000)
and the Protocols to the Common Transit Convention (Decisions No 1/2000 of the EC-EFTA
Joint Committees of 20 December 2000 - OJ L9, 12.1.2001).
Germany, Spain, Italy, Switzerland, Norway, the Netherlands and the Czech Republic.
Parliament and Council Regulation (EC) No 2700/2000 amending Council Regulation (EEC)
No 2913/92 establishing the Community Customs Code (OJ L 311 of 12.12.2000).

14

declaration and the modernisation of procedures (easing of customs
operations with an economic impact). This amendment aims to better protect
operators acting in good faith who import assets under a preferential scheme
on the basis of a declaration of origin provided by the third country’s
authorities, by introducing safeguard measures against errors by these
authorities which engender losses of benefits and corresponding customs
debts. Good faith, however, cannot be invoked by an importer when the
Commission has issued a warning regarding the sound application of such a
preferential treatment to a beneficiary country. Such warning ensures that
interested parties are advised against the risks of importing from such a
country.27

2.1.2.

Indirect taxation

Fraud in respect of VAT and excise duties primarily concerns the revenue of
the national public treasures, but it also has an impact on the share of VAT
which constitutes the Community’s own resources, as defined by Article 2 of
the own resources Decision. It also has a link with organised crime, which
makes use of all available instruments (tax evasion,
fraud,
corruption and trafficking) to thwart fair economic competition. The level of
serious VAT fraud in intra-Community trade is already high and rising
(increasing number of “carrousel” cross-border frauds.

financial

A report adopted on 28 January 200028 noted that Member States still had not
adapted their value added tax (VAT) control systems to take account of the
removal of tax controls at borders, more than six years after their removal.
Following the recommendations issued by the anti-fraud subcommittee of the
Commission and by the Council ad hoc working party on tax fraud, the
Economic and Financial Affairs Council of 5 June 2000 invited the Member
States to rationalise the information exchange system and adapt their control
systems. It also asked the Commission to make proposals on the basis of the
recommendations of the ad hoc group.

The Commission announced in its communication to the Council and to the
Parliament that, in order to improve the operation of the VAT system in the
internal market27 it will propose a reinforcement of the current legislative
provisions with
and mutual
administrative
regard
the Member States should
assistance.This report also recommends that
develop risk analysis systems in order to target limited resources on the tax
authorities. Within the framework of its powers,
the Commission has
encouraged initiatives from the Member States in this area, by financing
exchanges of officials and seminars on risk analysis through the FISCALIS
programme.

cooperation

to

In relation to excise duties, following the recommendation of the high level
group on tobacco and alcohol fraud, the Commission approved a feasibility

27

28

Commission Communication to the Council and the European Parliament, 8.9.2000
(COM(2000) 550 final.
Report on administrative cooperation in the field of indirect taxation VAT collection and
control procedures - COM(2000) 28 final.

15

study on the possibility of setting up a computerised system for
the
movement and control of goods subject to excise duties. Furthermore, work
has been going on with the aim of improving the functioning of the previous
information system put in place in December 1998.

2.2.

Traditional own resources

In 2000, a legislative initiative was taken in relation to the Communities’
the publication of Council Decision 2000/597/EC,
own resources:
EURATOM of 29 September 2000 relating to the system of traditional own
resources, which will take effect from 1.1.200229). This decision, which will
enter into force after ratification by all
the Member States, allows the
Member States to retain, as collection expenses, 25% of amounts recorded
after 31.12.2000 (against 10 % before).

The entry into force of codifying Council Regulation (EC, EURATOM) n°
1150/2000 of 22 May 200030 is only a preliminary step in the framework of
the ongoing work aiming to modify the implementing rules of the own
resources Decision.

2.3.

Agriculture

2.3.1.

The banana import rules

licences

(see chapter on Cooperation and Partnership),

Following the discovery of fraud in connection with the use of false banana
import
the
Commission adopted a regulation aiming to strengthen controls in this
sector.31 The new provisions aim to ensure that tariff quota schemes are
properly applied, in particular through checks on the authenticity of licences
on the basis of periodic cross checks carried out jointly by the customs
authorities where the procedures for release for free circulation are carried
and the competent authorities of the Member States where licences are
issued. To this end, the regulation imposes obligations on customs authorities
as regards keeping and passing on licences. The Commission will regularly
transmit to customs authorities a list of operators registered under the banana
import arrangements.

2.3.2. Decisions on clearance of accounts

Within the framework of the common agricultural policy, the clearance of
accounts procedure is a vital instrument for controlling expenditure and
provides an incentive to reduce the number of irregularities by improving
control and audit systems: it makes it possible to recover amounts paid
without sufficient guarantee as to the legitimacy of the payments or the
reliability of the relevant Member State’s control and audit systems. In 2000,

29

30

31

With the exception of Articles 2(3) and 4, which will take effect from 1.1.2001.
Regulation codifying the successive changes of Council Regulation (EEC, EURATOM) n°
1552/89 of 29 May 1989 (OJ L 130 of 3.05.2000).
Regulation (EC) No 1632/2000 of 25 July 2000 amending Regulation (EC) No 2362/98 laying
down detailed rules for the application of Council Regulation (EEC) No 404/93 regarding
imports of bananas into the Community.

16

€

the Commission recovered from the Member States
633.6 million unduly
spent on 1996-1999 financing.32 This involves funds recovered on grounds of
inadequate control procedures or failure to comply with Community rules on
agricultural expenditure (insufficient number of inspections, shortcomings in
the risk analysis procedure, failure to comply with periods allowed for
payment of aid etc.), including funds recovered as a result of inspections
conducted by Commission departments.

The recovered amounts have been directly taken off the monthly advance
payments made to Member States. The financial corrections made by the
agricultural expenditure authorising officer concern all the Member States,
but there are considerable differences between the amounts to be recovered.

2.4.

Structural measures

On 12 July 2000, the Commission presented two proposals for Regulations
as well as guidelines concerning, on the one hand, the improvement of the
financial management and control of Structural Funds expenditure and, on
the other hand,
the application of financial corrections in the event of
irregularities in the management of funds. These new initiatives were
adopted pursuant to the general regulation on the Structural Funds which
provides in general terms for decentralisation of the Funds and stronger
financial management.33

The proposed detailed rules encourage the Member States and their regions
to define the respective responsibilities of the various actors involved more
clearly – at national and regional level – in the management and control of
structural measures, and thus to reduce errors in the implementation of the
funds. When irregularities occur and Member States do not carry out the
necessary recovery measures, the Commission will be able to make financial
corrections for the Member States by the procedure laid down by the new
provisions34.

2.5.

Direct expenditure

In a more specific area of direct expenditure, the Commission adopted a
Communication on the reform of the management of external aid on 16 May.
The document
identifies a number of measures to strengthen financial
the quality and speed of implementation of external aid
management,
projects, where expenditure has tripled in the last ten years and now accounts
for 62 % of all programmes managed directly by the Commission. Several

32

33

34

Conformity decisions of 1 March and 5 July 2000, in accordance with Article 7(4) of Council
Regulation No 1258/1999 of 17 May 1999 relating to the financing of the common
agricultural policy (OJ L 160, 26.6.1999), and Decisions of 14.02.2000 and 28.04.2000 (OJ
No L 57 of 2.3.2000 and No L 104 of 29.04.2000).
Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on
the Structural Funds.
Procedures established by the guidelines defining the principles, the criteria and the indicative
ceilings to be applied by Commission services for the determination of the financial
corrections intended by article 39, paragraph 3 of Regulation (EC) N° 1260/1999 (adopted at
the same time as the two implementing regulations).

17

measures should contribute to more effective management of what has
become one of the most visible fields of action of the Union: the creation of a
single body to implement projects, a high degree of decentralisation of
towards the Commission’s external delegations and the
management
the introduction of stricter completion
authorities of recipient countries,
periods (adaptation of the Financial Regulation), the elimination of old and
dormant commitments and a clearer definition of responsibilities within the
project cycle.

Acting on one of the central recommendations of the Communication, the
Commission decided to set up EuropeAid from 1 January 2001 as the sole
cooperation office responsible for
implementation of all Commission
external aid instruments35.

2.6.

Intersectoral measures: recasting the Financial Regulation

Independently of the White Paper on Reform36, but with the same objective
of improving financial management, notably by simplifying and updating the
rules,
for
the Commission submitted on 17 October 2000 a proposal
recasting the Financial Regulation.37 This proposal aims at unifying the
basic principles and rules governing the budget and financial management
and the more precise rules applicable to specific budgetary fields: public
contracts and subsidies, accounting and financial statements, external action,
research, administrative
EAGGF Guarantee Section, Structural Funds,
appropriations.

Pending the final adoption of
the new Financial Regulation, certain
transitional measures have already been implemented in 2000: in particular,
audits and ex post controls have been decentralised.

2.7.

Implementation of Commission reform

On 1 March 2000, the Commission presented its overall strategy for internal
administrative reform, together with an action plan35, taking as a starting
point the two reports of the Committee of Independent Experts. One of the
priorities of this White Paper concerns financial management and control in
the departments, which was the first package of reforms implemented from
2000.
incorporates several measures to
contribute to boosting the protection of the Community’s financial interests.

the White Paper

In addition,

Other measures appearing in this White Paper refer to the reform of
disciplinary procedures and of warning procedures which allow for an
fraud and the
in the prevention and the sanctioning of
improvement
protection of the financial interests of the Community. The communications
of the Commission on the reform of disciplinary procedures and on
awareness-raising in relation to serious malfunctions, and the draft decision

35

36

37

Decision of 29 November 2000.
White Paper: Commission Reform, COM(2000) 200 final.
Proposal
Regulation applicable to the general budget; COM (2000) 461 final.

for a Council Regulation (EC, ECSC, Euratom) laying down the Financial

18

of the Commission on the creation of an investigations and disciplinary
office are all part of this improvement.

2.7.1.

The improvement of financial management and control

refer

initiatives appearing in the Reform White Paper

to the
Several
improvement of financial management and control: this involves in particular
actions 78 to 8338, which represent a deep-seated restructuring of the system
into the
of management, audit and control:
management process and definition of minimum control standards, abolition
of the “ex ante approval” of commitments and payments by the Financial
Controller, increased responsibility to be borne by financial managers in the
various Directorates-General under the supervision of a new internal audit
service (IAS) and under the general monitoring of an Audit Monitoring
Committee made up of three Commissioners as well as an external expert,
and presided over by Mrs Schreyer.

integration of controls

The new Commission approach to internal audit was clarified by guidelines
and charters on the three main pillars of the new system – internal audit
structures, the IAS and the Audit Monitoring Committee.39 A charter was
added in December 2000, defining authorising officers’ powers and the new
internal control rules.

In the context of focusing the Community administration on its core
functions, which constitutes one of the priorities of this White Paper, the
Commission adopted its Communication on the
externalisation of
Community programme management, as well as a proposal for a outline
decision for a new type of implementation agency.40 These new agencies
should enable the Commission to carry out Community programmes with the
requisite flexibility and specialisation while preserving responsibility for
management and policy-making. They thus form the core component of the
consistent and controlled externalisation strategy that
the Commission
committed itself to developing at
the end of 1999 in order to correct
malpractice in the form of uncontrolled use of certain technical assistance
offices (BATs).41

38

39

40

41

Section XXVII – Management and financial control within the Directorates-General, Actions
78 to 83: minimum control standards, Separation of financial tasks and circuits, Evolution of
the role of financial units inside the Directorates-General, Reinforcement of the control
function of the Directorates-General, Declaration of the Director-General in his annual activity
report, Sufficiency of personnel.
Documents adopted on 31 October 2000.
Communication from the Commission: Externalisation of the management of Community
programmes including presentation of a framework regulation for a new type of executive
agency; Proposal for a Council Regulation laying down the statute for executive agencies to
be entrusted with certain tasks in the management of Community programmes (COM (2000)
788 final, 13.12.2000).
See the second report of the Independent Experts on the reform of the Commission, Analysis
of current practices and proposals to remedy mismanagement, irregularities and fraud, in
particular Chapter 2 on direct management, externalisation and BATs (Doc. 381655,
10.09.1999).

19

2.7.2.

The protection of the Community’s financial interests in the White Paper

The White Paper also contains several measures to boost the protection of the
Community’s financial interests: the point here is to fraud-proof legislation
and financial management rules and procedures as far as possible and
regulate cooperation between Commission departments and between them
and the Member States more effectively. Actions 92 to 9842 provide also for
guidelines on sound project management to make officials and recipients
aware of conduct during the programme and project cycle which can cause
unintentional errors, conflicts of interests and irregularities.

The time-frame for implementing these actions is 2001, partly because of the
time needed to set up the European Anti-fraud Office, with two exceptions:
the optimisation of the early warning system and the improvement of the
debt recovery procedure. The Reform White Paper called for the introduction
on the long term of a central data base which would facilitate the
management and the follow-up of contracts and grants attributed directly by
the Commission, and for a mechanism making it compulsory to consult it
before entering a commitment in the accounts. Given that the new system
will only be set up in 2001, the Commission decided, during its meeting of
31 October 2000, to better define the responsibilities of the services involved
and to increase participation by authorising departments.

As regards the improvement of recovery procedures with regard to
expenditure directly managed by the Commission, a new initiative was also
introduced in 2000. To increase both the recovery rate of funds wrongly paid
out (which amounted to approximately 71% of outstanding amounts in 1999)
and the speed of recovery, a Commission communication of 13 December
200043 proposes improving the distribution of tasks between authorising
officers and accounting officers (greater responsibility of administrative
tools and
departments for pursuing debtors), developing management
redefining the role of the various actors involved in recovery – authorising
officers, accounting officers and the departments directly concerned
(Directorate-General for Budgets, Internal Audit Service, Central Financial
Service, Legal Service and – in cases of suspected fraud or irregularity –
OLAF).

It is planned to give general responsibility to OLAF when a case calls for a
criminal prosecution, so that OLAF can take the requisite action allowing the
Commission to participate as a civil party in proceedings in appropriate
cases.

42

43

Chapter XXX of the White Paper, Actions 92-98: Guidelines for good project management,
Improvement of coordination between OLAF and other services, “Fraud-proofing” of
legislation and contracts, Optimisation of the early warning system, More efficient recovery of
unduly paid funds, Improved management of the Structural Funds, Improvement of the
clearance of accounts procedure in the framework of the EAGGF.
Communication on the White Paper’s Action 96: More efficient recovery of unduly paid
funds.

20

3.

THE OPERATION OF OLAF

3.1.

A new structure

On 27 September 2000, the European Anti-fraud Office adopted a new
the new
transitional organisation chart. The primary objective of
administrative structure is to ensure continuity in work started by the old
UCLAF and prepare for reorganisation of the Office to adapt to the new tasks
and policy guidelines set by the legislation of 1999. It substantially meets the
challenges identified by the overall strategic approach for the protection of
financial interests and fraud prevention,44 adopted by the Commission on 28
June 2000.

The transitional structure of the Office comprises two directorates: a new
directorate for
investigations and operations and a second one for
“investigations and operations”. The already existing “intelligence” unit has
been completely modified and is attached directly to the Director general.
The accent has been placed on the intelligence function, both as regards the
focus of the operational strategy and with regard to assistance to Member
States.

The new directorate for investigations and operations, which is based on two
pools of investigators, which aims to be a flexible and effective work
structure covering all support activities (internal and external coordination of
investigations and operations). The horizontal Directorate for Policy,
Legislation and Legal Affairs combines magistrates and other experts
responsible for assistance with monitoring fraud cases with the national legal
authorities and the preparation of cases in the Office itself. In addition to a
service responsible for legislation and legal affairs within the Office’s sphere
of jurisdiction, the directorate is in charge of general matters and inter-
institutional relations as well as for fraud-proofing and administrative and
financial follow-up.

it must

strategic approach of

In accordance with the overall
the European
Commission concerning the fight against fraud, the Office must adapt its
structure,
in particular to develop its knowledge of the economic and
criminal environment (fraud mechanisms, structure of criminal networks). To
this end,
improve risk analysis and better use of operational
other Community
information
institutions and bodies such as the Court of Auditors, the Central Bank,
international authorities such as Europol, Interpol,
the World Customs
Organisation etc. and the national authorities. As thus organised the Office is
to perform more effective data gathering and analysis functions to assist the
Commission as a whole and operational departments in the Member States
and in third countries and work out an operational strategy.

from Commission

departments,

the

The new structure aims consequently to constitute a genuine platform of
services in all the sectors of its competence by putting its know-how and
multi-disciplinary experience at the disposal of all Commission departments

44

COM(2000) 358 final.

21

which contribute to the protection of financial interests and of all the national
organisations or authorities. The Director intends to coordinate and ensure
consistency between the various tasks assumed by the Office – operational
activities, strategic intelligence, improvement of the legislative framework
and liaison with the national judicial and police authorities. The intelligence
function, at the heart of this Community platform of services, will enable the
Office to contribute to the organisation of close and regular cooperation
between authorities responsible for protecting the financial interests of the
Communities against fraud, money laundering, corruption and any other
illegal activity. The new pool of magistrates for its part will work for a better
criminal-law treatment at national level of serious, often organised, crime.

3.2.

The power of investigation of the European Anti-fraud Office

This is conferred by Regulations (EC) No 1073/1999 and (Euratom) No
1074/1999, adopted on 25 May 1999 by Parliament and the Council, which
provide that OLAF is to carry out within the institutions, bodies, offices and
agencies set up by or on the basis of the treaties administrative investigations
for the purpose of fighting fraud, corruption and any other illegal activity
the European Community and to
affecting the financial
investigate serious matters relating to the discharge of professional duties. In
accordance with Article 4 of the two Regulations, each institution, body,
office and agency is to adopt the necessary provisions laying down the
conditions and procedures for implementing the regulation.

interests of

The European Central Bank and the European Investment Bank, however,
stated that they do not recognise the explicit power of OLAF to act within
their institutions.45 The need to give full effect to the anti-fraud rules was
stressed by the Heads of State or Government. The Commission, while
recognising that the implementation of Regulations (EC) No 1073/1999 and
functional
N° 1074/1999 must
independence, considers that their decisions are not compatible with the
Regulations of 25 May 199946. It consequently decided on 12 January 2000
to bring an action in the European Court of Justice.

these two institutions’

fully respect

3.3.

An overall anti-fraud strategy

Following major legislative and organisational changes in 1999 and early
the Commission approved a proposal aiming to consolidate the
2000,
Union’s anti-fraud policy on 29 June 2000. The communication on an overall
strategy for the fight against fraud and the protection of financial interests
describes the major challenges which must be taken up by the Community
and the Member States.

45

46

Decision of the European Central Bank of 7 October 1999 on fraud prevention (OJ L291,
13.11.1999) and Decision of the EIB Steering Committee, notified to the Commission on 16
November 1999 (regarding its activities in relation to own resources).
Action filed by the Commission on 14.01.2000 against the ECB and Action filed by the
Commission on 19.01.2000 against the EIB (Cases C-11/00 and C-15/00, OJ C 122 of
29.04.2000).

22

systematic

The protection of financial interests is a matter for the entire Commission, as
well as the other institutions and the Member States. The strategy stresses the
need to combine prevention with the fight against fraud in order to guarantee
effective and equivalent protection throughout the Community: this goes
in the
from the
Commission’s legislative and political initiatives to reinforcing the legal
instruments for detecting, controlling and punishing frauds. The development
of a culture of cooperation between all the competent authorities requires
changes in the structure of the OLAF so that it can give expertise and
operational support
to the national authorities and become a genuine
multidisciplinary platform of services.

anti-fraud provisions

incorporation of

The fight against fraud in the institutions aims to make all Commission staff
aware of the need for prevention and to make effective OLAF’s independent
power of internal investigation in all the Community institutions and bodies,
as desired by the legislature. The fourth challenge refers to strengthening the
criminal-law dimension, via close cooperation between the Commission and
the Member States’ judicial authorities to remove obstacles raised by the
complexity of cases and problems of compatibility between national legal
systems. The strategy was presented to the Economic and Financial Affairs
Council on 17 July 2000 and to Parliament, which approved it.47

3.4.

Reporting

The Commission is required by Article 280(5) of the EC Treaty to report in
its annual report on global measures taken to protect financial interests by
itself and the Member States.48 In addition, the European Anti-fraud Office is
required to report regularly on its operational activities by Article 12(3) of
Regulation No 1073/99. The first report of this kind, covering the period
between 1 June 1999, when OLAF was set up, and 31 May 2000, was
adopted on 23.5.2000: it analysed the Office’s powers and procedures under
the legislation and its operational activities in statistical and quantitative
terms, and presented a series of questions likely to serve as a base for future
guidelines. In order to balance its reporting activity during the year, the
Office will adopt its report for 2000 during the second half of 2001.

The OLAF Supervisory Committee presented its first activity report,
in
accordance with Article 11(8) of Regulations Nos 1073 and 1074/99.49 This
report describes the establishment of the Supervisory Committee and the
transition from the old Unit for the Coordination of Fraud Prevention to
OLAF, and clarifies its relations with the Office. The Supervisory Committee
also recommended improvements to procedures and monitoring techniques,
in particular the assignment of magistrates to legal advice and support
functions in relation to investigations.

47

48

49

European Parliament Resolution of 13 December 2000.
First Annual Report (1999) adopted on 8.11.2000 (COM(2000) 718 final).
Activity report July 1999–July 2000 (OJ C 360, 14.12.2000), approved by the Council on
5.12.2000.

23

4.

COOPERATION AND PARTNERSHIP

Member States,
in particular within the Advisory Committee on Fraud
Prevention, wished the Commission Report to comprise some illustrations of
cooperation with operational authorities. What follows therefore provides
examples of what cooperation and partnership between national authorities
for
interests in various
the Community’s financial
Community sectors can consist of, and of the potential value added by the
Office’s involvement.

the protection of

4.1.

With the Member States

4.1.1. Cooperation with internal audit services in the field of

traditional own

resources

In the field of the traditional own resources, the Commission, and more
particularly the Directorate-General for Budgets, works to establish close
links with internal audit services in the Member States in the framework of
cooperation based on the principle of the Joint audit initiative. This operation
the Member States’
has
responsibility in relation to their obligations to protect the Union’s financial
interests and to anticipate the necessary changes to control methods as the
Union is enlarged.

two clearly-stated objectives:

to increase

Following an exchange of experience between the audit services of the
Member States, the Commission set up an Audit Sub-group in the Advisory
Committee on Traditional Own Resources to provide the necessary impetus
for this form of partnership. The Commission is thus developing a new
approach to cooperation with the Member States in the control of traditional
own resources. It hopes that in the future it will be able to scrutinise their
legislation for compatibility with Community legislation on the basis of
independent controls carried out by the audit services of the participating
Member States.

This new way of voluntary cooperating enables the Commission test another
approach to controls: instead of controling the Member States itself, it would
leave these Member States’ internal audit services to carry out their work on
predefined topics and then check the national audit teams’ findings.

A pilot action on external Community transit
in
partnership with the Commission, in November 2000 yielded very good
results. Two new actions with Denmark and Austria will be tried out in 2001.
The Commission is ready to start negotiations with other Member States with
an internal audit system or another type of control system with the necessary
level of independence, in order to include the greatest possible number of
Member States in this initiative.

in the Netherlands,

The Commission is convinced that this approach offers major potential and
makes it possible to target controls more accurately while securing the
credibility of the Member States’ activities.

24

4.1.2. Operational cooperation

4.1.2.1. Illicit trafficking in products containing butter

Since October 1999 OLAF has been coordinating judicial investigations in
trafficking in products
Italy, France and Belgium concerning fraudulent
declared as Italian serum butter and sold by companies belonging to a group
closely linked to a Neapolitan criminal organisation. The Community interest
lies in the fact that goods adulterated in Italy then sent on to France and
Belgium were then exported as butter oil with payment of refunds or sold on
the internal market as pastry butter with production aid. The investigation
also provided an opportunity to examine these products in terms of their
suitability for human consumption; no health hazards were detected.

the beginning of 1999,

At
the Naples Prosecution Service launched
investigations into a group of companies used by the criminal organisation
for its business and tax frauds. Following this investigation, several arrests
were made for complicity in homicide and other criminal activities.

The Italian Magistrate then asked OLAF for assistance with the coordination
of proceedings between the various Member States concerned. The
subsequent investigations determined that an Italian company had sold a
product presented as butter to companies in several Member States.

In June 2000,

judicial authorities.

An information was laid in France and international letters rogatory were
exchanged between national
these
investigations led to simultaneous operations in Italy, France and Belgium
with technical and operational support from OLAF. Searches carried out
simultaneously in all three countries made it possible to seize significant
quantities of adulterated butter and make a large number of arrests in Italy
and France. It is established that between 1995 and 2000, approximately
35 200 tonnes of adulterated butter were sold , containing not only butter but
non-dairy animal fats and vegetable and synthetic fats. These goods were
acquired by several French, Belgian and German companies.

The investigations continues in the Member states concerned. Evidence was
also gathered that the main impact of the traffic was the financial loss to the
Community budget (which remains to be evaluated precisely). So far, the
analyses conducted by the experts on the seized goods have not established
any direct hazard for the consumers’health50.

4.1.2.2. Illegal dollar banana imports in the Community under cover of false import

licences

Within the framework of annual tariff quotas, banana imports from Latin and
Central America covered by AGRIM import
licences are eligible for a
€
€
680 per tonne). Making this
75 instead of
reduced customs duty rate (
specific arrangement secure consequently helps to enforce the Community’s

50

See the Press notes of the Office, OLAF/07/2000 of 05.07.2000 and OLAF/10/2000 of
19.12.2000.

25

commercial policy and make certain aspects of its development policy work
more effectively.

In the middle of 2000, at the Office’s initiative, the Italian and Belgian
authorities were informed of facts warranting administrative and criminal
investigations into organisations responsible for establishing and using false
licences for illegal banana imports in the Union.

investigations by OLAF and the national authorities revealed that
Joint
bananas were released for free movement with false AGRIM licences,
mainly in Italian and Belgian ports. Subsequent
investigations made it
possible to identify similar operations in Spain, Greece, Germany and
Portugal. Investigations are continuing to identify all the false licences.

It has been established so far that between the beginning of 1998 and the
middle of 2000, at least 220 000 tonnes of bananas were imported with false
licences. The amount of duties evaded is currently estimated at
164 million,
but it could turn out to be considerably higher.

€

Following this detailed investigation, the Commission immediately adopted
precise rules to strengthen controls of banana imports. These make it possible
in particular to check the authenticity of licences (see Point 2.3.1).

4.1.2.3. The fight against cigarette fraud

High-level cooperation between OLAF and the Member States is constant in
the fight against cigarette fraud. This is one of the most serious problems
interests and the national budgets.
affecting the Community’s financial
OLAF gave its assistance to the national authorities responsible for
investigations and the judicial consequences, in particular in order to target
international cigarette smuggling and the organisers of this illegal activity.
OLAF and Member States cooperated in particular on the preparation and
implementation of several letters rogatory. OLAF also cooperated closely
with the competent authorities of several non-member countries.

As regards specific cooperation projects, OLAF, having received information
from Austrian customs, contacted the Greek authorities and found a lorry
ready to leave the port of Patras with 4.3. million smuggled cigarettes. The
cigarettes were seized and the driver arrested. Alerted by the Dutch
authorities to a container of cigarettes seized in Rotterdam and of suspicions
regarding another container bound for Portugal, OLAF informed the
Portuguese authorities. They seized the container and identified four other
containers at various locations in the country. A total of 39.9 million
(counterfeited) cigarettes were seized.

On a proposal from OLAF, the judicial authorities at Genoa (Italy) produced
a search warrant against a bonded warehouse involved in cigarette
smuggling.
the search
In the presence of a representative of OLAF,
conducted at
the company made it possible to seize a number of T1
documents relating to consignments of cigarettes for African countries but
cleared with false customs stamps. These searches also revealed a link with a
US resident involved in international cigarette trafficking and the existence

26

of VAT fraud. This clearly illustrates the fact
that criminals are often
involved in several types of fraud and that their fraudulent operations are
highly professional.

The Italian judicial authorities also informed OLAF of difficulties
encountered in cooperation with the Swiss authorities, during their
investigations into cigarette smuggling and money-laundering. OLAF has
endeavoured to establish cooperation with the Swiss authorities. On the basis
of administrative arrangements concluded with the Swiss Office of
Integration in 1999, OLAF arranged ad hoc meetings with them and
representatives of the Italian Prosecution Service in Rome. The arrest in
Switzerland of several persons, including a judge and one of the principal
organisers of cigarette smuggling towards the Community, is a direct result
of the close liaison established between the relevant authorities.

In addition, in November 2000, the Commission commenced a civil action
on behalf of the Community and several Member States against certain
American cigarette manufacturers in the New York East District Court. This
action, based on the active participation of criminal groups in smuggling, is
for compensation for financial losses to the Community’s own resources and
an injunction to cease smuggling. So far, ten Member States decided to join
this action, for they have a twofold interest in recovering excise duties and
VAT on the cigarettes smuggled and in defending the interests of the
European Community.

4.1.2.4. Coordinating investigations in the Structural funds

In the context of seeking to improve the coordination of different Members
State investigative authorities and an improved collaboration with OLAF in
the undertaking of investigation of allegations of serious irregularity and
fraud in the Member States in the area of Structural Funds, OLAF has
assisted in the establishment and development in the United Kingdom of an
Intergovernmental Fraud Response Liaison Group.

This group, created principally for the protection of both Member State and
EC funds, comprises the senior members of the fraud investigation services
of all key UK government departments.

Its principal purpose, and one encouraged by OLAF in the context of joint
investigations under Regulation 2185/96,
is to facilitate a unified and
coordinated approach to investigations.

Following the first major investigation completed in October 1999 with the
FRLG with the collaboration of investigators from 4 UK government fraud
investigation services,
the case was referred to the competent national
judicial authorities. Financial recoveries are currently under way or are being
enforced in respect of amounts irregularly obtained both from the European
Social Funds (c. £ 4 M) and the Research and Technological Development
budget of the Commission (c.£ 3 M).

In 2000 a second investigation was undertaken into allegations of serious
irregularities in possible breaches of EC Public Procurement Regulations and

27

in the use of both ERDF and ESF monies (up to £ 15 M). The investigation,
in the course of being finalised, involved the coordination of investigators
from OLAF and 4 different competent investigative authorities in the UK.

4.2.

Mutual assistance with the countries applying for accession

4.2.1.

Administrative cooperation

With regard to aid for the restructuring of agriculture in the applicant
countries of Central and Eastern Europe, the Commission, in June 2000,
adopted the regulation on the financial management of the Special Accession
Programme for Agriculture and Rural Development (SAPARD), which has
€
an annual budgetary appropriation of

529 million until 2006.51

This regulation is based in particular on the principle that management is
fully decentralised to the applicant countries’ management authorities and
that the procedure for EAGGF Guarantee Section accounts applies. It thus
aims to ensure the rapid implementation of programmes, the proper use of
appropriations and the effectiveness of SAPARD controls throughout the
programme period (2000-06). It is also an element which encourages the
preparation of the applicant countries for the management of Community aid
after accession.

The adoption of this Regulation preceded the signature with the applicant
countries of multiannual financing agreements, which comprise rules of
financial control equivalent to those which apply within the framework of
EAGGF Guarantee Section,52 in particular the anti-fraud rules in the ‘acquis
communautaire’, including the financial regulation.

4.2.2. Operational cooperation

To set up an operational and multidisciplinary structure in Poland with the
specific task of protecting financial interests, the general inspectorate of the
3.5 million in
Polish customs was allotted PHARE programme financing of
1999. The conditions for implementing the project were therefore in place in
good time: three experts from the Member States and an OLAF official were
designated to assist the Polish authorities.

€

An administrative arrangement between OLAF and the general inspectorate
of the Polish customs was negotiated to determine administrative and
operational relations between the European experts and the Polish team. The
project moved on to the operational phase in Warsaw on 1 January 2000.

51

52

Commission Regulation (EC) No 2222/2000 of 7 June 2000 laying down financial rules for
the application of Council Regulation (EC) No 1268/1999 on Community support for pre-
accession measures for agriculture and rural development in the applicant countries of central
and eastern Europe in the pre-accession period: OJ L 253, 7.10.2000.
Between November 2000 and March 2001, such conventions were signed with Bulgaria,
Estonia, Latvia, Poland, the Czech Republic, Slovakia, Romania, Hungary, Slovenia and
Lithuania, in accordance with Article (9) of the SAPARD Council Regulation N°1268/1999.

28

4.3.

Mutual assistance with non-member countries

third
Among several agreements on mutual assistance with various
countries53,
the Commission wishes to draw attention to two recent
developments which are particularly relevant as regards the fight against
fraud and the protection of financial interests.

4.3.1. Draft cooperation agreement with Switzerland to fight against fraud and the
the

the financial interests of

other illegal activities to the detriment of
Communities, of the Member States and of Switzerland

The conventions and protocols with Switzerland, including the 1997 protocol
on mutual assistance in customs matters, have a limited impact, partly
because of their restrictive interpretation in Swiss law. That creates problems
of practical application for the purposes of assistance, in particular in cases of
fraud involving substantial amounts and organised networks.

In 1997,
this situation was criticised in the Report by Parliament’s
Committee of Inquiry into the Community transit procedure. Parliament
recommended giving the Commission a mandate to negotiate an agreement
on closer and more effective cooperation in relation to customs fraud and
offences.

Exploratory discussions with the Swiss authorities resulted in a number of
specific recommendations on measures to be taken to improve cooperation.
These discussions were completed in December 1999,
the two parties
agreeing to prepare the negotiation of an agreement.

On 14 December 2000 the Council authorised the Commission to negotiate
such an agreement with Switzerland, which should be concluded before the
end of 2001. This agreement aims to strengthen cooperation against
organised crime to the detriment of the financial interests of the Communities
and Switzerland. Given the intensity of economic relations between the
Communities and Switzerland, which will soon be further intensified on the
basis of seven bilateral agreements concluded with Switzerland in 1999,
cooperation must take into account the requirements as regards anti-fraud
cooperation which already exist in the Union.54

53

54

The agreement with Marocco entered into force in March 2000 (OJ L 70 of 18.03.2000). In
2000, negotiations started on a similar agreement with Cyprus and Macedonia (FYROM) and
it is envisaged to launch similar agreements with 14 other third countries or candidate
countries.
Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the
European Communities financial interests: OJ L 312, 23.12.1995, p.1; Council Regulation
(Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and
inspections carried out by the Commission in order to protect the European Communities’
financial interests against fraud and other irregularities: OJ L 292, 15.11. 1996, p.2; Council
Regulation (EC) No 515/97 of 13 March 1997 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 and agricultural matters:
OJ L 82, 22.3. 1997, p.1. Parliament and Council Regulation (EC) No 1073/1999 of 25 May
1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF): OJ L

29

4.3.2. Mutual administrative assistance in customs matters with Russia

The European Union and the Russian Federation have established regular
cooperation relations, in particular to combat fraud. Under the partnership
and cooperation Agreement of 28.11.1997 between the Communities and the
Member States on the one hand, and the Russian Federation on the other
hand,
the parties agreed a protocol concerning administrative mutual
assistance for the proper application of Community customs legislation.

In 1999, OLAF was informed of problems encountered by Member States in
the payment of Community export refunds, owing to the unreliability of the
Russian customs import declarations. The mechanism of evidence of arrival
at destination for agricultural products exported to Russia must be improved
to avert the risk of financial losses both to the Community budget and to the
Russian Federation’s budget. As an indication, beef and veal exports to
Russia during 2000 were 130 000 tonnes55, which represents an amount of
refunds of approximately

65 million.

€

Given the major financial consequences, a prior information system between
the Commission and the Russian customs authorities was set up to accelerate
procedures and provide, after prior notification, electronic confirmation by
the Russian authorities of the arrival of products and their release for the
market. This is being done on an experimental basis for consignments of beef
and pigmeat. It was envisaged that the centralising organisations of the
Member States notify the Commission of any information on the movement
of goods by road with the Federation of Russia via the prior information
system. This mutual information mechanism was established on the basis of
the existing partnership and cooperation Agreement.56 It became functional
on 1 February 2001 and will be reviewed at a later date in the light of
experience.

55

56

136, 31.5.1999, p.1; Council Regulation (Euratom) No 1074/1999 of 25 May 1999 concerning
investigations conducted by the European Anti-Fraud Office: OJ L 136, 31.5.1999, p.8.
This exclusively concerns exports to Russia eligible for refunds.
Commission Regulation (EC) No 2584/2000 of 24 November 2000 establishing a system for
the communication of information between central bodies designated by the Member States
and OLAF (OJ L 298, 25.11.2000) and administrative arrangement between OLAF and the
State Customs Committee of the Russian Federation of 5.7.2000.

30

Title II: Measures adopted by the Member States with a view to protecting the
Community’s financial interests (1 May 1999 - 31 December 2000)

Unlike earlier annual Commission reports on the protection of the Community’s financial interests, the
implementation of the new Article 280(5) of the EC Treaty means that the Member States’ activity in
this field must also be reported. In comparison with earlier years, a new Title has therefore been added
to the present report since 1999.

The new title – “Measures adopted by the Member States with a view to protecting the Community’s
financial interests” – describes the activity of the Member States (but without statistics) between 1
May 1999, when the Amsterdam Treaty came into force, and 31 December 2000.

To this end, between April and July 2000 the Commission and Member States, in accordance with
Article 280(5),
legislation and the
organisation of inspections. All the Member States answered, first for 1999 (between 1 September and
on 18 December 2000) and then for 2000 (between 15 February and 30 March 2001).

jointly drew up a questionnaire primarily covering national

The Commission presented for discussion by the Member States the summary and compilation of the
replies, first at the COCOLAF meeting on 11 January 2001 on the basis of the contributions for 1999,
and then on 6 April 2001, when all the contributions of the Member States for 2000 had been
incorporated.

Accordingly, the information supplied by the Member States in response to the questionnaire for 1999
and 2000 are summed up in this report as required by Article 280. These facts and contributions will
be the summarised in a working paper to come.

But it must be stressed that this report does not for the moment constitute a basis for assessing the
implementation of Article 280 by the Member States, in particular with respect to the principles of
assimilation and equivalence.

Such an appraisal could be performed only after:

–

–

an analysis of all the laws, regulations and instructions in force, whenever adopted;

a statistical analysis of the reality, i.e. controls of irregularities detected and the penalties
imposed.

Looking beyond the questionnaire itself, this statistical analysis would require, on the basis of Article
280 EC, a harmonisation for statistical purposes of the concepts of control and penalty and annual
notification of the Commission of the relevant data.

As matters stand, given the questionnaire adopted for 1999-2000, merely taking stock of the means
implemented by the Member States over this period does not make it possible to make an assessment
of their respective results in relation to the requirements of Article 280.

Several Member States (in particular Greece, Spain, Ireland, Italy, Austria, Portugal, Sweden and the
United Kingdom) provided more or less detailed descriptions of the measures which were in place
before the reference period. For the sake of a consistent presentation of the contributions, and despite
the interest that this abundance of information, these descriptions were not included in this document,
the principal objective of which had been agreed to be an assessment of new measures adopted
between 1 June 1999–31 December 2000.

31

In addition, the Member States did not all have new measures to report in all the areas. This explains
why they are not all mentioned every time in each part.

32

5.

MAIN CHANGES ON THE LEGISLATIVE AND ADMINISTRATIVE LEVELS

The main area in which there were changes to legislation and administrative practice in the Member
States in 1999-2000 was checks and inspections. This common factor deserves highlighting and
matching with the Commission’s desire to harmonise the arrangements governing checks and
inspections in accordance with its plan of action 2001-02.

5.1.

Own resources

The measures adopted or in preparation during the report period in relation to own resources focus
primarily in one group of Member States (B, E, F, I, A) on changes to the rules for checks and
inspections and in a second group on changes to the rules for penalties (DK, EL, S, UK).

Two of these Member States (DK, F) changed their rules of criminal law. The Commission, which under
its plan of action for 2001-2002 intends to reinforce the criminal-law dimension of the protection of the
Community’s financial interests, welcomes this.

Member
State

Measure

B

New legislation on the control of banks, insurance companies and the system for
issuing securities: notification procedures for officials in the Public Prosecutor’s
Office and the Insurance Supervisory Body in cases of suspected fraud involving
direct and indirect taxes.

Date

25.06.1999

Protocol of agreement between the Ministry of Justice and the Ministry of Finance to
implement new notification procedures in cases of suspected fraud.

1999

Extension of customs authorities’ powers to cover a 12 nautical-mile zone adjoining
Belgian territorial waters.

22.04.1999

DK

Amendment of the Criminal Code: harsher penalties in cases of serious VAT fraud,
introduction of specific provisions on Community resources fraud.

2000

Circular issued by the Ministry of Justice to police and public prosecution
departments setting out the Commission Decision to set up the European Anti-Fraud
Office.

28.12.1999

D

EL

The legislation for combating fraud and irregularities in the field of traditional own
resources is considered adequate.

Bill to amend the Greek Customs Code (penalties, recovery following international
fraud under Article 280 EC).

1999/2001

Instructions from the Ministry of Finance on irregularity reporting via AFIS
(Regulation No 515/97).

1999

Instructions from the Ministry of Finance on the management of Mutual Assistance
fiches and investigations.

1999

E

Reinforcement of checks and inspections, notably through mutual assistance with
Member States and non-member countries (General tax inspection plan 2000).

June 2000

33

F

I

A

P

Instruction from the Customs and Excise Directorate on the EWS for transit (land-
based departments).

March 2000

Instruction from the Customs and Excise Directorate on risk analysis (powers of
central unit/regional sections/bureaux).

The General Inspectorate of the public administration has established a national
database on public grants and aids.

13.01.2000

Act to improve the effectiveness of criminal procedures: conferring powers on certain
customs agents to carry out judicial inquiries.

23.06.1999

Ministry of Justice circular explaining the provisions of the Act of 23 June 1999.

Act No 526: extends the investigation and detention powers of the Guardia di Finanza
to irregularities linked to the collection of own resources and Community financing in
accordance with the principle of assimilation (Article 280 EC).

21.12.1999

Note from the Ministry of Finance spelling out customs control procedures.

20.07.1999

Preparations are currently underway to transpose the Naples Convention, which
increases the powers of the customs authorities, particularly in relation to monitoring.

22.12.1999

into

into

1.1.2001
(entry
force)

1.1.2001
(entry
force)

2000

Decree-Law No 566/99:

ban on post-seizure sales of tobacco;

reinforcement of statutory excise guarantees (IEC) to limit movements of products
under suspensory schemes;

imposition of tighter conditions for acquisition of IEC status;

prior notification system for movements of products subject to IEC;

system for sealing alcoholic beverages.

S

Act No 2000:1225: new provisions concerning penalties for smuggling.

Act No 2000:1281: new provisions concerning customs.

UK

Two new legislative measures have been developed:

Section 126 of the 1999 Finance Act, which allows interest to be charged on customs
debts, in accordance with Regulation No 2913/92;

preparations for a civil penalty regime for customs duty evasion and other regulatory
offences (to be implemented in 2001).

34

5.2.

Agricultural expenditure

Most Member States (B, D, DK, E, F, IRL, I, NL, FIN) have amended their provisions relating to checks and
inspections of agricultural expenditure. In parallel with this, certain Member States (E, IRL, P, S) reorganised their
information and risk detection facilities. In its plan of action the Commission envisages a review of the black-list
scheme relating to EAGGF Guarantee Section expenditure.

It is noteworthy that two Member States (D, IRL) have adapted their procedures for clearing accounts. The
Commission is looking at the question of charging interest on financial corrections (action 98 in the Reform White
Paper).

Member
State

Measure

B

New legislation on agricultural expenditure:

establishing a warning system and administrative fines;

Date

05.02.1999

extending technical means available to Belgian officials to establish offences
(observations made by air, at sea or on land);

extending the list of premises officials may access without authorisation of the
person under investigation;

introducing the principle of access to all documents and electronic media and
powers to seize goods and the means of production.

DK

Amendment of customs legislation: stricter conditions for obtaining a deferment of
payment of customs duty.

2000

Modification of the procedure for approving customs documents certifying imports
in a third country for the differentiated payment of export refunds (all documents
are now checked and approved by a special team of experts).

D

Procedures have been adapted to take account of the reform of the clearance of
accounts.

1999

New instructions have been issued by the Regional Funds and the Federal Ministry
for Agriculture and Food regarding the treatment of applications for aid, payment,
the conduct of administrative and on-the-spot checks, computer checks that controls
have been carried out and the notification of irregularities.

EL

Decree on administrative measures in the event of false declarations or fraud.

Order laying down additional measures in the tobacco sector (approval of firms,
controls at time of payment, terms for withdrawal of approvals).

Circular setting out
the obligations of agricultural
development Directorates and the conditions for imposing penalties in relation to
the production of olive oil and table olives.

the methods of control,

2000

1999

2000

E

Act No 55/1999 on follow-up to checks and inspections (offsetting against future
payments).

29.12.1999

35

F

IRL

The General Inspectorate of the public administration has established a national
database on public grants and aids.

13.01.2000

Draft legislation aimed at improving the controls on the transport of milk under
Regulation No 536/93.

1999

Distribution by the Department of Agriculture, Food and Rural Development
(DAFRD) of manuals and guidelines to Ministry staff:

Declaration of general policy on fraud: establishes the procedure where fraud is
suspected;

Circular: Guidelines to prevent the risk of conflicts of interest;

Manual of procedures on the accreditation procedure (EAGGF Guarantee Section);

December
1999

January 2000

Manual of financial procedures: financial management and control of European and
national funds.

April 2000

Oct/Nov 2000

Adoption of a Programme on business risk management and guidelines for its
implementation.

December
1999/2000

High-level cooperation and representation between the DAFRD and the Department
of Marine and Natural Resources (DMNR).

I

Act No 526: extends the investigation powers of the Guardia di Finanza to
irregularities linked to the collection of own resources and Community financing in
accordance with the principle of assimilation (Article 280 EC)

21.12.1999

Draft legislative decree on the system of penalties provided for by Regulation No
4045/89 (EAGGF Guarantee Section).

Finance Ministry Circular:
agricultural export refunds scheme

innovative aspects of new rules concerning the

NL

Bill to amend the Accounts Act for the 8th time:

lists the control powers of the General Court of Auditors regarding the use made of
Community grants (up to final beneficiary level);

establishes parallel powers for the Ministry regarding the search for information and
the ordering of controls.

28.06.1999

2000
(parliamentary
review
in
2001)

Community grants control Bill to confer three corresponding categories of powers
on the Ministry (right to be informed by the management body, right to give
indications to the management body and right to recover from the management
body).

2000
(Parliamentary
review
in
2001)

P

Decree-Law No 151/99: application of the principle of the black list in the field of
export refunds, under Regulations Nos 1468/95 and 745/96 (conferment of powers,
modus operandi).

10.05.1999

(publication)

IGF manual standardising procedures for reporting irregularities under Regulation
No 595/1991 (EAGGF Guarantee Section).

36

IFADAP circulars setting out the procedures for implementation of various aid
schemes within the framework of the EAGGF, Service note No 26/96 relating to the
treatment of irregular situations.

FIN

Decree 75/2000, circulars and Decision by the Ministry of Agriculture and Forestry
on controls on aids to surfaces cultivated and penalties.

1999, 2000

Circulars issued by the Ministry of Agriculture and Forestry on controls on aids to
stock-farming and penalties.

1999, 2000

Circulars on the use of checklists for the examination of aid wholly or partly funded
by the Community.

1999, 2000

Circular on the processing of applications for income aids.

Instructions
intervention measures (cereals, butter, skimmed-milk powder, school milk).

responsible for controls

for executive agencies

in relation to

1999, 2000

1999, 2000

S

Regulation SJVFS 1999/80: application of provisions relating to export premiums
(including possibility of withdrawing approval in the event of supply of incorrect
information).

1999

Manual for reporting irregularities to OLAF under Regulation No 595/91.

1999/2000

37

5.3.

Structural Funds and Cohesion Fund

The Member States’ reform of their rules for checks and inspections is also the dominant topic regarding structural
measures (DK, D, EL, F, IRL, I, NL, P, FIN, UK).

Two Member States (I, FIN) also refined their rules for recovery. The Commission wishes to launch a debate on
the role of OLAF in the recovery of amounts fraudulently evaded (action 97 of the Reform White Paper).

Member
State

Measure

Date

B

DK

D

EL

E

F

IRL

Following an independent audit of management and control systems for the
administrative processing of ERDF files: control manual

Amendment of the legal basis for the management of structural programmes to
adapt it to the new Community rules.

Statutory notice No 819 and Act No 254: amendment of the laws applying to the
management of ERDF and ESF aid.

2000

Adaptation of a number of administrative provisions on responsibilities, divisions
of powers, accounts and financial control.

2000

Introduction of the possibility of coordinating registers and gathering information
for the control of FIFG management

The Länder are currently modifying or adapting their management and control
systems for the programming period 2000-06.

2000

In the case of the ESF (managed by the Länder), several Ministries have defined
their audit trails and monitor recipients at the stage where the projects are carried
out (checks based on risk analysis).

1999

Greece states that it has adopted its control and management systems to the audits
under Regulation No 2064/97.

Act No 2741/1999 establishing checks and inspections as to legality by the Court
€
of Auditors for supplies of goods >
1.4 million and the implementation of projects
€
2.9 million.
by all public bodies >

1999

The General Inspectorate of the public administration has established a national
database on public grants and aids.

13.01.2000

Ministry of Employment and Solidarity circular on the control of projects co-
financed by the ESF.

1999

Statutory Instrument 123 (implementation of Article 12 of Regulation No
1164/1994 and Article 3 of Regulation No 2064/97): appointment and conferment
of control powers regarding on-the-spot inspections of recipients of Structural
Funds aid (ERDF and Cohesion Fund).

1999

Circular issued by the EFS National Authority implementing Regulation No
2064/1997 (certifications and verifications, percentage control rate no less than
5%).

September
1999

38

Secretariat guide to the supervision and control of Community finance issued by
the Economic Infrastructure Operational Programme 1994-1999.

Various circulars, manuals and guidelines adopted by the Department of
Agriculture, Food and Rural Development (DAFRD) (see part 1.2 above): these
texts also apply to the EAGGF Guidance Section.

I

Act No 526: extends the investigation and detention powers of the Guardia di
Finanza to irregularities linked to the collection of own resources and Community
financing in accordance with the principle of assimilation (Article 280 EC).

Act No 144: confers the power to recover unused ESF funds,
exchange-rate differences
implementation.

from administrative

authorities

interest and
for

responsible

Various administrative provisions and regulations have been adopted to regulate
the control of multi-regional operational programmes and Community initiatives
within the ESF framework:

various circulars on implementing measures for training and apprenticeship
projects;

Vade-mecum on the management and control of training activities;

General Note No 306: supervision of vocational training projects - centralisation
of administrative and accounting controls.

NL

Two Bills concerning the control powers of the General Court of Auditors and
control of Community grants (see 1.2 above).

21.12.1999

17.05.1999

1999/2000

09.11.2000

24.02.2000

2000
(Parliamentary
examination in
2001)

Conclusion of new protocols for decentralisation between the national authority
and the relevant provinces and cities (management, control and supervision of the
Structural Funds) in the context of the ERDF, the EAGGF Guidance Section and
URBAN.

2000

Development of a new system of management, control and supervision of the
ESF.

2000
(finalisation in
2001)

P

Decree-Law No 173/99 confers on the Inspectorate-General of Finances (IGF) the
power to establish summary reports on controls and to determine the validity of
the request for the final payment of expenditure.

20.5.1999
(date
publication)

of

Decree-Law No 54-A/2000 (amended by Law No 20/2000) to reinforce the
national system of management, follow-up, evaluation and control within the
framework of Community Support Framework III (CSF III) under Regulation
(EC) No 1260/1999:

07.04.2000/

10.08.2000

maintains the three-tier approach;

establishes new procedures for control of the implementation of the
Structural Funds;

39

Decree-Law No 151/2000 confers on the new Ministry for Planning responsibility
for general coordination of implementation of CSF III.

20.07.2000

Regulations adopted within the framework of the EAGGF Guidance Section:

Decree-Law No 163-A/2000: general rules implementing operational projects and
programmes in the fields of agriculture and rural development
(including
administrative penalties and seizure of taxpayer’s assets);

27.07.2000

Decree-Law No 224/2000: rules for the operational programme for fisheries
(MARE) and the fisheries aspects of regional operational programmes (MARIS).

Regulations

to

improve

implementation

of

the

ESF:

Decree-Law No 45/2000: sets up the European Social Fund Management Institute
(IGFSE);

Decree-Regulation No 12-A/2000: amends the rules governing the management of
the ESF and clarifies the obligations of bodies applying for financing;

Order No 799-B/2000: defines the circumstances in which financing may be
modified or stopped;

Regulatory Ordinance 42-B/2000: determines the nature and maximum limit of
expenditure considered eligible for co-financing by the ESF.

The Directorate-General for Regional Development has produced a document to
secure conformity and transparency of public procurement procedures
in
implementing the ERDF.

09.09.2000

22.03.2000

15.09.2000

20.09.2000

20.09.2000

Council of Ministers Resolution No 27/2000: defining management structures of
CSF III.

2000

Creation of a monitoring centre coordinated by the IGF for the application of
Regulation No 2064/97, responsible also for publishing the corresponding
statements.

2000

IFADAP circulars indicating the procedures for
implementing various aid
schemes within the framework of the EAGGF, Service Note No 26/96 relating to
the treatment of irregular situations.

FIN

Act No 329/1999 (amended by Act No 44/2000) on the financing of rural
development (controls and recovery).

1999, 2000

Structural Funds Act (No 1353/1999): responsibility of paying agencies for
controls and performance,
inspections of agencies and beneficiaries by the
ministries.

Government decree on rural development (controls, monitoring, recovery).

Ministerial Decree on the procedure relating to rural development aids (including
recovery procedures).

1999

2000

2000

40

Checklists for processing aid applications under the Act on the financing of rural
development (implementing structural programmes and funds).

S

The National Administration for Business Development and the National
Agriculture Administration have issued a series of administrative directives
relating to aid paid by the Structural Funds (the ERDF and the EAGGF in
particular).

1.12.2000,

22.12.2000

1999/2000

Regulation No 1999:1424 relating to the Community Structural Funds.

1999

Manual for reporting irregularities to OLAF under Regulation No 1681/94.

Amendment of conditions for making grants (Regulation No 1994:1716) and the
rules for application of the FIFG has begun.

2000 -

UK

Initiatives by the Department of Trade and Industry (DTI):

2000

clarification of the definition of fraud, for use within the department;

additional guidance on the reporting of irregularities.

Guidance note by the Department of the Environment, Transport and the Regions
(SETR) to all Government Offices in the regions, regarding the implementation of
Regulation No 2064/97 (5 % checks on ERDF expenditure).

Conclusion of a protocol between the Department of Education and Employment
(DfEE) and the Commission, providing assurances over the level of control in the
framework of the ESF.

1999

1999

Control plan for Objective 5b, clarifying monitoring procedures and introducing
in-depth checks, based on risk analysis.

1999

41

6.

MAIN CHANGES IN THE ORGANISATION OF CONTROL SERVICES

In 1999 and 2000 the Member States made sometimes far-reaching changes to the organisation of their
control services.

6.1.

Own resources

Here there is a tendency to centralise the fight against fraud underlying all the highly varied
patterns of development of the organisation of control services in the Member States. Most of
the changes concern central government departments (B, DK, EL, E, IRL, I, NL, P, S, UK).
Local developments tend to consist of reducing the number of disctricts (NL, FIN).

Member
State

Measure

B

Incorporation of the national centre for combating “carousel”-type VAT fraud
(N.C.C.C.) into the administration de l’inspection spéciale des impôts (Special Tax
Inspection Department).

Date

1999

Harmonisation of working methods as part of the Action Plan Customs 2000/2002:

1999

coordination of inspection activities at national level;

better interaction between the departments responsible for traditional inspections and
fraud investigations.

Agreement between the Belgian Ministries of Justice and Finance on supervision of
banks and insurance companies.

1999

Proposals to strengthen cooperation between the customs authorities and the cellule
de traitement des informations financières (Financial Information Processing Unit -
CTIF).

1999

Creation within the central customs and tax authority of an information centre on
inspection, gathering, processing and disseminating information on economic crime.

Under the Tax Code and the Customs Administration Act, customs officers continue
to carry out criminal investigations and tax inspections (company inspections, audits,
flying squad checks).

1999

Community levies are treated in the same way as national taxation.

Evasion of customs duties and agricultural levies is treated as tax fraud under the Tax
Code. Even where the offence is committed in another Member State, it can be
prosecuted by investigative authorities.

DK

D

Ministerial order on initial steps to centralise risk analysis.

EL

Establishment of excise fraud investigation teams in customs offices.

Establishment of customs control services (internal and ex post controls and audit).

28.01.1999

January
2001

End
2000

of

42

E

IRL

I

Computerisation of almost all customs activities (integrated computer system for the
Greek customs).

October
2000

Setting up of a risk analysis department within Directorate 33 of the Greek Customs
Inspectorate.

2000

Restructuring
antifraud departments
Investigation Office) to increase the specialisation of officers working in this field.

Information

(National

central

of

and

1999

Establishment of a Customs National Freight Intelligence Unit to undertake the
surveillance and identification of suspect maritime cargoes (risk analysis).

1999

Establishment of an antifraud unit (UCA) at the Ministry of Finance, with among
other things a special risk analysis section.

1999

Restructuring of the Guardia di Finanza: redeployment of available staff to dynamic
departments.

Organisation of training seminars for Ministry of Finance staff responsible for the
fight against fraud.

1999

2000

NL

Establishment of district information departments (DIA) in customs districts: regional
risk analysis.

A

P

FIN

S

Reduction of the number of districts from 9 to 7.

Restructuring of the tax information and investigation service (FIOD), incorporation
of the economic control service (ECD) in the FIOD as a separate unit.

Establishment of a central excise service (CPA)in the national customs information
centre (DIC) with control and investigation functions as a point of contact between
customs and the FIOD.

1999

During the period in question most employees of the Austrian customs administration
were engaged in traditional inspections in connection with the customs clearance of
goods.

As the Austrian Government has decided to suspend the recruitment of civil servants,
the numbers are falling slightly.

Decree-Law No 360/99: restructures the Directorate-General for Customs and Excise.

16.02.1999

Order No 705-A/2000: changes to the structures and powers of central and regional
customs services, including antifraud services.

31.08.2000

Decree-Regulation No 27/99: regulates the operation of the national internal system
for control of financial administration (SCI).

12.11.1999

Reduction of number of districts (from 7 to 5) with no change in staff numbers.

1999

Reorganisation of the national customs administration to:

01.03.1999

give priority to the fight against tobacco, alcohol and drug trafficking;

enhance the role of analysis for the control and collection of traditional own
resources.

43

UK

Concentration of all fraud investigations within one National Investigation Service
(although some staff in local offices also undertake some investigative duties).

1999/2000

Ongoing reorganisation within UK Customs and Excise (with effect from 1 April
2001): one group will control all anti-fraud activities within the department.

2000

Multi-disciplinary co-ordination: customs accounting systems aimed at a whole trader
approach to control and debt management.

44

6.2.

Agricultural expenditure

The organisation of agricultural expenditure control services evolved in virtually all the Member
States. The most radical organisational changes consisted either of full restructuring, done or in
preparation, (E, F, P, UK), or more commonly of the establishment of new bodies (B, DK, EL,
IRL, A, P, FIN).

Member
State

B

DK

D

EL

E

Measure

Clarification of the powers of the three departments involved in scrutinising
agricultural expenditure under EAGGF-Guarantee Section (the coordination unit
and first inspection unit, both responsible to the Ministry of Finance, and the second
inspection unit attached to the Ministry of Economic Affairs).

Date

1999

After a cooperation agreement was signed with the Belgian bureau d’intervention et
de restitution (intervention and refund office - BIRB), an internal audit department
was set up within the Economic Inspectorate.

1999

Merger of the two paying agencies (attached to the European Affairs Directorate
and the Structures Directorate within the Directorate for Food) to boost measures to
combat fraud and to reduce the number of irregularities. Decision to set up a special
EAGGF inspection and fraud office to provide general coordination.

01.04.2000

The office is to carry out physical checks under Commission Regulation 2064/97
and coordinate cooperation between customs and tax authorities on the controls
provided for by Council Regulation 4045/899.

Creation of a special expert team responsible for scrutinising all customs documents
relating to refund operations.

Internal audit departments, departments responsible for certification and the
regional offices give priority to the performance and quality of on-the-spot checks
carried out by technical departments.

1999

International seminar organised by the Federal Ministry of Finance on the fight
against fraud for the control bodies referred to in Regulation No 4045/89 (sample
checks on quantities).

June 1999

New approach to ex post checks.

Act No 2637/98, amended in 1999, establishes a body to certify accounts OPILOG
(agricultural products), a paying agency OPEKEPE (EAGGF Guidance and
Guarantee Sections) and an agricultural products certification and supervisory body
OPEGEP.

June 1999

2000

Regional internal audit division set up under Regulation No 1663/95, issuing of
export licences for fruit and vegetables.

2001

Restructuring of
antifraud departments
Investigation Office) to increase the specialisation of officers working in this field.

Information and

(National

central

1999

Reinforcement of staff on checks and inspections under Regulation No 4045/89.

45

F

IRL

I

NL

A

Restructuring of the ACOFA Inspectorate (one of the three departments responsible
for carrying out ex post controls under Regulation (EC) No 4045/89).

1999

Coordination of checks and inspections between customs and ACOFA inspection
services; joint checks and inspections

Establishment of an Internal Control Unit within the Department for Agriculture,
Food and Rural Development (DAFRD) to implement agri-environmental and early
retirement schemes.

December
2000

Refunds: designation of a liaison officer in the internal audit department of refund
paying agencies at each regional branch of the Ministry of Finance.

The countryside department has been designated as paying agency for the purpose
of rural development measures

2000

Establishment of a paying agency in the Agriculture Ministry for rural development
measures (Agenda 2000).

Decembre
2000

Merger between this paying agency and the paying agency for wine (in existence
since 1995) to exploit the potential for rationalisation and improve the effectiveness
of the administration. The new agency’s accounts will be certified by a new
certification body.

P

Reinforcement of the Control department of the National Agricultural Intervention
and Guarantee Institute (INGA)

1999

Improvement of checks by the Inspectorate-General of Finances (IGF) under
Regulation No 4045/89 (EAGGF Guarantee Section).

2000

Restructuring of the IFADAP, covering both operational departments and the
inspection department of the institute (DINS).

2000

Establishment of four functional departments and a bank information unit in the
DINS.

2000

Decree-Regulation No 27/99: regulates the operation of the national internal system
for control of financial administration (SCI).

12.11.1999

FIN

S

fraud and irregularities was

Fight against
strengthened by improving the
cooperation between officials involved, by creating a post for coordination in the
Ministry of Agriculture and Forestry

1999

Standardisation of procedures and controls in the unit responsible for grants on
exports of agricultural commodities and processed agricultural products (unit came
into existence as a result of a merger in 1998).

1999/2000

Intensification of training activities in the controls unit of the Swedish Agriculture
Council

Conferment of powers to conduct ex post checks on marketing aids (Regulation No
4045/89) on the National Agriculture Administration audit unit.

46

UK

Preparation of merger between different paying agencies to form a single paying
agency (with effect from 1 April 2001).

2000

47

6.3.

Structural Funds and Cohesion Fund

Most Member States (DK, D, EL, E, IRL, I, NL, A, P, FIN, UK) have iether redefined or at
least spelled out the respective powers and responsibilities of the various services responsible
for checks and inspections in relation to structural measures. But some of these (EL, E, I, NL,
A, P, FIN) have reorganised on a larger scale than the others.

Measure

Date

Use of an external audit office to meet the obligations deriving from Regulations
Nos 2064/97 and 1260/99.

1999

Administrative separation between the functions of case officer and local inspector

Member
State

B

DK

Reorganisation of the structures managing the ESF and ERDF as a result of
cooperation agreements on financial control concluded with the Commission in
April 1999.

1999/2000

The manpower services department has developed a computerised system to
improve the detection of fraud in connection with training (ESF).

2000

Scrutiny of ESF and ERDF projects by an auditor.

D

Reinforcement of internal controls in certain fields.

1999/2000

EL

E

Managers in some Länder have set up independent control groups responsible for
on-the-spot checks, final approval and annual consultative meetings.

Act No 2860/2000: creation of a Financial Control Committee to supervise the
managers, paying agencies and beneficiaries and make the final declaration of
expenditure for the 2000-2006 Community Support Framework.

2000

Establishment of a special unit at the Ministry of Employment and Social Affairs
responsible for ESF checks and inspections.

Reinforcement of staff on checks and inspections under Regulation No 2064/97 in
the Inspectorates-General of the Autonomous Communities.

IRL

Designation of authorised agents to carry out checks and inspections of operations
co-financed by the Structural Funds and the Cohesion Fund:

establishment of a unit responsible for on-the-spot checks and inspections
of beneficiaries of the ERDF and the Cohesion Fund, and a unit responsible
for control within the framework of the ESF;

May/June
1999

two additional authorised agents attached to the internal audit department
of the Department of Agriculture, Food and Rural Development (DAFRD),
with specific responsibility for financial control of operations co-financed
by the Structural Funds (implementation of Regulation No 2064/1997).

I

Ministerial decree No 4102: sets up an audit commission to issue the certification
provided for by Regulation No 2064/1997 (balance of expenditure for multi-
regional operational programmes).

January 2000

20.07.2000

48

Establishment of a Structures unit in the Ministry of Agriculture and Forests,
responsible for technical and administrative controls and for organising ex post
checks on samples within the framework of the EAGGF Guidance Section.

28.11.1999

Circular No 1378: coordination between external departments of the Ministry of
Employment for the purposes of traditional checks and inspections of training
projects (ESF).

28.11.1999

Draft study on control systems (ESF expenditure); experimental IT project
(ARCA).

2000

Ministry of the Treasury guidelines for the organisation of control systems.

Circular No 4373: defines the powers of the State Forestry Corps regarding
management, payments,
implementing
Regulation No 2080/1992).

and disqualifications

audits

(rules

04.10.2000

NL

Designation of the Ministry of Social Affairs and Employment as the body
responsible for granting ESF aid.

End of 2000

Forms of cooperation launched by the special investigation service of the Ministry
of Social Affairs and Employment:

2000

consultations with other investigation services during the implementation
of the ESF;

criminal investigations opened in cooperation with the prosecution service.

Following shortcomings observed in mid-1998:
review of administrative
organisation for the implementation of URBAN, reinforcement of controls (5% of
eligible expenditure, checks by the Ministry of the Interior accounting officer,
internal audits).

1999

Reorganisation of ESF management and control system to reduce the risk of fraud.

1999

Measures organised by various Ministries aimed at improving the management,
control and supervision of the Structural Funds, covering the period 2000-06.

20.12.2000
(parliamentary
in
review
2001)

A

Transfer of responsibility for horizontal and multi-disciplinary aspects of the
financial control of Structural Funds from the Ministry of Finance to the
Chancellery (from the start of the 2000– 2006 programming period).

2000

Transfer of responsibility for central financial control of the ESF from the Federal
Ministry of Labour, Health and Social Affairs to the Federal Ministry of
Economic Affairs and Labour (BMWA).

01.04.2000

49

P

Decree-Law No 54-A/2000 (amended by Law No 20/2000) to reinforce the
national system of management, follow-up, evaluation and control within the
framework of Community Support Framework III (CSF III) under Regulation
(EC) No 1260/1999:

2000

FIN

S

UK

maintains the three-tier approach;

establishes new procedures for control of the implementation of the
Structural Funds;

confers on the Inspectorate-General of Finances (IGF) the power to
supervise the entire system.

Decree-Regulation No 27/99: regulates the operation of the national internal
system for control of financial administration (SCI).

12.11.1999

The powers and responsibilities of
managing Structural Funds were clarified and strengthened by new legislation

the national authorities responsible for

1999/2000

Reorganisation and adaptation of working methods of the Swedish Labour Market
Office’s (AMS) economic departments.

Manual concerning the organisation of controls in the EAGGF Guarantee Section.

Circulation, on a quarterly basis, of a list of all cases of irregularity by the
Department of Trade and Industry (DTI), enabling all UK authorities to check the
consistency of their records with the DTI’s (following an audit by the European
Court of Auditors).

Guide by the Department of Environment, Transport and the Regions (DETR) on
monitoring of ERDF spending, following three audits of regional Government
Offices.

Transfer of the responsibility for the day-to-day monitoring of ESF controls from
the Department
to the regional
Government Offices.

for Education and Employment

(DfEE)

2000

1999

1999

Establishment of a Fraud Sub-Committee within the DfEE to oversee the
Department’s response to fraud.

1999

Creation of a cross-Government Fraud Response Liaison Group: co-ordination of
investigations where more than one structural fund is involved.

1999

50

7.

COOPERATION BETWEEN COMPETENT AUTHORITIES

Several measures taken during the report periodhelped with the attainment of the objective set by
Article 280(3) of the EC Treaty of close and regular cooperation between the competent authorities of
the Member States and between them and the Commission. These measures show that there is closer
cooperation in relation to own resources than in any other area.

The Commission continues to treat cooperation as a central feature of its antifraud strategy. Its plan of
action 2001-02 provides in particular for an upgrading of cooperation structures and for stronger action
on intelligence gathering and analysis.

7.1.

Own resources

Member
State

B

The regular close cooperation between relevant authorities here is felt
satisfactory by several Member States (B, EL, E, F, A, S).

to be explicitly

Several Member States would like the cooperation to go further and are willing to make extra
efforts (IRL, NL, A, P, S, UK).

Cooperation measures

Date

The existing rules allow close and regular cooperation between the Member States
and between them and the Commission.

The antifraud information system (AFIS) is a useful IT tool much appreciated by
Belgium.

The Belgian VAT and Customs and Excise departments carried out a multilateral tax
audit of two multinational firms. Civil servants from several Member States took part
in the audit meetings.

1999

EL

Customs give priority to mutual assistance and cooperate fully in it, as they believe it
to be most satisfactory (in particular in such vulnerable sectors as tobacco and fuels).

Customs cooperation agreements with Ukraine and Georgia.

Multipartite agreement with the countries of south-east Europe for the fight against
organised crime.

1999/2000

1999/2000

Co-operation agreement between the Office to combat financial crime and its Russian
counterpart.

1999/2000

Customs Cooperation agreement with ex-Yugoslavia now being reviewed.

Negotiations for a customs co-operation agreement with Turkey.

2001-

2001-

Seminar on the fight against fraud in textiles (OLAF/Greece, other Member States).

2000

E

Spain feels that existing cooperation is satisfactory.

51

F

IRL

NL

A

P

Cooperation between the Commission and the French customs authorities is generally
in spite of one or two specific dysfunctions (failure to inform the
satisfactory,
customs authorities in advance,
lack of
coordination with several of the departments involved in carrying out an on-the-spot
inspection or announcing that fraud was suspected without any legal certainty that the
Community rules had been infringed).

involving them in an inquiry too late,

Cooperation is particularly extensive in the field of external investigations and the
coordination of anti-fraud measures.

Regular reports on cases of mutual assistance should be sent to the competent
authorities in the Member States.

Cooperation efforts between the Irish customs and the corresponding departments in
other Member States.

1999/2000

Joint statement of intent by Dutch and UK customs to reinforce collaboration
regarding information exchanges and the fight against fraud.

1999

Project to establish a central point in the customs information centre (DIC) for
contacts with OLAF for the tax administration.

1999

Austria considers that mutual assistance is operating efficiently and that cooperation
is very good although, in certain cases, better co-ordination by OLAF would be
desirable.

Customs 2000 activities need to be continued to attain a uniform and harmonious
level of risk analysis.

Intensification of coordination efforts between all controlling agencies and with
OLAF and other Commission departments.

1999/2000

FIN

Operational cooperation agreements (customs/police/border police) extended to
Estonia, Latvia and Lithuania.

2000

Nordic cooperation procedures (network of customs and police correspondents
dealing with drugs and organised crime, regular meetings).

End of 2000

Administrative customs cooperation and assistance agreements with Poland, Ukraine
and Slovakia (organised crime).

2000

Intensive training on the common agricultural policy for Polish customs experts.

2000

Agreement with Russian customs authorities on fraud prevention (beef and pork
exports to Russia, rapprochement with OLAF data).

Early 2001

S

The Department to combat economic crime is responsible nationally for:

01.07.2000

coordinating measures taken in Sweden to combat fraud, other irregularities and
misuse of Community resources,

liaison with OLAF.

Establishment of relations with OLAF for reporting cases of fraud and irregularities,
joint reflection on ways of further developing existing forms of cooperation.

52

Sweden states that the co-operation with OLAF and the other Member States under
Regulation No 515/97 is good.

1999/2000

UK

Close and regular co-operation exists between competent authorities, as illustrated by
:

1999/2000

the UK’s deployment of customs and revenue liaison officers to work with the
corresponding authorities in 8 other member states;

the conclusion of bilateral Memoranda of Understanding with France, the Republic of
Ireland and the Netherlands;

Customs’ co-ordinated approach to Mutual Assistance Requests (single point of
contact).

Establishment of a customs intelligence team, in order to develop intelligence in all
areas of commercial customs fraud and to serve as a liaison point for other European
customs intelligence services.

2000

53

7.2.

Agricultural expenditure

Judging by the Member States’ replies, cooperation is less highly developed in matters of agricultural expenditure
than in the foregoing area. But closer links were established between the Commission and certain Member States
(EL, IRL, P S) during the report period.

Member
State

Cooperation measures

Date

EL

F

IRL

P

FIN

Co-operation between national authorities and the Commission is felt to be very
good.

The French authorities have drawn OLAF’s attention to the need to inform the
competent national administrations so that the necessary interim measures can be
taken.

investigations by OLAF, Department of Agriculture, Food and Rural
Joint
Development (DAFRD) and the Department of Agriculture of Northern Ireland
(DANI) - milk products (frontier regions).

1999/2000

the
Cooperation efforts with DANI, auditors of
Commission and the European Court of Auditors, concerning the EAGGF Guarantee
Section.

the Certification authority,

Organisation of OLAF/DAFRD seminar on risk management and protection of
directs payments from the Community.

October
2000

Intensification of coordination efforts between all controlling agencies and with
OLAF and other Commission departments.

1999/2000

Fight against fraud and irregularities was strengthened: cooperation between officials,
OLAF and the Russian authorities on verification of import documents (EAGGF
Guarantee Section expenditure).

Cooperation with the Russian authorities on the verification of import documents,
organisation of training sessions for customs officers and other Russian civil servants

54

7.3.

Structural Funds and Cohesion Fund

Although less highly developed than in matters relating to own resources, cooperation in the
area of structural measures is relatively active in certain Member States (IRL, FIN, S, UK).

Member
State

Cooperation measures

Date

B

EL

Organisation of annual meetings with the Commission (covering three Structural
Funds) to coordinate checks and inspections

Measures to grant ESF and cofinancing funds on an integrated basis

Cooperation between national and Commission departments responsible for checks
and inspections, OLAF and the European Court of Auditors is felt to be satisfactory
(protocols on periodic checks and inspections).

An investigation is in progress regarding questions where OLAF needs to be
involved.

IRL

Consolidation of cooperation with the Commission,
management authorities and executive agencies.

the Department of Finance,

1999/2000

I

P

The DAFRD has organised seminars and exchanges with the applicant countries,
twinning arrangements with Poland.

The central department of the Ministry of Employment organised a meeting with
the Commission and Italian national and regional
representatives of OLAF,
to clarify the scope of Regulation No 1681/94
administrative authorities
(irregularities).

1999

Italy then prepared a document simplifying the form to be used for reporting
irregularities to OLAF.

Intensification of coordination efforts between all checks and inspections agencies
and with OLAF and other Commission departments (bilateral protocols between the
Inspectorate-General of Finances and the Commission).

1999/2000

FIN

training for Finnish civil

Joint
authorities/Commission, OLAF.

servants

in inspection services

(Finnish

Intensification of cooperation between authorities

Rules and instructions concerning good reporting practice under Regulations (EC)
Nos 595/91 and 1681/94 (rural development measures and agricultural expenditure)
were updated and consolidated.

Control systems improved (databases)

S

UK

Establishment of relations with OLAF for reporting cases of fraud and irregularities,
joint reflection on ways of further developing existing forms of cooperation.

The DfEE has worked closely with the Commission/OLAF (the Fraud Response
Liaison Group includes in its membership a representative of OLAF).

October
1999

1999/2000

May 2000

55

8.

THE RECOVERY ISSUE

The Commission’s questionnaire to the Member States for the report period dealt more specifically
with the question of recovery. In particular the Commission asked the Member States about the
priority attached to Community financial interests in the event of the debtor’s default in the recovery
context. In general terms (there exceptions), the Community’s financial interests are on an equal
footing with national interests in the event of the tax debtor’s default, and Community claims are not
treated as priority claims.

The following table shows the measures adopted by the Member States to improve recovery of own
resources and wrongful payments, as well as providing some more general observations on the subject.

8.1.

Own resources

Member
State

B

Three Member States report new measures regarding recovery (DK, I, UK).

Measures aimed at improving recovery of uncollected resources and wrongful payments

The Belgian General Customs and Excise Act provides for a right of precautionary enforcement, a
privileged lien on the movable property of persons liable to pay customs or excise duties and a legal
mortgage on all these persons’ immovable property.

In the event of enforced execution (seizure) against the assets of the judgment debtor or of voluntary
payment pursuant to a court order, the order of priority of claims is import duties first, then excise
duties second.

Investigations carried out by the Belgian authorities have made it possible to recover substantial
amounts.

DK

Generally speaking, in Denmark Community claims enjoy the same status as national claims in the
event of recovery following an abuse.

The Customs Credit (Access Conditions) Act (Act No 228) has been amended The national customs
and tax authorities may now demand that firms wishing to join the customs credit scheme supply
the central customs and tax administration with certain financial information and information on
expected imports when registering for the scheme or changing their registration details.

Similar rules have also been established for operators exporting dutiable goods.

It is now also possible to deprive firms of their access to customs credit where there is reason to
believe that there is a risk that customs import duties will not be paid.

The legal basis for recovery is the combined provisions of the national Customs Code and
Regulation No 2913/92 laying down the Community Customs Code, plus the Code of Public
Revenue. National and Community interests are on an equal footing.

Section 379 of the French Customs Code establishes the same status for duties that constitute own
resources and the national taxes levied on imports of goods. The Customs Administration has a
preferential claim over all other creditors.

EL

F

56

I

L

NL

A

S

A major legislative reform was made in 1999 to improve the results of recovery and regulate
relations with concessionnaires (Act No 337, Legislative Decrees Nos 46, 112 and 326, Joint Decree
- Finance and Treasury - No 321, Ministerial Notes Nos 1584/VIII and 2488/VIII).

In 2000, recovery procedures (direct taxes) were updated by various legislation, regulations and
administrative provisions.

The Audit Department, which is responsible for carrying out external audits of economic operators,
combats fraud involving traditional own resources is very effective. Recoveries of own resources by
the Department total LUF 15 510 783 for 1999.

The rate of recovery in the ten cases of fraud listed in the 1999 annual own resources report was 100
%.

No measure has been taken to improve the recovery of own resources. But claims by the tax
departments have priority status.

The current scheme for recovery of traditional own resources is insolvency with no priority ranking
of creditors. There is therefore no priority for the recovery of public, including Community, claims.

The rate of collection of traditional own resources amounts to 99.92%.

B resources are far less important than in other Member State.

UK

Interest charged on customs debts was introduced in April 2000.

The Central Community Transit Office has reviewed its debt recovery procedures (speedier
notification to traders and guarantors regarding undischarged transits).

In early 2000 the recovery of customs debts was fully integrated into Customs arrangements for
recovering other duties and taxes.

Although customs duties and agricultural levies are non-preferential debts in the event of debtor
default, the majority of debts are paid or otherwise secured either at the time or before they are
incurred.

57

8.2.

Agricultural expenditure

Regarding the recovery of agricultural expenditure, ten Member States adopted new measures in
the report period (B, DK, EL, F, IRL, I, A, P, FIN, UK).

Three Member States state that there is a priority claims arrangement (EL, IRL, I).

Member
State

Measures aimed at improving recovery of uncollected resources and wrongful payments

B

The Belgian intervention and refund agency has adopted two noteworthy measures:

DK

EL

F

a new computerised system (IRIS) will centralise on computer all the data concerning
debtors and the near-automatic creation of a new debtor file where there is a refund
problem;

the agency has set up a debtors unit.

Improvements regarding the management of the debtors account have resulted in no losses on recent
claims, and most old claims have been recovered.

The implementation of a new system for managing securities and, in parallel, for supporting exports
has also helped to cut the risk of loss.

Act No 2520/97, as amended in 1999, gives debts to the State priority; amounts concerned by
irregularities in agriculture are returned after offsetting, plus interest at the rate determined by the
law.

The Interministerial Coordinating Committee for Inspections (CICC-EAGGF Guarantee Section
division) has stepped up its recovery activities on the basis of ex post inspections under Regulation
No 4045/89. A database has been set up and is updated every quarter by the paying agencies.

One of the obstacles to rapid recovery lies in the fact that recipients of aids wrongly paid are
increasingly inclined to contest the decision in court.

The principle of transferring the centralisation of reports under Regulation No 595/91 from the
Directorate-General for Customs and Indirect Taxation to the CICC was adopted at the end of 1999.

IRL

In general terms, the same priority is given to the recovery of Community claims as to the recovery
of national claims.

In 2000 additional resources were set aside for the recovery of claims under the agri-environmental
and early retirement schemes.

The Headage/Premia programme makes provision for reducing future payments to a debtor on the
basis of the debts incurred in connection with different Community schemes.

I

Italy’s agricultural intervention agency (AIMA) enjoys a special legal status as paying agency.

A Bill introduced by the Ministry of Finance would extend its privileges to other fields.

In 1999, various recovery measures were adopted.

58

A

P

FIN

UK

The Austrian agricultural expenditure payment agency, (AMA), has set up a unit specifically
responsible for the recovery of outstanding claims.

AMA is further empowered to offset amounts outstanding from a recipient against other amounts
payable to the same recipient.

As a result, 95% of all claims are recovered at low cost by offsetting within a year or two.

The National Agricultural Intervention and Guarantee Institute (INGA) has improved the computer
system used for recoveries and adapted the recovery rules.

More frequent use of the claims offsetting system has speeded up the recovery process.

Instructions for the recovery procedure updated, centralised database put into operation (especially
for monitoring recoveries)

High priority is given to recovery of agricultural expenditure (on the basis of revised instructions for
1999-2000).

During 2000, the Ministry of Agriculture, Fisheries and Food reviewed all debts that had been
outstanding for more than two years.

59

8.3.

Structural Funds and Cohesion Fund

Member
State

DK

EL

F

IRL

I

A

P

S

New measures relating to structural measures recovery were less frequent: they concern only
four Member States (F, S, FIN, UK).

Measures aimed at improving recovery of uncollected resources and wrongful payments

Improvement of the management of debtors accounts (EAGGF-Guidance) thanks, in particular to
the establishment of the new Directorate of Food, Fisheries and the Agri-food Industry.

The Danish labour market administration has increased the responsibility of regional authorities for
European Social Fund grants.

The procedure provided for by Joint Ministerial Order 2007892/461/27.5.98 relating to the recovery
of amounts wrongly or
illegally paid from national or European Union resources in the
implementation of Community policies is commenced for all reported irregularities, irrespective of
the amount.

Recoveries are regularly monitored by the Employment Ministry on the basis of inspection reports
from regional inspectorates. In 1999, circular DGEFP 99/21 spelled out the procedure for recovery.

Ireland has not felt the need to improve the existing system for the recovery of amounts paid under
structural measures.

Once the administrative act of self-protection has been taken, enforced recovery by the State-
approved body of lawyers becomes possible.

As regards the ESF and ERDF, there are provisions whereby the departments empowered to
authorise or pay grants may require the recipient to immediately repay the grant or suspend payment
in certain clearly defined cases (including delays, obstacles or modifications to the project, failure to
notify the documentary evidence asked for where a reminder has been issued, diversion of funds
received and where it is impossible to check that the grant application is well-founded).

In additional to these procedures, some departments demand a supplementary guarantee specifically
in the case of (ERDF) Community funds, with the result that recovery is guaranteed whatever
happens.

In the EAGGF-Guidance Section, the IFADAP offsets claims to recover amounts wrongly paid to
beneficiaries.

The manual of economic administration of the AMS has been updated.

The Swedish agriculture council has launched a project to increase the effectiveness of procedures
to recover environmental aids wrongly paid.

Directives for the management of reimbursements and notification of irregularities in connection
with FIFG aids are being drafted.

FIN

Recovery measures have been backed up by new legislative measures. Changes have been made to
recovery and checks and inspections monitoring systems (2000).

60

UK

Regarding the ERDF, the recovery of grants obtained wrongly or fraudulently is regarded as an
absolute priority.

The Department for Environment, Transport and the Regions (DETR) has made progress with the
revision of its fraud/irregularity database and guidance notes issued to the Government Offices in
the regions.

Regarding the ESF, the Department for Education and Employment (DfEE) has established a
scheme for detecting and recovering wrongful payments (possibility to block payment of new ESF
grants until a debt has been settled, possibility to deduce the amount of the debt from payments still
to be made), which has brought the recovery rate close to 100 %.

The Department also acts at the request of the Community in accordance with the relevant
legislation.

61

9.

HIGHLIGHTS OF THE FIGHT AGAINST FRAUD

In general terms, the changes made in antifraud practices in the report period concern first and
foremost the Member States’ control techniques.

9.1.

Own resources

In practice, the fight against fraud in relation to own resources in 1999-2000 was marked by the
adoption or amendment of protocols or methods checks and inspections in several Member
States (B, EL, E, I, FIN).

Fraud information systems were also covered by new measures, some of them concerning
computer systems, in four Member States (B, DK, EL, I). And certain Member States (EL, I, S)
made special training efforts.

Member
State

B

Highlights

Belgium plans to set up inspection cycles as part of the strategic plan for 2000-2002
adopted by customs and excise in 1999, which should help to direct inspection visits
more effectively towards fraud.

Customs and excise has set up a criminal analysis file (ACRIDA) in addition to the
customs information system (a judicial file relating data on crime to other significant
data).

Date

1999

1999

DK

Initiatives by the committee to coordinate the fight against financial crime in the
public sector:

a project
to strengthen cooperation and exchanges of information between the
authorities responsible for combating financial crime. The proposals gave the same
weight to financial crime involving the Union’s own resources as to financial crime
involving national taxes;

April 1999

the drafting of the information sheet “Who does this company belong to?” aimed
specifically at identifying the owners of companies and the investigations to be
conducted where public funds have been transferred to a company.

2000

EL

Protocol of agreement with the association of chemical industries (diversion of drug
precursors).

1999/2000

Negotiations for a protocol of agreement with the association of customs agents.

2001-

Preparation
(Customs/Justice/Police).

of

protocols

for

co-operation

against

financial

crime

2001-

Training in relation to counterfeiting and utilisation of protocols of agreement.

2000

62

E

I

Gradual implementation of integrated customs data system (OPST), including risk
analysis in intelligence and investigation.

October
2000

Instruction on export refunds by the Customs and Excise Directorate/EAGGF-
Section (Protocol for co-ordination of controls).

May 2000

into national

Transposal
regarding transit
(Regulation (EC) No 2787/2000 and EC/EFTA Decision No 1/2000 on common
transit)

innovatory aspects

legislation of

2000

Internal customs audit: Establishment of a commission responsible for drafting audit
manuals concerning traditional own resources.

1999

External customs audit: Execution of audits of firms in favour of the project
(experimental audits for the purposes of Decision No 210/97/EC).

1999

Draft from the Guardia di Finanza to optimise the operations of its customs and own
resources departments (under the Community “Customs 2000” programme).

Adaptation of the Guardia di Finanza’s information systems to reinforce risk analysis
(goods on arrival), intensify checks and inspections of international road traffic and
improve checks and inspections on firms doing international business.

November
1999

1999

Trends:

gradual replacement of concomitant controls by ex post controls;

gradual use of IT systems to develop risk analysis;

better co-operation between civilian and military bodies.

FIN

Finland recalls action taken on several fronts since 1995.

Common strategy on information technology (Customs 2000).

Strategy on quality of customs controls.

S

UK

Renewal of white-collar crime customs prevention programme (co-operation between
police, customs, revenue and recovery authorities).

2000

Organisation by the SLCE of training sessions and seminars on the fight against
economic crime (for judges, the police and economists responsible for combating
fraud).

Autumn
1999/spring
2000

Sweden states that customs services have relatively advanced IT facilities (in
comparison with the other Member States).

Sustained efforts to reform transit legislation in order to combat fraud (support of
European-wide measures, preparation of national plans to improve compliance with
Community Transit).

1999/2000

Development of national legislation to create a customs civil penalty regime.

2000

63

9.2.

Agricultural expenditure

The highlights in developments in practice relating to agriculture expenditure concern the review of checks and
inspections methods, several Member States having modified their techniques (B, EL, F, IRL, S) or he rules
governing internal cooperation between control services (DK, F, S, UK). Two Member States report that they
increased the staff of these services (E, F).

There were also a significant number of training sessions devoted to the protection of agricultural expenditure (B,
F, IRL, FIN, S).

And three Member States (F, P, UK) modified their information systems for the detection of irregularities.

Date

1999

2000

2000

1999

Member
State

B

Highlights

Improvement of controls in the agricultural field with the aid of various instruments
(inspection strategy and manual, special training for national inspectors, a new system
for monitoring cases, improvements to the graphic encoding of agricultural holdings).

Experience shows that many of the irregularities committed by producers involve small
sums only.

DK

Amendment by the central customs and taxation authority and the Directorate of Food,
Fisheries and the Agri-food Industry of the cooperation agreement concluded on
inspections.Introduction of cooperation mechanisms to step up the fight against fraud
and irregularities.

EL

Decree on additional measures to contrail table olive oil production.

E

F

Practical measures for the management of EAGGF Guarantee Section payments
(electronic monitoring of letters of guarantee and of wrongful payments).

Increase in control staff (Inspectorates-General of Autonomous Communities,
particular).

in

Establishment of a national office.

France has focused on developing group inspections selected on the basis of risk
analysis, which is regularly remodelled, and on cross-checking data from various
sources.

The aim is to carry out several on-the-spot checks and inspections at the same place.

64

Improvements to the quantity and quality of the system for on-the-spot monitoring of
direct aid:

1999

extension of the percentage of agricultural land monitored by remote sensing(40%).
Introduction of computer-assisted photointerpretation;

internal quality controls have been improved (harmonisation of the manuals of
procedure, monitoring of internal performance and “re-performance”;

a single control department has been set up in the body paying cereal aid and the
number of management staff in the central and regional departments responsible for
monitoring agricultural surfaces has been increased;

training (Ministry of Agriculture, paying agencies).

Regular examination of common market organisation controls based on the reports by
the departments responsible for inspections.

1999

Expansion of exchanges between the ACOFA inspection department and the customs
service (information and reciprocal access for
inspectors to training sessions,
exchanges).

1999/2000

IRL

Audits carried out upstream and downstream in accordance with Community
guidelines.

1999/2000

Personnel exchange programme between DAFRD and DANI.

2000

New irregularity cases within the framework of Regulation No 595/91:

66 cases in 1999.

46 cases in 2000.

Improvement to supervisory, control and administration procedures in connection with
Headage/Premia.

2000

Training schemes organised by the Irish Training Advisory Board.

2000

Implementation of Article 20 of Regulation (EC) No 800/1999: exporters now asked
for evidence of arrival at destination, whether refunds are or are not differentiated.

Since
1999

July

Use of computerised systems for checking land use (olive- and vine-growing sectors).

1999

Priority for physical checks on applicants before payment.

1999

Training of customs officers regarding checks and inspections on export aids
(Regulation No 4045/89).

Organisation by the SLCE and the Swedish Agriculture Council of training sessions
and seminars on the fight against economic crime (for
the police and
economists responsible for combating fraud) and specific training for desk officers and
inspectors in the national agriculture administration.

judges,

Autumn
1999/spring
2000

NL

P

FIN

S

65

Orientation of controls in the light of the objectives set for each type of aid:

export aids: Sweden reports technical adaptations (electronic transmission of reports)
so that controls are better monitored, with participation in several bilateral and
European coordination meetings and tougher requirements regarding national controls,
above and beyond Community obligations;

direct aids to agriculture: close cooperation with the controls unit of the national
training
agriculture administration and the 21 counties (evaluation of controls,
measures, preparation of instructions for counties).

Following shortcomings detected with the Russian customs authorities, Sweden
decided to extend checks on formal legality of import licences to other countries.

1999/

2000

Three firms were referred to SLCE for additional investigations in relation to export
aids.

2000

A new directive concerning ecological agriculture sets out to simplify and clarify the
rules so as to reduce the risks of error and fraud.

2000

UK

Regular meetings of an inter-departmental group, chaired by the Ministry of
Agriculture, Fisheries and Food, in order to discuss implementation of Regulation No
595/91 and to provide a co-ordinated approach to investigation work within the
framework of the CAP.

Relaunch of the freephone fraud line by the Anti-Fraud Unit of the Intervention Board
Executive Agency (IBEA).

December
1999

The Intervention Board Executive Agency makes extensive use of risk assessment and
information stored on its anti-fraud database to identify any areas or traders that might
appear more susceptible to fraud.

66

9.3.

Structural Funds and Cohesion Fund

The main new measures introduced in antifraud practice regarding structural measures seek to promote
cooperation between the various departments responsible for checks and inspections within the Member State (EL,
IRL, NL, A, P, S).

Secondly, certain Member States highlighted training (DK, FIN, S, UK) or staffing (E).

Member
State

Highlights

Date

B

DK

EL

E

IRL

Belgium points out that inspections by external auditors are based on risk analysis.

Revival of the interministerial committee (set up in 1996) to debate inspection and
fraud issues related to Structural Funds resources.

Organisation of a seminar, jointly with OLAF, on the fight against fraud and
other irregularities causing losses to the Community budget, particularly in
connection with Structural Funds.

September
2000

Controls are planned on a systematic basis, sample checks and inspections are based on
risk analysis (notably at the execution stage so as to prevent or correct irregularities in
real time).

The annual reports by the Director-General of the general State accounts office record
confirmed irregularities and their authors.

Increase in control staff (Inspectorates-General of Autonomous Communities,
particular).

in

Audit agreements between the ESF Internal Audit Unit and other government
departments and agencies under a general audit programme within the framework of
the ESF (approved by the Commission in January 1999).

Series of audits by the Department of Environment and Local Government within the
framework of the implementation of the Cohesion Fund.

June-
December
1999

The system in place in Ireland within the framework of the ERDF, the Cohesion Fund,
the ESF and the EAGGF Guidance Section offer relatively satisfactory protection of
the Community’s financial interests.

I

The central department of the Ministry of Employment prepared a paper defining the
concept of administrative irregularity to be reported to the Commission under
Regulation No 1681/1994. A general note on the subject is in the pipeline.

2000

Proposal by the Employment Ministry for simplification of the form used to transmit
data to OLAF (under Regulation (EC) No 1681/94)

NL

New practices in ERDF: advances limited to 80% of the total grant, and accountant
reports on final statement on a project.

Agreements between the special investigation service of the Ministry of Social Affairs
and Employment and the police and relevant judicial bodies.

67

A

FIN

S

Cooperation between the authorities responsible for financial control, representatives of
the Länder and the Federal Court of Auditors is periodically ensured by the Federal
Ministry of Finance and, since November 2000, by the Chancellery.

1999/

2000

With some minor shortcomings, the results of the inspections are considered to be
highly satisfactory.

1999/2000

Training regularly given to authorities responsible for supervising and checking the use
made of Structural Funds.

1999, 2000

Database for employment and economic development Centres (project control system).

2000

Organisation by the SLCE of training sessions and seminars on the fight against
economic crime (for judges, the police and economists responsible for combating
fraud).

Autumn
1999

Spring
2000

Organisation by the Swedish authorities of various training measures, and adoption of
guidelines and structures for cooperation to harmonise and improve checks and
inspections under Regulation No 2064/97.

May-
September
1999

Development of specific training for secretariats of decision-making groups involved
in implementing measures under the EAGGF Guidance Section.

1999

Close cooperation between the national agriculture administration and operational units
and counties in connection with the EAGGF Guidance Section.

Reinforcement of cooperation between the various authorities managing structural
measures (including Interreg), notably by sharing experience and through seminars.

Implementation of checks and inspections in connection with structural measures, in
accordance with a plan agreed with the Commission and on the basis of a special
training manual and module.

A common database for measures financed by the Structural Funds has been
developed.

As regards the ESF, procedures for information exchanges between the various
authorities involved could be improved.

UK

The Department of Education and Employment (DfEE) has established a programme
of internal audits as well as an information campaign aimed at heightening the
awareness of staff involved in controls in the framework of the ESF.

68

10.

ADDITIONAL TEXTS ON PROTECTING THE COMMUNITY’S FINANCIAL INTERESTS

10.1. Key elements and the state of ratification of the 1995 Convention and its Protocols

As things stand, the Convention on the protection of the European Communities’ financial interests of
26 July 1995 and the additional protocols signed in 1996 and 1997 (the PFI instruments), which were
adopted under the Third Pillar of the Treaty on European Union, should in principle be the first
important elements of a common base for the criminal protection of the Union’s financial interests, as
they deal with aspects of substantive criminal law and judicial cooperation in this field. The existence
of harmonised definitions and penalties for certain offences under the various national criminal law
systems and Member States’ obligations to provide judicial assistance, to cooperate in matters of
extradition and to transfer and centralise prosecutions - to list just a few of the important elements
contained in the instruments - would considerably strengthen the protection of the Community’s
financial interests that are particularly at risk as a result of the fragmentary nature of the European
criminal-law enforcement area.

69

The following table sets out the principal instruments contained in each of the instruments:

1. Convention on the protection of the European Communities’ financial interests of 26 July 1995: 57

– definition of Community fraud;

– obligation of Member States to make it a punishable offence, to establish their powers on the basis of territoriality, to
cooperate, to centralise prosecutions and to extradite;

– obligation of Member States to make heads of companies criminally liable.

2. First Protocol of 27 September 1996:58

- definition of corruption affecting the EC’s financial interests;

– obligation of Member States to make it a punishable offence59.

3. Protocol of 29 November 1996 on the interpretation of the PFI Convention and its Protocols by the Court of Justice. 60

4. Second Protocol of 19 June 1997:61

– obligation of the Member States, with regard to the offences listed in the PFI instruments, to make money-laundering62
an offence and to provide for the responsibility of legal persons;

– obligation of Member States to seize and confiscate the instruments and proceeds of these offences;

– rules on cooperation between the Commission and the Member States and on data protection.

57

58

59

60

61

62

Convention on the protection of the European Communities’ financial interests of 26 July 1995 drawn up on the basis of
Article K.3 of the Treaty on European Union (OJ C 316, 27.11.1995).
Protocol of 27 September 1996 drawn up on the basis of Article K.3 of the Treaty on European Union to the Convention on
the protection of the European Communities’ financial interests (OJ C 313, 23.10.1996).
The “Anti-corruption” Convention of 26 May 1997 takes over the substantial provisions of the First Protocol, but without
limiting its scope of application to the protection of the Community’s financial interests only (OJ C 195 of 25 June 1997).
Protocol of 29 November 1996 drawn on the basis of Article K.3 of the Treaty on European Union on the interpretation, by
way of preliminary rulings, by the Court of Justice of the European Communities of the Convention on the protection of the
European Communities’ financial interests (OJ C 151, 20.5.1997).
Second Protocol, drawn up on the basis of Article K.3 of the Treaty on European Union to the Convention on the protection
of the European Communities’ financial interests (OJ C 221, 19.7.1997).
For a definition of money laundering, the Second Protocol refers to Directive 91/308/EC.

70

Progress with ratifications
notified to the Secretariat-General of the Council of the European Union at 22.02.2001

PFI Convention
(26.7.1995)

1st
(27.9.1996)

Protocol

2nd
(19.6.1997)

Protocol

ECJ
(29.11.1996)

Protocol

B

not
submitted
Parliament
ratification

yet
to
for

not yet
to Parliament
ratification

submitted
for

not yet
to Parliament
ratification

submitted
for

not yet submitted
to Parliament for
ratification

DK

02.10.2000

02.10.2000

02.10.2000

02.10.2000

D

24.11.199863

24.11.1998

ratification
expected
short term

in

not
the

Act adopted but
ratification
not
notified

EL

26.07.2000

26.07.2000

26.07.2000

26.07.2000

E

F

IRL

I

L

20.01.2000

20.01.2000

20.01.2000

20.01.2000

04.08.2000

04.08.2000

04.08.2000

04.08.2000

ratification
process
underway

ratification process
underway

ratification process
underway

ratification
process underway

Act adopted but
not
ratification
notified

adopted

Act
ratification
notified

but
not

ratification
process
underway

ratification process
underway

internal
consultation
underway

NL

Act adopted but
not
ratification
notified

ratification process
underway

ratification process
in motion

Act adopted but
not
ratification
notified

ratification
process underway

Act adopted but
not
ratification
notified

A

21.5.1999

21.5.1999

not
ratification
expected before the
end of 2002

21.5.1999

P

15.01.200164

15.01.2001

15.01.2001

15.01.2001

63

64

The Act of 10 September 1998 on the protection of the European Community’s financial interests entered into force on 22
September 1998.
The ratification Act was adopted on 15.12.2000.

71

FIN 18.12.1998

18.12.1998

S

10.6.1999

10.6.1999

internal
consultation
underway

internal
consultation
underway

18.12.1998

10.6.1999

UK

11.10.1999

11.10.1999

11.10.1999

11.10.1999

Source: Council of the European Union, Agreements Office

NB. The date of ratification may differ from the notification, which marks the entry into force in the Member
State concerned.

72

10.2. Measures adopted implementing the Convention and its Protocols

Member
State

B

During the report period, 11 Member States (B, DK, EL, F, IRL, I, NL, A, FIN, S, UK) adopted or at
least prepared measures for the implementation of the Convention of 26 July 1995 and its Protocols. The
concept of corruption received for the special attention if some of them (B, DK, F, NL, S).

Two Member States adopted new legislative provisions to combat laundering (B, FIN), and a third
amended its Criminal Code to boost measures against VAT fraud (DK). The Commission welcomes this
as its plan of action 2001-02 envisages reinforcing cooperation in the fight against laundering and VAT
fraud.

Measure

Date

Amendment of the criminal law to strengthen the protection of the Community’s
financial interests:

1999

Act of 4 May 1999: establishment of the criminal liability of legal persons;

Act of 10 February 1999: extends the prosecution of corruption to cases involving
civil servants of a foreign country or serving in an international public-law
organisation and introduces the notion of private corruption;

Royal Decree of 28 December 1999 and Act of 22 April 1999 amending the Money
Laundering Act of 11 January 1993: establishes an exception from professional
secrecy in cases of suspected money laundering and extends the list of financial
bodies required to notify suspected cases of money-laundering;

Act of 7 May 1999 and Royal Decree of 6 May 1999: increasing the supervision of
gaming.

73

DK

Act No 228 made the following amendments to the Criminal Code:

04.04.2000

serious VAT fraud is subject to the same penalties as serious tax fraud (4 years
imprisonment);

the limitation period for VAT offences (failure to pay the tax or unauthorised
collection) is increased from 5 to 10 years;

foreign officials and officials working for international organisations guilty of active
corruption face the same penalties as Danish officials committing the same offence;

foreign officials working for international organisations guilty of passive corruption
face the same penalties as Danish officials;

a new general stand-alone provision in the Criminal Code makes fraud involving
Community resources a criminal offence;

the offence of receiving stolen goods has been introduced where the offence
committed previously was active or passive corruption in the public sector or fraud
involving Community resources;

legal persons are now criminally liable in cases of active corruption in the public or
private sector or in cases of fraud involving Community resources. The offence of
receiving stolen goods has also been introduced for companies in cases of active
corruption in the public or private sector or in cases of fraud involving Community
resources.

EL

F

IRL

I

Acts Nos 349 and 281: increase the period of limitation for criminal liability from
two to five years for offences committed in the fields of agriculture or fisheries.

May/June
1999

Act No 2803/2000 ratifying the PFI Convention and the 3 related Protocols.

03.03.2000

Act No 200-595: adapts the French Criminal Code to the Dublin Protocol and the
Convention on the fight against corruption involving officials of the European
Communities or officials of the Member States of the European Union (making active
and passive corruption involving officials and members of Community institutions, as
well as officials of other Member States, a criminal offence).

30.06.2000

Criminal Justice (Theft and Fraud) Bill: will permit ratification of the Convention for
the protection of the financial interests of the European Communities (1995) in 2001.

30.06.2000

Decree-Law No 507: decriminalises offences of smuggling involving amounts of less
€
4 000, in accordance with the Convention (decriminalisation does not apply to
than
foreign tobacco products).

31.12.1999

Act No 300 (Annex A):

29.09.2000

the first Protocol (1996) and the
ratifies and implements the 1995 Convention,
Protocol on the interpretation of the Convention by way of preliminary rulings by the
Court of Justice of the European Communities;

introduces the concept of receiving aids to the detriment of the State in the Criminal
Code, lowers the threshold for criminal proceedings in respect of aids wrongfully
received.

74

NL

A

S

Adaptation of the Dutch Criminal Code to meet the obligations under the Convention
and the 1996 Protocols (definition of active and passive corruption, extension to
international and foreign civil servants, introduction of a criminal provision regarding
fraud involving Community subsidies).

Bill to make fraudulent conduct an offence.

Bill to amend the legislation on corruption (intentional use of grants for purposes
contrary to their true purposes).

Longer terms of imprisonment for smuggling and the evasion of taxes and duties.

1999

2000

1999

The Swedish parliament has passed legislative amendments to give effect to the
requirements of the Convention and the protocols ratified:

1 July 1999
(entry into
force)

introduction of an offence of diverting grants in the Criminal Code;

extension of liability for corruption offences to situations where the undue advantage
is for the benefit of a person other than the person whose exercise of a function may
be influenced by the act of corruption.

UK

Entry into force of Part I of the Criminal Justice Act 1993, enabling the UK to ratify
the Convention and its Protocols.

01.06.1999

The jurisdiction required by the first indent of Article 4(1) of the Convention was
conferred by these provisions.

75

TITLE III: STATISTICS AND ANALYSES

11.

FRAUDS AND IRREGULARITIES

As the Commission emphasised in its last report, the fight against fraud concerns any
illegal act which has a negative impact on the budget of the European union; however, as
the type of illegal act can vary enormously, it is useful to distinguish clearly between cases
of “fraud” in terms of criminal law and cases of simple “irregularity”.65 Whereas OLAF
concentrates deliberately on the most serious cases, that is firstly cases of fraud, the
Member States are required by the regulations applicable66
to communicate to the
Commission, in addition to cases of fraud, any other irregularity whose budgetary impact
exceeds certain limits. This is the reason why the Commission called on the Member States
to choose a more homogeneous approach in distinguishing between these two different
categories.

At the present time, however, OLAF is not in a position to present two distinct snapshots in
this report, in accordance with the wish expressed by the Council67, for the phenomenon of
fraud and other irregularities. The Member States transmit some information on matters
which could constitute a fraud68. However practices differ in the Member States so that any
such distinction would be arbitrary. For example, Germany and Italy are much more
prepared to recognise the potentially criminal dimension of certain acts than other Member
States.

The Office is conscious of the practical difficulties involved in distinguishing between
‘frauds’ and ‘irregularities’. Whereas a simple “irregularity” in a transaction may be
detected by the administrative authorities on the basis of factual information gathered
within a relatively short time-scale, the detection of the fraudulent (and therefore criminal)

65

66

67

68

“Irregularity shall mean any infringement of a provision of Community law resulting from an act or omission
by an economic operator, which has, or would have, the effect of prejudicing the general budget of the
Communities or budgets managed by them, either by reducing or losing revenue accruing from own resources
collected directly on behalf of the Communities, or by an unjustified item of expenditure’ ( Council Regulation
(EC, Euratom N°2988/95: OJ L 312, 1995).
Fraud: “affecting the European Communities' financial interests shall consist of :
(a) in respect of expenditure, any intentional act or omission relating to :
- the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the
misappropriation or wrongful retention of funds from the general budget of the European Communities or
budgets managed by, or on behalf of, the European Communities,
- non-disclosure of information in violation of a specific obligation, with the same effect,
- the misapplication of such funds for purposes other than those for which they were originally granted;
(b) in respect of revenue, any intentional act or omission relating to :
- the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the
illegal diminution of the resources of the general budget of the European Communities or budgets managed by,
or on behalf of, the European Communities,
- non-disclosure of information in violation of a specific obligation, with the same effect,
- misapplication of a legally obtained benefit, with the same effect. (Convention on the protection of the
European Communities' financial interests, OJ C 316 of 27.11.1995).
Regulation No 1552/89 (traditional own resources); Regulation No 595/91 (EAGGF Guarantee Section);
Regulation No 1681/94 (Structural Funds); Regulation No 1831/94 (Cohesion Fund).
See conclusions of the Economic and Financial Affairs Council of 17.7.2000, item 7.
The transmission of a case to the prosecutor indicates that a fraud or an irregularity may have been committed.
So do certain types of irregularity or ways of committing the irregularity (use of falsified documents, fictive
movements or transformation of goods, contraband, etc…)

76

nature of a transaction is only apparent following much longer procedures and taking
account of the principle of the presumption of innocence. The true nature of serious cases
will only be known therefore years later. This type of information is available from the
judicial authorities, whereas information on the follow-up given to confirmed irregularities
is collected and transmitted by the administrative authorities of the Member States.
Member States will henceforth have to ensure that,
in accordance with their
obligations, the circulation of such information is not impeded.

In order to assist the Member States with this complex task, the Consultative Committee
for the Coordination of the Fight against Fraud (COCOLAF) has created a working group
and given it the task of producing guidelines in the near future. These guidelines should
ensure a more homogeneous treatment of cases.

12.

THE SITUATION IN 2000

12.1.

The overall level of fraud and other irregularities

If the number of new cases and their budgetary impact are compared with previous years,
the level of frauds and other irregularities detected or suspected in 2000 has increased.
While the number of cases detected in the area of own resources declined slightly, this is
compensated by an increase in the number of cases detected in the EAGGF Guarantee area
and, even more so, in the area of structural actions. The audit and control systems put in
place by the Member States in the area of structural measures has brought improved results
and controls have been strengthened with the aim of closing a good number of programmes
at an early stage. From now on, this area does not differ substantially from the other areas
of the budget.

Regarding the amounts involved, a significant increase can be seen in all the areas of the
budget.

In total, the Member States and OLAF have dealt in 2000 with 6915 new cases with an
overall budgetary impact (confirmed or estimated) of 2030 millions of euros. (For the
cases communicated by the Member States, see annexes,2, 4 and 5).

12.2.

Cases of fraud communicated by the Member States

In 2000,
the Member States communicated 6587 cases on the basis of sectoral
regulations69. These cases are split as follows in the different areas of the budget (for the
details see tables 1, 2 and 3):

Area of the budget

Number of cases

Amount (in 1000

Traditional Own
Resources

2403

534 525

€
)

% of the sectoral
budget 70
3.571

69

70

71

See footnote 63.
The budget as indicated is the sectoral budget (Traditional own resources, EAGGF-Guarantee expenditure,
then Structural funds, including the Cohesion fund). The percentages therefore cannot be added.
The percentage refers to the total amount of traditional own resources paid by the Member states for 2000,
minus the collection costs..

77

EAGGF Guarantee

Structural actions

2967

1 217

474 562

114 227

1.17

0.45

12.3.

Cases under investigation by OLAF

In addition to the cases communicated by the Member States, OLAF dealt in 2000 with
328 new cases, which fall, according to the provisional assessment of the Office, in their
large majority into the category of criminal. In fact, as a general rule, it is the suspicion of
fraud, which leads OLAF to open an inquiry: the sole exception is the area of direct
expenditure as, in this area, OLAF is responsible for dealing with all irregularities. Of
course, it will be for the national judicial bodies carrying out the investigation to determine
the nature of the behaviour. Regarding the impact of these cases on the budget, this is a
provisional estimate which, with the exception of the area of direct expenditure, must also
be confirmed by the competent national bodies who must issue the recovery order to the
persons concerned.

The files opened in 2000 are divided as follows:

Area of the budget

Number of cases

Amount (in 1000

€
) % of the sectoral

Traditional
resources

own

120

EAGGF Guarantee

Structural actions

Direct expenditure:
•

Internal policies
• External policies

21

39

57

91

608,771

102,025

25,051

13,752

156,622

budget

3.99

0.25

0.10

O.25

2.99

13.

TRENDS

In the last few years there was a tendency for the level of frauds and other detected
irregularities to stabilise, but in 2000 there was once again a rather large rise in the number
of detected cases and, especially, in the amounts concerned.

This also applies to the cases under investigation by OLAF. However, the real extent of the
frauds detected by OLAF in cooperation with the competent services of the Member States
is less easily attributable to a calendar year or a specific accounting period. The
investigations of OLAF are carried out with the aim of establishing the facts and revealing
gradually the real extent of the actions in question. Within the framework of the same
investigation, there may be a conservative assessment of the budgetary impact based on the
evidence (the “amounts established”) and an estimate of the probable budgetary impact
based on an extrapolation of the facts. This applies in particular to complex cases, which
involve organised economic crime such as cigarette smuggling, the case of the adulterated
butter or the fraudulent banana imports.

78

13.1.

The field of traditional own resources

13.1.1.

Introduction

Regulation No 1150/00 delegates to the Member States the collection of traditional own
resources, in particular import duties. Consequently, Member States are required to take all
the measures necessary to fulfil their obligations with respect to the Community budget.
Moreover, they have to inform the Commission of their inspection activities and their
results.

The Member States transmit statistical information to the Commission in the following
way:

–

–

by means of the irregularity and fraud files, in accordance with Article 6(5) of
Regulation No 1150/00, for cases where the amount is higher than

10 00072;

€

and also by means of their annual inspection reports, in accordance with Article
17(3) of Regulation No 1150/00. These reports show the activities and the results of
inspections carried out at national level.

The Commission can thus have indicators in order to analyse the trends, which emerge as
regards the fight against fraud and recovery in the Member States.

The Commission has adopted a new approach in drawing up its reports on protecting the
financial interests for the reporting exercise relating to year 2000. With the aim of
presenting to the budgetary Authority an overall assessment based on the factual elements
gathered from the Member States, it considered it convenient to amalgamate the OLAF
report – established under Article 280 of the Treaty – together with the report established
under Article 17(3) of Regulation 1150/00 on own resources. A first step was taken in this
direction in 1999, the 17(3) report featuring in the technical annex of the OLAF report. The
2000 report merges the two reports. However, the conditions in which they were prepared
are not ideal.

In order to meet deadlines, Member States were invited to transmit their annual reports by
the end of February 200l. But the data concerning inspection activity in 2000 by the
Member States actually received by the Commission within this timetable is extremely
compartmentalised and does not allow for any comparative analysis.

Moreover, information gathering has its price. Thus, the Commission considers that the
conclusions which it can draw from the fraud and irregularity files communicated under
10 000) are not very different from
Article 6(5) of Regulation N°1150/00 (amounts >
those likely to be drawn from the information provided under Article 17(3) (all amounts).
Accordingly, the results obtained as regards the fight against fraud and the recovery action
by the Member States are analysed on the basis of the fraud files.

€

72

The notion of fraud is not interpreted in a uniform way by the Member States. This is partly due to the fact that
the Convention on the Protection of financial interests which defines the notion has not yet been ratified by all
the national Parliaments. In some Member States, an infringement on Community regulations can be qualified
as fraud after the final decision of a Court. Whereas in other Member States, operational services qualify this
type of infringement themselves during the investigations. The Commission therefore recommends that only
overall figures covering both frauds and other irregularities should be used for the sake of analysis.

79

13.1.2. Analysis of data communicated by the Member States

On the basis of the whole of the data collected in accordance with Article 6(5) of
Regulation 1150/00, that is to say on the basis of 2403 cases of fraud and irregularities, the
Commission has noted the following trends:

In raw data, the number of cases of fraud and irregularity in 2000 (cases >
10 000, see
annex 1) shows an average drop of 4.5% in relation to 1999. Compared with the average
number of communications over a period of four years, the number of cases communicated
in 2000 shows a decrease of 2.95%.

€

Certain Member States were late updating their communications. Greece did not
communicate any cases of frauds or irregularities for the whole of 2000..73 This situation is
difficult to accept. On the one hand, certain Member States do not fulfil their Community
obligations; on the other hand, they deprive the Commission of information necessary for a
reliable analysis of fraud developments. The Commission depends very much on the
Member States for the information which it can have on frauds and irregularities. It lies
therefore with the Member States to find ways of remedying this situation.

In view of the lack of data on inspection activity in the Member States for 2000
(Annexes 1 and 2), the Commission is not in a position to provide an analysis for the year
2000, in terms of customs staff and the number of entries and the rate of checks.

With regard to the amounts established (Annex 2 column 3) as regards fraud and
irregularities, the increase has been constant since 1998; the amount for 2000 is almost
double the figure for 1998 and 1999. This increase is based in particular on the
irregularities detected in imports of milk products from New Zealand.74 This case concerns
primarily the United Kingdom, and has a considerable financial impact on the amounts
established by this Member State.

Leaving aside this case, the aggregated amounts increase from one year to another. This
increase does not systematically mean an increase in the number of cases reported by each
Member State. A significant rise in the amount established is seen mainly for France,
Germany. Italy, the Netherlands and Spain. Finland and Sweden show for their part a
to a decrease in the number of cases
considerable fall (for the latter,
communicated)..

in parallel

Situation of recovery (cases >

€
10 000)

Amounts

Number of cases

1997
€
2 535

1998
€
2 452

Amounts established

Amounts recovered

327 668 781
€
83 973 118

224 415 874
€
77 205 219

1999
€
2 516

243 773 815
€
33 892 250

2000
€
2 403

534 524 713
€
74 033 638

% recovered amounts

25.63%

34.40%

34.41%

13.85%

*Updated on 18.4.2001

73

74

Greece notified 24 cases of fraud and irregularities but these cases were linked to previous years whereas they
cover 2000. By reason of the late receipt of this notification, these cases have not been taken into account for
the present report.
This case was the subject of a special report by the Court of Auditors, No 4/98: OJ C 127 of 24.04.1998 and OJ
C 191 of 18.06.1998.

80

The constant rise in the amount established is accompanied by a significant fall in the
average recovery rate (column 8, Annex 2) between 1998 and 2000. The New Zealand case
is concerned by this situation, the Commission indeed having decided to put off the
recovery of 36% of the amounts pertaining to this case.

The national recovery rate fell in most Member States, except for Luxembourg (with a rate
of 100% since 1997), Belgium, Ireland, Portugal and Sweden.The recovery rate shows
great variations between Member States. However, even if the variation in the level of
recovery from year to year were in itself interesting, the Commission would like to stress
that this rate in itself is not an indicator of performance. This is because it is linked to a
number of
recovery procedures, procedures of appeal, whether
administrative or judicial) which must be taken into account.

factors (national

The Commission usually carries out a breakdown of frauds and irregularities by
customs arrangements, product and origin.

As regards frauds and irregularities established by customs arrangements75, the global
information drawn from the fraud forms confirms the trends observed on the impact of
fraud in particular in free circulation with 79.8% of the cases and 93% of the amounts
detected. Transit remains a sensitive fraud sector (with 11.3% of the cases). However in
terms of amounts, the impact is less significant (1.2%) than amounts established for 1997-
99. Fraud in other areas remains low. Fraud in free circulation76 is concentrated on the
incorrect description of goods (31.9% of the cases for 10.4% of the amount). In relation to
previous years, one observes a clear upward variation in number of cases but a clear
downward variation with regard to the amount. The number of non-declarations also
shows a general, significant decrease.

As regards a breakdown of cases of fraud and irregularities by types of goods, milk
products and cigarettes, in particular, as well as cars, clothing, and electrical equipment are
particularly sensitive to fraud. This trend can be observed during the years 1998 to 2000.
But the high figure for milk products causes a drop in the respective percentage of other
goods.

The breakdown of the cases of fraud and irregularities by origin show that dairy products
of New Zealand origin are at the top of the list of the 25 most commonly the subject of
frauds. This was noted in 1998 and 1999, but amounts established in 2000 are on a steep
rise. It is possible to observe a constant rise in the amounts for products originating from
the USA and in the amounts and number of cases involving goods of Chinese origin.

However, there is a fundamental difference between these two countries. The irregularities
in USA origin goods are mainly errors in tariff classifications; the detection of these errors
results in high recovery rates. The observations covering the goods originating in China
concern mainly the unjustified application of preferences or false declarations of origin and

75

76

The Commission noted, as far as the number of cases is concerned, a discrepancy between overall figures and
the data regarding risk analysis by type of irregularity. This does not mean there is a greater number of cases
for the established irregularities. The discrepancy originates in the fact that some Member States register more
than one anomaly per case, which leads to double counting. The impact on the general trend is not significant.
The Commission, however, draws the Member States’attention to the necessity of filling the fraud forms
accurately.
A detailed breakdown of fraud and irregularities established in free circulation brings to light the big share of
the column Other irregularities: 42% of the cases, 75.4% of the established amount. Some fraud forms do not
specify the irregularity concerned, a lack of detail which , as noted above, distorts the analysis.

81

recovery is often difficult. The cases of Japan and Singapore are similar to the USA cases.
The four cases from Ecuador detected in 2000 cover imports of bananas into Belgium in
breach of transit regulations.

13.1.3. Conclusion

This 2000 summary shows gaps with regard to the inspection activity of the Member
States; moreover, it reveals the impact of the merger of the two reports, whose publication
is not currently subject to the same imperatives. Lastly, the data used up to 1999 by the
Directorate General for the Budget for the drawing-up of the report has changed. These
factors required the Commission to be adaptable. The same adaptability is also awaited
from the Member States.

The collection of various items of information from the Member States aims to improve
the quality of the follow-up by the Commission of their inspection activity, in particular as
regards recovery, and to enable it in addition to identify the difficulties which may be
encountered in respecting their Community obligations.

But its objective is as much to assist the Member States to evaluate their own efforts in the
field of traditional own resources. The Commission could already draw conclusions, with
regard to the efforts which Member States will have quickly to make to improve the
quality of the information communicated,
in relation to their Community
obligations.

implicit

The Commission intends to continue its awareness-raising work with the Member States.
This will be the subject of discussions within the Advisory Committee on the
Communities’ Traditional Own Resources at
its next meeting or will be covered,
depending on the case, in bilateral exchanges.

13.2.

Agricultural expenditure (EAGGF Guarantee)

The number of frauds and other irregularities detected by the Member States in 2000 and
their budgetary impact are up on the previous year (+10% and +104%, respectively). The
considerable increase in the budgetary impact is due initially to two large-scale cases
which were detected by Italy and which concern fraudulent activities over a period of
several years.

The high budgetary impact of one of these two cases has the consequence that in 2000,
export refunds no longer represent the category of expenditure most affected. The relative
share of frauds and other irregularities concerning market support measures went up to
44%, while cases communicated in the category of export refunds accounted for 41% of
the overall impact (reflecting hardly any percentage change in relation to the previous
year). Expenditure for export refunds represented only 14% of the expenditure of EAGGF
Guarantee and expenditure for the market support measures only 9% of expenditure. The
relative impact of fraud cases and of irregularities was therefore particularly high in
relation to market support. On the other hand, fraud and irregularities only to a much
smaller degree affect direct aid, which is by far the easiest measure to control.

The relative incidence of cases of fraud and other irregularities in relation to the EAGGF
Guarantee budget reached in 2000 a level markedly higher than in the previous years
(1.17%, as against 0.74% and 0.73% in 1999 and 1998). The relative incidence is still
particularly noteworthy in Italy, Germany and France (the principal recipient of financing

82

from the EAGGF Guarantee Section) having communicated a significantly higher rate of
irregular expenditure than in the past.

The new cases opened by OLAF in 2000 concern firstly cereals, olive oil, and fruit and
vegetables.

For the trends in numbers and amounts for cases communicated by the Member States, see
Annex 9.

13.3.

The field of structural measures

In the field of expenditure of structural measures, the appreciable increase in the number of
new cases detected by the Member States as well as in terms of the budgetary impact
continues. In relation to the previous year, the number of cases communicated increased by
74%, whilst the overall budgetary impact of the cases communicated decreased by 5%.
The number of cases recorded shows that the inspection systems of the Member States
the transparency level has increased
have become increasingly effective and that
appreciably.

The cases communicated by the Member States concern primarily the Structural Funds
(EAGGF Guidance Section, ESF, ERDF, FIFG). With regard to the expenditure of the
Cohesion Fund (which amounts however to approximately
3 billion a year), the four
Member States which benefit from this financing, only communicated 2 cases. In terms of
the number of cases communicated, it is still the Social Fund which was the most affected
in 2000, while in terms of amounts it is the Regional Fund which was the most affected.

€

Behind these overall figures are hidden situations which vary enormously between the
Member States. France and the Netherlands, which in the past only communicated a very
limited number of cases, communicated in 2000 the largest number of cases (which
concern especially the Social Fund). On the other hand, in terms of amounts the cases
communicated by Ireland differ greatly from the cases communicated by the other Member
States, which is due to a very limited number of significant cases in the field of the
Regional Fund. This reflects the phenomenon already known in other budgetary fields that
detection – which is random in time – of certain important cases has a major impact on
statistics for a calendar year while the financial impact will concern rather a previous
period.

After the clear fall of the previous year, the number of new cases opened in 2000 by OLAF
and dealt with in cooperation with the Member States again increased considerably. OLAF
concentrated on projects financed by the Social Fund and the ERDF.

For the trend in the number and impact of cases communicated by the Member States see
Annex 10.

13.4.

Direct expenditure

In the field of direct expenditure (which is managed by the Commission), OLAF opened,
170
in 2000, 148 new cases whose overall budgetary impact is estimated at approximately
million, which represents an important increase in relation to the previous years. This
reflects the will of OLAF to give greater priority to this field of the Community budget
which, for years, has been the subject of substantial criticism from the Court of Auditors

€

83

and the European Parliament and where OLAF is the only body with the right to carry out
investigations. Almost 60% of the new cases opened in 2000 concern “external policies”:77
on average, the budgetary impact of these files is markedly higher than cases which
concern “internal policies”.78

14.

FINANCIAL FOLLOW-UP

Some progress was achieved but the actual rate of recovery of amounts involved in cases
of fraud and other irregularities remains unsatisfactory.

14.1.

Determining factors

The amounts seen in points 2 and 3 above and in the annexes serve to identify the impact
of fraud and irregularities against the European Union in relation to the budget. However
this must not be confused with the real and definitive loss to the Community budget. This
is because

–

–

–

–

shown

include

amounts

The
prevent
misappropriation’. These are cases of frauds and other irregularities where the
in place by the Member States and the
management and control systems put
Commission have made it possible for the Community budget not to suffer any real
loss;

discovered

‘attempts

time

in

to

A limited but nevertheless important part of the amounts shown is recovered or will
be in the years to come. The possibilities of recovery depend on the concrete
situation. The best conditions exist when the beneficiary (or the person responsible)
has agreed to a guarantee or when there are ways of obtaining compensation. It goes
without saying that recovery procedures must respect due process and procedures can
be protracted till evaded entitlements or amounts unduly paid are recovered. It is
therefore only after several years that the level of actual recovery is known (for more
details, see above);

Often penalties79 must be added to amounts to be recovered. Community penalties
accrue to the Community budget and offset part of the losses incurred in other cases;

In the areas of own resources and indirect expenditure, whenever recovery fails
through the negligence of the Member State concerned, the Commission may decide
to charge the Member State with the amounts to be recovered.80

14.2.

Recovery

Even though some progress is noticeable, the level of actual recovery of amounts due as a
result of cases of fraud and other irregularities remains unsatisfactory and procedures of
recovery engaged in the Member States are often too slow. As a result the Commission has

77

78

79

80

PHARE and TACIS, development assistance programmes etc.
Financing of activities in the European Union, for example in the fields of research, environment, trans-
European networks, training and culture.
For example, in export refunds paid in advance, the amount to reimburse is automatically increased by 10%.
See procedure in Article 17(2) of Regulation No 1150/2000, account-clearing procedure (Article 8(2) of
Regulation No 1258/1999), also procedure of Regulation No 448/2001.

84

put in place a global recovery policy which will enable it to assess actions taken by the
Member States and to take correcting measures when necessary.

14.2.1. Traditional own resources

Member States are responsible for the effective collection of traditional own resources.81 To
this end, they are required to set up an appropriate infrastructure. The Union finances this.
The Commission (Direction General for the Budget) supervises the way the Member States
recover funds in accordance with Community law.

In the Member States, recovery action is dependent on diverse factors, in particular
difficulties in identifying the debtor, slowness of administrative and judicial procedures for
recovery and insufficient guarantees. In view of all these factors, the Commission put in
place an overall follow-up strategy, which enables it to evaluate the actions of the Member
States and to take corrective measures when required. The mechanism for monitoring
recovery revolves around to three major main principles.

The number of recovery cases managed by the Member States is very high. On the basis of
Article 6(5) of Regulation No 1150/2000 and by means of the OWNRES system, the
Commission is informed each quarter of the cases of fraud and irregularity as well as of
any updates, where the financial impact exceeds
10 000. To process such a mass of
information, the Commission defined a sample survey strategy.

€

The first procedure (“Report A”), based on an overall statistical exploitationof fraud forms,
gives an indication of the general aspects of the situation of recovery82. The second
procedure (“Report B”) consists of following up to the clearance stage the recovery
operations pertaining to a number of particularly significant and complex cases83. This
monitoring of specific cases also aims to convince the Member States to strengthen their
recovery actions. It can lead to the Member States taking on the financial responsibility
through error or inaction, for not making available to the Community budget the traditional
own resources84.

€

Under certain circumstances, it may not be possible to carry out recovery. The Member
State in this case writes off the amount of the debt which could not be recovered. The cases
10 000) are communicated to the Commission for examination. If
of write-off (amounts >
the Member State showed all due diligence to obtain the recovery of the amount due, while
respecting national and Community legislation, the exemption can be accepted. Otherwise,
it is financially liable on the basis of Article 8 of Decision 94/728 and of Articles 2 and 17
of Regulation No 1150/00. Examining the diligence of the Member States constitutes a
very effective action to convince the national administrations to take recovery more
seriously.

81

82

83

84

See Decision 94/728 (OJ L 293 of 12.11.1994) on own resources and in particular its Article 8, which requires
Member States to collect traditional own resources.
A first report of this type was sent to the budgetary Authority in 1995. It is Report A 94, published on
6.09.1995 (COM(95) 398) and a second report amalgamating the A and B reports is planned for 2001.
Two reports of the kind were elaborated. Report B94, published on 9 June 1997 (COM(97) 259 final), deals
or so. Report B98, published on 21 April 1999 (COM(1999) 160
with 6 cases involving a total of 124 M
€
.
final) covers 9 cases for a total amount of approximately 136 M
Moreover, specific monitoring outside the “sample survey” is ensured for cases which do not fit the conditions
for inclusion in the B sample but nevertheless deserve greater attention for reasons of opportunity.

€

85

As regards application of Article 17(2) of Regulation N°1150/2000, writeoff cases
communicated in 2000 were particularly numerous, in relation to previous years (57 cases
over the period 1997-1999, 327 cases in 2000 – see Annex 3). This results mainly from one
Member State which first challenged the Commission’s interpretation of Article 17(2)
procedure, then ultimately accepted its observations and notified 282 cases for the period
1994-1998. In 2000, 327 cases were thus communicated to the Commission and examined;
the results are shown inAnnex 3.

Member States have to ensure the collection of traditional own resources under the best
conditions: with this mandate of remunerated delegation (25%)85 and while meeting
international standards of sound and effective management of public funds, any negligence
on the part of the Member States which results in a loss of resources gives rise to financial
responsibility for their administrative errors.

According to this approach,
the Commission holds the administrations financially
responsible for their own errors, for example in the event of limitation (provision) of an
amount according to Article 221(3) of the Code, while all the elements allowing for this to
be taken into account were well known, or in the event of an administrative error not
detectable by the debtor (Article 220(2)(b) of the Code). Thus, administrations will be
strongly motivated to act with all due diligence in the process of collection of duties.
During the period 1999-2000, the Commission sent 65 Letters of Calls for Funds (LCF)
€
representing an amount of approximately
46 million. The LCF were sent following a
refusal to write off the amounts concerned.

The improvement in the effectiveness of recovery largely depends of course on the will of
the Member States to act with all necessary diligence. For its part, the Commission
concentrates on the actions, which it can carry out in order to improve the effectiveness of
recovery in each of the main areas mentioned above, and has taken several initiatives for a
stricter monitoring policicy.

An active reminder policy with regard to requests for information from the Commission
was set up; a greater synergy between the Commission departments, in particular OLAF
and the Directorate-General for the Budget, is carried out in the management of the fraud
files. Furthermore the ‘Recovery 2000’ report, to be published for the first time in the
middle of 2001, will bring together samples A and B with the aim of describing the
situation concerning recovery more comprehensively.

Processing of write-off cases. Firstly, it is advisable to recall that already on 4 July 1997,
the Commission submitted a draft amendment of Regulation No 1552/89 (now Regulation
No 1150/2000) to make more effective the current write-off procedure for irrecoverable
amounts, setting in particular a deadline for the submission to the Commission of the cases
withdrawn from the separate accounts. Discussions in the Council are not yet finished.

Regarding the practical treatment of individual cases, the Directorate-General for the
Budget created an interdepartmental working group and also obtained the suitable
computer equipment to allow it to manage a large number of files effectively.

In relation to financial liability, the Commission set in motion an infringement proceeding
(under No A2000/2115) and sent the letter of formal notice on 19/7/2000. The reasoned

85

On the basis of Article 8 of Decision 94/728/EC, Euratom (replaced by the Decision of 29 September 2000
once it is ratified).

86

opinion should come out in the near future. This procedure will serve as a “pilot case” to
clarify whether the action of the Commission regarding the financial responsibility of a
Member State for its own administrative errors is justified.

14.2.2. EAGGF Guarantee Expenditure

In the field of agricultural expenditure, OLAF continued the exercise of checking the state
of recovery in particular in the cases already communicated several years ago and to
identifying the amounts which prove to be irrecoverable or to justify, if necessary, the
delay in effective recovery.

The problem of recovery in the field of EAGGF Guarantee remains still primarily a
problem for one Member State (Italy) which accounts, alone, for three quarters of the
overall balance still to be recovered. In large part, this problem is due to the length of the
national86 judicial procedures. Italy has not yet given the assistance necessary to find a
solution to this problem.

For the situation on recovery see Annex 6.

14.2.3. Structural measures

In the field of structural measures, the financial follow-up is determined by the fact that the
final decision on the balance to be recovered can be taken only at the time of the closure of
the multi-annual operational programme (or of the Community initiative or the Single
Programming Document). Member States which discover an irregularity during the period
of implementation of the operational programme have the possibility of rectifying the
financial situation at the latest at the time of the final payment (recovery of the undue
amount already paid or reduction of a later payment) and of reallocating the appropriations
released to another project where there has not been an irregularity.

The visibility of amounts yet to be recovered is limited by the fact that the Member states
do not always communicate the follow-ups of irregularities in a systematic manner.
Member States must now communicate annually to the Commission a breakdown of
recoveries to be effected in order to facilitate financial follow-up.87

OLAF henceforth is systematically involved in the follow-up organised by the authorising
departments of the Commission and takes part in the regular coordination meetings with
the Member States. The new regulation88 which introduced a type of “clearance of

86

87

88

Also see special report N° 11/2000 of the Court of Auditors which checked the recovery situation (and noted
the length of the procedures) in the olive oil sector, which represents approximately a third of the balance to be
recovered in the cases communicated by Italy.
Article 8 of Commission Regulation 438/2001 of 2 March 2001.
Commission Regulation N° 448/2001 of 2 March 2001 laying down the detailed rules for the application of
Council Regulation (EC) No 1260/1999 with regard to the procedure for the implementation of financial
corrections applicable to aid granted under the Structural Funds (OJ L 64, 6.3.2001).

87

accounts” will facilitate, in the future, charging to the Member State the amounts lost
following as a result of negligence.

For the situation on recovery see Annex 7.

88

ANNEXES

89

ANNEX 1

Traditional resources

Number of cases of fraud and irregularity communicated by the Member States89 to the Commission

Development over the period 1997- 2000

(updated on 18.04.2001)

Member States

1997
Cases

1997
Amounts in euro

1998
Cases

1998
Amounts in euro

1999
Cases

1999
Amounts in euro

2000
Cases

2000

Amounts in euro

AUSTRIA

BELGIUM

DENMARK

FINLAND

FRANCE

GERMANY

GREECE

IRLAND

ITALY

LUXEMBOURG

PORTUGAL

SPAIN

SWEDEN

NETHERLAND

UNITED KINGDOM

75
253
82
36
232
395
14
54
302
4
16
81
45
466
480

8.578.947

21.305.588

8.476.159

1.750.277

31.290.712

29.366.567

4.088.938

3.856.185

83.849.314

81.592

8.275.935

4.820.889

3.218.794

32.225.013

86.483.872

149
345
131
42
212
332
7
63
173
7
18
73
97
304
499

7.807.165

11.458.009

14.688.022

1.682.245

14.051.247

28.364.711

312.760

2.276.201

20.793.475

1.781.643

1.319.715

3.326.423

8.808.356

8.813.119

98.932.782

86
294
102
36
267
496
14
40
236
8
14
119
65
205
534

TOTAL CASES

2.535

327.668.781

2.452

224.415.874

2.516

4.277.866

14.860.474

8.670.831

5.104.165

15.737.713

40.150.373

440.627

7.048.580

15.367.436

774.492

463.693

8.668.713

8.863.380

8.718.006

104.627.466

243.773.815

73
306
108
36
245
482
0
37
226
2
14
116
17
245
496

6.222.115

14.734.332

10.706.245

1.598.820

29.005.108

57.338.293

0

1.822.792

40.850.713

35.466

72.973

10.075.701

1.312.296

11.264.044

349.485.815

2.403

534.524.713

89

The communication by the Member States of cases of fraud and irregularity above
of 22.05.2000

€

10000 is a Community obligation set out in article 6, paragraph 5 of regulation 1150/00

90

ANNEX 2
Traditional resources
Cases of fraud and irregularity communicated by the Member States in 2000
(Amounts in euros)

Member
States

Cases
communicated
in 2000

Amounts
established

Percentage
established out of
the totat for the 15

Average amount
per case

Amounts recovered for
cases communicated in
2000

% recovery EUR-
15 total

Crude rate of
recovery90

(1)

(2)

(3)

(4)

(5) = (3) / (2)

(6)

(7)

(8) = (6) / (3)

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

306

108

482

-

116

245

37

226

2

14.734.332

10.706.245

57.338.293

-

10.075.701

29.005.108

1.822.792

40.850.713

35.466

245

11.264.044

73

14

36

17

6.222.115

72.973

1.598.820

1.312.296

2,8 %

2,0 %

10,8 %

0,0 %

1,9 %

5,4 %

0,3 %

7,6 %

0,0 %

2,1 %

1,2 %

0,0 %

0,3 %

0,2 %

48.151

99.132

118.959

-

86.859

118.388

49.265

180.755

17.733

45.976

85.234

5.212

44.412

77.194

496

349.485.815

65,4 %

704.608

5

5

5

2.640.659

6.812.367

13.591.345

-

3.217.347

6.575.009

1.463.235

493.394

35.466

1.083.882

648.526

72.973

1.144.779

1.273.284

34.981.372

3,6 %

9,2 %

18,4 %

0,0 %

4,3 %

8,9 %

2,0 %

0,7 %

0,0 %

1,5 %

0,9 %

0,1 %

1,5 %

1,7 %

47,2 %

17,92 %

63,63 %

23,70 %

0,00 %

31,93 %

22,67 %

80,27 %

1,21 %

100,00 %

9,62 %

10,42 %

100,00 %

71,60 %

97,03 %

10,01 %

5

90

The rough rate of recovery is not a significant element. It varies according to both the national recovery procedures and the administrative and judicial appeal procedures.

91

ANNEX 3

Traditional Own Resources

Write-off cases communicated by the Member States91

1.

Summary of write-off cases sent by the Member States in the period 1992-2000

Observations of the Commission on examining these cases

Years

Total
cas

Total
Montant

€

Cases
acceptés

Exempt
En

€

Cases
refusés

Amount
En

€

Cases
autres*

Amount
En

€

1992-1999

2000

General
T t l

%

57

327

384

14.058.733,77

42.650.455,00

29

80

5.437.145,00

6.484.838,00

56.709.188,77

109

11.921.983,00

17

139

156

7.372.111,00

6.193.345,00

13.565.456,00

11

108

119

1.249.479,00

29.972.272,00

31.221.751,00

100%

100%

28%

21%

41%

24%

31%

55%

* The column other cases includes cases withdrawn or which came under old regulations where communication was not appropriate or requiring additional information
from the Member States .

2.

Détail des cas de mise en non-valeur adressés par les Etats membres en 2000

Observations of the Commission on examining these cases

Observations of the Commission

Number

% case

Breakdown by MS

€

Amount in

% amount

Cases accepted

80

25 %

1 case NL - 1 case Portugal

3 cases UK - 2 cases F

73 cas Allemagne

6.484.838

15 %

Cases refused

139

43 %

1 case NL - 1 case UK

6.193.345

14 %

137 cas Allemagne

Cases where information required

67

20 %

1 case UK

16.453.418

39 %

66 cas Allemagne

Not appropriate

41

12 %

41 cases Germany

13.518.854

32 %

Totalcasestransmitted

327 cas

100 %

5 Member States out of 15

€

42.650.455

100 %

91

Procedure set out in article 17 paragraph 2 of regulation n° 1150/00

92

ANNEX 4

EAGGF GUARANTEE

IRREGULARITIES COMMUNICATED BY THE MEMBER STATES UNDER
REGULATION N°595/91
2000

Numberofcases Amountsinvolvedin1.000

€

%ofEAGGFexpenditure

MemberState
Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Austria
Portugal
Finland
Sweden
UnitedKingdom
Total

68
34
940
49
651
261
68
116
0
98
52
195
13
29
393
2.967

39.604
538
61.393
15
28.445
15.480
1.148
281.160
0
10.203
528
14.843
83
664
20.458
474.562

4,86
0,04
1,22
0,00
0,52
0,41
0,07
5,62
0,00
1,14
0,14
2,28
0,01
0,18
0,46
1,18

The notion of "irregularity" under the regulation mentioned includes cases of "fraud". The qualification of an
irregu cas
Irregularity as “fraud”, meaning criminal behaviour, can only be made following a penal procedure.

93

ANNEX 5

STRUCTURAL ACTIONS

IRREGULARITIES COMMUNICATED BY THE MEMBER STATES UNDER
REGULATIONS N°1681/94 AND 1831/94

2000

Implicatedamounts(in1.000

€
)

%ofbudget

0
296
17.277
2.819
11.309
9.963
8.757
22.926
0
23.736
1.363
3.493
359
1.272
10.657
114.227

0,00
0,24
0,46
0,12
0,29
0,40
1,25
0,45
0,00
4,98
0,52
0,16
0,07
0,55
0,36
0,45

ombredecas

MemberState Numberofcases
0
12
107
14
185
266
88
117
0
223
44
50
13
19
79
1.217

B
Dk
D
EL
E
F
Irl
I
L
NL
A
P
FIN
S
UK
Total

The notion of "irregularity" under the regulations mentioned includes cases of "fraud". The qualification of

a case as a fraud, meaning a criminal behaviour can only be made following a penal procedure.

94

ANNEX 6

EAGGF GUARANTEE
SITUATION OF RECOVERY IN CASES COMMUNICATED UNDER
REGULATION N°595/91

(Amounts in 10.000 euros)

Toberecovered

TTorecoverotaltorecover

InJustice

casescommunicated
<200000

casescommunicated
in200000

Memb
er
State

Amounts
“irrecoverable”
"irrécouvrables"*

23.937
9.597
189.860
70.886
130.171
52.872
4.949
1.183.766
15
31.409
4.010
20.924
19
164
30.936
1.753.515

B
DK
D
EL
E
F
IRL
I **
L
NL
A
P
FIN
S
UK
TOTAL
* In the context of clearance of accounts, it will be decided if these amounts are on the Community budget
or on the national budget
** In most cases, Italy describes effective recovery as “not very likely”

17.764
5.049
29.345
39.836
48.339
33.430
0
387.051
0
8.095
0
18.790
0
0
15.077
602.776

25
3.703
15.639
86
20.196
2.127
243
69.035
0
2.261
0
1.282
0
0
17.321
131.918

38.896
55
56.275
11
25.629
12.358
833
280.665
0
10.123
171
14.240
3
92
17.475
456.826

95

ANNEX 7

STRUCTURAL ACTIONS

SITUATION OF THE RECOVERY IN THE CASES COMMUNICATED UNDER
REGULATIONS N°1681/94 ABD 1831/94

MemberState

Etatmembre

TotalSolde TTotal To recover à
recouvrer

1991994-1999

Totaltorecover
2000

B
DK
D
EL
E
F
IRL
I
L
NL
A
P
FIN
S
UK
TOTAL

945
331
40.314
9.601
17.646
3.561
3.202
66.310
0
1.064
0
37.281
260
999
50.644
232.158

2000

0
127
12.389
2.549
10.012
9.963
8.757
14.389
0
16.173
1.363
2.553
336
171
6.327
85.109

N.B.: In as much as these amounts are actually recovered, they can be reallocated to finance
otherprojectsinaprogramwhichisstillopen.

96

ANNEX 8

TRADITIONAL OWN RESOURCES
IrregularitiescommunicatedbytheMS*

year number
ofcases

amount
(x1000)

shareof
budget

2000
0
1999
1998
1997

2.403
2.516
2.452
2.535

534.525
243.774
224.416
327.669

3,50%
1,76%
1,59%
2,31%

budget
concerned
(x100
15.267.139
13.857.600
14.110.700
14.172.270

* The notion "irregularity" includes cases of fraud. The
classificationasfraud,meaningcriminal behaviourcan
onlybemadefollowinga penal procedure

OWN RESOURCES

N° of
cases

3000

2500

2000

1500

1000

500

0

4,00%

Budge-
tary
impact

3,00%

2,00%

1,00%

1997

1998

1999

2000

%budget
number of cases

year

97

ANNEX 9

EAGGF-
Irregularities communicated by the MS*

année nombre
decas

montants
(x1000)

partdu
budget

2000
1999
1998
1997

2.967
2.697
2.412
2.058

474.562
232.154
284.841
164.884

1,17%
0,74%
0,73%
0,41%

budget
concerné
(x1000)
40.437.400
39.540.800
39.132.500
40.423.000

* The concept "irregularity" includes fraud. The qualification as fraud,
meaning criminal behaviour, can only be made
following a penal procedure

EAGGF Guarantee

N° of
cases

3000

2500

2000

1500

1000

500

0

B
u
d
g
e
t
a
r
y

i

m
p
a
c
t

1,50%

1,25%

1,00%

0,75%

0,50%

%budget
N° of cases

1997

1998

1999

2000

année

98

ANNEX 10

STRUCTURAL ACTIONS
Irrégularities communicated by the MS*

year

number
ofcases

amounts
(x1000)

partof
budget

2000
1999
1998
1997

1.217
698
407
309

114.227
120.633
42.838
57.070

0,45%
0,39%
0,15%
0,22%

amount
concerned
(x1000)
25.556.00
30.658.45
28.365.99
26.304.90

* The concept “irregularity” includes “fraud”. The classification of fraud,
meaning criminal behaviour, can only be made following
a criminal procedure.

STRUCTURAL ACTIONS

N° of
cases

1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0

1997

1998

1999

2000

year

99

0,50%

Budgé

0,40%

impac

0,30%

0,20%

0,10%

%budget
N° of cases

ANNEX 11

DEPENSES DIRECTES

Suspicions de fraude et autres irrégularités investigées par l'OLAF

année

nombrede
cas

montants
(x1000)

partdu
budget

budgetconcerné(x1000)

2000
1999
1998
1997

148
107
24
41

170.374
73.300
11.000
18.000

1,33%
0,87%
0,09%
0,17%

12.788.618
8.425.287
11.750.900
10.681.600

DEPENSES DIRECTES

N° of
cases

200

100

0

B
u
d
g
e
t
a
r
y
i

m
p
a
c
t

2,00%

1,50%

1,00%

0,50%

0,00%

%budget
N° of cases

1997

1998

1999

2000

année

100