Protection of Communities' financial interests – Fight against fraud European Parliament resolution of 6 April 2011 on the protection of the Communities’ financial interests – Fight against fraud – Annual Report 2009 (2010/2247(INI))
Date: 2011-04-06
Institutions: Committee on Budgetary Control, European Parliament
Subjects: EU Member State, European Anti-fraud Office, European Court of Auditors, European cooperation, corruption, fraud against the EU, national statistics, penalty








CE2012296EN.01004001.xml










2.10.2012   


EN


Official Journal of the European Union


CE 296/40





Wednesday 6 April 2011Protection of Communities' financial interests – Fight against fraud
P7_TA(2011)0142
European Parliament resolution of 6 April 2011 on the protection of the Communities’ financial interests – Fight against fraud – Annual Report 2009 (2010/2247(INI))
2012/C 296 E/06

The European Parliament,






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having regard to its resolutions on previous annual reports of the Commission and the European Anti-Fraud Office (OLAF),










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having regard to the report of 14 July 2010 from the Commission to the Council and the European Parliament entitled ‘Protection of the European Union’s financial interests – Fight against fraud – Annual Report 2009’ (COM(2010)0382) and its accompanying documents (SEC(2010)0897 and SEC(2010)0898),










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having regard to OLAF’s Tenth Activity Report – Annual Report 2010 (1),










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having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2009, together with the institutions’ replies (2),










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having regard to the Annual Report of the Court of Auditors on the activities funded by the eighth, ninth and tenth European Development Funds (EDFs) concerning the financial year 2009, together with the Commission's replies (3),










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having regard to Articles 319(3) and 325(5) of the Treaty on the Functioning of the European Union,










—


having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (4),










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having regard to its declaration of 18 May 2010 on the Union's efforts in combating corruption (5), with a view to ensuring that EU funds are not subject to corruption,










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having regard to Rule 48 of its Rules of Procedure,










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having regard to the report of the Committee on Budgetary Control (A7-0050/2011),






General considerations








1.


Regrets that, in general, the Commission's report on the Protection of the European Union's financial interests – Fight against fraud – Annual Report 2009 (COM(2010)0382) (the ‘PIF report 2009’), presented in accordance with Article 325(5) of the Treaty on the Functioning of the European Union (TFEU), does not provide information on the estimated level of irregularities and fraud in individual Member States, as it concentrates on the level of reporting, and it is therefore not possible to have an overview of the actual level of irregularities and fraud in the Member States and to identify and discipline those with the highest level of irregularities and fraud;










2.


Stresses that fraud is an example of purposeful wrongdoing and is a criminal offence, and that an irregularity is a failure to comply with a rule; regrets that the Commission's report fails to consider fraud in detail and deals with irregularities very broadly; points out that Article 325 of the Treaty on the Functioning of the European Union relates to fraud, not irregularities, and calls for a distinction to be made between fraud and errors or irregularities;










3.


Points out that over the last few years techniques have been developed for measuring fraud as part of a broader attempt to combat corruption, and urges the Commission to boost these research efforts and to implement, initially as pilot projects, in cooperation with Member States, appropriate new methodologies which are being developed to measure the phenomena of irregularities and fraud;










4.


Calls on the Commission to exercise its responsibility in ensuring compliance by Member States in their reporting obligations with a view to providing reliable and comparable data on irregularities and fraud even if this requires the Commission to modify the penalty system for non-compliance with these reporting obligations;










5.


Deplores the fact that large amounts of EU funds are still wrongly spent and calls on the Commission to take appropriate action with a view to ensuring prompt recovery of those funds;










6.


Is concerned about the level of outstanding irregularities not recovered or declared unrecoverable in Italy at the end of the fiscal year of 2009;










7.


Calls on the Commission to hold Member States more accountable for the amount of irregularities that have yet to be recovered;










8.


Notes that Union legislation requires Member States to report all irregularities no later than two months after the end of the quarter in which an irregularity has been subject to a primary administrative or judicial finding and/or new information about a reported irregularity becomes known; calls on the Member States to make all the necessary efforts, including the streamlining of national administrative procedures, to meet the required deadlines and reduce the time gap between the identification and the reporting of an irregularity; calls on the Member States to act primarily as protectors of taxpayers’ money in their efforts to combat fraud;










9.


Asks what steps the Commission has taken to combat the increase in suspected fraud, in number of cases and amounts as compared to the total number of cases of irregularities in the Member States of Poland, Romania, and Bulgaria;










10.


Is concerned at the suspiciously low suspected fraud rates in Spain and France, especially considering their size and the financial support received, as described by the Commission in the PIF report 2009, and therefore calls on the Commission to include detailed information on the applied reporting methodology and the fraud detection capability in these states;










11.


Calls on those Member States which have not yet ratified either the Convention of 26 July 1995 on the protection of the European Communities’ financial interests (6) or its protocols (7) (the PIF instruments) i.e. the Czech Republic, Malta and Estonia, to proceed with the ratification of those legal instruments without delay; urges those Member States which have ratified the PIF instruments to step up their efforts to reinforce their national criminal legislation to protect the Union's financial interests, in particular by addressing the existing shortcomings revealed in the second report from the Commission on Implementation of the Convention on the Protection of the European Communities’ financial interests and its protocols (COM(2008)0077);










12.


Welcomes the introduction in 2009 of the Irregularity Management System (IMS), an application developed and maintained by OLAF, and the positive developments it has brought about; is concerned that the Commission explains the increase in the number of cases reported and the financial impact by the use of new technological reporting; calls on the Commission to provide Parliament with a detailed methodology of the newly implemented technological reporting and to include it in next year's report; calls on the Member States to fully implement the IMS and to further improve their reporting compliance;










13.


Asks the Commission to include in its next year's report the amount of irregularities reported using the new technological reporting as against the traditional methods of reporting; calls on the Member States to improve the speed with which irregularities are reported;










14.


Reiterates its regret – given the serious doubts about the quality of the information provided by the Member States – that the Commission puts more effort into convincing the European Parliament of the need to introduce a ‘tolerable risk of error’ than into persuading Member States of the need for mandatory national management declarations duly audited by the national audit office and consolidated by the Court of Auditors; calls on the Commission, in cooperation with the Member States and by drawing up an appropriate report in line with the Treaty, to provide Parliament with a reasonable assurance that this objective has been attained and that action to combat fraud is being carried out properly;






Revenue: Own resources








15.


Is concerned about the amount of fraud as compared to irregularities in the Own Resources sector in the Member States Austria, Spain, Italy, Romania, and Slovakia, as fraud constitutes more than half the total amount of irregularities in each Member State; calls on the Member States to take all necessary measures, including close cooperation with European institutions, to address all causes of fraud relating to EU funds;










16.


Deplores the deficiencies in national customs supervision revealed by the Court of Auditors – in particular as regards the performance of risk analysis for the selection of traders and imports to be subject to customs controls – which increase the risk of irregularities remaining undetected and could lead to a loss of Traditional Own Resources (TOR); calls on the Member States to strengthen their customs supervision systems and on the Commission to provide the relevant support in that respect;










17.


Emphasises the fact that around 70 % of all customs import procedures are simplified, which means that they have a substantial impact on the collection of TOR and on the effectiveness of the common trade policy; finds unacceptable, in that context, the lack of effective controls on simplified procedures for imports in the Member States, as revealed in the Special Report of the Court of Auditors No 1/2010, and calls on the Commission to further investigate the effectiveness of controls for simplified procedures in the Member States, and in particular to investigate progress in the conduct by Member States of ex-post audits, and to present the results of such investigation to the Parliament by the end of 2011;










18.


Notes the outcome of investigations carried out by OLAF in the area of own resources; is deeply concerned at the scale of fraud involving merchandise imported from China, and urges the Member States to recover the sums in question without delay;










19.


Welcomes the successful outcome of the joint customs operation Diabolo II, involving customs officials from 13 Asian countries and 27 EU Member States, coordinated by the European Commission through OLAF;










20.


Welcomes the agreements the European Union and its Member States have concluded with tobacco manufacturers to combat the illicit tobacco trade; is of the opinion that it is in the EU's financial interest to continue working to combat cigarette smuggling, from which the annual loss of revenue for the EU budget is estimated at around EUR one billion; urges OLAF to continue playing a leading role in the international negotiations for a Protocol on the Elimination of the Illicit Trade in Tobacco Products under Article 15 of the World Health Organization Framework Convention on Tobacco Control, which would help to combat illicit trade in the Union; and takes the view that the EUR 500 million to be paid by the two companies concerned – British American Tobacco and Imperial Tobacco – should also be used by the Commission and the Member States concerned to reinforce anti-fraud measures;






Expenditure: Agriculture








21.


Welcomes the Commission's conclusion that the overall reporting discipline in this policy group has improved and that compliance now stands at 95 %; calls on those Member States which still do not report in good time (Austria, Finland, the Netherlands, Slovakia and the United Kingdom) to remedy the situation promptly;










22.


Calls on the Commission to monitor closely the situation in Spain and Italy, which reported, respectively, the highest number of cases of irregularities and the highest amounts involved, and to report to the European Parliament on the specific measures undertaken in order to address the problems in those two Member States;










23.


Calls on the Commission to ascertain whether the disparity between higher expenditure and a minimum rate of reported irregularities, and the significant variation in the rates of irregularities reported (Estonia 88,25 %; Cyprus, Hungary, Latvia, Malta, Slovenia and Slovakia 0.00 %), are related to the effectiveness of the control systems, with a view to carrying out a review of those systems;










24.


Is deeply concerned at the Court of Auditors’ finding that payments for the year 2009 in this policy group were affected by material error and that the supervisory and control systems were generally, at most, partially effective in ensuring the regularity of payments; deplores the finding of the Court of Auditors that, although the Integrated Administration and Control System (IACS) is, in principle, well designed, its effectiveness is adversely affected by inaccurate data in the databases, incomplete cross-checks or incorrect or incomplete follow-up of anomalies; calls on the Commission to closely monitor the effectiveness of the supervisory and control systems in place in Member States to ensure that information on the irregularity rate per Member State represents a true and fair view of the actual situation; calls on the Commission to address the weaknesses in the effectiveness of IACS;










25.


Notes that final figures can only be established for those financial years that can be deemed finalised, and that in this light, to date, the most recent financial year that can be deemed finalised is 2004;










26.


Deplores the catastrophic situation regarding the overall recovery rate in this policy group, which in 2009 was 42 % of the EUR 1 266 million outstanding at the end of the 2006 financial year; is particularly concerned at the Court of Auditors’ observation that the EUR 121 million recovered in the years 2007-2009 from the beneficiaries represents less than 10 % of total recoveries; finds that situation unacceptable and calls on the Member States to urgently address it; urges the Commission to take all necessary steps in order to put in place an effective system of recovery and to inform the European Parliament, in its next year's report on the protection of EU's financial interests, of the progress made;






Expenditure: Cohesion Policy








27.


Deplores the fact that the data contained in the PIF report 2009 does not provide a reliable picture of the number of irregularities and fraud in this policy group, as a high level of irregularities and/or fraud may simply be an indication of efficient reporting and/or anti-fraud systems;










28.


Is deeply concerned at the fact that payments for the year 2009 were found by the Court of Auditors to be affected by high material error (above 5 %);










29.


Notes that one important source of error in cohesion spending is a serious failure in applying public procurement rules; asks, therefore, the Commission to propose, without delay, new legislation to simplify and modernise these rules;










30.


Is deeply concerned at the Court of Auditors’ finding that at least 30 % of the errors found by the Court in the 2009 sample could have been detected and corrected by the Member States prior to certifying the expenditure to the Commission on the basis of the information available to them; calls on the Member States to intensify their efforts in order to enhance their detection and correction mechanisms;










31.


Calls on the Commission to provide the European Parliament with information on the measures that have been taken with regard to the irregularities reported by the Member States and detected by the Commission in this policy group;










32.


Is not satisfied by a recovery rate exceeding 50 % for the programming period 2000-2006; urges the Member States to deploy further efforts for the recovery of irregular amounts and calls on the Commission to take action to ensure a higher recovery rate, given that the Commission implements the budget on its own responsibility, as stated in Article 317 TFEU;






Expenditure: Pre-accession funds








33.


Is deeply concerned about the suspected high fraud rate in Bulgaria for the Special Accession Programme for Agriculture and Rural Development (SAPARD) in 2009, which – for the whole programming period – stands at 20 % and represents the highest rate seen in all funds analysed (Cohesion and Agriculture); notes that more suspected fraud cases were initiated by external controls/interventions than by internal/national ones; notes that the Commission exercised its obligations properly in suspending the payments from SAPARD in 2008 and lifted that suspension on 14 September 2009 after thorough checks; calls on the Commission to continue supervision of the Bulgarian authorities in order to further improve this situation;










34.


Notes that the Czech Republic, Estonia, Latvia and Slovenia reported a zero fraud rate for SAPARD, and questions the reliability of the reported information or the fraud detection capability of those States; underlines that similar zero or low level fraud rates could signify weaknesses in the control systems and vice versa; urges the Commission to provide data on effectiveness of control mechanisms and to implement, together with OLAF, stricter control on how EU money is spent;










35.


Finds unacceptable the very low recovery rate for suspected fraud in the pre-accession funds, which is only 4.6 % for the whole programming period, and calls on the Commission to put in place an efficient system in order to address this situation;






Public procurement, increased transparency and the fight against corruption








36.


Calls on the Commission, the relevant Union agencies and the Member States to take measures and provide resources to ensure that EU funds are not subject to corruption, to adopt dissuasive sanctions where corruption and fraud are found, and to step up the confiscation of criminal assets involved in fraud, tax evasion and money-laundering-related crimes;










37.


Calls on the Commission and the Member States to design, implement and periodically evaluate uniform systems of procurement to prevent fraud and corruption, to define and implement clear conditions for participation in public procurement, and criteria on which public procurement decisions are made, and also to adopt and implement systems to review public procurement decisions at national level, to ensure transparency and accountability in public finances, and to adopt and implement risk management and internal control systems;










38.


Welcomes the Commission's Green Paper on the modernisation of EU public procurement policy ‘Towards a more efficient European Procurement Market’; calls on the Council and Commission to finalize the adoption of the reform of the basic EU public procurement rules (Directives 2004/17/EC and 2004/18/EC) by no later than the end of 2012;










39.


Following its request in its last year's report on the protection of the Communities’ financial interests, urges OLAF to present in its next annual report a detailed analysis of the strategies and measures put in place by each Member State in the fight against fraud and for preventing and identifying irregularities in the spending of European funds, including where these are caused by corruption; considers that specific attention should be paid to the implementation of agricultural and structural funds; takes the view that the report, with 27 country profiles, should analyse the approach followed by national judicial and investigating bodies and the quantity and quality of controls performed, as well as statistics and reasons in the cases where national authorities did not file indictments following reports by OLAF;










40.


Following its request in the last year's report on the protection of the Communities’ financial interests, urges the Council to complete the conclusion of the Cooperation Agreements with Liechtenstein in the shortest possible time and urges the Council to give the Commission a mandate to negotiate antifraud agreements with Andorra, Monaco, San Marino and Switzerland;










41.


Urges the Commission to take action to ensure one-stop transparency of the beneficiaries of EU funds; calls on the Commission to design measures to increase the transparency of legal arrangements and a system whereby all beneficiaries of EU funds are published on the same website, independently of the administrator of the funds and based on standard categories of information to be provided by all Member States in at least one working language of the Union; calls on the Member States to cooperate with the Commission and provide it with full and reliable information regarding the beneficiaries of the EU funds managed by Member States; invites the Commission to evaluate the system of ‘shared management’ and provide Parliament with a report as a matter of priority;




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42.


Instructs its President to forward this resolution to the Council, the Commission, the Court of Justice of the European Union, the European Court of Auditors, the OLAF Supervisory Committee and OLAF.






(1)  http://ec.europa.eu/anti_fraud/reports/olaf/2009/en.pdf

(2)  OJ C 303, 9.11.2010, p. 1.

(3)  OJ C 303, 9.11.2010, p. 243.

(4)  OJ L 248, 16.9.2002, p. 1.

(5)  Texts adopted, P7_TA(2010)0176.

(6)  OJ C 316, 27.11.1995, p. 48.

(7)  OJ C 313, 23.10.1996, p. 1, OJ C 151, 20.5.1997, p. 1 and OJ C 221, 19.7.1997, p. 11.