Fight against fraud
Commission takes measures to protect EU budget
By Nathalie Vandystadt | Thursday 12 July 2012
EU money is no more protected from fraud than national money. To address this growing concern, Commissioners Viviane Reding (justice) and Algirdas Semeta (fight against fraud) had drafted a proposal for a directive, which European Commission adopted, on 11 July.
More than 90% of the EU funds is managed nationally. In 2010, there were a total of 600 suspected fraud cases involving EU expenditure and revenue. Member states reported suspected cases of fraud worth a total of €600 million, according to the EU executive’s figures.
In a number of cases, imprecise information is provided by EU fund applicants, says the Commission, citing the areas of agriculture and regional development. There are also national civil servants who accept money in exchange for allocation of public procurement in violation of relevant EU rules.
The two commissioners propose the following solution: a more harmonised European framework in order to pursue and punish frauds involving the EU budget from one member state to another. This would prevent criminals from exploiting differences between national legal systems. When it comes to fraud, for example, some countries punish it with prison terms (from six months minimum in Austria to 12 years in Romania), while others do not have a minimal sentence (UK and Ireland).
When it comes to money laundering, the prison sentences can vary between two years in Finland to 20 years in Austria. Commissioner Reding said: “Our aim is clear: to ensure that EU budget fraud does not go unpunished, in turn saving taxpayers’ money”. Semeta added: “Fraudsters should not escape prosecution and sanctions simply because of their geographical location”.
The proposal tackles three key points: 1. agreement on a common definition of fraud or possible fraud (corruption, misappropriation of funds, money laundering, obstruction of public procurement procedures). Today, the conviction rate for cases of fraud detected in member states when executing the EU budget ranges from 14% to 80% (with an EU average of 41%) depending on the member state concerned; 2. enabling member states to impose a minimum punishment of six months’ imprisonment for serious cases (involving amounts in excess of €100,000) and up to ten years when committed in the context of organised crime; and 3. harmonising the periods of limitation, which currently range from a minimum sentence of six months to 12 years, and would become 5-10 depending on circumstances.
To contribute to the reimbursement of losses, the revenues from these offences will be confiscated. The European Parliament and the Council of Ministers will have to co-decide on the matter.