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Important points 1994-1999




Parliament in front line of the fight against fraud

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Fighting fraud committed against the EU budget has been one of the outgoing Parliament's top priorities. Parliament's efforts, led by its Budgetary Control Committee, have focused on two fronts: firstly exploring ways to enable the Union, acting together with the Member States, to defend its financial interests from the increasingly sophisticated attacks of international organised crime, which has learnt to take advantage of the single market; secondly stepping up democratic scrutiny and, in the light of the Court of Auditors' reports, assessing the Commission's handling of EU budget spending and then deciding whether or not to approve it (in technical terms "to grant a discharge").

Another step taken by Parliament was to set up a committee of enquiry into Community transit. International organised crime now exploits crossborder traffic on a large scale, particularly since the single market came into being. The EU suffers considerable revenue losses because of fraud, mainly in connection with highly taxed goods such as cigarettes, alcohol and products funded under the common agricultural policy. The committee of enquiry's recommendations, which were adopted by Parliament in spring 1997, stress the need for an efficient transit system based on strict checks and closer cooperation, with a common approach from national authorities. Computerisation of the system is seen as essential.

"Common legal area" needed to protect public funds

The EU and its Member States have a common interest in protecting the Union's finances. After all, the Community budget is funded by the taxpayer's money. Unfortunately, efforts to fight fraud and corruption are often frustrated by various obstacles: differences between national legal systems (e.g. differing definitions of crime, liability and penalties), the jealously guarded prerogatives of Member States in criminal law matters (e.g. rules of procedure and the issue of jurisdiction) and material and legal obstacles to judicial cooperation. Parliament responded to this problem by organising two interparliamentary conferences with national MPs to discuss ways of improving cooperation between the EU and national authorities as well as the legal instruments needed to achieve this.

The first of these conferences was held in spring 1996 and was followed by a public hearing in 1997 in response to the "Appeal by the Geneva Judges", who had called for increased judicial cooperation between the Member States to combat corruption and international organised crime. The second was held in November 1998. At the conferences, MPs and MEPs sketched out a framework for combatting budget fraud more effectively. Firstly, the European Parliament wanted the Community to be given powers to adopt anti-fraud measures by co-decision (between the EP and the Council). This demand was satisfied with the inclusion in the Amsterdam Treaty of Article 280. Secondly, given the lack of a body of EU criminal law, the conferences looked at the question of introducing in the long term a Corpus Juris, a body of common criminal law rules to protect the EU's financial interests. The Corpus Juris, which is the fruit of work done by independent experts at Parliament's request, although with no intention of encroaching on national jurisdictions, envisages the creation of a European Public Prosecutor's office, an independent authority which would be able to operate throughout the Member States' territory. This would be a decisive step towards creating a single European legal area and would make the task of fighting fraud and corruption committed in connection with the EU's budget simpler, fairer and more effective. First, however, the reservations of the Member States must be overcome.

A more effective anti-fraud body

The Unit on Coordination of Fraud Prevention (UCLAF), set up in 1987 at Parliament's insistence, is a department within the Commission and has been in operation for a long time. With powers and staff levels which have since been increased (always thanks to Parliament), and now with a total staff of 130, its role is to protect the EU's financial interests. It conducts on-the-spot checks in cooperation with the Member States, or when necessary on its own, to help prepare its reports and ensure that EU resources are properly used. It also collects information. However, a report drawn up in 1998 by the Court of Auditors highlighted UCLAF's internal organisational weaknesses and suggested that it had achieved only limited success in combatting fraud. The report also pinpointed the fact that UCLAF was not authorised to conduct enquiries in other Community institutions. This was at a time when irregularities and even cases of fraud in the management of Community funds by Commission departments were coming to light.

Parliament was keen to beef up the fight against fraud. In 1998, therefore, while it was carrying out its budgetary control tasks, it called for UCLAF to be turned into an anti-fraud office (OLAF) which would be independent of the Community institutions, enjoy wider powers than UCLAF (while also being able to use all the instruments available to the Commission for fighting fraud and corruption) and be able to conduct enquiries in all the EU institutions. Its findings would, where appropriate, be forwarded to the competent legal authorities. It would be managed by a board of directors and be supervised by an independent supervisory body. The Commission was asked to bring forward a legislative proposal for this purpose and in December 1998 presented a plan for an investigative body independent of the Commission. Parliament, the Council and the Commission are currently negotiating for OLAF to be set up quickly in the form desired by Parliament.

Further information : Georgios GHIATIS (tel. 0032-2-284 2216 or e-mail gghiatis@europarl.eu.int)


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