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Procedure : 2002/2211(INI)
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Document selected : A5-0055/2003

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A5-0055/2003

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P5_TA(2003)0099

Texts adopted
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Thursday, 13 March 2003 - Strasbourg
Protection of financial interests and the fight against fraud
P5_TA(2003)0099A5-0055/2003

European Parliament resolution on the protection of the Communities" financial interests and the fight against fraud – annual report 2001 (2002/2211(INI))

The European Parliament,

–   having regard to the Commission's annual report 2001 on the protection of the financial interests of the Communities and fight against fraud (COM(2002) 348 – C5-0519/2002),

–   having regard to the Commission's communication on protecting the Communities' financial interests - fight against fraud: Action Plan for 2001-2003 (COM(2001) 254),

–   having regard to the annual report of the European Court of Auditors for the financial year 2001(1),

–   having regard to Article 276(3) and Article 280(5) of the EC Treaty,

–   having regard to Rule 163(1) of its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A5-0055/2003),

A.   having regard to the four objectives set by the Commission in its overall strategic approach to the fight against fraud (COM(2000) 358), and in the Action Plan for 2001-2003 (COM(2001) 254): development of an overall anti-fraud legislative policy, development of a new culture of operational cooperation, an interinstitutional approach to prevent and combat fraud and corruption, and the enhancement of the penal judicial dimension,

B.   whereas the total volume of fraud and irregularities specified in the Commission's annual report amounted to EUR 1.275 billion in 2001, a figure which breaks down as follows:

   - revenue side: Own resources EUR 532.5 million (previous year: 1 143)
   - expenditure side: EAGGF Guarantee EUR 429 million (previous year: 576)
  

Structural actions EUR 249.1 million (previous year: 139)

  

Direct expenditure EUR 64.2 million (previous year: 170),

C.   whereas this represents a considerable reduction in comparison to the figures for 2000, when the total volume of fraud and irregularities was calculated at EUR 2.028 billion,

D.   whereas this reduction can partly be explained by the fact that, of the cases investigated by the Anti-Fraud Office (OLAF) only those concluded in 2001 were included in the statistics, and not those for which investigations had been opened, but not completed,

E.   whereas, according to the Commission, problems in adjusting to a new notification procedure may also have led to a reduction in the number of irregularities communicated by the Member States,

F.   whereas, further, despite the reduction in comparison to the previous year, the volume of irregularities identified in 2001 (EUR 1.275 billion) was considerably higher than the long-term average,

G.   whereas in the year 2000 only 87.9% (EUR 83.3 billion out of EUR 94.8 billion) and in 2001 only 82.3% (EUR 80 billion out of EUR 97.2 billion) of the resources available for payments were actually used; whereas this low utilisation rate places the decrease in the volume of irregularities in context,

Recovery of excessive or undue payments

1.  Notes that an analysis of the communications received in 2001 has revealed that the total number of irregularity messages communicated decreased in all sectors in comparison to the year 2000; in that connection, points out that in the years 2000 and 2001, over EUR 26 billion in unused budget resources was paid back to the Member States;

2.  Notes, however, that the financial impact of irregularities on the budget decreased only in the spheres of own resources (from EUR 1 143 million to EUR 532.5 million) and the EAGGF Guarantee (from EUR 576 million to EUR 429 million), whereas in the sphere of the Structural Funds, that impact increased from EUR 139 million to EUR 249.1 million;

3.  Reminds the Commission that the European Parliament in its resolution of 29 November 2001(2), called upon it to provide, by 15 December 2001, a list of all the irregularities communicated since the entry into force of the Commission Regulation (EC) No 1681/94 of 11 July 1994 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the structural policies and the organisation of an information system in this field(3) showing in each case the size of the financial loss and whether, and to what extent, monies had been recovered;

4.  Notes that the amount recovered in 2001 (EUR 40 342 534) was more than 50% lower than in the year 2000 (EUR 86 101 547), giving an overall recovery rate of 15.7%;

5.  Criticises the fact that amounts still to be recovered in connection with cases of fraud and irregularities established by the Member States, OLAF, and the Commission have built up over the years to almost EUR 3 billion, which is an entirely unacceptable state of affairs;

6.  Notes that the procedures for the recovery of wrongly paid sums clearly do not work and constitute a shortcoming which is severely damaging to the financial interests of the Community; calls on the Commission, therefore, to submit to Parliament by 30 June 2003 a detailed analysis of the causes of this problem and proposals to remedy it;

7.  Urges, therefore, that pending the establishment of an effective recovery procedure, the Commission should halt payments as soon as OLAF assessments substantiate reasonable suspicion of fraud and the Office opens an investigation;

8.  Notes that, on 3 December 2002, the Commission submitted, albeit very belatedly, a communication on this subject with the aim of improving the recovery procedure; doubts, however, that this aim can be achieved until such time as the division of responsibilities between OLAF on the one hand, and the Commission's competent directorate-general on the other, has been clarified; notes with amazement that Luxembourg has never yet communicated an irregularity; points out that, in view of the stated figure of almost EUR 1.4 billion in sums outstanding for the period to 2002, any move by the Commission to offer Italy special treatment must be rejected; calls for the immediate submission of the promised amendment to Article 8 of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the Common Agricultural Policy(4);

Combating fraud in the sphere of the Structural Funds

9.  Regrets the fact that the figures compiled by the Commission in its annual report do not clarify to what extent effective, uniform protection of the Community's financial interests is being achieved in all the Member States in relation to the Structural Funds;

10.  Expresses concern at the fact that, in the sphere of the Cohesion Fund (overall volume in 2001: roughly EUR 3 billion), only Greece communicated irregularities (involving some EUR 2.5 million), whereas Spain, Ireland and Portugal informed the Commission that there were none to communicate; notes the Annual report of the cohesion fund (COM(2002) 557), in particular point 4.2 thereof, and urges the Commission to make a statement on this matter in the next annual report on the combating of fraud and on the action it has taken in cases in which contracts financed under the Cohesion Fund have been awarded in a manner which is not consistent with the directives on tendering procedures;

11.  Notes that the number of suspected cases communicated by the Netherlands in 2001 was more than four times as high as the corresponding figures for Spain or Greece and indeed almost twice as high as the figure for Germany, the obvious implication being that the degree of diligence in identifying and communicating irregularities varies substantially from one Member State to another;

12.  Calls strongly once again on the Commission to refrain in future from merely reproducing without comment the figures communicated by the Member States, but instead to carry out a comparative analysis and assessment of those figures, to openly draw attention to shortcomings and thus encourage the Member States to step up their efforts;

Dealing with internal cases of fraud

13.  Makes clear that the financial implications of external cases of fraud far outweigh those of internal cases; points out, however, that internal cases of fraud seriously damage the reputation of European institutions and that the Commission has therefore announced a "zero-tolerance policy";

Eurostat

14.  Criticises the way in which OLAF has so far investigated this case: allegations known about at the end of the 1990s were not investigated with the necessary rigour despite very precise information, investigations were closed without any results and subsequently reopened; calls on the OLAF Supervisory Committee to make a thorough examination of OLAF's work in connection with Eurostat and to report on it in its next activity report;

15.  Notes that in two cases (EuroCost and EUROGRAMME) OLAF brought in the Luxembourg prosecuting authorities;

16.  Calls on the Commission to take measures which enable it to keep Parliament and OLAF informed of the progress of the investigations conducted by the Luxembourg prosecuting authorities;

17.  Notes that the EUROGRAMME company gave the Commission unclear information not only about its financial position but also about the qualifications of the staff it employed;

18.  Regards it as incomprehensible, in the light of this, that in the period between 1996 and the end of 2001 the Commission should have concluded 70 contracts with EUROGRAMME (the value of the contracts for 2000 and 2001 alone amounting to more than EUR 2 million), with three further contracts even being concluded in 2002;

19.  Welcomes the new Commission's approach to the contractual relationship with EUROGRAMME as stated in the Commission's reply of 28 February 2003 concerning the 2001 discharge procedure, including the suspension of all payments under current contracts and the application of cancellation clauses in contracts, provided that this does not impose any extra financial burden on the Union's budget;

20.  Calls, further, for an explanation as to what extent "intra-muros" employees of private firms have been working on Eurostat's premises since 1999 and whether there is any truth in allegations that these employees were given tasks that could or should have been carried out by officials;

21.  Notes that the PRODCOM project is now being implemented directly by Eurostat;

22.  Notes, further, that Eurostat and the Commission have begun to implement recommendations made as part of the internal PRODCOM audit and to improve the project management arrangements;

23.  Notes that in 2001 alone Eurostat made provision for commitment appropriations for payments to more than a hundred different firms and approximately EUR 8 million was paid (Commission's answer to Written Question E-1283/02); expects an assurance from the Commission by 30 April 2003 that it will ask its Internal Audit Service to examine by summer 2003 the legality and regularity of all the contracts concluded by Eurostat since 1999 and to include in the investigation those contracts concluded by other Commission services on Eurostat's recommendation;

24.  Notes that the Luxembourg-based firm ASBL EuroCost has been accused of serious irregularities (balance-sheet manipulations, double and triple financing of projects, theft of IT equipment) which, according to the Commission (answer to Written Question P-3742/02), has left the Community budget facing a loss of more than EUR 1 million;

25.  Calls on the Commission to state, further, whether those irregularities were first brought to light as long ago as early 2000, as a result of checks carried out by officials of the Commission's DG Financial Control, even though the case was handed over to the Luxembourg judicial authorities only in summer 2002;

26.  Finds it incomprehensible that the relevant report by DG Financial Control was not submitted to the Commissioner responsible for financial control and combating fraud;

27.  Expects to be provided by 30 April 2003 with copies of all the audit reports in connection with Eurostat since 1999;

28.  Calls on the Commission to state to what extent any senior official of Eurostat, as a founding member and past chairman of ASBL EuroCost, helped to secure for EuroCost subsidies from the Community budget over a period of more than 10 years;

29.  Is astonished that the Commission apparently approved the activities of the senior official and asks for copies of the relevant decisions; notes with surprise that, according to the Commission, up until the year 2000 the senior official of Eurostat was also active in other associations in his capacity as Director-General of Eurostat; asks the Commission whether it still regards such activities on the part of its senior officials in organisations which receive subsidies from the Community budget as acceptable;

30.  Asks the Commission to state whether it will require the senior officials of Eurostat involved to make good any losses suffered by the taxpayer;

31.  Asks the Commission to state whether senior officials of Eurostat have also been involved with other firms or associations which have received subsidies from the Community budget, and if so, to identify which ones;

32.  Welcomes the Commission's decision to halt cooperation with EUROGRAMME; calls on the Commission to pursue with the utmost vigour the recovery procedure against EuroCost, which is now in liquidation;

Suspected cases of fraud and favouritism in the Commission

33.  Notes that the cases involving two former Commissioners have been followed up by OLAF and the Commission; calls on the Commission and OLAF to inform Parliament of the outcome of the proceedings;

34.  Welcomes the fact that the Commission decided to prepare a statement setting out the facts relating to possible breaches by Mrs Cresson of the obligations of a Commissioner, as set out in Article 213 of the Treaty; welcomes, further, the fact that the Commission decided, at the same time, to send a statement to Mrs Cresson inviting her to submit any observations to the Commission within two months; notes that the Commission has thus acted on Parliament's recommendation;

35.  Calls on the Commission to forward OLAF's report and the recommendations set out therein concerning the so-called 'official cars affair';

36.  Notes that in December 2002 a Belgian court sentenced the main defendants in the so-called 'PerryLux' case to four and one year's imprisonment respectively;

37.  Calls on Luxembourg, after years of prevarication, to finally meet its obligations under Article 280 of the EC Treaty and to ensure that its judicial authorities take all the steps required to clear up the PerryLux case and the allegations in connection with Eurostat and, if necessary, to instigate criminal proceedings;

38.  Calls on the Commission to inform Parliament of the steps the Luxembourg prosecuting authorities have taken in connection with this matter and to state, by 30 June 2003, when the investigations are likely to be completed;

Commission delegation offices in Stockholm and Vienna

39.  Notes that the Commission has still not answered the question as to when it was informed about the illegal practices involving works contracts in the Vienna delegation office;

40.  Notes with incomprehension the fact that the investigations were opened on 7 August 2001 and had still not been completed by the end of 2002; calls on the Commission to inform Parliament in March 2003 of the follow-up measures taken;

41.  Notes that disciplinary measures were taken against two members of staff of the Stockholm delegation office; a third case is pending before the Swedish courts; calls on the Commission to inform Parliament as to why the court proceedings will not open until March 2003 and asks, furthermore, to be kept informed of the progress of those proceedings;

42.  Calls on the Commission to state the conditions on the basis of which one of the members of staff concerned has retired;

Protection of financial interests in connection with enlargement

43.  Shares the Commission's view that the correct use, control and evaluation of Community pre-accession financing represent important indicators of the applicant countries' capacity to implement the Community's financial control provisions; points out, in that connection, that Parliament, in its aforementioned resolution of 29 November 2001, called on OLAF to set up units in the applicant countries;

44.  Makes clear that the units need not necessarily be independent offices; however, a representative of OLAF should be present on the spot;

45.  Points out, further, that in the above-mentioned resolution of 29 November 2001, it called on the European Court of Auditors to submit to it by early 2003 at the latest, an opinion on each applicant country, showing whether the system of financial control in those countries is able to work in such a way that the shift to decentralised management, a fundamental aspect of the enlargement, can be made;

46.  Expresses concern at the rate of utilisation of SAPARD resources: only 0.1%, or EUR 1 million, has reached the final beneficiaries (solely in Bulgaria and Estonia); the Commission underestimated the amount of time and money needed to develop administrative and control systems in the applicant countries;

47.  Shares the Commission's view, however, that the establishment of an effective Integrated Administration and Control System (IACS) alone offers guarantees of the effective and fraud-proof use of resources;

48.  Insists, in the light of that fact, that the applicant countries should not be judged against more stringent criteria than the Member States;

49.  Takes the view that the deadline for implementing multiannual commitments under pre-accession aid schemes should be extended;

50.  Expresses concern that the isolation of the Kaliningrad region as a result of the enlargement of the Union to the east, and the increase in financial crime being perpetrated from Kaliningrad is increasingly undermining the protection of the Community's financial interests; calls on the Commission to take measures to prevent fraud in connection with trade in goods, services and capital with the Kaliningrad region; calls on OLAF to take prompt steps to set up cooperation with the Russian tax police in that region with a view to drawing up a survey of the "Kaliningrad financial crime" problem as the basis for practical recommendations and measures;

Anti-fraud legislation

51.  Calls, on the basis of the Commission proposal of May 2000, for further progress to be made with the development of an information system designed to exclude bidders already convicted of fraud from public invitation-to-tender procedures; points out, further, in connection with the improvement of financial follow-up measures and penalties, that Parliament is still awaiting clarification as to how the principle of proportionality will be applied in connection with the imposition of fines: Parliament made both these calls in the aforementioned resolution of 29 November 2001;

52.  Notes that in 2001 two regulations on the more effective monitoring and financial control of the Structural Funds were adopted(5);

53.  Welcomes the regulations which lay down a legal basis for cooperation between the European Central Bank, Europol and the Commission/OLAF, thereby protecting more effectively the authenticity and credibility of the common currency;

54.  Calls on the Commission to explain why no progress was made in 2001 in the negotiations with Switzerland on a mutual assistance agreement on tax and customs matters;

Developing cooperation between the competent authorities

55.  Notes the list of new national legal provisions implementing Article 280 of the Treaty, the survey of the stage reached in the procedures for ratifying the Convention on the protection of the Communities" financial interests and its protocols, and the survey of the degree of coordination between services responsible for the protection of financial interests;

56.  Points out, however, as it did in its aforementioned resolution of 29 November 2001, that such lists are of scant value to Parliament as long as they are not analysed by the Commission with a view to highlighting any shortcomings in the protection of the Community's financial interests;

57.  Criticises the fact that a uniform system for the forwarding by Member States of data, details of irregularities and cases of fraud has still not been set up; calls on the Commission, therefore, to keep Parliament regularly informed of the progress of the negotiations between the Member States and the Commission;

58.  Notes that in 2001, OLAF opened investigations into 381 cases which, on the basis of a preliminary assessment, are criminal in nature (own resources: 74 cases; agriculture: 105 cases; Structural Funds: 66 cases; direct expenditure: 136 cases); calls on the Commission to state which areas, in addition to claims in respect of expenditure not eligible for support, pose the most serious risk of fraud;

Strengthening the criminal law dimension

59.  Emphasises that protection of the Communities" financial interests is not a matter for the institutions alone; instead, those institutions must be seen as part of a comprehensive system;

60.  Welcomes, in that connection, the submission in December 2001, of the Commission's Green Paper on criminal law protection of the financial interests of the Community and the establishment of a European Prosecutor (COM(2001) 715);

61.  Looks to the Commission to immediately inform it of any difficulties which arise in connection with consideration of the Green Paper with Member States;

62.  Calls on the Commission to incorporate in its considerations, and to submit to the European Convention, Parliament's proposals on this topic(6), made on 27 March 2003, in particular the draft of a new Article 280a of the Treaty;

63.  Acknowledges the establishment of EUROJUST(7) as an important contribution to judicial cooperation among the Member States; makes clear, however, in this connection, that Parliament, as the institution granting discharge, remains the guardian of the Community's financial interests and that EUROJUST is accountable to Parliament in this sphere;

64.  Calls for information on the stage reached in the legal action brought by the Commission and Parliament against major tobacco concerns in the United States, with a view to averting the danger of cigarette smuggling and money laundering carried out by organised crime in the EU;

65.  Welcomes the judgment handed down by the Court of First Instance on 15 January 2003 rejecting as inadmissible the attempt by the cigarette manufacturers Philip Morris, Reynolds and Japan Tobacco to prevent the Community from continuing the legal proceedings brought in the United States against those firms on the grounds of their involvement in cigarette smuggling;

66.  Notes the most recent report drawn up by the House of Commons Public Accounts Committee which puts at GBP 3.5 billion the tax revenue lost by the United Kingdom in the year 2000/2001 as a result of cigarette smuggling; against the background of this financial loss, calls on the United Kingdom to join the legal action brought by the Commission and Parliament in the United States;

Anti-Fraud Office (OLAF)

67.  Emphasises that Parliament will submit its own report on the working methods of OLAF, which will draw on the information contained in OLAF's annual report, the conclusions set out in the annual report of the OLAF Supervisory Committee and the recommendations set out in the Commission's progress report;

68.  Regrets the fact that, contrary to Article 15 of Regulation (EC) No 1073/1999 of the European Parliament and the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)(8), the Commission failed to submit the progress report prior to the expiry of the term of office of the OLAF Supervisory Committee, at the end of June 2002; notes that the Commission is in breach of the law; calls for a written explanation, by 30 April 2003, as to why the report has not yet been submitted;

69.  Regards it as entirely unacceptable that the pending appointment of the members of the OLAF Supervisory Committee could have been delayed by the Italian Government in the Council since September 2002; welcomes the fact that the Greek Presidency of the Council has now apparently managed to remove this obstruction;

70.  Notes that, in the term of office which has now expired, the OLAF Supervisory Committee, working in difficult conditions, has made a decisive contribution to building up OLAF and securing its independence; declares itself, therefore, emphatically in favour of reappointing the current members of the Supervisory Committee;

o
o   o

71.  Instructs its President to forward this resolution to the Council, the parliaments of the Member States, the European Court of Auditors, the Commission and the Anti-Fraud Office.

(1) OJ C 295, 28.11.2002.
(2) OJ C 153 E, 27.6.2002, p. 325.
(3) OJ L 178, 12.7.1994, p. 43.
(4) OJ L 160, 26.6.1999, p. 103.
(5) Commission Regulation (EC) No 438/2001, OJ L 63, 3.3.2001, p. 21; Commission Regulation (EC) No 448/2001, OJ L 64, 6.3.2001, p. 13.
(6) P5_TA(2003)0130).
(7) Council decision 2002/187/JHA (OJ L 63, 6.3.2002, p. 1).
(8) OJ L 136, 31.5.1999, p. 1.

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