‘Corruption in the EU’ or EU Fraud?

A heavily publicised EU report came out last week on corruption in the European Union, with much moralising on what should be done. Corruption across Europe costs a ‘breathtaking’ £99 billion (€120bn) a year, the European Commission estimated.

Cecilia Malmstroem, the European home affairs commissioner, described levels of corruption across the EU as “breath-taking” and criticised governments for failing to tackle the problem. “One thing is very clear: there is no ‘corruption-free’ zone in Europe. The political commitment to really root out corruption seems to be missing,” she said. “The price of not acting is simply too high.”

However, the publicity carefully glided over the corruption and the fraud of the EU itself. No mention was made of  the more than £4 billion of taxpayer cash said to be “disappearing” from the EU budget every year because of a failure of officials to combat fraud. In a report highly critical of the lack of control, the peers on the European Union Select Committee found fraud against the taxpayer could be up to 12 times worse than Brussels officials will admit. The report stated that there could be a loss in the UK of up to £1 billion a year in VAT fraud and 77 million euro (£66 million) and 204 million euro (£176 million) against EU agricultural and cohesion policy programmes.

Nor any mention that Italy had to repay a record £307 million to the European Union after an investigation found that a motorway project in the south of the country was riven with mafia infiltration, corruption and kickbacks.

Or this:
A European Court of Auditors report says that the effectiveness of the EU’s €1.9 billion aid to the Democratic Republic of Congo (DRC) between 2003 and 2011 has been sorely limited, with less than half of programmes likely to deliver the intended results.

Or this from the European Court of Auditors:
For the period 2007-2013 approximately € 1 billion in aid was allocated by the EU to Egypt. As more than half of this amount is channelled through the PFM, the Commission and the European External Action Service (EEAS) failed to ensure that the Egyptian authorities tackled major weaknesses in PFM. Lack of budgetary transparency, an ineffective audit function and endemic corruption were all examples of these undermining weaknesses.

Or this:
EU freezes €4bn of Polish funds in fraud case. The frozen money concerns €4 billion of unspent Polish allocations from the EU’s 2007 to 2013 budget in the “infrastructure & environment” programme. The commission is also freezing €382 million of unspent Polish funds in its “development eastern Poland” programme. It said in a statement that in order to get the money flowing again, Poland must “undertake a wide-ranging control/audit to establish the scope of potential irregularities and risk of other projects having been affected.”

The European Union does have a fraud investigation team, OLAF, which has been successful in a number of cases. It recovers on average €100 million a year. A major criticism is that this entity takes too long to select and pursue cases:

  • Average length of an investigation was 17.3 months in 2012.
  • Average length of the selection of cases was 1.4 months in 2012.

Some investigations can go one for four year as the case over Digitaleco reveals. This was a relatively small sum, but is indicative of the state of EU affairs into investigations into its problems. Perhaps the EU ought to resolve its own travails first, then it would have the necessary credibility to resolve the issues of public and private sector corruptions which undoubtably exist, but surely cannot be tackled by an agency tainted with scandals of its own.


Steven Whalley