The European Court of Auditors (ECA) wants to launch an audit of how the European Commission manages the risk of fraud in EU spending. The audit will focus on fraud prevention and fraud response and will include contributions from NGOs, academics and prosecutors, as well as Europol and Eurojust.
In October 2016 already, the new EC president, Klaus-Heiner Lehne, has warned that the European institutions have, to a degree, lost the trust of EU citizens. Lehnee said that, in the months and years to come, a major challenge for the EU would be to regain that trust.
In a 2015 Eurobarometer survey on perceptions of fraud and corruption affecting the EU budget, 71% of respondents thought that fraud occurred “rather frequently” and 60% felt that corruption was “significant in the EU institutions”.
This represents a significant increase compared with the 2008 flash Eurobarometer, when 54% thought fraud happened rather frequently and 44% felt that corruption occurred in EU institutions.
Juhan Parts, the Member of the European Court of Auditors responsible for the audit, said, “These figures show how seriously the problem of fraud is taken by our citizens. We cannot simply explain it away by saying they don’t understand. The only solution is an EU fraud management system which effectively prevents, detects, investigates and punishes fraudulent activity.”
Fraud is difficult to measure. It can only be established through a criminal court procedure, and possible weaknesses in the Commission’s and Member States’ detection and reporting of fraud can reduce the reliability of the available figures.
In 2015, the total value of suspected fraud reported by the Commission was €560 million (representing 0.4% of payments from the EU budget). On average, around 10 % of all suspected fraud cases reported at EU level end up actually being established as fraud by the courts. On this basis, fraud against the EU budget for 2015 can be estimated at €56 million. However, the auditors warn that it is unclear how much fraud goes undetected and unreported.
The auditors’ report is expected to be available in 2018.
The European Court of Auditors is the independent audit institution of the European Union. Its audit reports and opinions are an essential element of the EU accountability chain. Its output is used to hold to account – particularly in the context of the annual discharge procedure – those responsible for managing the EU budget. This is primarily the responsibility of the European Commission, along with the other EU institutions and bodies. But for around 80% of spending – principally agriculture and cohesion – this responsibility is shared with the Member States. The auditors test samples of transactions to provide statistically-based estimates of the extent to which revenue and the different spending areas (groups of policy areas) are affected by error.
EU budgetary spending totalled €145.2 billion in 2015, or around €285 for every citizen. This spending amounts to around 1% of EU gross national income and represents approximately 2% of total public spending in EU Member States.
European Anti-Fraud Office
The European Anti-Fraud Office (OLAF) is the only EU body mandated to detect, investigate and stop fraud with EU funds. While it has an individual independent status in its investigative function, OLAF is also part of the European Commission. OLAF carries out independent investigations into fraud and corruption involving EU funds, so as to ensure that all EU taxpayers’ money reaches projects that can create jobs and growth in Europe; contributes to strengthening citizens’ trust in the EU Institutions by investigating serious misconduct by EU staff and members of the EU Institutions; develops a sound EU anti-fraud policy.
OLAF can investigate matters relating to fraud, corruption and other offences affecting the EU financial interests concerning: all EU expenditure: the main spending categories are Structural Funds, agricultural policy and rural development funds, direct expenditure and external aid; some areas of EU revenue, mainly customs duties; suspicions of serious misconduct by EU staff and members of the EU institutions.