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Commission welcomes report by the House of Lords EU Committee on fraud against the EU budget
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Published on 17-04-13

On 17 April, the House of Lords published a report entitled "The Fight against Fraud on the EU's Finances ".

Under EU law, Member States have primary responsibility for preventing, detecting and following up on irregularities and fraud. They are responsible for managing almost 80% of EU expenditure. The vast majority of the problems of both fraud and error identified in reports by the EU's Court of Auditors occur at Member State level, rather than in "Brussels".

    Commission welcomes report by the House of Lords EU Committee on fraud against the EU budget

    The report concludes that the level of fraud against the EU budget is currently underestimated and that "evidence suggests that some Member States do not take their anti-EU fraud responsibilities seriously". It makes a series of recommendations on how the UK could reinforce its own efforts to combat the problem.

    The Commission welcomes the report as a positive contribution to further stepping up the fight against fraud on the EU budget.

    It supports most of the report's recommendations and hopes they will be taken up by UK authorities.

    The Commission operates a zero-tolerance policy to fraud, and has taken many measures to tighten its stance against it.

    In the last two years alone, the Commission has put forward over a dozen proposals / initiatives to improve the fight against fraud in EU funds.

    The Commission is constantly calling on Member States to take their responsibilities more seriously in protecting the EU budget.

    The Commission will shortly make a proposal to set up a European Public Prosecutors Office to investigate, prosecute and bring to justice those who commit fraud involving EU funds.

    The House of Lords' committee's report says that the UK should wait to see this proposal before taking any stance on it

    Regarding the scale of fraud against the EU budget, the report says that the Commission's estimate of the volume of fraud against EU budget (€404m) is "only a glimpse" of the real level, which it estimates at around €5 billion.

    The Commission figure is based on fraud reported by Member States. It has to rely on national data on this and has asked Member States (repeatedly) to improve detection and reporting.

    The report includes in its € 5bn figure losses linked to VAT fraud. This is not something that the Commission includes in its figure, as Member States were not willing to report to it on VAT fraud losses. This type of fraud is in fact ultimately a loss to national budgets, not the EU one.

    Nonetheless, it is a major problem in the EU, central to the Commission's proposals for the reform of the EU VAT system.

    The Commission invites the UK government to come forward with proposals to fight VAT fraud more effectively, given that it could not support the Commission's proposal on a Quick Reaction Mechanism to combat VAT fraud last year.

    A number of Member States rejected this at the March meeting of Finance Ministers.

    It may be put on the table again at the May meeting, given renewed enthusiasm amongst Member States to fight against fraud and evasion.

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    Last update: 24/04/2013  |Top