Wednesday

20th Jun 2018

Valencia faces EU probe over dodgy statistics

  • Valencia faces an EU investigation into whether it deliberately sent false data on government spending. (Photo: SWIFT)

The European Commission has launched a probe into whether the Spanish region of Valencia is guilty of the first case of statistical fraud since the Greek crisis in 2009.

The investigation, which will look at years worth of unreported spending by the region, could carry stiff sanctions including, at worst, a fine worth up to 0.2 percent of Spain's economic output.

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In May 2012, Spain's statistical office was forced to revise up its deficit forecast for 2011 by 0.4 percent after turning up previously unrecorded spending in Valencia and Madrid. A subsequent investigation by Eurostat, the bloc's statistical agency, confirmed that Valencia had sent incorrect data on government spending to the Spanish statistical authorities for a number of years.

In a paper issued on Friday (July 11), the EU executive warned that Valencia's local government appeared to have "systematically sent incorrect information to the national statistical authorities over many years."

It added that the investigation, which could last up to 10 months, would seek "to determine whether there has indeed been deliberate manipulation and / or serious negligence and to decide which part of the “chain” was responsible for this".

For his part, Algirdas Semeta, the commissioner for statistics, said that the "quality and credibility of European statistics is not something that the Commission is willing to compromise on."

However, the commission is not calling into the question the reliability of Spain's overall data.

Under the bloc's economic governance rules, re-written in response to the eurozone debt crisis, deliberately cooking the books can carry a fine worth 0.2 percent of GDP.

Statistical fraud in Greece, where the government's deficit forecast of 4 percent for 2009 had to be revised to over 12 percent, wrecked market confidence in the country's ability to pay its bills, forcing it into the first of two bailout programmes worth €300 billion.

With the Greek crisis affecting confidence in other eurozone countries, EU politicians vowed to tighten up controls of statistical offices and production, handing new powers to Eurostat and auditors.

Regional and national offices are now required to send data to the Luxembourg-based Eurostat at least twice a year.

Meanwhile, new rules also allow Eurostat and commission officials to conduct country-specific visits in order to verify dubious data.

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