19th Nov 2019

EU auditors find errors in billions paid out by member states

EU auditors have once again refused to sign off the bloc's accounts while noting that EU farm subsidy reform means that handouts are going to golf clubs rather than farmers.

The president of the European Court of Auditors, Hubert Weber, gave a negative statement of assurance on the EU's spending when presenting the 2006 accounts report to the European Parliament's budgetary control committee late on Monday (11 November).

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  • 12% of €32.4 billion of EU money should not have been reimbursed last year, auditors say (Photo: European Commission)

"I believe that the EU citizens are entitled to expect EU funds to be properly managed and controlled across the Union," he told MEPs, concluding that this is not yet the case.

The red card from the auditors is the 13th in a row and comes despite several improvements introduced in recent years to boost the regularity of EU cash distribution.

Just as last year, member states are the key target of the auditors' criticism due to "the high level of error" in their dealings with the EU's budget. Member states manage and control 80 percent of the bloc's common budget, some €32.4bn in 2006.

"The supervisory and control systems in the member states were generally ineffective or moderately effective, and the [European] Commission maintains only a moderately effective supervision of their functioning," noted Mr Weber.

The Court pointed out in its report that "at least 12% of the total amount reimbursed to structural policies projects should not have been paid out," particularly in the area of regional development and social cohesion.

Golf clubs profiting from farm funds

The top auditing body also stressed that the EU's new administration and control system (IACS) which covers 70 percent of agriculture pocket (€49.8 bn in 2006) paid out in direct subsidies to farmers has proved effective, where applied properly.

Greece has been singled out as the one country where problems remain on the matter and could be punished by a freeze of its portion of EU farm aid.

But in the area of agri-environmental type of measures "the Court found that in seven out of eight cases checked in rural development, the farmers audited had not met their commitments."

Also, the introduction of a single payment scheme in farm subsidies - aimed at allocating EU aid not according to the amount of production but the amount of land - has resulted in allocation of entitlements to landlords who have never practised agriculture, Mr Weber pointed out.

"Among new beneficiaries are railway companies in the UK, horse riding or breeding clubs in Germany and Sweden and golf or leisure clubs and city councils in Denmark and the UK," he added.

EU audits marathon kicks in

EU auditors also found errors above the accepted level in the area of EU policies controlled primarily by the commission - mainly due to commission reimbursements to beneficiaries who had overstated the costs of projects.

Problems were identified in the auditing of projects related to the EU's internal policies, foreign policy action and in pre-accession countries schemes.

The Court of Auditors' president is due to present the findings to finance ministers on Tuesday (13 November) and on 29 November to the parliament plenary.

Each April, MEPs approve or "discharge" the previous year's spending, paving the way for adoption of the following year's budget.

Delaying the discharge can put pressure on the commission or member states to make changes, while refusing to discharge can damage confidence in the commission, even causing its fall as in 1998.

In the first round of comments on the auditors 2006 report, the Finnish centre-right deputy Alexander Stubb said, "Looking at the review of structural funds, approval of last year's spending is not the first thing that I think about."

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