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24th Sep 2020

EU to propose mandatory data-mining tool against fraud

  • The EU spends some €57bn a year in farm subsidies alone (Photo: Images_of_Money)

The European Commission wants its own anti-fraud data-mining tool made mandatory for all EU states to crack down on financial crimes.

"It is a data collection, a data-mining tool which allows us to identify risks and more importantly also allows us to detect conflicts of interests," Joost Korte, a senior European Commission official told MEPs on Thursday (11 June).

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Known as Arachne, the software is already being used in around 20 member states and digs into big EU budget items like the structural funds - alone worth over €350bn.

Arachne stores the data of some two million beneficiaries of EU funds. It then cross-checks the data with more than 210 million companies and the some 120 million people behind those companies.

Plans are also in the works on predictive modelling to detect fraud.

"We need the legislature to roll Arachne out for all the member states and make it a compulsory instrument," said Korte.

Korte is the head of the European Commission department that deals with employment and social affairs. Under his portfolio, he oversees some €85bn of EU-funded projects.

Conflicts of interest

But Korte also admitted that conflicts of interest should not be entirely eliminated because it would undermine the concept of "shared-management".

Shared management means the Commission largely entrusts the paper work and oversight of how EU money is spent to the member states.

"There is a tension between them because the whole concept of the shared management fund is that we rely on politicians," he said.

That money is often channeled through government structures, which may then be captured by a state-like mafia similar to examples found in Hungary and the Czech Republic.

In Hungary, the government has used EU agricultural funds to retain party loyalists, according to a New York Times investigation.

Andrej Babis, the billionaire prime minister of the Czech Republic, is also currently fighting court battles with the European Commission over Agrofert.

The firm, which is one of the biggest in the Czech Republic, received millions in EU funds.

Although Babis had placed Agrofert in a trust before taking up office, an EU audit found he actually retained control.

The EU complained that Babis cannot retain control over Agrofert while at the same time making decisions over the EU budget.

"We need to be careful that the conflicts of interest should not derail in such a way that it is impossible to find anybody who wants to be part of our shared management," said Korte.

"I am not talking about Mr Babis, that is clear," he added.

New EU public prosecutor has four staff for 3,000 cases

Laura Kovesi who heads the new European Public Prosecutor's Office, tasked to tackle fraud linked to VAT, money laundering, and corruption across the EU, warned she is dangerously understaffed and underfunded.

EU's landmark GDPR failing to live up to full potential

The commission's two-year review also indicates that the authorities based in Ireland and Luxembourg - European headquarters to Google, Facebook, Twitter and Amazon - need a substantial boost in resources.

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