March 28, 2007
Fraud in Brussels and how not to handle it
Is fraud endemic in the European institutions? You might think so, reading the coverage of the revelations that three Italians have been arrested in a multi-milllion euro case involving bribery and forgery involving public tenders for EU buildings overseas.
The allegations of fraud lasting more than 10 years are shocking, and have been presented in some media as the latest manifestation of a sickness at the heart of the European Union. While the particulars of the case are grim, I’m not sure the problem is as chronic as some believe.
Before I’m accused of being a Brussels apologist, could I plead that I was the journalist whose interview with Marta Andreasen, the sacked EU chief accountant, put her story on the front page of the FT and helped to establish her as a eurosceptic martyr? My colleague, Tobias Buck, broke the Eurostat fraud scandal.
Clearly there was a massive problem in the 1980s and 1990s when financial control inside the EU was appalling. But after the Santer Commission was forced to resign amid allegations of fraud and nepotism in 1999, things have been tightened up.
The Eurostat scandal and - to a certain extent - this latest case dating back to 2004 are the fag ends of the abysmal laxity of control which persisted into the early part of this decade. Nowadays cases of fraud in Brussels itself are relatively rare.
It’s true the problem has not been stamped out once you get out of Brussels. Rumours of financial irregularity and waste continue to dog EU outposts and EU agencies and in third countries.
But most of the fraud - and the reason why the EU’s accounts are never signed off - takes place on the watch of national governments, responsible for dispensing most European money, mainly through farm and regional subsidies.
The European Commission’s record recently isn’t so bad - as a recent report by Britain’s House of Lords concluded. But you wouldn’t have known that from the defensive approach taken by its press service yesterday, which went into bunker mode.
Surely they have learned by now that the best approach is to give out everything you possibly can to convince journalists you are being open? No wonder reporters were still trying to winkle information out of spokemen two hours after the briefing started.
By looking like they have something to hide, they have fuelled the fire and the headlines in Thursday’s papers will be worse than they would otherwise have been. The impression of a corrupt EU in denial will continue to flourish.
George aren’t the spokesmen restricted in what they can say to some extent because of potential prejudicial effect of their statements to a court case?
Posted by: Chris Sherwood | March 29th, 2007 at 1:10 pm | Report this commentThe Bulgarian Agriculture Minister, Nihat Kabil, was interviewed for 3 hours on 5th June in connection with thefts from the SAPARD Fund. Not important to you perhaps as one of the distant “outposts”.
I take a different and simplistic view… I pay taxes to Gordon Brown, he gives them to Brussels and they give them Bulgarian criminals. If you are right, no-one cares. APATHY RULES OK!!
The full text of my article is:-
QUOTE
BULGARIA…THE MISSING MILLIONS.
THE UNEASY PARTNERSHIP BETWEEN ORGANISED CRIME AND DISORGANISED GOVERNMENT.
The Bulgarian Press is fond using euphemisms for theft, such as “drainage”, “embezzlement”,”irregularity” or “fraud”, but it is is all the same thing and I like the word ‘theft’. There has been large-scale organised theft from the pre-accession funding in Bulgaria. A group of people were entrusted with the task of spending the money for the public good. They betrayed that trust and diverted the funds instead to their criminal mentors. As fast as the EU funds were arriving at the front door the insiders were shovelling the money to their criminal associates out of the back door! This is, in itself, no state secret and scandal after scandal has been reported in the Bulgarian Press.The reaction to each new revelation, however, particularly from those who bear the ultimate political responsibility, has been less than hysterical, in fact it has been virtually non-existent. Do they want us to think that every case of large-scale theft was unrelated to every other case of large-scale theft and that there was therefore no discernible pattern…. no community of purpose…. no planning?
The European Commission’s contribution to Bulgaria between the years 2000 and 2006 totalled about 3 billion Euros. This went to the PHARE administration for economic rejuvenation and the SAPARD administration for rural development; the ISPA fund was for transport and environmental matters. Three funds, three administrations and each of them has been affected by fraud. The Ministry of Finance had obligations delegated to it under the accession treaty to appoint suitable persons to serve in these administrations and to ensure that the money was spent on approved programmes.The Ministry had an obligation to oversee (audit if you will) their work and it had the power to take away this responsibility if they were not performing properly. This was all ideal on paper and appeared to have fraud-prevention as uppermost on everyone’s mind. So why did the Ministry of Finance fail to detect even a single theft until years later? Why did it fail to prevent any of the losses?
Before the funds arrived, everything on the surface appeared to be in order when in fact organised crime had already infiltrated the three administrations. What followed was therefore never in doubt. It was as if the funds were a carcass, immediately surrounded and torn apart by scavengers the moment they arrived in Bulgaria.
While the outcome was a foregone conclusion, the criminals did not have it entirely their own way. The authorities have investigated some cases of theft and have even punished some of the lower-order wrongdoers. In the year 2006 alone, TWENTY-NINE cases specifically related to Bulgaria’s handling of the pre-accession funding,, were under investigation by the European Fraud Office (OLAF). By the end of 2006 the Bulgarian authorities had investigated 11 cases, three of which had involved the theft of BGN 18 Million or more. Many of the thefts (and much has been written elsewhere) involve the initial movement of large sums into foreign bank accounts, bogus transactions, bogus subcontractors and bogus consultants. Most of the known cases concern the SAPARD fund, but there are investigations into all three.
The story of the office rents is an instructive example of how organised crime worked the SAPARD fund ( let us remind ourselves that this was money intended for farmers). The fund operated for about 6 years between 2000 and 2006. The story of the rents indicates that the drainage started right at the beginning on day one. With the help of some Slimy Creature from the Abyss of Depravity, the SAPARD administration soon found office premises in central locations. SAPARD signed an agreement to rent office space on terms which were onerous. The rent was exorbitant, and the terms included for payment of that rent for 6 years in advance (that is to say, from the criminals’ perspective, as much as they could possibly get!). This matter was not revealed by the authorities until after 2006 when the leases were coming to an end. Someone was then dismissed from SAPARD (March 2007) over two leases for “striking an inappropriate bargain”. The Government then admitted that this theft had cost the fund BGN 1 Million. No-one has been prosecuted and the admission was to divert attention away from much larger frauds. The 2 leases which were called the “inappropriate bargain” in this case, were reported in the Press as being specifically the leases for the offices in Plovdiv and several smaller towns but I am tempted to imagine that the pattern was repeated nationally (SAPARD had prestige offices in most large towns).
Hugely profitable for the Bulgarian criminal but not so for the Bulgarian farmer!
Other revelations coming to light in 2006 and 2007 also show a pattern of behaviour and that this all started at the outset of the programme. Organised crime had co-conspirators in place within the administrations and were always ahead of the game. Notice would you that the revelations tended to come years after the events.
Did I say “pattern”? O-Oops! Surely the Bulgarian Government’s official position is that there is no “pattern’”, just SERIAL UNRELATED LARGE-SCALE THEFTS. Multiple wholesale frauds…. YES: pattern…. NO! Officially, it also appears, there are no “missing millions” because the authorities were one hundred per cent successful in recovering the money from foreign bank accounts as each revelation arose (sic). Officially the thefts are ALL now in the public domain, they are not the tip of some gigantic nefarious iceberg (sic). Officially Bulgaria brings to the European Union honest Government with full transparency and accountability (sic).
So I ask myself, mischievously, how early in the SAPARD programme, was it before farmers were told that all the money had already been allocated? Clearly if, hypothetically, 98 Eurocents in every Euro went straight into the pockets of criminals, there was not much left for farmers! Perhaps it was sometime before lunch on the very first day!
UNQUOTE
Posted by: Sam Took | June 6th, 2007 at 4:59 pm | Report this comment