Grant frauds

Fraudulent procurement
Fraudulent use of government or private grants
Subsidies fraud
Agricultural fraud
Agricultural fraud associated with the EEC/EU Common Agricultural Policy and loss of income from Value Added Tax and duties, was estimated in 1993 to be worth some £4 billion per year. Of the £188 million fraud detected in 1992, only £7 million was recovered. The EEC/EU budget for combatting fraud was increased from £53 million in 1992 to £93 million in 1993. In 1992 there were 820 cases of fraud against customs regulations and 1,030 cases of frauds involving claims of agricultural subsidies. There is a tendency for large-scale fraud to be associated with the northern countries of the EEC/EU whereas the southern countries are associated with fraudulent declarations by small farmers.

The European Court of Auditors criticized the EEC/EU CAP for waste, fraud and inefficiency. Irregularities included: double payment of premiums, discrepancies in transport charges, malpractice in certain industries ([eg] olive oil, fats, milk products and meat), despatch of products where they were not wanted, airlifting products which could have been sent by road, diversion of aid to small producers to large ones (who artificially split up their holdings to qualify). Much of the fraud involved EEC/EU subsidies for exports to other countries which were then diverted elsewhere, or the passing off of produce as grown in the EEC/EU when it had been illicitly imported from elsewhere. In 1993 EEC/EU acknowledged the existence of an Italian racket in durum wheat which had defrauded the EEC/EU of £81 million over a period of four months. In 1994 the Court severely criticized a £1 billion scheme to subsidize tobacco farmers each year. Southern European farmers produce mainly sub-standard tobacco which has to be dumped. But the report noted that there was no assurance that payouts for processing and storing tobacco were incurred in a regular and lawful manner. There were irregular manipulations of the tender system and a few large business were illegally favoured. Italy and Greece were singled out in 1994 with respect to agricultural fraud.

In 1994 a former UK cabinet minister specifically accused Italy, Germany, France and Spain of defrauding the EEC/EU Common Agricultural Policy and perpetuating a wicked corrupting system of between a quarter and a half of the total expenditure. He argued that in particular Italy appeared to have defrauded the EEC/EU taxpayers of 60% of the losses identified.

One two year operation worth £11 million in illegal subsidies involved a trader who imported "prime beef" from South America described as "offal" to escape EEC/EU farm import levies. The offal was then exported as prime beef which attracted export subsidies. In another case, chicken scraps were exported as beef and the exporter applied for beef export subsidies. A 1990 UK report estimated nearly 10% of the $11.4 billion agriculture export refund budget was allotted to fraudulent exporters.

The European Commission reportedly suspected that member governments, responsible for policing European Community fraud, were failing to report all the fraud that they detected, possibly for fear that an employment-generating company might be closed or that the funds would have to return from the national treasury.

(D) Detailed problems