Monday, November 22, 2004

CAP funds not correctly spent again

For the tenth year running the European Court of Auditors has felt unable to give a clear assurance that EU funds across the board were spent properly, although it did see some signs of improvement in relation to the CAP. The year being covered was 2002 which was the last year before enlargement.

The Commission's system of 'clawback' to recover misspent CAP funds after the event came in for particularly harsh criticism by the auditors. Only 17% of these funds have actually been recovered since 1971 and 10% have been written off as unrecoverable. Recovery of €2.31bn is left 'pending'. This evidence of systematic failures in EU procedures is just the kind of ammunition that proponents of the whole integration process need. The Commission points the finger at slow judicial and administrative procedures in member states, but this kind of 'blame game' is not going to solve the problem.

The auditors believe that the outgoing Prodi Commision has laid the basis for better financial control in the EU. What remains unclear is whether these new structures have altered behaviour and management culture. The Court of Auditors noted, 'There is still room for progress as regards agricultural spending in its entirety in order to rectify the significant shortcomings observed in the supervisory systems and controls.'

The Court found that arable payments were less prone to error or deliberate fraud than animal premiums Animals are, after all, less susceptible to satellite surveillance of the kind that one set of fields for which aim was being claimed was located in the North Atlantic. The phoney herd of cows allegedly kept on the 5th floor of an office block in Rome was, however, eventually exposed as a fraud. In fact some of the worst problems were in relation to southern products such as the tobacco, cotton and olive oil regimes along with export refunds and rural development. The three southern product regimes have now been reformed.

Serious underspending on programmes is also a problem that thwarts effective policy delivery. Pre-accession aid to enlargement states was a particular area of difficulty. Payments under the SAPARD instrument, designed to familiarise new member states with rural development programmes, had reached only 15% of available funds by the end of 2003. However, the Commission pointed out that early payments were made early in 2004.

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