Wednesday, November 12, 2008

Auditors' report makes for sobering reading

The very complexity of the CAP opens it to scams of various kinds. These may not be fraudulent in the criminal sense of the term (although such instances have occurred) but they do represent a use of loopholes to divert public money to line the pockets of individuals.

In this respect the report from the EU Court of Auditors for 2007 makes for sobering reading. The EU spent 51 billion euros in 2007 on agriculture and natural resources of which all but 2 per cent was on agriculture and rural development. The Court's press release states, 'the estimated overall error rate is still material. [Translated out of bureaucratic code, a lot of public money is being wasted]. Rural development, with its often complex rules, accounts for a disproportionately large part of this error rate.'

Of 196 transactions examined, 61 were affected by error and some two-thirds of the errors (40) were classified as 'serious'. In its response, the Commission finds reassurance in the fact 'that the most likely overall error rate is not significantly different from last year's'. So that's all right then.

Once again olive oil in Southern Europe is a particular culprit. In its 2006 report, the Court pointed out that in Greece, Spain and Italy the olive cultivation data were neither complete not reliable. 'These weaknesses persist in Italy and Greece, where four out of five transactions audited contained errors, some of which led to significant overpayments.'

Significant overpayments were found in relation to nuts and dried grapes in Spain and Greece. In one case in Spain a farmer appeared to have far fewer sheep than the number that had been claimed for.

Northern European states were far from blameless. In relation to the Single Payments Scheme which now accounts for 55 per cent of all payments, 'in England the four entitlements audited were erroneously calculated mainly due to failure to take account of changes in land parcels; while these errors did not have a significant impact on the 2007 payments since England applies the "dynamic" model, these initial entitlements, unless corrected, will result in significant over/underpayments in future years.'

In England the same parcel of land can be claimed by two 'farmers' under different area related and EU schemes. In nine out of 12 on-the-spot visits to 'new beneficiaries' of EU direct aid, 'the area declared for SPS was not eligible in whole or in part either because it was not in good agricultural condition, its main use was not agricultural or the beneficiary was not eligible because he did not carry out any agricultural activity on the land.' [This is sometimes referred to as 'sofa farming']

More generally, the Court states that 'the administrative controls in England do not provide assurance that EU aid is paid out correctly. England [does] not avail of the option to use aerial or spatial orthoimagery'. As the Commission points out in its response, this is not legally required, but it is still good practice.

Portugal has paid out €3.5m on 'balido' land. This land is usually public land of very poor pasture and mainly covered by bushes and trees. In Greece quantities of rice were missing from public storage.

In nine out of 13 agri-environmental schemes audited in France and Ireland farmers had not met the eligibility conditions. Even the Commission admitted that many of these errors had 'an important financial impact' in relation to records about nitrate reduction. The Commission also conceded that it was following up with French authorities the lack of an adequate audit trail in relation to interest rate subsidies.

One is left with the impression that public funds will contunue to be misallocated or wasted.

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