European Union: Prevention of Fraud (Hansard, 5 November 1998)

§ Baroness Amos
My Lords, the Government are very concerned at recent allegations of fraud within the Commission, notably in the EC Humanitarian Office (ECHO). We are strongly in favour of fighting fraud inside Community institutions by the most effective machinery that can be devised. The Commission's anti-fraud unit takes the lead in fraud investigations. The Government strongly support measures to improve the effectiveness of the anti-fraud unit.

§ Lord Willoughby de Broke
My Lords, I am most grateful to the Minister for her reply. However, is the noble Baroness aware that, first, UCLAF—I believe that it is the unit to which she referred; namely, the anti-fraud unit—is itself the subject of a deeply critical report by the European Court of Auditors which was published in July of this year? First, I do not believe that the Government can rely on UCLAF to safeguard funds distributed through ECHO, which has been shown to be deeply flawed. Secondly, is the Minister aware that the British taxpayer in 1997 contributed £46 million to the ECHO pot? Does the Minister agree that that money might be better spent and more wisely accounted for if it were distributed unilaterally rather than through the highly dubious channel of ECHO, or any other European agency?

§ Baroness Amos
My Lords, as I said in my original Answer, we take a very serious view of the matter. Indeed, we have always been in the vanguard of member 366 states who are working to ensure financial propriety. In fact, the Government have consistently supported measures to improve financial management within the EC. In particular, we supported the measures to strengthen the role of the European Court of Auditors which were agreed at Amsterdam last year. We are in fact committed to our aid being channelled through a number of sources. We work in partnership—it is one of the factors most strongly outlined in last year's White Paper—with a number of institutions.

§ Baroness Crawley
My Lords, I welcome the statement by the Minister that the Government are determined to tackle financial irregularity in the European Union. However, can my noble friend tell us whether the Government believe that ECHO is making a positive contribution to international humanitarian work?

§ Baroness Amos
My Lords, I thank my noble friend for her question. As I said, the Government are keen for fraud to be dealt with both promptly and effectively. But, yes, ECHO is a major provider of humanitarian assistance and has made an effective contribution to humanitarian programmes in many parts of the world. We believe that considerable progress has been made in the past year to ensure that ECHO's assistance is provided in a well-targeted and principled manner. We shall continue to support and encourage that process.

§ Lord Swinfen
My Lords, can the Minister tell the House whether immunity from prosecution will be lifted from Commission employees who may be implicated in either irregularities or fraud, so that they can be prosecuted in one of the EC countries?

§ Baroness Amos
My Lords, a criminal investigation into the missing ecus is being separately undertaken by the Public Prosecutor's Office in Luxembourg. There has also been a call for the establishment of an anti-fraud office which is independent of the Commission. We await the outcome of both processes with interest.

Lord Bruce of Donington
My Lords, will my noble friend the Minister take into account not only the recent reports which point to a considerable amount of fraud and irregularity within the Commission's structure itself, but also the necessity for an immediate overhaul of the financial regulations by virtue of which an endeavour is made at Commission level to control such matters? Will my noble friend emphasise to the Government the necessity for an urgent examination—and I mean "urgent"—of the financial regulations, which are at present in a form which facilitates fraud rather than preventing it?

§ Baroness Amos
My Lords, as I said earlier, the Government have consistently supported measures to improve financial management within the EC. This was one of the areas in which we took a lead during our presidency of the European Union.

§ Baroness Ludford
My Lords, will the Minister confirm that much of the fraud in the use of European money occurs, sadly, in national administrations, unfortunately particularly in the farming sector, but that in those cases the requirement for unanimous voting in the Council of Ministers has often blocked serious anti-fraud measures? It is therefore inconsistent for those who want to tackle fraud in the use of European Union money to resist the use of majority voting to get anti-fraud measures accepted.

§ Baroness Amos
My Lords, the noble Baroness has widened the Question considerably. I am unable to address the specific area of farming that she mentioned. We are not aware of fraud in any other European development programmes other than the ones that I have already mentioned. If I can assist the noble Baroness further I shall write to her.

§ Baroness Gardner of Parkes
My Lords, I congratulate the noble Baroness on the first occasion she has answered Questions at the Dispatch Box. With regard to the question about humanitarian aid asked by the noble Baroness on the Benches opposite, is the Minister aware that at present NGOs which are applying to the European Commission for funding for humanitarian aid are not receiving a reply either in the affirmative or the negative? There is something wrong; the whole system seems to be rather bogged down. Is the Minister aware of that problem, and if she is able to do so will she try to obtain responses with regard to this badly needed humanitarian aid?

§ Baroness Amos
My Lords, I thank the noble Baroness for her kind words of welcome. I am not aware of NGOs experiencing particular problems in the area that she identified. However, I shall investigate the matter and write to the noble Baroness.

§ Lord Stoddart of Swindon
My Lords, I add my congratulations to my noble friend on her elevation to answering Questions in this House. I am particularly pleased to hear that the Government wish to strengthen the hand of the Court of Auditors. Is the Minister aware that Mr. Bernhard Friedmann, the President of the Court of Auditors, has recently criticised M. Santer and the Commission for delaying for four years information which would have enabled the Court of Auditors to examine this fraud in the ECHO system? Do the Government have any plans to make representation to the Commission to be more open and more honest in its dealings in the future?

§ Baroness Amos
My Lords, as far as I am aware the Commission agreed to release the documents relating to this matter for European parliamentary scrutiny. We have supported the measures to increase transparency. However, it is important to recognise that nothing can be done at this stage which would prejudice the early completion of the present investigations.