§ Mr. ShersbyTo ask the Chancellor of the Exchequer what steps are being taken to help combat fraud in the European Union, with particular reference to the spending of the common agricultural policy and structural or cohesion budgets. [14974]
§ Mr. Heathcoat-AmorySteps are being taken to combat fraud in all areas of the European Community budget.
At the Essen European Council last December, the Prime Minister made a number of proposals to help tackle fraud, as well as waste and mismanagement. These are now being taken forward. Member states will report back to the European Council later in the year on what they are doing to combat fraud against the Community budget on their own territories. The Council is actively pursuing agreement on a legally binding instrument on national criminal law protection of the Community budget, as well as on a regulation on the protection of the Community's financial interests which would establish a framework for extending Community administrative penalties to all areas of the Community budget.
Significant progress is being made against fraud under the common agricultural policy. Administrative penalties are being applied on overclaims and member states are being "disallowed" previous agricultural expenditure where it is found not to be in accordance with the applicable rules. CAP reform is addressing weaknesses in controls that have previously led to fraud and irregularity. This includes a Commission proposal for a new procedure to reform the clearance of CAP accounts, involving in-year audits to improve management, and preventative and corrective action with suggestions from the Commission on possible changes to procedures instead of financial penalties. Also well advanced is Council consideration of a significant measure for tackling fraud, known colloquially as the CAP blacklist. This would set down a framework for member states to identify, and to notify each other of, traders who have deliberately, or as a result of serious negligence, committed an irregularity prejudicial to Community funds or who are subject to "well found suspicion" of having done so.
In July 1994, Commission regulations were introduced to ensure that member states report irregularities under the structural funds and the cohesion fund. These require member states to submit quarterly reports to the Commission on any irregularities which have been the 653W subject of initial administrative or judicial investigations. These reports, the first of which was presented by member states to the Commission at the end of last year, will provide a more complete picture of fraud, financial mismanagement and waste in the structural funds.