Auditors smell a €6 billion scam in EU grant overclaims

The European Union last year paid out six billion euros wrongfully, in the highest ever overclaims being reviewed by the European Court of Auditors.

The auditors have found numerous cases of overclaiming in the EU's €114 billion  budget, mainly in regional projects designed to raise living standards of the poor, as well as breach of procurement rules.

Auditors have found that at least 11 per cent of the €42 billion budget for regional and social funds have been overpaid for which the 27 member states and the European Commission were jointly liable.

There were also ''irregularities'' of between 2 per cent and 5 per cent in the €51 billion agriculture budget, the auditors said.

However, the Court of Auditors was unable to state whether the EU accounts were clean for ''most spending areas.''
 
''The court still finds that payments made to financial beneficiaries, such as farmers and project promoters running EU-funded projects, have a too high level of error,'' they said.

The auditors also picked holes in the agricultural spending to encourage rural development, where they found a ''disproportionately large part of the overall error rate.''

The auditors attributed the irregularities to unreliable data also said in random checks on 13 claimants, 9 were found not to have met the criteria. The auditors singled out olive farmers, mostly in Italy, for criticism, for ''errors such as unreliable data leading to overpayments.''

''In general, errors are often due to farmers over-claiming and/or entitlements being wrongly calculated. The court found errors related to farmers overclaiming or exaggerating land area or the number of animals,'' the auditors added.

While the estimated level of ''irregular'' regional spending fell slightly from at least 12 per cent to at least 11 per cent, this led to the highest cash total because of the leap in the EU budget from €107 billion in 2006 to €114 billion last year. In all, there were material errors in 92.4 per cent of the EU budget.

EU Commissioner for Regional Policy Danita Hubner said her department had reclaimed €843 million in irregular payments this year, with €1.5 billion more in the pipeline for recovery, including €243 million from Britain.

The European Commission is expected to demand back £190 million in overpayments for lack of paperwork from Britain this year.

In the Puglia region of southern Italy, certified organic olives were found to be growing in a waste dumpy. Four people were held for fraud after allegedly sending false certificates to the funding body.

The owners of a charitable horse-riding school received €400,000 (now £326,000) in EU funds from the Lombardy region of Italy by providing inflated numbers.