€850m EU fund fraud under investigation

FRAUD involving more than €850 million of EU funds is being investigated by the European Union anti-fraud office, OLAF.

More than 560 new cases of suspected fraud an increase of 4% were reported, including 12 against Ireland in the year up to June 2003.

Most of the theft was from aid to countries such as Kosovo and Africa, and from structural and agriculture funds being spent in member states.

OLAF is investigating 52 cases involving employees of the European Commission, through which most of the EU's €92 billion budget is channelled.

Following a series of scandals, the independent body has adopted a zero tolerance attitude towards any financial irregularities among the 16,000 people employed by the Union.

This follows high-profile cases such as that against Eurostat, where about €5 million is missing amid claims that senior management awarded contracts to their own private companies.

Last year, one Commission official was fined and jailed in Belgium for helping to create false travel expense claims to non-existent meetings. Most cases relate to fraud involving tenders for contracts.

Italy was the worst country for fraud with 89 suspected new cases opened. It was followed by Belgium with 83 cases and Germany with 79.

There were 51 cases reported in Britain and just 12 in Ireland, the third lowest of the 15 member states.

A Commission source said that the Irish cases were not major.

During the year one Irish case of fraud was proven involving structural Funds given to improve the country's infrastructure and training.

Under this heading Italy again headed the black list with 65 cases. In one case, ten people have been accused of embezzling €1.5 million which was paid by the EU for online training for students.

Almost a quarter of the cases investigated concerned the EU's budget to developing countries. In one case a former UN official was convicted in Germany of siphoning off almost € 4 million from an electricity project in Kosovo.

OLAF managed to retrieve €2.7 million of the money from a bank account in Gibraltar just before it was due to be transferred to Belize. The unnamed official was sentenced to three and a half years in jail.

Much of the theft is in export refund claims, especially of meat. OLAF said in its annual report it uncovered a ring of false Russian import documents. In another people were claiming refunds on cane sugar from Croatia even though sugar cane does not grow there.