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The BBC's Colin Blane
"Fight against fraud is top priority for European Commission"
 real 28k

Friday, 19 November, 1999, 22:56 GMT
EU fraud: a billion dollar bill
Baghdad market was the destination for subsidised European beef

A new report by the European Commission's anti-fraud unit says the European Union lost a billion dollars last year through crime and corruption.

Cigarette-smuggling alone deprived member states of hundreds of millions of dollars of duty.

Other major smuggling operations involved alcohol and olive oil.

In one case of corruption within the Commission, an official was sacked for receiving kickbacks from companies to which he gave contracts.

Michaele Schreyer: taking on organised gangs
But the EU's budget commissioner, Michaele Schreyer, said there had been some success in tackling organised crime.

The commissioner responsible for reform, Neil Kinnock, also published what he called a "whistleblower's charter" offering guidelines for EU employees wishing to report suspected fraud.

Tax evasion

"Criminality cannot be brought down to zero," Ms Schreyer told a news conference in Brussels.

"But we cannot tolerate tax evasion, customs fraud or taxpayers' money disappearing into the pockets of individual criminals and international organised crime."

The report said the Commission had investigated more than 5,000 cases of suspected fraud, and that its suspicions had been borne out in one in five cases.

It said the Commission had managed to persuade authorities in the tax haven of Andorra, near Spain's border with France, to stamp out rampant smuggling of cigarettes into the EU.

This is estimated to have saved the EU 75 million euros in lost customs duties in 1998, along with 300 million euros in VAT and excise duties.

Whistleblowers' charter

The report also said that the Commission had uncovered a systematic diversion since 1991 of large amounts of subsidised beef to Iraq, in violation of a UN embargo.

Neil Kinnock: whistleblowers foster transparency
In a serious case of alcohol smuggling, a big crime syndicate diverted 1.5m litres of contraband from the EU to Eastern Europe, some of it falsely declared to be tomato sauce.

Anti-fraud officers are currently investigating allegations of corruption within the EU office in Stockholm.

Mr Kinnock said his "whistleblowers' charter" would foster transparency and assert the need for accountability.

"I have long held the view that conscientious and responsible whistleblowing in public and private sector organisations is necessary and justified," he said.

Mr Kinnock was one of only four commissioners re-appointed to the new European Commission after a whistleblower's revelations of cronyism and corruption led to the resignation en masse of the former Commission in March.

He said the new charter would provide better safeguards to protect whistleblowers' careers.

Earlier this week a report by the European Court of Auditors said that the European Commission had misspent about five per cent of its budget in 1998. It noted weaknesses in accounting systems, and other management problems.

After publication of the report, the Commission's spokesman, Peter Guilford, said the new EC president, Romano Prodi, was sweeping a new broom through the organisation.

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See also:
16 Nov 99 |  The Economy
EU fraud costs millions
30 Sep 99 |  Europe
European Commission axes perks
10 Sep 99 |  Europe
Report lashes 'lax' European Commission
15 Sep 99 |  Europe
Prodi's new commission approved
10 Jul 99 |  Europe
Who's who in the new European Commission
09 Jul 99 |  Europe
Prodi's new EU Commission

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