The Search for Supra‐National Solutions: Investigating Fraud against the European Budget
| Published date | 01 April 1997 |
| DOI | https://doi.org/10.1108/eb025827 |
| Pages | 152-159 |
| Date | 01 April 1997 |
| Author | W.A. Tupman |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 5 No. 2 — Fraud
BRIEFINGS
FRAUD
The Search for Supra-National Solutions:
Investigating Fraud against the European Budget
W. A. Tupman
ABSTRACT
Fraud against the Community budget requires a supra-
national
response because
it is an area in which
organised
crime groups work on a cross-border basis. The paper
considers
some of the difficulties confronting the mounting
of such a supra-national
response:
the inbuilt
character
of
fraud on the Community budget, given the nature of the
organisation; difficulties with information technology; the
scale of the problem; the lack of prioritisation of the issue
by Member States; corruption within the political estab-
lishments of Member States; and legal problems. The
paper concludes with an examination of the available
models for operational cooperation in the fight against
fraud:
the K4 Commission set up under the Maastricht
Treaty, the SIRENE bureaux, Interpol, Europol and
UCLAF, the Commission's own anti-fraud unit.
National police investigators have anyway set up their
own
cross-border
networks to combat the changing modes
of
cross-border
crime; but all this raises questions about
national
sovereignty
and
accountability.
'Organised crime has gone international . . . the
protection of common interests . . . cannot be
safeguarded by isolated action on the part of
national anti-fraud units . . . criminal networks
actually thrive on the differences between the
criminal justice systems in different countries
and the discrepancies between the penalties
applied in the Member States.'1
The above statement goes to the heart of the
matter: contemporary crime is internationally orga-
nised. It is also, as a result of the expansion of the
illegal drugs industry, bountifully supplied with
finance for new enterprises.2 Citizens of the Euro-
pean Union (EU) simultaneously want free move-
ment of goods and people across internal borders
and the maintenance of an open, democratic soci-
ety. They also want to be secure from victimisation
by criminal groups. They will, therefore, have to
accept institutions above the level of national gov-
ernments so that such criminal groups may be
effectively combated. Fraud against the Commu-
nity budget is only one of many cross-border
operations in which various organised crime
groups cooperate, but it is the one in which a
supra-national response is most urgent, primarily
because Member States will always devote their
own scarce resources to redressing their own losses
rather than investigate crime against a 'foreigner',
as the Commission or 'Brussels' is perceived.
Unite Contre la Lutte AntiFraude (UCLAF),
the Commission's anti-fraud unit, believes that
major frauds against the Community budget are
committed by the same 'organised crime' groups as
those involved in drug trafficking, money launder-
ing, smuggling and perhaps even terrorism.3 In
Italy, for example, the Mafia has been blamed for a
high percentage of ECU255m worth of fraud
committed between 1984 and 1992. The IRA has
been accused of involvement in moving animals
across the Northern Irish border to attract sub-
sidies fraudulently.4 On the income side of the
Community budget, 2 per cent of the cases
account for 66 per cent of the ECUs reported as
defrauded. On the expenditure side, 8 per cent of
the cases account for 74 per cent of the ECUs.5
Individual evaders, as opposed to organised crimi-
nal conspiracies, may be responsible for a numer-
ically high proportion of cases but the economic
impact of these opportunists, as in other forms of
crime, is relatively minor. A small number of
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