The European Public Prosecutors Office (EPPO) said that the European Union budget lost more than €5 Billion in misused funds.
This figure is exponentially bigger than the European Commission’s own stated loss of €300 million.
The report from EPPO comes at time when serious questions are being asked about corruption and how EU institutions protect taxpayers’ money.
There is also a significant difference between the number of cases reported by EPPO and those reported by the EC and its watchdog, the European Anti-Fraud Office (OLAF).
The EU Chief Prosecutor Laura Codruța Kövesi said in a letter in July to Ilze Juhansone, Secretary General of the EC, that “the Commission did not know about the existence of more than 90 per cent of suspicions of fraud” that were hurting EU finances.
The reason being, she said, was that many of these cases were “under investigation by national prosecution services”.
The letter was made public at the request of investigative outlet Follow the Money. When other unreported cases of alleged fraud, which mainly damage the budgets of EU Member States, are included the total damage rises to an estimated €9.9 Billion.
The revelations come at a time when the EU is under serious scrutiny over how it protects itself and its taxpayers’ money against corruption.
They also come in the wake of the Qatargate scandal, in which several centre-left MEPs are alleged to have received hundred of thousands of euros in bribes.
They were allegedly paid in exchange for giving foreign countries influence in the EU’s law-making processes, and thus EU citizens’ confidence in the bloc’s integrity has significantly deteriorated.
According to a poll conducted by the European Parliament, only 35 per cent of Europeans were satisfied with the EU’s fight against corruption within. This was the lowest level recorded for any aspect of EU democracy included in the poll.
In March, a report was issued by the Court of Auditors (ECA), another of the EU’s corruption watchdogs, which stated that the EC had no way of guaranteeing that billions of euros given out from its joint Covid-19 fund were not being lost through fraud.
The crux of the issue was what the ECA called an “accountability gap”. This was the fact that the EC handed out money to Member States from its recovery fund and then merely relied on those nations to assure it that the funds were spent correctly.
The report noted “the EU’s executive did not plan to examine” how recipient countries would guarantee that EU-funded investment projects were in line with the bloc’s standards.
A similar dynamic has now played out with the EC and OLAF, which appear to have relied on Member States to report losses to them.
The difference is also causing reverberations in terms of the amount of money OLAF has succeeded in recovering.
It can only provide non-binding recommendations to Member States. Unlike the EPPO, which is independent and holds prosecutorial powers, OLAF’s investigations have resulted in a mere 30 per cent recovery of funds lost.
Kövesi’s revelation that the EC is only aware of 10 per cent of fraud implies to many that OLAF’s actual effectiveness in recovering funds could be as low as 3 per cent.
While the EU’s executive had spent more ambitiously in the wake of the Ukraine war and the Covid pandemic, it now looks like it is running into serious trouble.
As the EC demands increased budgetary payments from Member States, national leaders told the EC to tighten its own belt at the latest European Council summit in October.