Security & Fraud

Auditors Say EU Failed To Stop Misuse Of Funds

EU Failed to Stop Misuse of Funds

Auditors of the European Union said Thursday (Jan. 10) that the EU is failing to stop the misuse of funds to the tune of hundreds of millions of euros annually, reported Reuters.

According to the report, auditors said that the EU has only been able to get back about 15 percent of the misused funds. The auditors found that misused EU funds totaled 391 million euros or $451 million in 2017, in line with the past four years, but the EU's anti-fraud investigative office OLAF was only able to indict EU member states in 45 percent of cases. Between 2012 and 2016, around 15 percent of the total volume of uncovered fraud was recovered, noted the report.

What's more, the auditors said fraud was likely underreported because the mechanism to share information between EU states wasn't that effective. They noted that in some instances, the OLAF found that the misused EU funds were going to national politicians, their families and/or associates.

In the auditor's report, they backed the move to create a European Prosecutor's Office in charge of conducting investigations on spending, which is targeted to open starting in 2021. The auditors warned that a lack of staff or funding may force it to rely on national authorities. The regulator wouldn't have jurisdiction over Hungary, Poland, Ireland, Sweden, Britain or Denmark, all of which opted out of the program. In response to the auditor’s report, the European Commission said it will make moves to better fight fraud.

At the same time that the EU is being called to task for recovering misused funds, it is calling for more stringent enforcement of anti-money laundering (AML) rules. Prompted by a series of scandals, Brussels wants to go past proposals made in September for bank supervision. If instituted, the proposals would give the banking authority more power to oversee national banking watchdog organizations.



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