Countries’ assessments of the effectiveness of their own anti-fraud measures are also too optimistic, says the European Court of Auditors.
In a report the watchdog has called for efforts to prevent, detect and deter fraudsters targeting EU cohesion funding to be strengthened substantially.
“Cohesion policy represents one third of the EU budget but accounts for nearly 40% of all reported fraud cases and almost three-quarters of the total financial amounts involved in these cases”, said Henri Grethen, the auditor responsible for the report.
“Member states, however, generally conclude that their existing anti-fraud measures are good enough. We consider this conclusion too optimistic.”
According to the European Court of Auditors, more than 4,000 potentially fraudulent irregularities affecting the EU’s financial interests were identified between 2013 and 2017.
These represented almost €1.5bn (£1.3bn) of EU support, 72% of which concerned cohesion policy which is aimed at reducing economic and social disparities between members states.
The auditors assessed the performance of national authorities in the “anti-fraud management process” – ranging from prevention and detection to response – and visited Bulgaria, France, Hungary, Greece, Latvia, Romania and Spain.
While authorities in these countries had improved their assessment of the risk of fraud and fraud prevention measures, the auditors said, their analysis was often “insufficiently thorough” and they generally had no specific anti-fraud policy.
They added that the impact of prevention and detection measures is often insufficiently monitored and evaluated, and corrective measures have a limited deterrent effect.
Reporting arrangements are unsatisfactory, cases are under-reported, fraud suspicions are poorly communicated to appropriate bodies, and coordination between anti-fraud bodies is weak.
The European Court of Auditors has recommended that member states adopt formal strategies and policies to combat fraud against EU funds, strengthen their fraud risk assessment, and improve the way they use data analytics to battle corruption.
According to a European Commission report in 2017, irregularities reported as fraudulent by member states represent 0.4% of the EU funds paid for cohesion policy.
