EU drive against pounds 8.3bn fraudsters

BRUSSELS - The European Union plans to add another weapon to its anti-fraud armoury today - pay-offs for Euro-grasses, writes Andrew Marshall.

The EU Commission will today discuss a scheme for paying people who inform on fraudsters, put forward by Peter Schmidhuber, the German Commissioner responsible for the budget. Initially, the sums involved will be low - between 100,000 (pounds 83,500) and 200,000 ecus will be allocated - and it will take some months to finalise the details. The Commission wants to agree the plan with both the Court of Auditors, the EU's financial watchdog, and the European Parliament's budgetary control committee.

One of the most difficult issues to tackle, Commission officials say, is how to protect those who give information. Calls will be taken on a special Brussels hotline by members of UCLAF, the Commission's fraud-busting squad. At the moment, the Commission is a leaky place, but given that some fraud is connected with organised crime, there will have to be tight security of a kind not normally practised.

UCLAF's staff is to double from 50 to 100 as part of a new attack on fraud that was set out in April. Most of the new recruits are former police or customs officers, reflecting a new seriousness in the fight against fraud.

Member states that are or are about to become contributors to EU funds, including Britain, Germany and the Netherlands, have pressed for a clampdown. This is partly because they want to rein in EU spending and partly because fraud is used by critics of the EU as a weapon against it.

The amount of EU cash that disappears because of fraud is hard to quantify, as only some of it ever comes to light. The figure is variously put at between 1 and 10 per cent of the EU's 70bn ecu budget, putting it between pounds 1bn and pounds 10bn. Large amounts of money are also wasted or lost because of irregularities, poor accounting or poor drafting of legislation.

Last year, detected fraud amounted to 394m ecus, up 50 per cent from the year before. Organised crime was increasingly involved, Mr Schmidhuber said.