Katherine Butler: My disgraceful role in exposing EU fraud

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The Independent Online

This will sound sad, but one of the highlights of the calendar when I was an EU correspondent some years ago was an annual invitation to lunch with a balding middle-aged accountant from Luxembourg. This assignation, always in mid-November, was a secretive event, the setting a private dining room in an excellent but fabulously discreet restaurant, far from the unwelcome attention of prying eyes. He preferred it that way.

November being the game season, we would have partridge or venison from the Ardennes, and the finest of French wines. And then, when the last soupçon of Pavé au Chocolat, or whatever, had been cleared from our plates, the accountant would take out a large brown envelope and the four invited journalists (no, sadly it wasn't just me) would take out our notebooks and the real feasting would begin.

The accountant, you see, was was a member of the European Court of Auditors, the EU's financial watchdog, and his briefcase contained a leaked copy of the body's annual report.

For me, I am now ashamed to admit, this annual leak was manna from heaven. Although as voluminous as a telephone book and written in the densest of legalese, it was possible to decode the one story guaranteed to make headlines in Britain. The auditors were refusing to sign off the annual accounts.

Year in, year out, you could rely on the November ritual to generate outrage, and cracking copy, about the appalling levels of "fraud" that were blighting the European Union. The detail would vary, but the narrative didn't: in the anti-European press, "bungling" Eurocrats were so useless they hadn't a clue where "our" money had gone, while "grasping" peasants ran rings around them, "fiddling" and "cheating" their way through the CAP.

Abuses cited were sometimes in Britain (one landowner, I recall, was paid for fields that on the map would fall somewhere in the North Sea), but the report was an invitation to xenophobia with southern Europeans (and Irish), predictably, in the firing line. The Italian olive "scam" (with delicious hints of involvement by mafia dons in Sicily), the suggestion that officials in Thessalonika were trousering bribes and fitting out holiday homes with Euro-cash, or the Irish beef exports to Iran that never left the warehouse in Co. Leitrim. It was dodgy, and seedy. All that was missing was sex.

Even the neutral BBC or the pro-European British papers found it difficult to resist the outrage. We spoke of "a catalogue" of fraud and mismanagement, and questioned whether the European Commission could be entrusted with the management of the Union's finances.

This year's report from the Court of Auditors was published yesterday. For the 11th consecutive year, they refused to sign off the €100bn (£67.5bn) budget. The BBC devoted a big slice of news time to the scandal.

And it would be a scandal if it were all fraud. But is it? What the auditors actually say is that they cannot certify the accounts because much of the payments budget is "affected by errors of legality and regularity". But some of the misgivings relate to such "bungling" as a government agency in Britain failing to meet a deadline for its paperwork to be returned. Does that count as fraud?

Critics of EU mismanagement must accept that 80 per cent of spending is handled by the member state governments, so it is they who must find ways to comply with the auditors' demands. I say that not because as a European taxpayer I fear that there is mass embezzlement of billions of cash; I don't believe there is.

What I do fear is that the failure of our governments to close the loopholes, or simplify the hideously complex ways farmers, women on training schemes, the Palestinian Authority, or other beneficiaries claim money, means the "fraud" story will always be a convenient stick with which to beat Europe. Gordon Brown has seized on "fraud" in the EU to refuse an increase in the budget that is required to help the new member states of the East. That is the same Gordon Brown who, along with other finance ministers last month, rejected plans whereby national treasuries, and not Brussels, would have the responsibility to account for every penny of EU money they handle. Is Brussels too good a whipping boy?

In Britain, the "fraud" story is always discussed in the terms most comfortable to our simplistic debate on Europe. It is a narrative of them and us, of victory and defeat.

Sadly, even after eight years of supposedly pro-European government, there is rarely a sense of Europe being a collective venture in which imperfections exist, and we all have a responsibility to put them right, because the bigger picture might be worth it.