BELGIUM:EU auditors refused to sign off on the union's 2006 accounts yesterday, citing weak internal controls and substantial errors in payments made to individuals and firms.
They also criticised Ireland's record in implementing the new single payment system scheme introduced to disburse EU agricultural funds. More than 150,000 payments to farmers were judged "irregular" and the system of controls and procedures in the Republic were deemed "unsatisfactory".
Problems with the distribution of EU agriculture funds - worth €49.8 billion in 2006 - were some of the key reasons that the European Court of Auditors (ECA) delivered an adverse opinion on the bloc's accounts for the 13th year in a row. The auditors also uncovered irregularities with EU structural fund payments, where 12 per cent of the total amount of EU cash reimbursed to beneficiaries was estimated to be paid in error.
The ECA concluded more effort was needed from the European Commission and EU states to better control EU spending worth €106.6 billion in 2006.
"Reasons for the errors in the underlying transactions include neglect, poor knowledge of the often complex rules and presumed attempts to defraud the EU budget," said ECA president Hubert Weber, who delivered the court's verdict on the accounts to EU finance ministers in Brussels.
Auditors noted a marked reduction in the level of errors related to the supply of agriculture funds. But the ECA said a new single payment scheme, introduced to help simplify the common agricultural policy by focusing payments on land use rather than production, had diverted funds from farmers to big landowners.
Golf clubs in Denmark, railway companies and city councils in Britain, and horse riding schools and stud farms in Germany, are now receiving EU agricultural aid, it said.
EU rules governing the single payment scheme also gave member states discretion in relation to the allocation of entitlements, which could lead to unequal treatment of beneficiaries from one state to another, and even people within the same country, according to the ECA.
The report specifically criticises the implementation of the single payment scheme in the Republic, noting that 150,000 entitlement payments were affected by "irregular consolidation". The ECA said the Government had not complied with EU legislation by enabling farmers with fewer hectares of land than entitlements to "consolidate" all their entitlements on the introduction of the new payments system based on land use.
It also highlighted the case of an individual Irish farmer, who by simply transferring his land holding to his son had almost doubled entitlements on the same holding to €125,000 from €67,800.
A Department of Agriculture spokesman said last night that it would consider the report and if necessary revert to the court on the matter.
But he said that entitlements and transfer of holdings rules for farmers had already been discussed with the commission in preparation for the introduction of the single payments scheme back in 2005.