EU farm fraud growing fast

Brussels - The European Union is suffering vastly increased losses from fraud, some of it directed by organised crime, according to officials in Brussels, writes Andrew Marshall.

The European Commission's 1993 fraud report shows a 50 per cent increase in detected fraud to nearly 400 million ecus. Fraud in the farm sector accounts for most of this and is growing the fastest, the report warns.

'Frequently we are now encountering organised crime,' said Peter Schmidhuber, the German Commissioner for the Budget, who heads the fight against fraud. 'Criminal groups have extended their activity.'

Mr Schmidhuber put forward a new plan for fighting fraud, including a special telephone line for informants with information on frauds, blacklists of companies and individuals involved with crime, new powers and staff for the EU's fraud unit, and greater harmonisation of EU law to enable the Commission to bridge the gaps between national law.

Michael Howard, the Home Secretary, also suggested a new plan to tackle fraud when he met fellow justice ministers on Wednesday. His strategy is to allow member states to co-ordinate their action, to allow fraudsters to be extradited and imprisoned, and to make sure that fraud against the EU is treated as seriously as fraud against member states, as required by the Maastricht treaty.

There is, however, a problem: the fight against fraud has become enmeshed in the perennial battles over who in the EU should have influence.

Mr Howard's plan is to be implemented by member states, rather than by any central EU body. Mr Schmidhuber's scheme would allow a considerably increased role for the Commission itself, giving it a foothold in the sensitive area of criminal law. It could also lead to plans to harmonise some legal aspects across Europe, something that would raise hackles in Britain. But the Commission is likely to claim that the passage in the Maastricht treaty which covers fraud gives it new powers.