Just as huge sums of European Community funds are being found to put massive amounts of unwanted beef and veal resulting from the mad cow crisis into subsidised public intervention cold storage, four countries of the European Union, France, Ireland, Italy and UK, have been heavily fined by the Brussels Commission for non-compliance with financial and sanitary regulations in the sector.
Responsibility for the ensuring that this sector operates legally falls to the European Executive, the Commission. The mechanism known as "intervention stocks" exists to cushion over-production. The goods are preserved until such time as there is a demand. Abuse is widespread. Fines for abuse are proportional to the level of fraud. Policing the system operates simply: inspectors run spot checks, report their findings and when fraud is uncovered, estimate what is owed to EU. A "correction" is duly levvied.
All fairly straightforward up to this point. But, from here, the picture clouds over somewhat. Fixing the fines is so serious a matter that the ultimate decision is made at top level by the College of Commissioners themselves (20 including President Jacques Santer). And this is where the chaos sets in as lobbying errupts on the scene. Individual member states dispatch their most able negotiators to Brussels with instructions to threaten, promise, curry and cajole EU officials into reducing their penalties.
And so it was Ireland's and Britain's good fortune that their efforts paid off. Faced with the uncomfortable prospect of forking out Irish punt 74 263 567.- (rumoured to equal the country's total contribution into the EAGGF budget!) Ireland succeeded in getting 24 020 455.- deducted, leaving a less fearful 50 243 112.- to pay. Ireland currently holds the EU presidency.
Preparations for such a mandate begin three years in advance and entail regular close contacts with Brussels. Ireland took maximum advantage of this to bend the Commission's ear, according to observers on the scene. During this run up period officials from the little country would discuss nothing but the daunting fine. Only when a solution which suited them was offered could other business proceed. The UK must have used effective bargaining tactics too because a hefty reduction of £7 475 778.-to £ 4 983 852.- from an initial £12 459 630.- was negotiated. Less fortunate were, France and Italy who were faced with immovable amounts, respectively FF 189 379 759.- and It Lira 54 927 174 195.-.
Before taking an eye-opening glance at the misdeeds done to earn such penalties (see excerpts of Summary Repor below), the context of intervention and the European Agriculture Guarantee and Guidance Fund (EAGGF) need to be understood. EAGGF is the principle Fund of the EEC, it was created in April 1962 as the financial instrument of the Common Agriculture Policy. It has no judicial character of its own, the Commission manages it. A very significant part of the European Community general budget : 49% in 1995 is taken up by the EAGGF. The guarantee activity finances interventions within the internal market (to guarantee producers minimum prices) and provides export restitutions for goods sold to countries outside the EU.
The revealing excerpt below, regarding Beef and Veal public storage, is taken from the European Commission's latest Summary Report on the results of inspections concerning the clearance of the EAGGF Guarantee section. It refers to accounts for 1992 and of some expenditure for 1993. The document is internal. The excerpt relates to only one aspect of the EAGGF budget.
Meat going into intervention may be kept there indefinitely, experts at the Commission say. But the quality of meat gradually diminishes the longer it is kept frozen. The meat can be stored boned or deboned according to specifications agreed with each member state. Carcases are stored in halves or quarters. (Weight of quarter carcases vary depending whether they are hind or fore quarters.) Deboned meat must be packaged according to procedures designed to limit fraud....
Quality of the Public storage of beef and veal
In 1990 the EAGGF investigated public storage of beef and veal in Ireland. The Irish monitoring system was based on "permanent presence" and presented a number of basic flaws :
- no effective monitoring of the goods during storage; - no lightning inspections; - no administrative or contractual penalties where traders failed to meet their obligations; - no staff rotation in sensitive areas, which inevitably reduced their independence and impaired the effectiveness of the entire monitoring procedure as a result.
Fears that such an inadequate system for monitoring public beef storage might lead to fraud and irregularities were heightened by the fact that an identical system with all the same flaws had led the Commission to make a correction on private storage in the 1989 clearance of accounts.
The Commission began its inspections on bones and bone-in meat in March and April 1990. These investigations were followed by checks in 1991 on boned meat and carcases in Ireland, then on a consignment of boned meat in Italy in 1992 and lastly on tonnes of bone-in meat stored in Netherlands (four centres) in 1993.
The EAGGF's findings during these checks were notified to the Irish authorities in a series of letters (five in all). The main points highlighted were :
- inadequacies of the "permanent presence" systems as the only means of control; - the Irish acceptance procedure caused classification problems that resulted in the buying-in of ineligible goods; - the Irish instructions on boning and their interpretation did not comply with the Community rules and led as a result to the inclusion of ineligible goods in the cartons of boned meat; - no real explanation was provided for the differences in yield upon boning noted between public and private storage.
All the above was explained in detail to the Irish authorities by letter in September 1991, July 1992, November 1992, May 1993 and January 1994. Two bilateral meetings were held in May 1993 and July 1994, the latter concentrating in particular on the outcome of the inspections undertaken in the Netherlands in 1993 and in the differences in yield which have still not been satisfactorily explained by the Irish authorities.
3. Anomalies detected
The Commission reached the following conclusions, based on the various checks and analyses carried out :
- The Irish monitoring system, based on "permanent presence" was unable to ensure satisfactory protection of the Community funds (point 1.6 below).
For the above reasons, the Commission has concluded that the Irish authorities did not fulfil their obligations in 1990-91 pursuant to Article 8 of Regulation (EEC) Nö 729/70.
5. The Conclusions of the Special Tribuna
The Special Tribunal included in its report under 'Recommendations' the comments made by the Director of the EAGGF as regards the inadequacies of the "permanent presence" system. The Tribunal considers the amendments contained in Regulation (EEC Nö 2456/93 eminently advisable. The new Regulation led the national authorities to carry out a complete overhaul of the monitoring procedures in several key sectors. As regards the problem relating to yields, the Tribunal established that the companies in the xxxxx group operated on the basis that, once the minimum threshold of 68% had been reached, the quantities of meat left over from the boning operations became their property. This practice was followed semi-officially under the monitoring and surveillance arrangements then in force in Ireland.
A correction is necessary because in 1990-91 the Irish authorities did not fulfil their obligations under Articles 8 of Regulation (EEC) Nö 729/70. The weaknesses inherent in the monitoring system occurred in areas considered essential by the Commission. Furthermore, anomalies had already been reported for 1991 in summary report VI/320/94. Very large amounts had been wrongly charged to the Fund as a result.
As the loss suffered by the EAGGF cannot be measured accurately, it is necessary to make a flat-rate assessment which, in view of the efforts made by the Irish authorities to improve their monitoring system, will amount to 10% of the expenditure charged to the Community budget for 1990 and 1991 in respect of the public storage of beef and veal.
After carefully examining the report of the Conciliation Body of 21.11.1995 on case 95/IR/013, the Commission considered that the proposed correction for 1990 should be maintained, in view of the gravity of the deficiencies found during their controls and that for 1991 fixed at 5%, in view of the measures taken during that year to improve the effectiveness and reliability of controls and the consequent lesser risk of irregularities.
TOTAL 1990: 26 222 656.62 IRL
TOTAL 1990 + 1991: 50 243 112.26 IRL
In 1990 the EAGGF began an investigation in Italy into the public storage of beef and veal. In view of the deficiencies in the organization of buying-in and the anomalies detected, a second mission took place in 1991. The findings made during the on-site scrutiny of the goods were confirmed when goods left storage as part of the humanitarian aid operation for Bulgaria (Regulation (EEC) Nö 843/91) and sales to the former Soviet Union (Regulation (EEC) Nö 1187/91) and Brazil (Regulation (EEC) Nö 910/91).
The Italian authorities were informed of the investigation results in letter Nö 30509 of 7 October 1992 from the Director-General for Agriculture. A bilateral meeting was held in Brussels on 15 and 16 March 1993 during which the Italian authorities responded to the Commission's findings and submitted a plan to improve their buying-in procedures. Their responses were officially sent by letter Nö 1573, dated 19 May 1993, from the Director-General of AIMA. The Director of the EAGGF replied by letter Nö 1549 3 January 1994 in which he said that AIMA's replies were unsatisfactory. 2. Inadequacy of checks
Responsibility for checks had been delegated in its entirety to the professional body AIA. AIMA did not check to see whether the responsibilities delegated were properly carried out. Auxiliary staff with links to the meat industry were frequently used to carry out the checks; their independence could not therefore be assured. Some of the staff were not sufficiently qualified to carry out buying-in. Responsibility for boning operations was entirely delegated to the intervention centres, without monitoring. The monitored were thus their own monitors.
3. Buying-in of ineligible goods
The following anomalies were detected during the on-the-spot goods inspection:
All of the findings in Italy in 1990 and 1991 show that the monitoring system then in place was unable to satisfy the requirements of Article 8 of Regulation (EEC) Nö 729/70. In the case of 1991 in particular, the EAGGF regrets the light-handedness with which the German health and customs authorities treated goods leaving their territory, since some German traders took advantage of the inadequacies then pertaining in Italy.
In 1990 to 1991 sales into Italian intervention of meat originating in Germany increased considerably (from a few thousand tonnes in 1990 to about 80 000 tonnes in 1991). Some of this merchandise was of doubtful origin, because health stamps had been cut out and the original classification of numerous carcases had been removed. Much of the merchandise in question did not meet criteria applicable for German intervention and was accompanied by health certificates which had clearly been altered. It is hardly imaginable that these facts could have passed unnoticed by either the health or customs authorities, given the quantities involved.
The inadequacies in the monitoring system occurred in areas that the Commission deems essential. Furthermore, anomalies had already been reported for 1991 in summary report VI/320/94. Very large sums had been wrongly charged to the Fund as a result. As the loss sustained by the EAGGF cannot be measured accurately, it was decided to make a flat-rate assessment. In view of the Italian authorities' efforts, the proposed correction amounts to 10% of the expenditure on public beef and veal storage charged to the Fund for 1990 and 1991, as follows:
Total for 1990: 7 002 348 655 LIT
TOTAL 1990 + 1991: 54 927 174 195 LIT
In 1992 the EAGGF investigated the public storage of beef and veal in France. The findings made during the investigations were notified to the French authorities by letter from the Director-General for Agriculture Nö 3179 of 20 January 1993. The French authorities replied in note Nö 1125 of 23 July 1993. In his letter of Nö 34350 of 19 October 1993, the Director-General for Agriculture noted that the replies sent were unsatisfactory. Two bilateral meetings were held in Brussels on 21 January 1994 and 23 March 1994. A technical meeting was held in Paris on 25 April 1994.
The following shortcomings were highlighted :
The inadequacies and anomalies detected show that the system for buying beef and veal into intervention as operated in France in 1992 did not fulfil the requirements of Article 8 of Regulation (EEC) Nö 729/70. The inadequacies related in particular to the monitoring arrangements, which the Commission deems to be of great importance. Moreover, anomalies had already been reported for 1991 in summary report VI/320/94.
As the loss to the EAGGF cannot be calculated accurately, it has been decided to make a flat-rate assessment. In view of the efforts of the French authorities to improve their buying-in and monitoring procedures, a correction amounting to 5% of the expenditure charged to the EAGGF for the public storage of beef and veal will be proposed by the Commission. After carefully examining the report of the Conciliation Body of 21.11.1995 on case 95/IT/009, the Commission's services consider that the proposed corrections should be maintained, in view of the gravity of the deficiencies found during their controls.
7. Specific irregularities
The French authorities will initiate recovery proceedings against the trades involved in the irregularities detected during the EAGGF investigation. They must follow the procedure laid down in Regulation (EEC) Nö 595/91. The EAGGF will reserve its position on charging to the Community budget, as laid down in Article 8 of Regulation (EEC) Nö 729/70, sums which have not been recovered.
Total 1992: 189 379 759 FF
In 1991 The EAGGF investigated the public storage of beef and veal in the United Kingdom. The on-site checks were done in two phases: an examination of frozen meat and a selection of cartons to be thawed out (Northern Ireland: November 1991, Great Britain: February 1992); examination of the thawed-out cartons (NI: December 1992, GB: November 1992).
When the EAGGF investigation was announced the UK authorities informed the EAGGF of irregularities it had discovered in the activities of xxxxxxx. A second company was convicted of wrongdoing between the first phase of the investigation and the second. The EAGGF agreed not to check the goods from these two companies, provided that the results of the national authorities' investigations were incorporated in the Commission's Article 9 investigation, since the financial consequences of the irregularities had to be examined in accordance with Articles 8 or Regulation (EEC) Nö 729/70.
In June 1994 the Commission sent the UK authorities its conclusions, in particular as regards the management of buying-in.
As a result of their discussions with the EAGGF in June 1992, the UK authorities undertook a radical overhaul of their monitoring arrangements.
Four irregularities were detected by the UK authorities as a result of the investigation initiated by the EAGGF. The scale of the irregularities illustrates the flaws in the system in force in the UK at that time. The anomalies recorded in one of these cases were so varied they are likely to have a major financial impact on the Fund. They will be dealt with under the procedure provided for in Articles 3 and 5 of Regulation (EEC) Nö 595/91. The national authorities have yet to inform the Commission of the quantities involved, the contracts in question and the exact nature of the fraudulent practices uncovered. it is not yet possible, therefore, to draw any conclusions as to the financial consequences under Article 8 of Regulation (EEC) Nö 729/70.
4. Anomalies detected
The UK authorities replied to the EAGGF's observations by letter dated 4 October 1994. The replies, which ran counter to the official written instructions from the UK intervention agency, were deemed unsatisfactory by the Commission.
In view of the UK authorities' failure to fulfil their obligations under Article 8 of Regulation (EEC) Nö 729/70, a flat-rate correction will be applied. The shortcomings in the monitoring system then in force in the UK occurred in areas that the Commission considers important. Furthermore, anomalies had already been notified for 1991 in summary report VI/320/94. In view of the efforts made by the UK authorities to improve the monitoring procedures, 5% of all expenditure on intervention in the UK has been withheld.
Following the conciliation procedure (report of 21.11.1995 on case 95/UK/011), and taking into account the results of a reexamination of the British control system (in particular the frequency and the organisation of controls in Northern Ireland), and on the basis of criteria laid down in document Nö VI/216/93, the Commission's services consider that the proposed correction can be reduced to 2%.
The irregularities notified in accordance with the precedure laid down in Regulation (EEC) Nö 595/91 will be dealt with separately. The EAGGF reserves its position in accordance with Article 8 of Regulation (EEC) Nö 729/70 as regards charging to the Community budget sums that have not been recovered from the traders concerned.
Total: 4 983 852.02 UK£
Thu, 25 Jul 1996
1.1 The BSE problem
BSE, the so-called "mad-cow disease" was identified for the the first time in the UK in 1986. since 1988, more than 160 000 confirmed cases of BSE have been identified in British herds, according to figures supplied by the UK in May 1996. Cases of BSE have also been reported in France, Ireland, Portugal and Switzerland. A number of preventive measures have been enacted in the UK since 1988 and at the level of the Union since 1990. Since 1990 the European Parliament has adopted several resolutions related to BSE and has made a number of proposals with a view to eradication of the disease. In March 1996, the independent body advising the UK Government on matters related to BSE published new information on the recent appearance of certain atypical cases of Creutzfeld-Jakob disease in the UK and stated that in the absence of any credible alternative, the most likely explanation was at present that these cases are linked to exposure to BSE. On 22 March 1996, the Scientific Veterinary Committee of the European Union recognized the need to review the adequacy of the current Community measures in the light of the new information; the committee also recognized that the risk of spread of BSE could be further reduced by excluding from the food chain animals most likely to have been exposed to infection. On 27 March 1996, the Commission adopted decision 96/239/EC which prohibits exports from the UK to the other Member States and non-Member countries of live bovine animals slaughtered in the UK, a number of products obtained from bovine animals slaughtered in the UK as well as bone meal. On this occasion, the Commission stated that the risk of transmission of BSE to man could not be excluded. On 11 June 1996, the preventive measures imposed by Commission decision 96/239/EC were partially relaxed. The export ban with regard to bovine semen was lifted. On other products (essentially gelatine and tallow) the lifting of the export ban was made subject to the application of certain manufacturing measures. This new decision also requires the Commission to carry out Community inspections, before exports of tallow or gelatine may be resumed. On 16 July 1996, following an invitation by the European Parliament, the President of the Commission, Jacques SANTER, and the Commissioner responsible for Agriculture, Franz FISCHLER, made declarations on the Commission's information policy on BSE since 1988 and measures it has taken to ensure compliance with the export ban and to eradicate the disease. 1.2 Current problems The are significant indications that the BSE problem has not been managed with the necessary vigilance by the Commission or the national authorities in their responsibility for monitoring the activities of economic operators and that the measures and initiatives taken have not proved sufficient to protect the health of the public in the European Union and effectively to combat 'mad cow disease'. - According to an internal Commission document published in the press the Commission underestimated its duty to inform the Member States in an appropriate manner about the risks connected with BSE and encouraged one Member State no longer to publish its research findings. - Recent press revelations indicate that the export ban imposed by the Commission on 27 March 1996 has not been observed by certain Member States. The Commission, in cooperation with the Member States, is currently carrying out investigations to shed light on these allegations. - Although the British Government banned the sale, in July 1988, of feeding stuffs for ruminants containing ruminant protein, the Council did not adopted the first measures in this connection until 1990. Moreover, the European Parliament had called on the Commission as early as 1990 to bring forward a proposal with a view to prohibiting the use as animal feed of animal protein recycled from carcases. - Further to a technological change in the manufacturing process of meal of animal origin, the disease seems to have appeared without the Member States or the Commission taking the precaution of effectively ascertaining the harmlessness of these new processes and the practices of the businesses concerned. 1.3 The aim of the temporary committee of inquiry The aim of the temporary committee of inquiry is to establish the facts about these allegations and the implications for the various authorities and operators without prejudice to the juirisdiction of the Community and national courts. The Commission may, where appropriate, formulate recommendations as provided in Article 4(3) or the decision of the European Parliament, the Council and the Commissiosn of 19 April 1995 on the detailed provisions governing the exercise of the European Parliament's right of inquiry and in Rule 136(10) of Parliament's Rules of Procedure. 2. Explanatory statement 2.1 Attitude of the Commission towards the dissemination of information about BSE. In the abovementioned internal Commission document the conclusion is drawn that it is necessary to 'practice disinformation' with regard to BSE and that 'it was better to say that the press has a tendency to exaggerate'. The committee of inquiry will investigate whether and to what extent this attitude was generally characteristic of the action taken by the Commission and the relevant Member States with regard to the real data relating to the spread of BSE and to their duties from the point of view of Community law as regards the protection of the health of European consumers and the necessary checks on the relevant products within the internal market. It will also consider the implications and repercussions on the Member States' administrations and the national supervisory and research departments. 2.2 Publication of research findings about BSE The Committee of inquiry will verify whether the Member States' administrations, individuals or other bodies were the subject of enticements or recommendations to the effect that they should not disclose the information in their possession about the nature and seriousness of the disease and the development of relevant scientific knowledge. 2.3 Controls on the production and exports of recycled animal protein In July 1988 the British Government prohibited the sale of cattle feed containing cattle protein. Subsequently the United Kingdom reportedly continued to export animal protein recycled from carcases to the other Member States and to third countries. These exports, to France in particular, allegedly increased substantially after the use of these animal proteins was prohibited on the British market. The Committee of inquiry will check the measures taken to control the quality and distribution of animal feed by the competent departments in the Commission and the Member States following the introduction of new manufacturing processes for meal of animal origin in the United Kingdom and in other Member States. 2.4 Controls on the temporary ban on exports of cattle, beef and meat-based products The Commission's decision of March 1996 to ban the export of beef from the United Kingdom to the other Member States and to third countries is apparently not being observed. The committee of inquiry will review the effectiveness of administrative checks at Mamber State level. 3. Brief of the temporary committee of inquiry The temporary committee of inquiry will be set up in order to clarify the nature and causes of the alleged infringement or maladministration of the application of Community law by the competent authorities of the European Union and the Member States with regard to BSE, without prejudice to the jurisdiction of the Community and national courts. It will identify any malfunctioning and will formulate conclusions in the light of the requirements of public health. It will recommend improvements as regards in particular - the transparency of the policy to combat BSE through the widest possible dissemination of relevant research data and findings, - the procedures for monitoring the ban on exports of the products in question, - the adoption of all relevant measures for the protection of public health and the restoration of the smooth operation of the markets. 4. Duration of the temporary committee of inquiry The temporary committee of inquiry will submit its report within three months of the publication of the European Parliament's decision setting up the committee.
But at the Commission they tell me it can be kept "INDEFINITELY, saying there is meat holed up in there dating back to the WAR!!!!