There was some €244,800,000 of the European Union’s Common Agricultural Policy (CAP) expenditure between 2016 and 2020 lost to fraud, the Irish Farmers Journal can reveal.

The analysis is based off an annual CAP budget at the time of approximately €68bn and a study by the European Court of Auditors (ECA), which found that 0.09% of CAP spending was defrauded annually during the period.

The €244.8m represents approximately 10.9% of the total fraud detected in EU spending for the four years, according to the ECA.

Speaking from Brussels on Monday, a representative of the ECA said “in our view, this is an underestimate of what the real figure is” and “it does not give the full picture” of fraud in agricultural expenditure.

Fraud patterns

The ECA conducted its audit by examining patterns of fraud in CAP payment schemes, analysing measures financed by the CAP under shared management (direct payments, market measures and rural development) and examining data from the 2007-2013 and 2014-2020 CAP periods.

In doing this, the ECA analysed the CAP spending of France, Italy and Slovakia, as case studies, and surveyed all other member states on fraud risks.

The level of CAP fraud in Ireland was described by the ECA as no different from that seen in other EU member states.

‘More proactive’

Outlining its fraud findings, the ECA called on the European Commission “to be more proactive in its fight against fraud in agricultural spending” and to support member states to create “a culture of vigilance”.

ECA lead Nikolaos Milionis said: “Fraud harms the EU’s financial interests and prevents EU resources from achieving the policy objective.

“We expect our report to help the Commission and the member states to develop their anti-fraud capacity under the new CAP 2023-2027.”

New technologies

Responding to questions, Milionis acknowledged that the ECA’s findings published last week, which suggest the European Commission does not have enough data evidence to analyse the impact and performance of the CAP, also apply to fraud.

He said member states do not have the technology or data management systems in place to accurately measure fraud activity in CAP expenditure.

While stating that the European Commission has responded to instances of fraud in CAP spending, the ECA warned that member states are not “exploiting the potential of new technologies” to do so.

The ECA said the “Commission has promoted the use of new technologies to automate checks”, such as “satellite monitoring”, to “support member states in preventing fraud”.

However, it said: “Member states have taken up these technologies at a low pace. Artificial intelligence and big data have potential in fighting fraud, but member states face challenges in seizing these opportunities.”

Land grabbing

The ECA found “land grabbing” to be one of the areas where CAP expenditure is most exposed to fraud, with Milionis warning the incidence is “quite high”.

Land grabbing may involve fraudulent practices, such as the falsification of documents, coercion, the use of political influence or insider information, manipulation of procedures, or the payment of bribes.

Investigations by the European Anti-Fraud Office (OLAF) and national authorities have found that the agricultural areas most susceptible to this type of fraudulent activity are publicly owned land or private land with unclear ownership.

Fraudsters may also seek to acquire land for the sole purpose of receiving direct payments, without performing any agricultural activity on it.

The ECA found that the risk is higher for certain pastureland and mountainous areas, where it is more difficult to check that the required agricultural activity, such as grazing, is actually taking place.

In June, the Irish Farmers Journal reported that up to €1m was to be repaid to the EU after OLAF found that payments were claimed on some land near Rome’s Fiumicino Airport where the land wasn’t farmed at all.

OLAF found that “serious irregularities” in the case had been committed since at least 2005 regarding land located within the perimeter of the airport in Italy.