EU missing a trick on Fraud

2.23.18pm BST (GMT +0100) Tue 8th Jun 2004

Dr Alan Riley, Liberal Democrat European Parliamentary Candidate in the East Midlands, has a novel suggestion as to how to tackle fraud in the EU. In an article published last week in the Wall Street Journal, he outlined a role for a new civil investigative and penal regime similar to that used in the US.

Dr Riley explained writing in the Wall Street Journal said: "It seems that the EU is missing a trick in dealing with fraud. The US system offers a smarter way to clean up the EU's act."

"The US has a piece of legislation called the Civil False Claims Act (CFCA), which means that civil fines can be imposed for each false invoice, plus fines of three times the loss to the US government. Whistleblowers can obtain up to 30% of the recovery.

"With 80% of EU budget being administered by Member States, it is hardly surprising that most of the responsibility for fraud lies with them. But when also 80% of EU fraud is cross border it is difficult for Member States to detect. Furthermore, as the money lost is the EU's, not Member States' there is little incentive for countries to seek out and eradicate fraud. A EU civil fraud law would give individuals the incentive to whistleblow, potentially saving taxpayers millions.

Dr Riley also said "The CFCA has proved very successful in the US, with 6 billion dollars retrieved since it came into force in 1986 - 900 million dollars of which was raked in by whistleblowers. It is estimated that the CFCA was largely responsible for the falling error rate of Medicare claims from 14% to 7% during the 1990's. There is no reason why this principle should not be successfully applied to the EU."

ENDS

Notes to Editors:

Dr Riley is the senior lecturer in European Law at the Centre for Legal Research, Nottingham Law School, and an associate fellow at the Centre for European policy Studies, Brussels.

For the full text of Dr Riley's article, go to: http://www.libdemeuro.com/article.php?id=13