February 9, 2011
Much fuss is currently being made in Austria and elsewhere of latest revelations on fraudulent exploitation of the Common Agricultural Policy. In “The Black Book of Agriculture – the intrigue of agricultural politics”, one Hans Weiss has opened the lid on fraud and misapplication of CAP subsidies in Austria. The book made headlines in Austria, found itself on the nightly news, and topped the best seller chart. As a long time observer and analyst of European agriculture policy, one is intrigued that anyone still finds this subject surprising or even interesting. Be assured Herr Weiss, a few farmers (and pseudo farmers) fiddling their EU subsidy applications in one small state among twenty seven is as nothing compared with the historical scale of the CAP racket.
In fact, it is probable that the scale of fraud and misapplication is far less now, since the CAP was largely converted from a market rigging to an income subsidy policy. In the heyday of CAP rackets – fifteen years or more before Austria joined the European Community, DG6 insiders assured anyone prepared to listen that probably a quarter or more of the then 30 billion ‘units of account’ (nominally about €25 billion in today’s money) was paid out on subsidy harvesting scams. The major racketeers in those days were not farmers, but traders and wide boys involved in shifting food commodities from one EC country to another and out of and into the EC.
Because of the market manipulating nature of the pre-Mac Sharry/Fischler agriculture policy, surpluses were large and politically embarrassing. They had to be disposed of, inevitably with large wads of taxpayer’s cash. This inevitably created fertile ground for fraud and for less illegal but equally immoral ‘manipulative trading’. Discussing this with an old Brussels colleague recently, we recalled scams which leave today’s minor fiddling in deep shade.
Just a few examples:
- Lorry loads of wheat and other grains passing and re-passing the same customs posts to collect monetary and accession (intra market adjustment) subsidies on each journey;
- Wheat being elevated out of one end of the hold of a freighter at Rotterdam and reloaded into the other in order to collect special EU export subsidies;
- Shiploads – millions of tonnes – of wheat, butter, beef and wine ‘sold’ to the Soviet Union under special DG6-sanctioned deals which actually meant that Moscow was paid by the EU taxpayer to take the stuff away;
- Manipulation of the Commission’s market monitoring system by international grain traders in order to minimise variable levies on imports and maximise EU subsidies on exports.
Note that all of these activities were of course not fraudulent; that they were in fact legal demonstates the basically corrupt and corrupting nature of the pre-reform CAP which cost taxpayers millions and lined the bank accounts of food traders . But probably the biggest source of loss through actual fraud was the manipulation of the official intervention buying system by false declaration of qualities, quantities and other criteria by traders selling to the official intervention systemBrian Gardner