EU Referendum

Reality Check: Has the EU had its accounts signed off?

Philip Davies saying: ...they [the EU] haven't had their accounts signed off for 20 years

Claim: The European Union is so corrupt that the European Court of Auditors has not signed off its accounts for 20 years.

Reality Check verdict: The Court of Auditors has signed the EU accounts every year since 2007, while pointing out that EU countries, once they receive the EU funds, misuse about 4.4% of the total budget.

At Prime Minister's Questions, Shipley MP Philip Davies supported David Cameron's comments about Nigeria and Afghanistan being corrupt and asked: "Can he tell us where he has the European Union in his league table of corruption given they haven't had their accounts signed off for 20 years."

The EU's accounts are scrutinised by the Court of Auditors, which checks whether they correctly reflect the spending of the EU budget.

The latest report, published in 2015 for accounts in 2014, explicitly said that the auditors were "signing off the accounts" as they have done every year since 2007.

The Court did point out that some of the funds - 4.4% of the total in 2014 - were not used in accordance with the EU rules. But it stressed that this "is not a measure of fraud, inefficiency or waste", but money that: "should not have been paid out because it was not used in accordance with the applicable rules and regulations".

The auditors said typical cases involved roads or airports that attracted insufficient traffic.

'Poor value for money'

It is important to stress that around 80% of the EU budget is managed by member states themselves, and not by EU institutions. The EU transfers funds to the national treasuries and then the countries themselves decide which projects to spend the money on. The auditors have called on EU countries to take more care in their spending.

In 2014, the court found that €666m (£524m) from the EU fund that is given to countries to finance projects in underdeveloped areas, was "poor value for money". Poland, for example, built three airports, in Lodz, Rzeszow and Lublin, which have received more than €100m of EU funding, but which have not attracted enough customers to keep them in business.

In 2012, a mountain lift was constructed in the Sicilian village of Sutera, to improve access to a mountain monastery to attract tourism. The project reportedly received around €2m of EU regional development money. However, due to high operating costs, the lift has never been in use.

There are UK-based examples too. In 2008, the Canolfan Cywain rural heritage centre opened in Gwynedd, Wales, after it received £900,000 from the EU structural development fund. It ran into financial difficulties in September 2011 and closed a year later.

On 28 April 2016, the House of Commons Public Accounts Committee called on the UK government to improve how it spends EU funds.

The committee found that UK departments contribute "additional complexity" to the implementation of EU programmes, especially agricultural and rural development ones, which also drives up errors. The errors have cost the UK government "at least £650m" in penalties, to the European Commission, over the past decade.

Detecting fraud

If the auditors do suspect corruption, they pass the cases to OLAF, the EU's anti-fraud office. According to the latest figures provided by the Commission, fraud affects 0.2% of the EU's annual spending. The estimated cost of fraudulent irregularities was €248m in 2013.

For comparison, the UK National Audit Office says fraud across UK government was equivalent to only 0.02% of total expenditure: it ranged from £27.5m to £72.9m, depending on the source, from a total expenditure of £306bn.

OLAF says it completed 3,500 investigations, which led to the recovery of more than €1.1bn for the EU budget and a total of 900 years of prison sentences since 1999.

A separate NAO report estimated that the Department for Work and Pensions' fraud and error rate was 1.9% and HMRC's was 4.4% on its spending on benefits and tax credits in 2013-14. The report does not say how much was due to fraud and how much was due to error.


Read more: The facts behind claims in the EU debate


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