52000DC0107

REPORT FROM THE COMMISSION - Summary report on the communications by the Member States on their inspection activities and findings and questions of principle relating to traditional own resources - 1998 - (Article 17(3) of Council Regulation (EEC, Euratom) No 1552/89)

Summary report on the communications by the Member States on their inspection activities and findings and questions of principle relating to traditional own resources - 1998 - (Article 17(3) of Council Regulation (EEC, Euratom) No 1552/89)

1. Introduction

1. Under Regulation No 1552/89 [1] the Member States are responsible for collecting "traditional" own resources and are obliged to take all the necessary steps to ensure that debts due to the Community budget (chiefly import duties) are established, entered in the accounts, recovered and made available to the Commission.

[1] Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC on the system of the Communities' own resources (new version - Decision 94/728/EC).

The Commission is kept informed of these activities by various reports it receives from the Member States on the basis of Regulation No 1552/89. As regards inspection work in particular, Article 17(3) of the Regulation provided that Member States must keep the Commission informed of their activities by means of half-yearly reports.

With the adoption of Regulation (EC, Euratom) No 1355/96, [2] the reports became annual and the Commission was required to produce a summary of the reports for the budgetary authority.

[2] Council Regulation (EC, Euratom) No 1355/96 of 8 July 1996 amending Council Regulation No 1552/89 of 29 May 1989.

2. These summary reports were intended to take stock of inspection activities and findings at national level and provide an overall view of the volume of fraud and irregularities involving the European Communities' traditional own resources. They should also enable the Commission to conduct an additional documentary check and make optimum use of risk analysis in drawing up its own inspection programme.

In view of the disappointing experience with the previous half-yearly reports, it was agreed when Regulation No 1552/89 was amended in 1996 that a solution should be found for the considerable discrepancies between the national reports and differences in the interpretation of various basic concepts. After extensive discussion within the Advisory Committee on Own Resources, a harmonised model annual report was sent to the Member States in March 1997. [3] This set out the overall data to be provided on cases of fraud and irregularity and aimed at greater consistency in the accounting data supplied.

[3] Commission Decision 97/245, 20.3.97 (C(97) 800 final).

As the Member States found it difficult to harmonise the data, there was a considerable delay before the Commission received the annual reports for 1996. When it examined the information it had received, the Commission concluded that it was better not to publish its summary report, as the Member States had failed to follow the model. However, a summary document was drawn up in May 1998 [4] and examined by the Advisory Committee on Own Resources on 8 July 1998.

[4] XIX/24329/98, 27.5.1998.

Analysis of the reports for 1997 [5] has shown that the results largely failed to live up to expectations: the Commission considered that it couldnot yet reach any completely valid conclusions in view of the absence of comparable or, in some cases, reliable data.

[5] COM(1999) 110 final 12.03.1999

3. From the 1997 report analysis the Commission did establish that there had been a net improvement in the presentation of information by Member States even if supplementary information had to be requested in some instances. It considered that publication of even an incomplete and non-standardised report could throw light on current difficulties in connection with traditional own resources and encourage the Member States to improve the quality of the information they supply.

It was also planned that there should be an analysis of questions of principle relating to the problems encountered in applying Regulation No 1552/89, including those raised in matters in dispute. However, from past experience, the Commission has concluded that any problems reported by the Member States will be better dealt with by being brought to the attention of the ACOR as they arise rather than analysed in the summary reports drawn up under Article 17(3).

This analysis tabulates the key elements of the model report which the Commission has sent to the Member States. Each table is accompanied by appropriate explanations and gives the reasons for the production of the indicator.

2. analysis of national reports

The analysis of national reports is intended to reveal two main types of information: a general picture of the Member States' inspection operations and an assessment of measures to combat fraud and irregularities. For this purpose, data are first compiled concerning inspection activities in the form of the number of entries processed by each national administration at the time of importation and at the time of inspection (ex post) and the number of staff assigned to inspection work. This provides an indication of inspection activity in relation to the volume of traffic in each Member State.

The national reports then provide the information needed to quantify and categorise the results of activities to combat fraud and fraudulent practices. Given the cross-border nature of fraud, and with a view to illustrating the patterns of fraud on the Community's customs territory, the national figures (number of cases, amounts) are expressed in terms of the totals for all the Member States. In this analysis a distinction is made in the data between the different stages of fraud prevention: investigation and detection of cases, determination and entry of amounts, recovery of duties.

These data are also compared with other information supplied by the Member States on the entry in the accounts of own resources not collected and on the fraud forms. This comparison is intended to throw light on disputes involving own resources and reveal any discrepancies in the establishment and making available of these resources. Finally, the analysis categorises cases of fraud and irregularity by customs arrangement and by type of fraud.

To produce this analysis of national reports, the Commission used some of the data supplied in the national reports for previous years, with due allowance for the fact that some of them were incomplete and that the information supplied by the Member States was not readily comparable.

Although limited, this comparison between the years concerned nevertheless allows certain conclusions to be drawn on the development of the Member States' inspection activities and findings and the main trends affecting the collection of own resources.

2.1. Inspections by Member States

A general picture of inspection operations can be provided by comparing the entries accepted, the entries checked after customs clearance and staff specialising in inspections of this kind in each Member State.

This comparison is set out in Annex 1, which also shows the percentage of entries inspected and the ratio of entries inspected per person. At the same time this gives an idea of the volume of transactions on the Community's customs territory.

To place these indicators of inspection activity in perspective, Annex 2 compares overall inspection activity in the Member States in 1996 and 1998.

The following comments can be made on the two tables in Annexes 1 and 2:

(a) Number of entries accepted

A total of 95 302 846 entries were accepted in 1998. The number has increased in the great majority of Member States; in Greece the figure almost doubled. Over the last four years there has been a slight decline in transactions in Finland, while in 1998 France recorded a more surprising drop from nearly 10 million in 1997 to less than 7 million.

As in previous years, comparison between Member States reveals a wide discrepancy between the number of entries accepted by the Netherlands and Germany and those accepted by the United Kingdom, especially when compared with each Member State's share of established traditional own resources (amounts entered in the "A" and "B" accounts). The ratio between this figure and the number of entries is relatively stable (except for the Netherlands and the United Kingdom), as the following chart shows:

>REFERENCE TO A GRAPHIC>

(b) Post-clearance checks

The data on the number of entries checked cannot be used to make an exhaustive comparison between the Member States (proportion of entries checked after customs clearance), since only nine Member States submitted the actual number of entries checked after customs clearance (see also the explanations in the notes to Table 1 in Annex 1). However, this represents an improvement on the previous year. Only Portugal and the United Kingdom had no figures available.

Subject to these constraints, it is worth pointing out that the number of entries checked after customs clearance increased sharply from 2.3 million in 1997 to 4.6 million in 1998, although there was a significant drop in Finland and Denmark. This enormous increase in the number of post-clearance checks in 1998 (+96%) cannot be explained by the increase in staff (+1.1%).

The Commission is currently examining instances where the scale of these changes is not justified by any variation in transactions. The figures might reflect a decline in inspection activity (Italy and Finland over the three-year period), a major re-targeting of inspections or the introduction of new accounting methods (Germany, Greece, Spain, France, Austria and Sweden).

As a result there has also been a general improvement in inspection rates, albeit with major variations between Member States, for example 25% in Greece, 1.73% in Italy and 1.22% in Ireland.

(c) Staff assigned to post-clearance checks

As for the relationship between staff specialising in post-clearance checks and the number of entries inspected, it is difficult to make comparisons between Member States because of differences in the internal organisation of national government departments. With the usual reservations, the total number of customs officers in the European Union comes to 84 116.

The figures set out in Annex 2 show that, apart from a very large increase in the United Kingdom, the total number of staff assigned to customs services rose slightly in 1998 (up 1.7% compared with a 13% increase between 1996 and 1998). The number of staff assigned to inspections has followed a similar trend (+15% from 1996 to 1998, +1.1% from 1997 to 1998).

2.2. Fraud and irregularities

2.2.1. Amounts established and already recovered in 1998

The annual reports contain two types of statistics on cases of fraud and irregularity: the volume of cases detected and accounting data. The table in Annex 3 therefore sets out three series of figures: the number of cases detected, amounts established and amounts recovered. This gives a picture of the patterns of fraud on the Community's customs territory and the efforts deployed in combating fraud.

A "rate of recovery" is then calculated to give an initial indication, at the end of the first year, of the result of the efforts of each Member State to recover the amounts involved in these cases. The table also shows the amounts established and recovered in each Member State in relation to the totals for the Community.

It should first be pointed out that the number of cases of fraud and irregularity reported in column 2 are far from uniform. Sometimes a country's figures are at odds with its intensive trade in third-country goods (Germany). Numbers in the thousands may mean that the Member State has reported all infringements handled in the course of the year by its government departments. By contrast, the figures for other Member States seem to indicate that only some of the infringements have been reported.

In the case of amounts established, comparison of the data between Member States reveals major discrepancies which are difficult to interpret: it is striking, for example, that the amounts established in Belgium come to double the figure for Germany and the same as for the Netherlands (column 3) and that the amounts for the United Kingdom (in cases involving over EUR10 000 only) are around three times those for the Netherlands. The only explanation for these discrepancies would be that the concepts of fraud and irregularity have not been interpreted uniformly or that only amounts over EUR10 000 have been reported, i.e. those covered by the fraud forms provided for in Article 6(4) of Regulation (EEC) No 1552/89.

It is worth noting that the recovery rate indicated in column 7 is a "crude" rate (i.e. the amounts established still have to be adjusted, where appropriate, to take account of corrections and cancellations). The recovery figure for the year also covers amounts which have often been established several years earlier. This rate can therefore serve only as a statistical indicator, giving a fairly broad picture of the recovery situation before any corrections that have to be made.

Given this situation, it can be said that the average recovery rate for all the Member States combined has risen markedly since 1997 (up from 23.26% to 37.63%). It has been pushed up by the figures for a number of Member States (Denmark, Spain, Ireland, Luxembourg, Netherlands, Portugal, Finland and Sweden) which, together, account for almost 30% of established amounts and have an average recovery rate of 83%.

On the other hand, the rate of recovery is around 20% in a group of countries accounting for nearly 70% of established entitlements (Belgium, Germany, Greece, France, Italy and United Kingdom). At first sight, this variation in rate between Member States raises a problem as regards assessing the efforts made: the shortcomings may be in establishment or in the recovery of entitlements.

Finally, if the amounts established and recovered in each Member State in 1998 are compared with the total amounts for all the Member States (columns 4 and 6 of the table), a strange discrepancy is found between the relative share of some national administrations in the total amount established and in the overall recovery figures. However, this discrepancy appears to be caused mainly by the differences observed in amounts established. The percentages recorded for two Member States in particular (Germany and Netherlands) require some explanation if they are to be interpreted correctly.

2.2.2. Changes in amounts established and the rate of recovery

As treatment of cases of fraud and irregularity is necessarily cyclical, the table in Annex 4 tries to identify significant trends by examining changes in the volume of fraud over a number of years. However, to a certain extent, this comparison of data on cases of fraud and irregularity reported for 1995 to 1998 may reveal changes caused by different factors such as an improvement in inspection activity, a temporary increase in fraudulent or irregular operations or the isolated discovery of cases of fraud or irregularity involving a particularly high amount.

a. Cases of fraud and irregularities

The number of fraud cases has increased in the majority of Member States (ten). However, it has been falling steadily in Germany and sharply in Portugal. The overall increase is 25% on 1997.

The analysis comes up against the problem of the comparability of data, which relate either exclusively to infringements reported in the fraud forms and thus to amounts exceeding EUR10 000 (United Kingdom and possibly Germany) or to all infringements (the other Member States). However, the following anomalies should be noted:

- In Germany the number of cases is constantly falling with the result that the figure for 1998 is half that for 1995.

- In Denmark the number of cases is six times higher than last year.

- In Austria the number of cases rose suddenly from 64 in 1997 to 15 474 in 1998 (compared with 47 783 in 1995). This sharp increase, similar to the one recorded in Sweden in 1997 could be a result of including cases involving less than EUR10 000.

Some discrepancies are not merely cyclical and require further explanation from the Member States (decline in Germany and Portugal, increases in Denmark and Austria).

b. Amounts established

In absolute terms, the amounts established in the Community as a whole tripled between 1995 and 1998, although there was a slight drop in 1998 (0.78% down on 1997). There are sharp contrasts, however, in individual trends, with large increases in the United Kingdom, Ireland and Luxembourg and smaller ones in Finland and Austria (a doubling of amounts established).

Nevertheless, some changes are difficult to explain: the 42% fall in amounts established in Belgium over the period 1995-1998 is at odds with the twofold increase in the number of cases, while the 27% fall in Denmark is hard to explain, as the number of cases increased by a factor of 21. The 58% drop in the Netherlands contrasts with a mere 7% reduction in the number of cases. In general, despite the large increase in the number of infringements detected by the Member States in 1998, the total amounts established as a result of these infringements have, paradoxically, declined.

The case of Germany deserves a special mention here. Amounts established have moved in parallel with the number of cases, but the Commission is intrigued by the 60% drop in both figures. For its part, the United Kingdom recorded a threefold increase in amounts established over the reference period, while there was a steady but slight rise in the number of cases.

The Commission does not have any data to explain these phenomena. The Member States will be asked to provide any further information required.

c. Rate of recovery

Between 1995 and 1998, the amounts recovered in the Community as a whole increased substantially (fourfold in Denmark, tenfold in Austria and by a factor of forty-eight in Sweden), although six countries recorded a fall (Ireland, Portugal, Finland and especially Belgium, Greece and the United Kingdom).

In three Member States (Italy, Finland and the United Kingdom, but not Luxembourg) the decline in the rate of recovery was accompanied by a drop in the amounts established. However, the falling rate in these Member States may be due to a number of reasons such as cyclical factors (types of fraud leading to establishment), changes in establishment procedure and the correction of establishments or, finally, a drop in recovery itself.

2.2.3. Amounts established and amounts entered in the accounts

All traditional own resources established must be entered in the accounts. Amounts recovered or guaranteed and not contested are entered in the "A" account (Article 6(2)(a) of Regulation No 1552/89) and amounts which have not been recovered and are contested, even though a security has been provided, are entered in the "B" account (Article 6(2)(b) of the Regulation). Many of the cases of fraud and irregularity detected are contested or are not covered by a security and are therefore entered in the "B" account.

It is therefore worthwhile comparing the amounts established and mentioned by the Member States in their annual reports for 1998 with the totals entered in the B account (table in Annex 5).

In 1998, the total established as a result of fraud and irregularities differed from the total entered in the B account (containing amounts established but not yet recovered) in eight Member States. The differences may be due to the fact that these countries reported only cases of fraud and irregularity involving more than EUR10 000, contrary to the instructions in the model annual report. [6]

[6] Annex 6, endnote 2, of the Commission Decision of 20 March 1997 laying down the arrangements for the transmission of information by the Member States under the Communities' own resources system (C(97)800 final) states that all cases are to be reported, regardless of threshold value.

The following table gives more precise details of the differences noted when comparing the amounts established and mentioned by certain Member States in their annual reports with the totals entered in the B account for 1995 to 1998.

Amounts established<Amounts in B account (EUR)

>TABLE POSITION>

In the case of Germany, France, Italy, Austria, Portugal and the United Kingdom, this difference has consistently been negative. In 1998 it was negative for even more Member States.

This situation is obviously abnormal since the total amount established in connection with cases of fraud and irregularity cannot be lower than the amount entered in the separate account as not all the amounts involved in these cases are contested or without a security.

The Commission considers that this anomaly is due to the incorrect interpretation given by some administrations to the concepts of "fraud and irregularity". In this connection it has repeatedly asked the Member States to apply the definitions of these two concepts set out in Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 [7] on the protection of the Community's financial interests or in the Convention of 27 November 1995 on the protection of the Community's financial interests. [8]

[7] OJ L 312, 23.12.1995, p. 1.

[8] OJ C 316, 27.11.1995, p. 49.

2.2.4. Annual reports/fraud forms

Article 17(3) of Regulation No 1552/89 provides for a comparison between the number of cases of fraud and irregularity contained in the report on inspection activity and the fraud forms submitted under Article 6(4) of the Regulation (amounts exceeding EUR10 000 contained in the IRENE base for the year). This comparison is set out in the table in Annex 6.

The problem highlighted in last year's report no longer occurs, i.e. the amount to be recovered according to the fraud forms received by the Commission (cases involving over EUR10 000) is systematically lower than the total amount established as a result of fraud and irregularities.

The Commission feels that this pattern is in line with the regulations.

2.3. Breakdown of fraud and irregularities by customs procedure and type of fraud

Not all customs procedures are equally susceptible to fraud and irregularities; their vulnerability may change in the course of time as certain economic sectors are briefly targeted.

Transit operations have thus been a favourite target of fraud in recent years, particularly as regards certain sensitive agricultural products.

The table in Annex 7 presents a quantitative picture of how cases of fraud and irregularity break down by Member State and by customs procedure in order to determine how vulnerable each procedure was in 1998.

It shows that, as in 1997, external transit (10.6% of cases and 10% of the total amount at stake) and release for free circulation (80.8 % of cases of fraud/infringements accounting for 81.4% of the total amount at stake) are particularly affected. By comparison, the following chart shows that other customs procedures and end-uses are only marginally affected.

The figures unfortunately confirm what is already a well-known trend.

As regards the breakdown of infringements by Member State, two findings require further explanation. The amounts established by the United Kingdom concerning release for free circulation came to nearly four times the figure for the Netherlands (and over ten times that for Austria), despite a comparable number of cases. In the transit field, Belgium established one and a half times the amounts established by the Netherlands (EUR11.145 million as against EUR7.25 million), again with a comparable number of cases.

>REFERENCE TO A GRAPHIC>

Legend:

LP Free circulation

TR External transit

ENTR Warehousing

PA Inward processing

PP Outward processing

AT Temporary admission

Other Other customs procedures and end-uses

If a comparison is now made in this respect between 1997 and 1998, as is done in the table in Annex 8, it is found that the amounts established have decreased slightly for all procedures, but particularly in the case of the free circulation and external transit procedures, where there is a clear contrast between the trend in the number of infringements (which have risen sharply) and in the amounts established (which have fallen substantially). By contrast, the amounts established in connection with inward processing have doubled compared with 1997.

The number of cases of fraud and irregularity in connection with the transit and free circulation procedures have increased (by 42% and 1% respectively), while the amounts established have fallen (by 16% and 40%). For these two procedures the general trend seems to be towards an increase in infringements with a lower financial impact. By contrast, in the case of the inward processing procedure, both the number of infringements and the amounts involved have increased substantially.

The breakdown of cases of fraud and irregularity by Member State and by type of infringement shown in the table in Annex 9 reveals that the most common cases are inaccuracies in the description or tariff classification of goods (26.2%), false declarations of value (23%) and irregular entry into the customs territory of the Community (13% of cases).

However, the infringements with the most impact in terms of amounts established are incorrect description of goods (21%) and false declarations of value (17.1%). These types of infringement, which are very frequent in Sweden, the Netherlands, the United Kingdom and Austria, sometimes involve large sums, for example in France, the Netherlands and Sweden in the case of the former and in the Netherlands and the United Kingdom in the case of the latter. Contraband has reached remarkable levels in Germany (in terms of amounts involved) and there are many problems with declarations of origin in Italy.

The comparison between 1997 and 1998 in the table in Annex 10 reveals a decline in the financial impact (but not the frequency) of contraband, while the amounts established in cases of inaccurate declarations of weight or quantity are more or less back to 1996 levels. This comparison confirms the trend towards a higher number of infringements with a lower financial impact, apart from incorrect classification and "other" infringements.

3. Application of article 17(2) of Regulation (EEC, Euratom) No 1552/89

3.1. Use of the procedure

Article 17(1) states that the Member States must make available to the Commission all the entitlements they establish. When this is not possible for reasons of force majeure or in specific cases when recovery is impossible for reasons that cannot be attributed to the Member State, the entitlement is written off. If the amount of duty exceeds the threshold of EUR10 000, the case is referred to the Commission for examination in accordance with Article 17(2).

In 1998 two Member States notified the Commission of eleven cases in which amounts were written off. A further fifteen cases relating to 1998 were notified in 1999.

In addition, the twelve requests to write off own resources shown in the first table in Annex 11 (including cases notified in previous years but still pending) were examined in detail to check all the relevant data which the Member States have to report under Article 17(2) of Regulation (EEC, Euratom) No 1552/89. An interdepartmental working party, set up for this purpose in 1997, meets regularly to assess each case as effectively and as quickly as possible. The appropriate Commission departments thus reach a common position.

Of the twelve requests mentioned above, four (including one in part) were accepted by the Commission which, after a detailed analysis of all the information supplied, considered that the own resources could not be recovered for reasons which could not be attributed to the Member State concerned. However, eight requests (including one in part) were rejected as the Commission considered that the Member State concerned has not displayed due diligence and had not availed itself of all the powers offered by Community and national law to protect the Community's financial interests.

Finally, one case was considered inadmissible since the Community entitlements for which the write-off was requested had not been established even though the establishment of entitlements is a precondition for application of Article 17(2). The Member State has been held financially liable.

Of the fifteen cases in the second table in Annex 11, seven are still pending. The Commission has not yet expressed its final position, as the information supplied by the Member States concerned does not enable it to do so in full possession of the facts. It will complete its examination on receipt of the information requested from the Member States concerned. In the other eight cases the request to write-off was rejected following a detailed examination of all the pertinent facts and with the agreement of all the relevant departments, which were duly consulted.

Despite the Commission's inspections and the continuous dialogue with the Member States, there has been no notable change in the number of cases written off by the Member States. However, seven Member States make regular use of this procedure (Germany, Spain, France, Netherlands, United Kingdom and, since 1997, Belgium and Denmark).

This is the course advocated by the Commission which considers that this procedure allows a fair and open examination of the collection of own resources by the Member States and makes for efficient management of Community entitlements.

3.2. Comparison of amounts written off

The inspections carried out by the Commission included a comparison of the amounts written off and included in the report provided for in Article 17(3) of Regulation 1552/89 and the amounts removed from the separate accounts. Annex 12 sets out the results of this comparison, alongside the amounts written off in connection with the reports on fraud and irregularities.

By 1 October the Member States had notified for consideration by the Commission a total of fifteen write-offs for 1998 totalling EUR4 193 441. The total amounts entered in the separate account, of which the Commission receives a quarterly statement, and then written off came to EUR4 770 133 in 1998. Although the separate account records all amounts irrespective of thresholds, there appears to be a considerable discrepancy between the amounts notified (amounts over EUR10 000) and the accounting entries. Only the amounts for Ireland are comparable. By contrast, the amounts entered in the B account by Belgium and the Netherlands are very small compared with the amounts notified. This is inconsistent with accounting procedure.

The total corrections made to established amounts entered in the B account (EUR103.8 million) and those included in fraud forms sent in 1998 (EUR92.5 million) appear to be large when compared with total amounts written off. From an accounting point of view, it would make more sense if the real problem concerning fraud and irregularities were in recovery, and be reflected in amounts written off. Moreover, the corrected amounts in the separate account must necessarily be higher than those arising from the fraud forms, whereas the opposite appears to be the case here.

This suggests confusion between what is a revision mechanism for established own resources entitlements and cases where debts are written off because of recovery problems. The confusion evident in the amounts reported by Italy, the Netherlands and the United Kingdom. The Commission will be asking for more information on these discrepancies, which are in apparent contradiction with Articles 8 and 17 of Regulation 1552/89.

4. Conclusions

The Commission concludes from the information supplied that progress has been made in the way in which the Member States report on their inspection activities and findings.

In particular, the Commission notes a clear improvement in producing and reporting data compared with the previous two years. However, the continuing differences in the information reported reflect the difficulties in harmonising the basic concepts between the Member States and, for the Member States themselves, in ensuring the internal consistency of the information supplied.

The comparability of data thus suffers from considerable differences in the interpretation of concepts of "fraud and irregularities" which are often incorrect. This gives a sometimes improbable picture of the volume of fraud detected and makes it difficult to judge the record of the national authorities.

Moreover, the information supplied by some Member States in their annual report cannot be reconciled with figures from other sources such as the separate accounts for own resources. Certain inconsistencies have been found this year.

As regards inspections, the information supplied shows a large overall increase in staff assigned to this activity together with a sustained increase in the number of entries accepted. However, these data do not allow precise assessment of the efforts actually made by administrations and the reliability of the analysis is undermined by differences in administrative organisation.

The quality of the information supplied by the Member States on their inspection findings is better than for the previous year. However, progress is patchy and divergences between Member States are difficult to explain, in particular as regards amounts established. Moreover, some Member States have seen their results plummet in terms of both establishment and recovery: further information is therefore required, particularly where there is a considerable discrepancy with the volume of traffic.

Analysis of the national reports since 1995 gives a fairly clear picture of trends in connection with fraud. For example, it reveals an increase in the number of infringements detected, which, however, has had no impact on the level of established entitlements, quite the contrary. The risk attached to the various procedures is also clearly established, the most vulnerable being release for free circulation and transit.

As for the procedure for writing off amounts which cannot be recovered, progress remains limited but seven Member States now use this procedure. At least part of this result can be attributed to inspections by the Commission and the Court of Auditors in connection with the separate account and clearance procedures, but it is also the outcome of the continuous dialogue between the Commission and the national administrations on these matters.

Finally, the Commission would point out that the only real point of this report is to give an idea of the efforts which the Member States are making to comply with their obligations under Article 17(3) of Regulation No 1552/89. The document will be put before the Advisory Committee on Own Resources. The Commission will endeavour to establish the best conditions necessary to ensure that any difficulties arising in the Member States are quickly resolved.

ANNEXES

ANNEX 1

Inspections by Member States

>TABLE POSITION>

Notes:

(1) Number of tariff headings.

(2) No figures available for the number of entries scrutinised in checks on firms.

(3) Checks at firms only.

(4) This figure includes 1 044 454 import entries.

(5) This figure refers only to import entries checked by sampling methods.

(6) Including 309 persons assigned to central departments and those assigned to surveillance departments.

(7) Post-clearance documentary checks by the specialised regional services (CERDOC), not including general inspections.

(8) Total staff numbers, including senior management and laboratory staff.

(9) This figure includes 470 540 import entries.

(10) Entries selected by the SADBEL computerised system, manual entries and entries checked by the Inspection d'Audit.

(11) This figure includes 25 420 799 import entries and 3 593 821 transit entries.

(12) This total includes computerised entries and entries in the agricultural sector.

(13) The figure includes 23 persons in the Ministry of Agriculture, but not tax investigation staff (FIOD).

(14) This figure includes 954 cases involving several entries.

(15) There is no reliable inventory of this type of inspection.

(16) This total includes imports and exports, in particular 418 189 transit operations.

(17) Not all staff are assigned full-time to this type of activity.

(18) Expressed in person/years.

(19) Staff in employment at border and internal customs offices.

ANNEX 2

Inspections by Member States

>TABLE POSITION>

(1) In 1998, 5854 physical checks were made, equivalent to 12.8% of the total entries handled.

ANNEX 3

Fraud and irregularities: amounts established and already recovered

(Amounts in EUR)

>TABLE POSITION>

The euro exchange rate used in the tables is the average rate for 1998.

Notes:

(1) This total includes around EUR 3 000 corresponding to the proceeds of public auctions following the confiscation of goods.

(2) The computer system does not distinguish between the recovery of amounts evaded through fraud and of other recovered amounts. Amounts in cases involving less than EUR 10 000 are assumed to have been recovered.

(3) Columns 3,5 and 6 relate only to debts of over EUR 10 000.

ANNEX 4

Fraud and irregularities: amounts established and recovery rate - Change

(Amounts in EUR)

>TABLE POSITION>

ANNEX 5

Amounts established/Amounts entered in the accounts

(Amounts in EUR)

>TABLE POSITION>

(1) Amounts corrected because of differences in rates and divergences in quarters.

ANNEX 6

Annual reports/Fraud forms

(Amounts in EUR)

>TABLE POSITION>

(1) Net amount to be recovered, adjusted after corrections, cancellations, etc.

(2) This figure includes five cases of fraudulent consumption involving over EUR 10 000, where the total amount at stake (EUR 1 126 812) was not entered in the accounts until 1999 for procedural reasons.

ANNEX 7

Vulnerability of customs procedures to fraud and irregularities

(Amounts in EUR)

>TABLE POSITION>

ANNEX 8

Vulnerability of customs procedures to fraud and irregularities

(Amounts in EUR)

>TABLE POSITION>

(1) The data available are not comparable.

ANNEX 9

Free circulation: Types of fraud and irregularities

(Amounts in EUR)

>TABLE POSITION>

ANNEX 10

Free circulation: Types of fraud and irregularities

(Amounts in EUR)

>TABLE POSITION>

(1) The data available are not comparable.

ANNEX 11

Cases of written-off own resources handled in 1998

>TABLE POSITION>

(1) Case relating to 1994 (3) Case relating to 1996

(2) Case relating to 1995 (4) Case relating to 1997

Cases of written-off own resources -1998 (reported in 1999)

>TABLE POSITION>

>TABLE POSITION>

(1) Updated figures as at 1 October 1999.

(2) This amount is entered as a negative figure in the statement for the first quarter (impact here cancelled out).

(3) Including a negative amount of EUR 4 147.92 (impact here cancelled out).