WRITTEN QUESTION P-3575/02

by Ioannis Averoff (PPE-DE) to the Commission

(6 December 2002)

Subject: Shortcomings in the application of IACS in Greece

The Court of Auditors' Special Report No 4/2001(1) includes a table (No 4) giving a summary of the weaknesses identified by the Commission in the Member States with regard to the year 1998 (mission reports from 1998 to June 2000). This table shows that there are key control weaknesses in Greece. Specifically, the weaknesses identified in connection with area aid are: respect of deadlines, computerised databases, the identification system for parcels, administrative controls, on-the-spot controls and penalties, while in connection with animal premiums the weaknesses identified are: respect of deadlines, computerised databases, the identification and registration system for animals, aid applications, administrative controls and on-the-spot controls. In addition, paragraph 64 of the report states that the Commission's services have concluded that the integrated administrative and control system (IACS) introduced by Council Regulation No 3508/1992(2) of 27 November 1992 establishing an integrated administration and control system for certain Community aid schemes has not been implemented by Greece.

What is the current situation with regard to Greece's implementation of IACS and what measures has the Commission taken or does it intend to take to ensure that Greece's implementation of IACS is satisfactory?

Is the Commission aware of the reasons for these shortcomings in implementation? In its view, what impact have the shortcomings in applying this system had on the effectiveness of the checks carried out?

Can the Commission state the total amount for financial corrections implemented at Greece's expense from 1 January 1997 (the deadline for full implementation of the IACS) as a result of unsatisfactory physical inspections arising from the failure to implement the system?

(1) OJ C 214, 31.7.2001, p. 1.

(2) OJ L 355, 5.12.1992, p. 1.

Answer given by Mr Fischler on behalf of the Commission

(16 January 2003)

The situation in Greece and its progress has been until now, and will continue to be, closely assessed by the Commission services responsible for the audit of agricultural expenditure.

Greece has not yet completed its bovine identification and registration system pursuant to Council Regulation (EC) No 1760/2000 of the Parliament and of the Council of 17 July 2000 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products and repealing Council Regulation (EC) No 820/97(1), which had to be fully in place by 1 January 2000 at the latest. Likewise, the system whereby sheep and goat farmers are required to maintain flock movement registers, pursuant to Council Directive 92/102/EEC of 27 November 1992 on the identification and registration of animals(2), does not operate correctly, even though a premium requirement since 1995. Greece's Land Parcel Identification System that pursuant to Council Regulation (EEC) No 3508/92 of 27 November 1992 establishing an integrated administration and control system (IACS) for certain Community aid schemes(3) was to be finalised by 1 January 1997 at the latest is still incomplete. Recurrent problems have also been encountered with regard to the processing of aid applications, payment and on-the-spot inspection arrangements.

The above-illustrated deficiencies relate to each of the key components of IACS. Consequently, the regulatory administrative and physical controls, such as computerised cross-checks and on-farm inspections, cannot be fully relied upon. This unsatisfactory situation causes a risk of over-charge on the Fund, which is dealt with in the context of the Commission's clearance of accounts procedure.

On this basis, the Commission has until now decided yearly corrections at the rate of 5 % or more for arable crops, 10 % for bovine premia and 5 % for ovine premia.

As from the first of January 2000, the identification and registration of animals became a clear eligibility requirement to receive the animal premia, so that the weaknesses of identification and registration of the animals in Greece involve a higher rate of non compliance with the rules. Therefore, the Commission is considering a 25 % correction rate on certain bovine premia of the year 2000. This proposal is currently at the conciliation stage. Further corrections at a high rate, are still under consideration in the Commission.

On the other hand, the Commission, in its audits, has not found indications that the situation on the spot, at the farm level, suggests a significant degree of anomalies or frauds. So that there is no reason to consider that the risk for the fund is higher than the financial correction rates decided by the Commission.

The total amount already refused Community financing by Commission Decisions in respect of claim years 1997 to 1999 comes to EUR 156 153 993. However, given that expenditure is declared in the financial year following the claim year, it should be noted that the clearance of accounts procedure is continuing with regard to claim years 1999 onwards for the arable crops sector and 2000 onwards for the animal premium sector, in respect of which further significant financial consequences are already at an advanced stage of clearance and envisaged for 2003. In addition taking into account the possibility that the recurrence of weaknesses in control system can, year after year, imply an increase of incorrect declaration by the farmers, the Commission is preparing guidelines aiming to increase the rate of flat rate corrections in the case where a Member State has not applied corrective measures to weaknesses of control systems having already lead to financial corrections in the framework of the clearance of accounts procedure.

In conclusion, the financial corrections applied until now correspond with the financial risk to the fund as assessed by the Commission. The situation for 2002 will be assessed during the next year and, based on the progress made, and on the remaining weaknesses, the Commission will consider making use of the most appropriate means in such cases, including if necessary reductions of payments to the Member State.

(1) OJ L 204, 11.8.2000.

(2) OJ L 355, 5.12.1992.

(3) OJ L 355, 5.12.1992.