Many of our politicians are absurdly eager to remain signed up to all manner of expensive EU toyshops. In this they are encouraged by a range of academics and lobbyists who are unhappy at the prospect of their purse-strings being cut. Yet it rather behoves the rest of us to reflect beforehand on problems associated with these common budgets and latterday Five-Year Plans. A rather fundamental one is the inherent double risk of fraud and waste.
The omens have never looked good on this score. While working in Brussels 18 years ago, I got hold of an election manifesto for reps for Union Bruxelles, one of the four key trade union bodies. ‘You will know the unedifying history that has led to the cancellation of the previous elections,’ it observed. ‘Fraud, forgery: again, this casts a slur on the name of the staff committee, which was already damaged.’ And that was just what the EU’s employees were saying about the running of their own staff organisation.
Why have we forgotten the wider track record? Let’s take a file from the archives. A Mafia case involved a $300million plan to divert 20,000 tons of meat heading towards the beef mountain and replace it with offal. It was discovered when some of the cans were sent to Russia as aid. Because of the shipping route, UK Customs was involved in the investigation and handed over the evidence to the Italian authorities. Much of this was then lost in an arson attack on the building where the documents were stored. In the end, prosecutions were few and charges were light.
We might take the case of Italian olive trees that were potted to allow a degree of subsidy-friendly mobility that would be admired by Tolkien’s Ents, or the German wheat that gained French nationality to qualify for grants, or the grain moved in Hamburg from one hold to another in the same freighter to become an export.
Some might say these are ancient history. For instance, after years of highlighted abuse, inventories of Commission purchases are now held, meaning that it is harder for £5million of office equipment (the definition included cars) to go walkies every year simply by being physically removed and replaced. The ‘two-overcoat’ system (leaving one garment on a peg to imply still being at work) is also now (mostly) suppressed.
The problem, though, is that lessons remain unlearned. As a new paper from the Red Cell think-tank, Unfinished Business, which can be found here, explores, EU finances remain a leak risk. The real scandal, however, is less the fact of the fraud, or even its scale (despite it running overall on a par with those parts of national budgets which are most vulnerable to fraud). It is the persistent attitudinal failure to consider it a problem to address rather than to suppress. Whistleblowers become enemies of the state even when they are speaking internally.
The issue should serve as a double reminder. In the first place, the inherent and longstanding risk should discourage us from too close a budgetary affiliation. Simply put, the more we pay the EU, the more money will be lost. So we should manage taxpayers’ money directly, accountably, by ourselves.
But also, we need to be upfront. The UK itself needs to prepare. After Brexit, UK customs systems will need to be robust. Many staff in post will be used to operating largely inside a customs union and will need quickly to pick up some old-school skills. The nature of the Northern Ireland border may lend itself again to old-fashioned carousel fraud. I suspect the end deal itself and technology will work against that; but old hands might still be needed to prompt colleagues on how to avoid technical fraud that circumvents quota and rules of origin. The UK will need to demonstrate from the outset its competence in managing through-trade to comply with customs rules, if we are to maintain our existing credibility and so reduce the need for checks at borders (and thus border queues).
We also need to avoid complacency. History shows that the UK has a lower tendency for fraud, but not immunity. One UK meat exporter deliberately submitted customs checks only after officials clocked off. A UK cheese exporter claimed high water content, a fraud reportedly worth £4.7million. Our officials need to be trained and prepped (and not, for instance, as in one port operating with the weighbridge broken).
Finally, we need to remember the true heroes. A number of EU whistleblowers have been crushed by the system for standing up for what is right. We have a duty of care, at the very least towards UK nationals whom the EU machinery system has smothered.
Brexit brings risks and opportunities. One area concerns good financial governance. It may be worth reflecting on both aspects before we commit many more tens of billions to the leaky pot.