The EU's anti-fraud unit, OLAF (Organisation de la Lutte Anti-Fraude), yesterday confirmed that it had found evidence of IRA involvement in attempts to defraud the EU. Presenting the independent unit's annual report for 1998, OLAF's acting head, Mr Per-Brix Knudsen, said in cases investigated during the year there was evidence "that the IRA was involved in organised crime".
Mr Knudsen refused to detail cases but said "it is no secret that organisations like the IRA have a very large need for financing and use sources like we have seen here".
OLAF's predecessor organisation investigated 5,138 suspicious cases notified to it by the authorities in the member-states. About 20 per cent proved to be fraud. Of the €1 billion affected by fraud which was detected (on a budget of €82 billion), 54 per cent involved revenue, largely due to the black market in cigarettes or alcohol. Some 42 per cent involved agriculture spending and 5 per cent structural funds.
The Irish authorities notified 129 suspicious cases, involving sums totalling €4.6 million.
The report gives details of some of the operations. By far the most successful was the closing down of a massive cigarette smuggling route through Andorra to Spain which cost the EU €400 million in 1997.
In January the seizure of lorries with 80 million cigarettes by the Spanish authorities led to inquiries spanning Greece, Albania and the US and successful prosecutions.
The smuggling of 150,000 litres of pure alcohol worth €6 million into Ireland and the UK involved what is known as a "carousel". It was organised by a crime syndicate based in Italy which was successfully dismantled.
Duty-free alcohol had been exported from the UK to Holland and Belgium only to be illegally rerouted to Ireland and the UK using fake Italian travel documents. The scam was worth €850,000 per lorry.
A large scale operation also ended a major Spanish scam to adulterate olive oil with cheap hazelnut oil from abroad - in excess of €8 million in illegal aid had been claimed on the oil.
A Japanese car manufacturer was found to have circumvented €32 million import duty on some 58,000 cars by fraudulently claiming that they were substantially built in its Hungarian factory. Import quotas on cheap garlic from China were circumvented by importers who fraudulently described them as coming from Iran, the UAE, Malaysia, Jordan and India. Malaysia confirmed to OLAF that it did not produce garlic.
Some €65 million in export refunds was improperly paid to beef exporters who claimed that beef was going to Jordan when it was in fact transhipped to Iraq.
An Irish firm, involved in supplying aquaculture equipment to projects in Greece which were co-financed by the EU was found to have been involved in "very significant over-invoicing" of one item of equipment. The sums involved €2.29 million.
The report also refers to one of the cases which contributed to bringing down the last Commission - the diversion of funds from technical support to humanitarian missions in Rwanda and Bosnia using fictitious contracts. Prosecutions of several former Commission employees are pending.
At the launch of the report, the Budget Commissioner, Ms Michaele Schreyer, appealed to member-states to assist the fight against fraud by ratifying the convention on the protection of the Community's financial interests. Agreed in 1995, only four states have yet ratified it. Ireland is not one of them.