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relatively small number of problems posed by the Bill. By "problems" I mean the point raised by the hon. Member for Huddersfield and other matters, including the one raised by the hon. Member for Greenock and Port Glasgow (Dr. Godman), to which I shall turn in a moment.The hon. Member for Huddersfield made a great show of being bipartisan, of saying that we were all in this together. However, he allowed the mask to slip, and was inclined to lash out from time to time. I think that, in particular, he was unfair to my right hon. Friend the Foreign and Commonwealth Secretary--especially in criticising my right hon. Friend's record in trying to deal with international co-operation and money laundering. It is a record of which the whole Government can be proud.
The hon. Gentleman was also very unfair to the Home Affairs Select Committee when he used that Committee's admirable report, which was published in November, as ammunition for his arguments about money laundering in this country.
Mr. Sheerman : Will the right hon. Gentleman give way?
Mr. Patten : If the hon. Gentleman allows me to develop the argument I shall, of course, give way. His fox was shot very quickly and splendidly by my hon. Friend the Member for Westminster, North (Sir J. Wheeler), who said that the money-laundering problems isolated in the Select Committee's report were founded not on a lack of co-operation between the banks themselves, or on a lack of co-operation between the banks and the investigative authorities, but on the very complexities of trying to track sums of money as they moved around the globe. My hon. Friend will no doubt correct me if I am wrong, but I think that I use his words more or less exactly. In such circumstances, the problems lie in identifying the ultimate owner of the money. I do not believe that the hon. Member for Huddersfield was quite accurate in his use of the report of the Home Affairs Committee.
Mr. Sheerman : Will the Minister give way?
Mr. Patten : I thought that I had dealt adequately with the hon. Gentleman's arguments but he wants a second barrel.
Mr. Sheerman The Minister knows that we are the Opposition and that, even in the most harmonious debate, it is incumbent on us to advance arguments in opposition. I argued that, as the Select Committee pointed out, £15 million seems very small when set against the sum of £1,800 million. That was not a criticism of the Select Committee ; indeed, my hon. Friend the Member for Bassetlaw (Mr. Ashton), who is a member of the Select Committee, intervened in support of my argument. We are merely saying that the Bank of England, after consultation with the other banks, must be able to come up with a way of doing more, more quickly. That was our point, and we believe that that should be done soon.
Mr. Patten : The Bank of England can defend itself admirably, but the criticisms of the banking system made by the hon. Members for Huddersfield and for Kingston upon Hull, West were a little unfair in view of the considerable efforts that the banks are already making to deal with precisely that problem.
Mr. Randall rose--
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Mr. Patten : Let me just answer one point raised by the hon. Member for Huddersfield. My officials and those at the Treasury--I see that my hon. Friend the Economic Secretary to the Treasury is here--as well as officials from Customs and Excise and other departments, are in regular contact with the Bank of England on the subject of drug trafficking and money laundering. Let me give an example. The Bank of England has been part of the United Kingdom delegation to the financial action task force set up by the economic summit to consider fresh initiatives in the fight against drug trafficking. There is no question of the Bank of England not playing an active part. I come now to--Mr. Sheerman : Before the Minister does that--
Mr. Patten : In that case, I had better give way to the hon. Member for Kingston upon Hull, West, who rose some moments ago.
Mr. Sheerman : This concerns the specific point that the Minister was attempting to answer. Will he take away with him the transcript of the BBC's investigative programme? I know that he does not care much for the BBC, but will he show it to his right hon. and learned Friend the Home Secretary and discuss with him the serious allegation to the effect that the Government are not pushing the banking system far enough or fast enough? I should be much happier if he answered those serious allegations.
Mr. Patten : I can give the House the undertaking now that I shall look at any document that the hon. Member for Huddersfield chooses to send me, but he must not attribute to me views that I have never expressed publicly or privately about the BBC or any other broadcasting organisation. That is simply not fair of the hon. Gentleman.
Mr. Randall : Will the Minister give way?
Mr. Patten : Yes. Now the hon. Member for Kingston upon Hull, West gets his chance.
Mr. Randall : May I put the record straight? The Minister will find from the report of our debate that I made no criticism of the banks. At one time, I was in banking myself and I know banking reasonably well--at least in a specialised area. What I said was that the Opposition believed that the Government could be doing more to ease the banks in a certain direction. The Minister has not told us anything. He said that discussions had taken place, but he did not say what initiatives the Government had taken to ease the banks forward to co-operate internationally to solve the problem that he so eloquently described. We are waiting to hear.
Mr. Patten : Each time I give way to the hon. Gentleman, I learn more about his fascinating career. A couple of weeks ago, in a Standing Committee on Statutory Instruments, I learned that he spent his early days as an engineering apprentice. I now learn of his expertise in banking.
Mr. Lawrence : He changes his job often.
Mr. Patten : As my hon. and learned Friend says, the hon. Gentleman changes his job often ; I dare say that he will do so shortly after the next general election.
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Mr. Patten : My right hon. and learned Friend's response to the Home Affairs Committee will, of course, include observations concerning the matters referred to by the hon. Member for Kingston upon Hull, West. He will not have to wait very long.
Mr. Patten : Because my right hon. and learned Friend is following the well-precedented conventions of the House, and replying properly and in the normal way to the Home Affairs Committee's
recommendations. The hon. Member for Kingston upon Hull, West is getting into a terrible muddle : he referred to a number of detailed matters raised in the Home Affairs Committee's report and not to questions arising from the Bill.
My hon. Friend the Member for Warrington, South (Mr. Butler), on the other hand, did indeed refer to detailed questions raised by the Bill, and I thank him for his remarks. He was especially concerned about precursor chemicals, which are a tricky problem. The convention provides a mechanism whereby new chemicals can be added or other chemicals deleted or transferred from one table to another, and that is by resolution of the United Nations Commission on Narcotic Drugs. I ask my hon. Friend to glance at clause 12, which provides a corresponding power for the schedule to the Bill to be amended so that we can introduce new precursor drugs rapidly should the need arise. I hope that hon. Members on both sides of the House will accept that rapid mechanism.
Mr. Butler : Why is it necessary, for the purposes of clause 12, to specify drugs?
Mr. Patten : Because there is a wide range of chemicals that can be used. New chemicals are being introduced all the time and it is necessary to have the power to place them on the list. Let us take the example of the chemicals that might be used in the manufacture of cocaine. Some of the chemicals needed are commonly used. Acetone, for example, can be used as a reagent and a solvent. Those chemicals have a wide licit--I hope that the Hansard reporter is listening--use in many manufacturing processes and therefore to include a general blanket definition would be to use a very big-bore gun.
Mr. Lawrence : My right hon. Friend should be aware that my hon. Friend the Member for Warrington, South (Mr. Butler) is not alone in suggesting that such a provision may not be unnecessary. There is already a requirement in the clause that we should know or suspect that the substance is to be used for unlawful production of a controlled drug. Add to that the fact that there is a whole list of chemicals, such as acetone, which will not necessarily be used for the manufacture of a drug and one cannot but ask what on earth is the point in having a scheduled list which may end up excluding rather than including the very chemicals that one seeks to catch. I do not expect my right hon. Friend to give an answer immediately, but will he consider the matter in due course?
Mr. Patten : I do not know whether my hon. and learned Friend the Member for Burton (Mr. Lawrence) wants to serve on the Standing Committee, but I suspect that my hon. Friend the Member for Warrington, South has earned his ticket and that we shall have some debates on this in Committee.
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The hon. Member for Huddersfield said that we were not doing enough at home or abroad. Let me give one example of what we are doing abroad. The United Kingdom is the fourth largest donor in the world to the United Nations fund for drug abuse control, and that is not a bad record. The total United Kingdom aid in the current financial year is more than £7 million, which includes £4 million that is to go to Colombia, where it will be very well used. The conference to be held in April under the chairmanship of my right hon. and learned Friend the Home Secretary will do a great deal to devlop the global approach to tackling the cocaine problem in south America in particular.In criticising our efforts at home, the hon. Member for Huddersfield was unfair to overlook the considerable budgetary provision that we make annually to try to solve the drug problem. On education, for example, some £3 million has been provided for drug prevention campaigns, some £9 million has been spent in the last four years for education campaigns in schools and a substantial sum of between £3 million and £4 million has been provided for in-service teacher training to prevent drug abuse in schools. That is terribly important in persuading children to resist the offer of a drug. There is also my right hon. and learned Friend the Home Secretary's drug prevention initiative, which is to be area-based. He has announced that it will happen in at least nine of our cities where the drug problem is particularly bad, beginning in 1990-91. The Department of Health has earmarked some £14.5 million for drug treatment services in the current year. That is a substantial and growing amount. When we tot up all those heads of expenditure alone, they come to about £30 million.
Mr. Sheerman : I know that the right hon. Gentleman is a geographer, not a mathematician, but could we have that figure expressed as a percentage of the £1,800 million which his officials reckon is made out of drugs at present in this country? I have not worked it out--I am not a mathematician either--but it sounds like a small percentage.
Mr. Patten : We all know that it is easy for people to talk about the need to spend public money. It is important to spend public money properly, and I suggest that all the money being spent by various Government Departments--I thought that we had the Opposition's support for that--is being exceptionally well spent.
The hon. Member for Huddersfield tried the Home Secretary's patience earlier by continually saying that he would bring forward new policies but never saying what they would be. Here he goes again, saying that he wants to spend more. Does he wish to give a pledge now? My hon. Friend the Economic Secretary is here with his little calculator. He would love to add such a pledge to previous Labour pledges. The trouble is that the Labour party will not say what they intend to do or how much they intend to spend.
Mr. Sheerman rose --
Mr. Patten : I shall not give way to the hon. Gentleman again.
Sir John Wheeler : I intervene as I reflect on what my right hon. Friend has just said. Does he agree that the £18
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billion referred to in the Home Affairs Select Committee report is the estimated amount of money which moves through the international banking system, which happens to be based here in London? Does he agree that it is not money that is identifiable in the sense that we can send vanloads of police to seize it tomorrow but money that is believed to move through the system because London happens to be the premier banking location in the world?Mr. Patten : My hon. Friend is right. That is yet another example of how the hon. Member for Huddersfield simply misquoted the Home Affairs Select Committee report. The report is available in the Library of the House and the words are on the page.
Mr. Sheerman : On a point of order, Mr. Deputy Speaker. I reluctantly take issue with the Chairman of the Select Committee. He misleads the House--I am sure because he has a lapse of memory. The report says :
"The National Drugs Intelligence Co-ordinator estimated that there is at least £1,800 million"--
not billion--
"derived from drug trafficking in the United Kingdom."
Mr. Deputy Speaker (Sir Paul Dean) : That is an intervention, not a point of order.
Mr. Patten : The hon. Member for Greenock and Port Glasgow (Dr. Godman) talked himself pretty satisfactorily on to the Standing Committee. He asked several detailed questions about Scottish provisions, the definition of a ship and whether British customs or other vessels in hot pursuit can board boats in international waters. I look forward to debating all those points in Standing Committee, but I should surely be out of order if I debated them in detail on Second Reading.
Dr. Godman : Will the Minister give way?
Mr. Patten : If the hon. Gentleman will forgive, I must make some progress. I have given way more than all those who have spoken put together.
I shall end my speech by referring to the speeches made by my hon. Friend the Member for Westminster, North and my hon. and learned Friend the Member for Burton. My hon. Friend the Member for Westminster, North was right when he urged us again and again that there must be no legalisation of any presently illegal drugs. We agree with him entirely. I congratulate him and his Committee on its excellent report, to which, as I said earlier, we shall reply as soon as possible.
I thank my right hon. and learned Friend the Member for Burton for his support for our tightening up of confiscation orders. I know that, with his wide experience at the criminal bar and sitting as a recorder, he recognises the need to tighten up the confiscation legislation. Perhaps we should have recognised it in earlier legislation. He also referred to the need for greater international co-operation.
I welcome the bipartisan approach of the Labour Front-Bench spokesmen and congratulate both the hon. Member for Huddersfield and the hon. Member for Kingston upon Hull, West on their excellent speeches. I look forward to the Committee stage. However, the point was made forcefully by my hon. Friend the Member for Westminster, North and my hon. and learned Friend the Member for Burton that we are debating an issue which affects all our children-- the fight against drugs.
Time after time, my right hon. and learned Friend the Home Secretary rose to press the hon. Member for
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Huddersfield, who was making generalised statements about future Labour policy, to give greater detail. Understandably, the hon. Gentleman could not give an answer. I do not criticise him for that, because the person who should have been here this afternoon to debate this extremely important issue is the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). There is nothing more vital for our children's future than prevention of drug abuse. Where was the self -styled shadow Home Secretary? He was not here this afternoon.The only thought-provoking remark made by any Opposition Member about how a Labour party policy might develop in future was made by the hon. Member for Bassetlaw (Mr. Ashton), who is no longer in his place. He has been described in my hearing as a thinking man's Roy Hattersley. He at least came up with a positive suggestion, which was grasped with both hands by the hon. Member for Huddersfield as the nearest thing to a proper Labour policy on drug abuse that he could find. He then compounded his failure by intervening--which I thought was impertinent--in the speech by my hon. Friend the Member for Westminster, North to say that the right hon. Member for Sparkbrook had more important things to do than attend the debate this afternoon, because he was deputy leader of the Labour party. The right hon. Gentleman was putting his political duties before his duties to the House.
Labour Members bellow brazenly with criticism, but they are shy of telling us their policies. I shall do my best during the Standing Committee proceedings, if the Bill receives a Second Reading, to tease out those policies. We shall return to Labour's policies--
Mr. Lawrence : And how much they cost.
Mr. Patten : As my hon. and learned Friend says, and how much they cost. Having said that, I thank the Labour Front Bench spokesmen for supporting the Bill and I sit down in the sure and certain knowledge that they will not force it to a Division.
Question put and agreed to.
Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).
CRIMINAL JUSTICE (INTERNATIONALCO-OPERATION) BILL [Lords] [Money]
Queen's Recommendation having been signified--
Resolved,
That, for the purposes of any Act resulting from the Criminal Justice (International Co-operation) Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of any expenses incurred by the Secretary of State under that Act.-- [Mr. John Patten.]
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European Community (Fraud)
[Relevant document : un-numbered Explanatory Memorandum submitted by Her Majesty's Treasury on 4th December 1989 on anti-fraud policy : Commission work programme.]
6.38 pm
The Economic Secretary to the Treasury (Mr. Richard Ryder) : I beg to move,
That this House takes note of the Annual Report of the Court of Auditors of the European Communities for 1988 and European Community Document No. 4582/90 relating to action against fraud ; and approves the Government's efforts to press for value for money from Community expenditure.
The two reports referred to in the motion will be discussed at ECOFIN on 12 March. I hope that the debate will help to show the Commission, and our partners, that the Government have the full backing of the House as we spearhead efforts to get to grips with fraud. It may be helpful to remind the House of the backcloth to the two reports.
The Commission's report on action against fraud stems in no small part from a growing anxiety here in Britain. This House has shown a major interest in the subject, on which we have held valuable debates. My hon. Friend the Member for Southend, East (Mr. Taylor), the hon. Member for Newham, South (Mr. Spearing) and my hon. Friends the Members for Holland with Boston (Sir R. Body) and for Stafford (Mr. Cash) have shown a particular interest in the subject. The House of Lords Select Committee on the European Communities published an excellent report on "Fraud Against the Community" in February 1989 and the Government's political determination to tackle fraud has never been in doubt. We have, with the full support of the House, striven to put fraud higher on the agendas of Brussels.
The British Government have ensured a higher profile for fraud in ECOFIN and other Councils of Ministers, and we will keep up our pressure to turn good intentions into concrete changes for safeguarding public money. The annual ECOFIN debate of the Court of Auditors report began in 1985, largely at United Kingdom instigation. The present initiative against fraud was launched by ECOFIN in March 1989, and followed discussion of a United Kingdom paper.
Our recommendations, accepted by the Commission, included revision of arrangements for monitoring and surveillance of common agricultural policy transactions involving the payment of export refunds to traders, adjustments to improve the monitoring of systems for storing agricultural products which have been taken into intervention, better scrutiny of the accounts of firms and traders which receive payments under CAP, simplification of Community legislation in relevant areas, and a review of the supervisory arrangements which member states were required to introduce in the regulations governing the expanded structural funds.
Those recommendations were reinforced at a meeting of the Commission's committee on fraud prevention, known as UCLAF, in May when another United Kingdom paper examined this work and suggested further work for the future. It emphasised the need for a long-term programme of action and laid particular stress on the need to improve systems for combating fraud. We advocated
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regular and comprehensive examination of control systems consistent with firm financial management control.At our instigation, fraud featured both at ECOFIN and at the European Council at Madrid in June. ECOFIN welcomed the Commission's programme of work on fraud, called for early action on export refunds and intervention storage and asked all member states to instruct their ministerial colleagues to intensify the fight against fraud. The European Council in Madrid emphasised the need for firm action, welcomed the work programme and instructed the Council of Ministers to decide quickly on proposals from the Commission to combat fraud. Britain has always been in the vanguard in the fight against fraud. The discussions and decisions that I have outlined owed a great deal to our political will and to the importance that we and the entire House attach to it. Sadly, the available figures do not suggest that all other member states take the problem as seriously as Britain does. We reported 163 cases of CAP fraud to the Commission in the first three quarters of 1989, whereas Greece and Portugal reported none. Regrettably, reporting standards differ between member states which makes comparisons difficult.
Dame Elaine Kellett-Bowman (Lancaster) : Does my hon. Friend agree that the maddening aspect of this is that, because we track down fraud assiduously and come up with figures, other people think that we are worse than they are, which is most misleading and unfair when we have far less fraud and are much more careful about it?
Mr. Ryder : My hon. Friend draws attention to an important point which she raised in the recent agriculture debate. We certainly believe that Britain is as assiduous as any other European Community country in identifying and reporting fraud.
Dr. Norman A. Godman (Greenock and Port Glasgow) : Is the Minister satisfied that Community fisheries policy funds can no longer be siphoned off by unscrupulous fishing interests in certain European Community littoral states?
Mr. Ryder : Fraud is such a complex issue that one can never be certain about anything when it comes to some of the ways in which people in Europe can commit fraud. The British Government, the Commission and most of our partners in the European Community have done everything possible to get to grips with this issue, especially in the past year and principally as a result of the pressure that we brought to bear in Brussels and at other Council meetings in Europe--notably the Council to which I have already referred, which met last June in Madrid. I leave it to hon. Members to draw their own conclusions from the figures that I have given, which show that our reporting of fraud seems to be far more accurate than that of some other countries.
I wish to highlight four areas in which concrete progress has been made. First, a new export refund monitoring regulation toughens up existing arrangements by requiring customs officers in all member states to inspect in person a minimum proportion of items on which export refunds are claimed. The proportion will rise to 5 per cent. by 1992.
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This measure is a direct response to last year's Court of Auditors report which catalogued numerous examples of frauds relating to export refunds. In a sample of 95 export consignments examined by the court in one member state, only one had been subject to random examination ; and that was fraudulent.Mr. Ron Leighton (Newham, North-East) : Does the Minister agree that that is shocking, and that if a private company was involved in that amount of fraud it would soon be up in court and prevented from continuing to trade?
Dame Elaine Kellett-Bowman : That is why we are dealing with this.
Mr. Ryder : As my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) observes from a sedentary position, that is precisely why we are dealing with this matter. As I have said, the British Government have been in the vanguard and have spearheaded the efforts of the European Community to get to grips with the problem. I only wish that others in Europe took the issue as seriously as we do. A considerable amount of the progress in the past 12 months has been made as a result of the efforts undertaken by Ministers in many Council meetings in Brussels. We have also received the support and approval of the Commission.
Secondly, in its report last year the Court of Auditors said that existing documentation for export refund purposes did not provide sufficient proof that cargoes had arrived at their stated destination. The court cited the discovery in one case that two major export refund traders in different member states owned complete sets of customs stamps of the main countries with which they traded. This illustrated the danger of relying on the documentation in question--the so-called annex 2 documents--which bears no greater proof of arrival than a customs stamp. This document has now been abolished and replaced with a more secure sysstem. Incidentally, the United Kingdom is one of only two member states that have given the Commission wholehearted support in this matter.
Thirdly, a new code of conduct defines the basis on which member states are obliged to report all significant frauds and irregularities in respect of structural fund receipts. The code specifies the information to be provided by national authorities, including information on the state of legal proceedings, and the timetable for returns.
The last of my four points concerns tougher regulations relating to the payment of own resources. For example, regulation 1552/89 requires member states to report all funds and irregularities involving more than £7,000 of own resources and empowers the Commission to carry out on- the-spot inspections at traders' premises and customs offices in member states.
Attempts have also been made to simplify the tests applied to determine whether a payment is justified. This makes sense for everyone involved in a transaction--the person claiming the payment and the organisation, such as a Ministry of Agriculture, deciding whether the payment is justified. In some areas, notably agriculture, the requirements were becoming difficult to apply, as well as being increasingly difficult to audit. A good example of what has been achieved is the scheme for export refunds of beef and veal where the number of product classifications has been reduced by more than a third and the number of frozen meat refund rates has been cut by half. That will
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reduce the scope for fraud based on bogus declarations of the quality of exported meat and its destination. While recognising that sensible simplification of complex rules should be supported, we shall not fall into the trap of agreeing rules which diminish our chances of preventing fraud.Dame Elaine Kellett-Bowman : Does my hon. Friend agree that we would stand a much better chance if people from other countries inspected each other's things? An inter-EEC inspectorate, in which we do not have to adjudicate on our goods and the Dutch do not have to adjudicate on theirs, would be better because people are by nature more reluctant to identify fraud in their own country because it redounds badly on their country. Does my hon. Friend not agree that interchangeable inspectorates would be much more likely to sus out what was going on, so long as they all worked alongside one another?
Mr. Ryder : We have been making broad progress in that direction. When this subject was debated in the House a year ago, only 10 people were employed in the Serious Fraud Office in Brussels--now the number is 30. The office also has considerable powers along the lines that my hon. Friend the Member for Lancaster would like. As time goes on we shall move further in the direction in which she wants the House and the Community to go.
Mr. Anthony Beaumont-Dark : (Birmingham, Selly Oak) : In countries such as Britain, which has a national Parliament, if someone engages in fraud he or she is taken to court and faces severe penalities. That is right--otherwise, fraud would prosper. What penalties have been imposed on people who have engaged in fraud abroad? Is it not true that all that happens is that one loses the payment for which one fraudulently claims? If that is the only penalty, would it not be worth having a try?
Mr. Ryder : I am not sure whether my hon. Friend would ever do that. I shall refer directly to my hon. Friend's point about prosecutions later in my remarks.
Mr. Christopher Gill (Ludlow) rose--
Mr. Ryder : I must make progress. I have given way several times already, but I shall give way for the last time to my hon. Friend.
Mr. Gill : Before my hon. Friend moves on to another subject, will he consider that with beef--a product that he mentioned--the inspectorate will find it difficult to discern whether fraud has taken place? The way in which the commodity is handled, stored and generally presented defies expert identification. Even people who have spent a lifetime in the industry would be hard put to tell whether the commodity that is labelled as being in the box is actually contained in it, and whether it is a certain cut of beef or not. The only way in which my hon. Friend will ever solve the problem of fraud in that sphere is to do away with the whole system. No amount of inspectors and extra cash thrown at the problem will eliminate it because it defies even the experts.
Mr. Ryder : I know that my hon. Friend speaks with a deep knowledge of the subject. I believe that he has been in the industry all his life.
Mr. Ian Taylor (Esher) : It has made him a vegetarian.
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Mr. Ryder : My hon. Friend whispers from a sedentary position that it has made my hon. Friend the Member for Ludlow (Mr. Gill) become a vegetarian.
I was beginning to have some sympathy with the point made by my hon. Friend the Member for Ludlow until he came to his conclusion. If he believes that there are ways in which the system can be improved in line with what we have been doing during the past 12 months, I shall be happy not only to receive his advice but to consider it before the ECOFIN meeting in mid- March, which will be attended by my hon. Friend the Financial Secretary to the Treasury.
Before we can assess the effectiveness of measures against fraud, we need better information about the scale, nature and incidence of fraud, especially from some of our partners. Nevertheless, it is clear that there is widespread recognition of the problem of fraud in Europe. The Commission's report on fraud includes two significant examples. The first is a list of 132 irregularities in agriculture, totalling about £39 million. I do not for one moment believe that that represents more than the tip of the iceberg. The second example involves a legally significant Greek fraud, where maize imported from Yugoslavia was re-exported under a Greek label and payment of the agricultural levy thereby evaded. The respective powers of the member states and of the Commission are being examined as a result of the ruling by the European Court of Justice on the case which followed the exposure of that fraud.
The Commission regards the European Court of Justice's judgment as reaffirming the power of the Commission to impose administrative sanctions to ensure compliance with Community law and the obligation on member states to take effective action to penalise fraud affecting the Community budget in the same way as fraud affecting their national budgets. We believe that the Commission's position on administrative sanctions is right and we are disappointed that some other countries do not share that view.
We support the imposition of administrative penalties, provided that the penalties are automatic and in proportion to the scale of error involved and that the arrangements do not involve any form of judicial process. An attempt to distinguish between genuine mistakes and deliberate attempts to defraud should not be undertaken by the Commission as that would be an unacceptable intrusion into the role of the judiciary. The Commission may publish a regulation setting out its view. That is unnecessary, but we will support it if it is the only way to improve financial discipline.
We agree with the general direction of the Commission's programme of work on fraud for 1990, but we want to see a clear timetable, with dates for completion of the work. We want concrete evidence of improvements in the reporting of fraud and in the controls carried out by member states and resolution of the question of administrative penalties in agriculture. We also want early introduction of a binding code of conduct for the structural funds.
With regard to legislation, we shall maintain pressure on the Council to react to Commission proposals quickly. Indeed, the European Council underlined the need for swift action last year in Madrid.
I have set out the background to and some of the main themes of the Commission's report, "The Fight Against
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