| ACTION IN THE EVENT OF IRREGULARITIES
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| (i) Administrative penalties
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| C&AG's Report, paras 4.4 and 4.5
| 37. Administrative penalties are applied by the Ministry under European Union regulations relating to Common Agricultural Policy schemes. The European Commission has set down uniform scales of penalties for the schemes covered by the Integrated Administration and Control System. The Ministry may have to make difficult judgements in determining the nature of any error discovered and the penalty that should apply. But the Ministry has no discretion whether or not to apply penalties once an irregularity has been identified. These penalties may involve the rejection of an entire claim or a partial reduction in the payment due. Claimants may also be excluded from the relevant scheme for up to two years.
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Q 19
Q 65
| 38. The Ministry told our predecessors that the penalties applied under the Integrated Administration and Control System were in general far larger than any penalty imposed by a United Kingdom court. The Ministry confirmed that the loss of financial subsidy for one or more years dwarfs any fine which may be imposed by the courts.
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| 39. Our predecessors suggested that the difficulty of the court system and the low level of fines, unless there was some really good reason for making a public show of a particular case, meant that it was more cost effective to apply administrative penalties. The Ministry considered that while such penalties were more cost effective, that was not the only consideration in delicate matters of public policy.
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| Qs 33-34
| 40. Our predecessors asked the Ministry what right of appeal farmers had against administrative penalties. The Ministry said that all citizens had a right of appeal through judicial review. However the Ministry was considering the introduction of a mechanism for a right of appeal. The matter was reasonably well advanced and would be in the form of an appeal to an independent person or tribunal outside the department, with legal training.
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| (ii) Prosecutions
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| C&AG's Report, para 4.18 and Figure 9
| 41. In deciding whether or not to prosecute a suspected offender the Ministry's lawyers use the guidelines laid down for Crown prosecutors. The main criteria are whether there is sufficient evidence to prove beyond reasonable doubt that a criminal offence has been committed; and whether it is in the public interest to prosecute. Of the 116 cases referred for investigation in 1992-94, 33 were sub-mitted for prosecution, 29 of which were successful.
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| Q 21
| 42. Our predecessors asked the Ministry if it considered that these figures suggested that it had been applying its criteria for prosecution too stringently, leaving wrongdoers unpunished. The Ministry believed it was applying the correct criteria; indeed it might be that its staff were a bit too ready to refer cases to the investigation branch. The Ministry noted that the claimant had been vindicated in 13 cases where investigations were carried out.
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Q 44
C&AG's Report, Figure 10
Q 19
Q 20
| 43. The Ministry assured our predecessors that a farmer would have to be very clever to escape prosecution by exploiting the time limit which meant that, under scheme regulations, cases could not be brought 52 weeks or more after the offence. Very serious cases could be prosecuted under the Theft Act which had no statutory time limits. The Ministry did not think that the time limit under scheme rules was a significant weakness.
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| (iii) Publicity
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| C&AG's Report, para 4.28
| 44. The Ministry's guidance to claimants makes clear the existence of administrative penalties and the possibility of prosecutions for irregular claims. It publishes press bulletins on its remote sensing facilities and on changes to scheme rules. However the Ministry does not promote local, trade or national press coverage of the irregularities it has discovered and its successful prosecutions. Nor does it publicise the impact of administrative penalties imposed on offenders.
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| Q 13
| 45. Our predecessors asked the Ministry about the National Audit Office's recommendation that the Ministry should publicise the results of its enforcement activities to deter potential offenders. The Ministry said that it was happy with the recommendation and was considering several ways of putting it into practice, for example detailing the consequences of making wrong claims in scheme literature and introducing a telephone line whereby members of the public could report suspected irregularities.
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| (iv) Conclusions
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| 46. We appreciate that administrative penalties can be more severe than those imposed by the courts. Nevertheless, as prosecution has a deterrent effect in that those found guilty acquire a criminal record, we look to the Ministry to pursue appropriate cases of irregularity through the courts to demonstrate the gravity with which the Ministry views fraud.
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| 47. We encourage the Ministry to extend the publicity given to its enforcement activities and to the action taken to penalise those making irregular claims, in order to deter others from submitting false claims.
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