Examination of Witnesses (Questions
240-259)
WEDNESDAY 6 MARCH 2002
MR BRIAN
BENDER CB, MR
JOHNSTON MCNEILL
AND MR
HUGH MACKINNON
240. For the year 2000 we had 2,500 tip-offs
of which 15 per cent were investigated, ie 375, of which two led
to prosecutions. The figure you gave for fraud between the UK
and the EU was one case of fraud in the year 2000 compared with
408 in the European Union and yet there were 375 criminal investigations.
I cannot stack up how this follows through given your definition
of fraud, which is something intentional.
(Mr McNeill) I think given the complexity of the figures,
would it be helpful if we were to supply them to the Committee
in tabular form with the details.
241. It is not the figures I am confused about.
(Mr McNeill) I can read them out again, Chairman.
242. Are my figures not right? 2,500 tip-offs,
of which 15 per cent led to criminal investigation equals 375.
In the year 2000 there were two prosecutions and the figures you
gave the Committee for fraud compared with irregularity between
the UK and EU is one case of fraud in the UK compared with 408
in the EU.[16]
(Mr McNeill) No, I am sorry, I said it
represented 15 per cent of the criminal investigations undertaken,
not that 15 per cent of the calls resulted in criminal investigations.
I think my understanding of the situation is we received 2,500
calls and of the number of criminal investigations undertaken
by counter-fraud compliance units, 15 per cent was the last year
figure to the best of my understanding and that is what then was
investigated. How many prosecutions those result in I will have
to get back to you on.
243. Of the 2,500 tip-offs, how many led to
criminal investigations?
(Mr McNeill) I do not have that figure. All I know
is that of the total number of investigations it represents 15
per cent. If you look at criminal investigations in the year 2000
it was 137.
244. Where is this 15 per cent coming from?
(Mr McNeill) Fifteen per cent of those arose from
initial consideration of the 2,500 calls on the help line. As
I have mentioned, a significant percentage of the calls relate
to black milk, milk quota issues which were easily rectified once
one identified where the lorry came from. That is an inspection
issue, not a criminal investigation.
245. Right. 137 criminal investigations, you
are saying only two of those were intentional?
(Mr MacKinnon) No, I do not think we are saying that.
I think what we are saying is that in two cases we got enough
evidence to take the cases into court. Many of the others would
have led to recovery action being taken against the individuals.
Some will have led to other action being taken, probably warning
letters and so forth. I cannot break them all down but all of
them will have been investigated as cases where the investigators
thought that there was a strong possibility that at the end of
it they would get a prosecution. In not all those cases was it
possible.
246. You feel you have got enough evidence to
reclaim back money paid to people but not enough money to prosecute.
It just seems odd that you have got enough evidence for one but
not for the other.
(Mr MacKinnon) We have a very strong hand where recovery
is concerned because these are repeat customers and if we are
satisfied—
247. Are you recovering money unjustly?
(Mr Bender) As I am sure the Committee knows, Government
departments need to follow the Attorney-General's guidelines in
deciding whether it is in the public interest to prosecute and
in gathering different levels of proof required for criminal/civil
proceedings. So there is a lower threshold of activity and, if
you like, definition of public interest in recovering as opposed
to prosecuting. I know this is an issue the Committee have cross-examined
predecessors on as to whether enough prosecutions happen. As I
say, all Departments need to follow the Law officers' guidelines
on whether it is in the public interest to proceed with prosecution.
Mr Gibb: It seems to me, the impression I get
from being on this Committee is that both your department and
the Social Security Department are very slack in prosecuting people
who are stealing my money as a taxpayer and the people I represent
in Bognor Regis and Littlehampton who pay money in good faith
and people are deliberately—137 cases here—taking
away that money against the law and not being prosecuted. It seems
totally wrong. I just think that you ought to take into account
the deterrent effect of prosecutions and take these people to
court. I think it is very, very wrong. I will leave it there.
Jon Trickett
248. We are coming to the end of this and it
has been quite a long afternoon so perhaps I will ask some tidying
up questions and not take the full 15 minutes. Before I do that,
I just find one thing very, very curious about the regime which
ran at the time. I represent an area which used to produce coal.
Now at the moment there are some subsidies left to the few remaining
collieries. They do not get their money because they have got
assembly belts and miners, they get the subsidy because they produce
so many million tonnes of coal, and coal has to be the product
of the assistance regime which is being provided by the EU. In
this case there is no coal, is there? You actually had a regime
which did not require the coal to be produced, did it? There did
not have to be a product of this process?
(Mr MacKinnon) No. I probably cannot answer policy
wise for the European Union Common Agricultural Policy. My role
was implementing it. The linseed aid, for instance, the Arable
Aid Payments Scheme, was compensation for a quite sharp reduction
in institutional prices within the EU so it was paid on the area
of land actually sown to crops.
249. Is not the real systemic problem the fact
that there was no need to demonstrate that any product had come
off the land?
(Mr MacKinnon) In the flax aid case, the European
Union did learn the lesson and in 1997 it made it a condition
of getting the flax aid, which was also an area aid, that there
was indeed flax produced and that flax was processed. The attractions
of flax were that it was a non food crop, food production was
in surplus, it was a very expensive surplus to store or refund
for export. If you had a novel new market opening up, such as
flax, we had novel uses such as body panels in cars being made
from this flax and so forth, then that was an area which would
not contribute to the surpluses and, therefore, to the cost to
the Community budget.
250. The fact of the matter is to use the word
systemic is a very interesting one and certainly a useful one.
The system of agricultural subsidy, in fact, was a racket from
start to finish in the sense that all you had to do was demonstrate
you had sown a field. You had to make a declaration that the area
had been sown and harvested. In fact you were not required, were
you, to demonstrate, you as a farmer and even the contractors,
that anything that had been taken off the field was of any human
value whatsoever? There were tens of millions of pounds over donkey's
years going into these communities, literally to produce nothing.
(Mr MacKinnon) No.
251. The reason why you were not interested
in what was in the barn after the alleged fires was because the
system did not require anything to be in the barn for the man
to get the money.
(Mr MacKinnon) I think the assumption underlying the
regulation as it was in 1994 to 1996 was that the contractor,
the processor, would have an interest in getting flax off the
field. The processor would have invested heavily in his plant,
the equipment to process the flax. He would have had his own customers
to whom he was supplying the processed flax and the assumption
in designing the scheme was that that contractor would police
it, make sure that the flax was grown on the field and delivered
to him. In practice, as we see in the Bowden case, and have seen
in other cases since, that has not worried the processor over
much. I cannot explain why that is but that is so.
Jon Trickett: I suspect collusion. We might
come back to that if the Chairman will allow me to continue.
The Committee suspended from 18.11 to 18.19
for a division in the House
Chairman: Mr Trickett, do you wish to continue?
252. Okay. I was going to ask some other questions
but I think I have made my point and the department to some extent
agrees with the point I was making. It does beg the question actually
whether it would have been better to get rid of the inspectors
and the fraud unit as well so they just hand the money out to
the farmers. The fact of the matter is they were being paid not
to produce anything in effect since no checks were done as to
whether they would have been produced or not. That in itself begs
the question, I think we have discovered there were 400 inspectors
but I do not think we know the size of the Anti-Fraud Unit?
(Mr MacKinnon) 60 people in total.
253. Was that the case over that period of time,
that kind of number?
(Mr MacKinnon) It would have been about that sort
of number made up of a unit of field investigators, about a third
of it, an intelligence unit which is handling data coming in from
the free fraud line, from within the organisation, information
from there and from any other source and processing that information.
Then there is a team within the Anti-Fraud Unit which is engaged
in what are known as scrutiny visits to claimants which is a bit
like the inspector's role but looks much wider across a period
of time and a period of activity and looks in depth at the business
and will spend rather more time at it.
254. Sixty people to produce 130-odd criminal
cases, two of which go to prosecution in a year, does not strike
me as a very high level of output at all.
(Mr MacKinnon) Well, of course, they are clearing
down a whole number of reports as well which do not become criminal
investigations. I think we have seen in the Bowden case what is
involved in actually bringing one of these cases to court. Prosecutions
are labour intensive things.[17]
255. Another department told us, I think, 165
days per prosecution or something. It is still a remarkably low
level of productivity. I just want to ask something else. We know
for the 25,000, I will not say separate people, it may be the
same person making 25,000 different tip-offs, there are 400 inspectors
and 60 crack flying squad type people. How many cases do they
tackle a year in relation to the 25,000? The 25,000 is up to Joe
Public, the benign characteristics of the people out there in
rural communities and elsewhere. How many other cases are we generating
with our specialists and our crack squad?
(Mr MacKinnon) I think the figure was 2,500, not 25,000.
256. Sorry, yes, it was.
(Mr MacKinnon) That is about a quarter of the referrals,
if you like, which go into—
257. So there are 10,000 a year?
(Mr MacKinnon) Something of that nature.
258. Of which we get one or two prosecutions
a year?
(Mr MacKinnon) That is the order of it. Those prosecutions
are the year in which the prosecutions commenced but they may
be from investigations which started earlier. Bowden, for instance,
started in 1996-97 and was prosecuted in 2000.
259. Let me just ask you this: are there prosecuting
people or specialists within your department as part of the 60
or are they additional to the 60? I just need a yes or no answer.
(Mr MacKinnon) Sorry?
16 Ref footnote to Q 14; Ev 26, Appendix 1; and Ev
30, Appendix 1, Annex A. Back
17
Ev 26, Appendix 1; and Ev 30, Appendix 1, Annex A. Back
| 
