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Earl Russell: The noble Lord has just said that a single language goes with a single currency. Would he care to repeat that opinion in Caernarvon?

Lord Beloff: I did not use the word "language". I am afraid the noble Earl—I do not blame him—was not listening to me very carefully. In this House we are not only free in what we can say: we are also free in how far we listen.

Perhaps I may come back to my central point. I was struck yesterday by something quite different which came from the speech of the noble Lord, Lord Tebbit. He pointed out that our Minister of Agriculture was unable to stop the trade in live animals across the Channel because, under the Community's rules, he had no power to do so. Then it struck me how interesting it was that in this country the sufferings of animals figure largely in the public consciousness. As someone living in the county of Sussex, which is now being flooded with policemen at our expense in order to protect these shipments, I am aware of the degree to which animal welfare is a subject in this country. But it is not among most of our continental partners. There is a difference. It is a profound, if one likes, philosophical difference.

Wherever we go—fraud is one way in and animal welfare is another: one can think of half a dozen more but they were illustrated yesterday—we are brought to the conclusion that the most important task at the moment is to find ways in which the countries of Europe, different though they are, can co-operate. The noble Lord, Lord Eatwell, who lives in a world of abstractions, was suddenly confronted, as he thought, by some degree of what he called xenophobia in our discussions. There may be some xenophobia—not, I think, in the discussions of this House but in the country and in other European countries—but the xenophobia is created by the Community. It is because people feel that they are not being asked to be nice to foreigners or to co-operate with foreigners but are to be ruled by foreigners that there is this instinctive reaction.

This debate has given us the opportunity to look at this matter again. I hope there will be further opportunities. I beg to move.

Lord Bruce of Donington: The amendments moved by the noble Lord, Lord Beloff, draw attention not only to fraud but to irregularity in financial management, at whatever level. In the course of our discussions on Second Reading relating to fraud and to irregularity in financial management the Government have concentrated mainly on the fraud aspect, without any particular emphasis upon irregularity in financial management. Their case is substantially the same as that of the Commission itself. It is that the responsibility for fraud lies mainly with the member states. The value of this amendment is that over the whole sphere it draws attention not only to fraud but to irregularity in financial management.

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There can be no doubt but that irregularity and mismanagement are not necessarily principally concentrated in the member states but in the Commission itself. If the noble Lord reads pages 5 and 6 of the Court of Auditors' report for the financial year 1993 he will find that view abundantly justified. Because of time I shall give two extracts only from pages 5 and 6 of the Court of Auditors' report for 1993. The first states that,

    "the development of Community activities has not been accompanied, either in the Commission or in the Member States, by a commensurate development of the necessary financial management and control systems".

It goes on:

    "Although the Commission has undoubtedly made efforts to correct the weaknesses in accounting and financial management systems to which successive reports of the Court have drawn attention, it has failed to secure ... the proper level of financial management and control necessary in the complex environment of Community finances".

If I may say so, this is one of the factors to which I have endeavoured over these weeks and months to draw your Lordships' attention.

At the bureaucratic level there is lack of control and bad financial management. There are persistent breaches of the Commission's own financial regulations and the Commission seeks to avoid responsibility for this by insisting, with the apparent approval of Her Majesty's Government and possibly also, for all I know, of Her Majesty's Opposition, that the principal responsibility lies in the hands of the member states. There will indeed have to be further investigations into this matter. I can assure Members of the Committee that there will be detailed investigations into when, doubtless through the usual channels, it will be convenient to discuss the Court of Auditors' report for 1993, which has only recently been delivered.

In the meantime I leave the Committee with a quotation from a report which appeared in the Daily Express on 12th November 1994. I would like some observations as to whether Her Majesty's Government know anything about it and, if they do, whether they place any credence in it at all. So far it has not been contradicted either by the Commission or the Government. It says:

    "Several top Eurocrats face jail for involvement in frauds worth billions of pounds. EU officials revealed yesterday that there are nine separate investigations into corruption inside Commission headquarters, with the Italian Mafia believed to be involved. The EU has already completed one investigation into corruption—by an Italian who committed suicide when he learned he was about to be questioned. This week the EU opened a fraud hotline, with rewards for information which leads to fiddles being exposed".

I do not place my own personal credence on that report. I would like to have greater verification than that, as the noble Lord well knows. But at this stage I ask whether the Government have heard anything about it and whether—following the usual press office facilities that exist within the noble Lord's department, a department which has tentacles throughout the Press Association and the newspapers of the world—any checks were made by the Treasury or by his department as to whether or not there is any truth in this. I have seen no rebuttal.

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In the meantime I trust that the Committee will accept the verdict of the latest Court of Auditors' report which has not been before either the other place or this House. It shows that there is widespread irregularity and lack of proper financial control within the Commission itself. I trust that, when the Government provide the various reports which they have promised and which substantially agree with what the noble Lord asks for in his amendment, they will include full details of anything that comes to light.

6.30 p.m.

The Earl of Onslow: This question of fraud is inevitable when we have something quite as silly as the common agricultural policy. Fraud is involved in Italy in getting subsidies for double or triple the number of olive trees which really exist. There is the export of more hard wheat from Italy than is actually produced there. There is the fraud as regards Greek tobacco which even the Albanians will not smoke. Admittedly the next fraud is peculiarly and blissfully an Irish one involving cows on a farm which straddled the border, the animals being moved back and forth across the border. The farmer was finally acquitted because defence counsel said, "How can you prove that the cows were exactly the same as those which went each way on several occasions?" That was a famous Irish fraud.

The CAP is the root cause not only of distortion of world trade, but of this fraud and fiddle. Until we get rid of it, with all its trade distortions, environmental disasters and subsidies to do things which we should not do, there will be no improvement. I plead guilty to putting my nose into the trough and getting set-aside payments. If somebody is stupid enough to put the trough there, my nose is going to go into it with the rest of them, and quick as a flash. But we must get rid of the common agricultural policy which is where the vast majority of the fraud occurs. The CAP also accounts for a large proportion of the European budget. It represents at a minimum 50 per cent. of its budget. Furthermore, in the social and cohesion funds, there is the drainage of the marshes at Missolonghi to increase Greek agricultural production. That has caused environmental damage. There is also the question of cutting down cork trees which was mentioned by the noble Lord, Lord Buxton, in the debate yesterday. We have not only the common agricultural policy which takes up far too much of the European budget and the possibilities for fraud which go with it, but we have other budgets under other financial headings for increases in agricultural production. Until these matters are put right fraud will not go away.

Lord Monson: I support this amendment. I wish to pick up what was said by the noble Lord, Lord Beloff, in his magnificent introduction as regards the attitude to fraud as distinct from specific acts of fraud. Time and time again those of us who are not actively involved read or hear what occurs when British Ministers, MPs, MEPs, commissioners or civil servants bring up the question of fraud in Brussels or Strasbourg. Their continental counterparts, or most of them, almost

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invariably yawn, fidget, twiddle their fingers, fill in crosswords or generally show by their body language that they are thoroughly bored with the whole business.

It is not that they are actively in favour of fraud, but simply that generally they do not consider it to be as iniquitous as we do on this side of the Channel and that too much Anglo-Saxon obsession with fraud diverts time and energy from the grandiose task of building a United States of Europe. That is why it is so important that Her Majesty's Government produce an annual report on fraud, whether by accepting the amendment on the Marshalled List or otherwise.

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