Examination of Witnesses (Questions 45
- 59)
WEDNESDAY 10 JANUARY 2007
MR RUDY
VOLDERS AND
MR YANNIC
HULOT
Q45 Chairman:
Good morning, it is very nice to see you.
Mr Volders: Welcome to this meeting concerning
VAT fraud. I am perfect in French and in Dutch but in English
it is going to be difficult for me. I understand everything but
speaking I am always looking at the TV and American films and
it is English that everyone understands but for the rest it is
very passive. Excuse me for this annoying situation. The Secretary
of State, Mr Jamar, is going to come later. There is an urgent
meeting at the Parliament because he is also responsible for corruption
and OECD and he must now defend before the Parliament the project
of law is compliant with the OECD evaluation of Belgium. The Minister
of Justice has demanded that he appear. He is sorry about this
but he is going to arrive. It is 10.15 and I think he is going
to be half an hour. He will immediately come back and you can
meet him. For the technical aspects I have invited Mr Hulot who
has undertaken the study that has caused much ado about nothing.
Q46 Chairman:
That is very English!
Mr Volders: Much ado in the government of the
UK and also in the Parliament. I think the Parliament wants more
explanation as to why the Belgians—It is not why the Belgians,
we have been contacted by James Oliver of the BBC—
Q47 Chairman:
For the Panorama report.
Mr Volders: Yes, for the Panorama report.
That was the introduction. He said in the Belgian Parliament Mr
Jamar had defended the politics of Belgium to cope with the VAT
fraud and we mentioned this study. The journalist knew this and
he contacted Mr Jamar and Mr Jamar gave an interview to the BBC
journalist and then we had a diplomatic incident. We have spoken
with the Ambassador and we are open to discussion to defend our
position and certainly to explain our politics to fight against
VAT fraud.
Q48 Chairman:
We will start as if we had Mr Jamar here. May I thank you for
having us. Thank you for filling in for Mr Jamar, who we look
forward to meeting later in the morning. We are recording all
of this because we are a House of Lords Committee and I hope that
is all right. You will get a transcript so you can see what it
is that has been said.
Mr Volders: No problem.
Q49 Chairman:
I believe you have also had a list of the questions that we hope
to ask and, indeed, very appositely the first thing we wanted
to ask you about was the work of the Task Force because that must
have been the core document from which Panorama drew their
figures and their facts. In fact, we have not got a copy of the
report and we would be terrifically grateful for it.
Mr Volders: A copy of the report?
Q50 Chairman:
Of the report on Missing Trader Fraud.
Mr Hulot: It is only available in French.
Q51 Chairman:
That is all right, we can get that translated.
Mr Volders: We are copying it now.
Q52 Chairman:
Good. None of us is fluent enough in French.
Mr Hulot: We have a short résumé
about the Eurocanet project.
Mr Volders: That is in English!
Q53 Chairman:
Wonderful. That really constitutes our first two questions. What
we are beginning to find is that there is some disagreement about
the size of the fraud. We have, as it were, in the United Kingdom
owned up to somewhere between £3.7 and £4.5 billion
lost through carousel fraud. We owned up to that in the Autumn
Budget statement but, for instance, your figure of eight billion
is rather higher than we recognise. Then there are reported comments
from Mr Kovacs who says it is 250 billion which would be five
times the size of the CAP. We would like your views on where the
numbers are and where they are coming from and what you think
about Eurocanet.
Mr Hulot: Eurocanet is a detection method, not
an evaluation method. It is a network between all the Member States
between anti-fraud units about the fraudulent transactions. If
we have a transaction from Member State one to Member State two,
to Member State three, Member State four, we have the companies
which are targeted. The aim of the project is to monitor closely
electronically the companies which are invoicing constantly to
missing traders. With that data it is possible to make a reproduction
of where the missing traders are in the EU. Do you understand
what I mean?
Q54 Chairman:
Yes.
Mr Hulot: It is possible to do a reproduction.
With the network it was possible to make this study, and we did
it. The first conclusion is that VAT fraud is not homogenous in
the EU, there are big differences.
Q55 Lord Watson of Richmond:
Differences in how it is done?
Mr Hulot: Yes. It was not a study about the
VAT fraud in the UK, it was a study of data and we have very good
data. It is perhaps the first time in the European Union that
we have had the data to make the study. If Mr Kovacs says it is
€250 billion of fiscal fraud and €60 billion of VAT
fraud, I do not know if he has got data to say that, but to do
the study we did we had data and we had data from 23 countries.
Q56 Chairman:
That says, to me at least, that the Eurocanet data is probably
better than anything else that is around because you have collected
it from the people who are actually directly dealing with the
data.
Mr Hulot: Yes.
Q57 Chairman:
Is there any chance that the amounts are double-counted?
Mr Hulot: Normally not. We made a filter to
avoid double-counting. Also, we had a problem with the Dubai route
because all the fraud which we called the "Dubai route"
was in the UK. We were in communication with all anti-fraud units
in the EU and we never had a case with damage out of the UK.
Q58 Lord Watson of Richmond:
May I ask a supplementary. However, there is this enormous discrepancy
between your figure, which is bad enough, and this other figure
which is hundreds of billions. It prompts the question whether
what is actually happening here is that we are really only beginning
to look for this fraud and that it may be rather like an iceberg,
that we have detected what is on the surface but we have not actually
discovered the dimensions under the surface. Do you allow for
a possibility that the extent of VAT fraud, and carousel fraud
in particular, may be much, much greater than that has been anticipated?
Mr Hulot: I think last year we were at the top—
Q59 Lord Watson of Richmond:
You had never done that research before?
Mr Hulot: No. I have to say we saw the figures
for the first quarter to 2006 and the transactions went down from
70 per cent, and also in the UK. That means that the study gave
some figures and now it is not the situation we had then.
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