Examination of Witnesses (Questions 60
- 79)
WEDNESDAY 10 JANUARY 2007
MR RUDY
VOLDERS AND
MR YANNIC
HULOT
Q60 Lord Watson of Richmond:
It is less.
Mr Hulot: Yes. The reason we know was there
was the First Curacao bank which closed and on the Dubai route
everybody had an account in this bank.
Q61 Chairman:
The bank was in Curacao, not Dubai.
Mr Hulot: Yes, Curacao.
Q62 Chairman:
One in Dubai as well?
Mr Hulot: Yes, but it was for the fraud that
we call the "Dubai route". It was the Dubai route but—
Q63 Chairman:
It was banked in Curacao.
Mr Hulot: The accounts were offshore in Curacao.
This fraud disappeared in September. In the study the Dubai route
represented 66 per cent of the fraud in the UK which means these
figures have disappeared. We imagine now the fraud in the UK is
at least a third less than last year.
Q64 Chairman:
Can I ask who has been providing the Eurocanet figures from the
UK?
Mr Hulot: To evaluate the fraud in a country
you do not need the data from the country but you need the data
from the other countries and we had the data from all the countries.
Q65 Chairman:
Including the UK?
Mr Hulot: No. We have a problem with the UK.
Q66 Chairman:
Do tell me, why?
Mr Hulot: At this moment the Eurocanet network
is a very good detection method but for one year we have had no
data from the UK, they do not want to participate and we do not
know why. The UK is the one that is of more concern and we have
contacts but we have no data, no feedback about the missing data.
We send the results from all the other countries, they have the
results, but the UK do not participate and I do not know why.
Q67 Chairman:
Oh dear.
Mr Hulot: We have contacts in the Ministry of
Finance, we have contacts in CCT and also with the FLO. If you
can help us to have good contacts and exchange of information.
Lord Watson of Richmond: If I may say,
this is quite extraordinary. I do not know whether you saw yesterday's
Financial Times.
Chairman: It is one of yours.
Lord Watson of Richmond: Yes. There is
a trader in Britain who has been sentenced to 15 years in prison
and his two colleagues seven and a half years each. He is actually,
by nationality, French and Belgian but he has been carrying out
his fraud in the UK. There is a name given to the person who has
been heading the investigation, not just of this but all these
investigations, for the Revenue and I am just wondering why you
have not had contact with him. He is Mr Chris Harrison, Deputy
Director for Investigations at the Revenue. You should contact
him. You could ring him up this afternoon.
Q68 Chairman:
But, like you, we have a minister who is fundamentally responsible
for fraud, the Paymaster General, but you have not been in contact
with her office either?
Mr Hulot: Yes, but apparently they do not know
very much of the project and they fight against fraud but with
other methods.
Mr Volders: They do not believe in the Eurocanet
method but that is strange. Is there another country with the
UK that is not participating in Eurocanet?
Mr Hulot: Yes, we also have a problem, a political
problem, with Germany.
Q69 Chairman:
That is very interesting.
Mr Hulot: For the project we had some help from
OLAF last year and they do not want to work with OLAF. It is more
a political problem. Germany is ready to work on the project without
the help of OLAF. They think it is a good project but they had
a problem with the participation of OLAF in the project.
Q70 Lord Cobbold:
Why do they have that problem with OLAF?
Mr Hulot: Apparently it is the sovereignty of
fiscal matters and then OLAF. They want to stick with Member States
but not with the European Commission about the operation of fighting
fraud.
Q71 Chairman:
Yes, I am familiar with that statement of objection.
Mr Hulot: Perhaps we have the same problem in
the UK, I do not know.
Q72 Chairman:
I am just thinking that this could be the case but we must find
out because obviously it is in everybody's interests to find out
how extensive the fraud is.
Mr Hulot: For one year we have had no help from
OLAF and it is a project only for Member States. If that was the
reason it is over now.
Q73 Lord Watson of Richmond:
Is it your understanding then that the British and the Germans
are not co-operating but they are not co-operating for different
reasons, the Germans are not co-operating because they see this
as a sovereignty issue and the British are not co-operating because
they do not believe in the methodology of your project?
Mr Hulot: Perhaps that is the case. You have
to know that the project works in 23 countries in the EU and everybody
is very interested and have invested in the project. In some countries
they have created teams to work in Eurocanet and we have contact
points which are working in Eurocanet full-time. It is a very
early method of detection. With this method we can detect six
months earlier than with other methods.
Q74 Lord Kerr of Kinlochard:
I am impressed about this initiative, which I take it originated
in this Ministry and is run by this Ministry?
Mr Hulot: Yes.
Q75 Lord Kerr of Kinlochard:
I am less impressed by the report which you have kindly shown
us. I am not clear how you can be in a position to make statements
like the one on page 33 where you say that the "Dubai route"
is exclusively a phenomenon in the United Kingdom. If you have
not had working co-operation with the United Kingdom I am not
sure how you know of the scale of the Dubai route in the UK, and
if you have not had working co-operation from other Member States
I do not know how you can state that the Dubai route is exclusively
a problem in the United Kingdom. I take that as an example. I
see that you basically decide on the scale of carousel fraud in
Member States by making an assumption based on proportions of
GDP per Member State, and I see that curiously you put the United
Kingdom top of the list followed by France, Spain and then Sweden.
I am now looking at the league table on page 17 which puts Sweden,
far higher up the league-table than Belgium. I am not clear about
the basis for any of these statements. It seems to me that it
is very good to take an initiative against carousel fraud, but
it is dangerous to make statements about the scale of carousel
fraud in the United Kingdom without any working link with the
United Kingdom authorities, and dangerous to say the Dubai route
saying is exclusive to the United Kingdom if you do not have complete
coverage across the European Union.
Mr Volders: That is not our problem. It is a
remark. Why? Because it is very hard. We say it is now only in
the UK but now we must prove why we made this statement, and Mr
Hulot can answer that.
Mr Hulot: It says that you have a big risk if
your country is big and if your reimbursements are abnormal. That
is what the figures are saying. It is only that the United Kingdom
is a very big country and the reimbursements in proportion are
very big. That is only what I am saying there.
Q76 Chairman:
It is a statistical observation?
Mr Hulot: Yes, it is statistical and macro-economical.
In the study there are two approaches, macro-economic and micro-economic.
Q77 Lord Kerr of Kinlochard:
Forgive me. Your league-table covers a minority of Member States,
not including the largest nor several of the smallest. Cyprus
and Malta are not there. Nor is Germany. An EU league-table without
Germany is a very odd table.
Mr Hulot: It is because the data was not available
for those countries. That was not published.
Q78 Lord Kerr of Kinlochard:
That illustrates my point, if I may say so. I think it is very
good to take an initiative, but very dangerous to publish conclusions
drawn on the basis of only partial completion of the initiative.
Mr Hulot: My sources are the World Trade International,
an international organisation. I only copied that data in the
report. It was very indicative of the size of the country and
the level of fraud.
Q79 Lord Kerr of Kinlochard:
Why is the United Kingdom discussed throughout this report, although
you say there was no co-operation with the United Kingdom, and
Germany not discussed anywhere in the report, although you also
say there was no co-operation with Germany?
Mr Volders: He has not found the figures for
Germany.
Mr Hulot: They are not available. They are classified
"confidential" in Germany.
Mr Volders: When we averaged the figures the
representative end was bigger but we stayed with the macro-economic
analysis based on the figures in Eurocanet and based on the figures
from the countries who have published their figures. I think we
have a representative study.
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