EU backs off fight against fraud ahead of trillion-euro budget proposal

Euractiv

2 days ago

As the Commission prepares to pitch its next long-term budget framework on Wednesday, one thing is noticeably absent: a serious plan to stop EU cash from being siphoned off by fraudsters.
A confidential draft of the Commission's new anti-fraud strategy, seen by Euractiv and to be presented to Commissioners along with the budget plan, outlines only minimal procedural intentions of reforms and avoids any major structural changes to the bloc's fraud-fighting system.
In 2024, Ursula von der Leyen pledged to crack down on budget fraud, which is estimated to cost the EU up to hundreds of millions of euros every year.
But now, five officials with direct knowledge of the talks say the Commission has deliberately scaled back its ambitions, opting instead for bureaucratic caution over institutional overhaul, which it postponed to 2026.
'We are basically just managing the tension, not solving it yet,' one EU official said on the condition of anonymity.
'It's on track,' said a Commission official, noting that a high-level meeting on the issue took place shortly after Commissioner Piotr Serafin, in charge of the anti-fraud overhaul, assumed office in late 2024. 'The goal at that stage was to identify existing loopholes and begin a period of reflection' ahead of a comprehensive review expected in 2026, they added.
The EU's strategy to tackle misuse of its cash matters more than ever, as the Commission is set to pitch a more flexible regime for allocating EU money from 2028 to 2034. Critics warn this could open the door to further misuse.
It also comes at a time when EU countries are demanding tighter control over how every euro is spent while slashing social spending to free up funds for green investment, defence, and migration.
'If we're going to ask citizens to accept budget discipline, we should start by showing that the money isn't being stolen,' said another EU official working on judiciary matters, lamenting the lack of urgency in the Commission's strategy. Mounting pressure Political pressure is growing as EU countries and law enforcement raise alarms over criminal groups increasingly targeting the EU budget. Annual losses from fraud – particularly in agriculture , cohesion funds , and procurement – are estimated to exceed €1 billion a year , according to recurring audits by the European Court of Auditors and European Anti-Fraud Office (OLAF).
The true figure is likely much greater, given inconsistent enforcement and widespread underreporting. Most of the money is never recovered, or is clawed back by national authorities rather than the Commission.
In the European Parliament, frustration is mounting over the Commission's failure to deliver on anti-fraud promises already made in von der Leyen's 2022 State of the Union speech .
'Corruption costs us hundreds of billions of euros every year in Europe,' said Chloé Ridel, a socialist MEP and a shadow rapporteur on the anti-corruption directive. 'The Commission's approach is not enough,' she added.
While centrist groups generally welcome the proposals, they also call for robust anti-fraud measures. 'The Commission knows that Parliament will not be satisfied with cosmetic changes,' said Renew MEP Gilles Boyer, who is working on a report on the protection of the EU's financial interests and calls for more cooperation and information sharing between fraud busters. Two watchdogs, one budget At the heart of the delay is an unresolved turf war between two EU watchdogs responsible for protecting the budget: the longstanding Commission-affiliated OLAF and the newly created and independent European Public Prosecutor's Office (EPPO).
While OLAF conducts administrative investigations and recommends fund recovery, EPPO handles criminal prosecutions in 22 EU countries and can seize – and potentially confiscate – assets. Tensions between the two have grown , with OLAF accusing EPPO of delaying financial recovery, and EPPO warning that OLAF investigations can disrupt criminal cases.
Rather than clarifying responsibilities, the Commission's anti-fraud white paper, seen by Euractiv, proposes a 'twin-track' model that allows both bodies to work in parallel and promises improved cooperation. It avoids suggesting immediate reform, which is postponed to 2026 with the revision of their two legal framework, following an audit of the two institutions by the Court of Auditors. Several officials describe the paper as a way to defuse tensions without resolving the core institutional rivalry.
Another key point of the Commission's proposal is a stronger mandate for Europol, the EU's law enforcement agency, moving towards the old federalist dream of a European FBI. While law enforcement forces welcome the proposal, two officials said, several EU countries are unlikely to let that pass. Not to offend anyone Underlying this debate is an unresolved, and perhaps uncomfortable, question: Is the EU's fraud strategy aimed at recovering money or securing convictions? For now, the EU executive appears to prioritise institutional calm by delaying tough decisions. As one official put it, 'the Commission isn't ready to confront EPPO or empower OLAF – so we end up with a status quo that satisfies no one.'
Critics warn that this ambiguity erodes public trust. With tighter budget rules on the table, citizens are being told to accept fiscal discipline, but with no clear message that budget funds are in safe hands.
A stronger Europol is a "good thing," said Ridel, the socialist MEP. "A s is the improved cooperation announced between the EPPO and OLAF. But that won't make the difference in the fight against corruption and fraud... What's needed are legislative changes and budgetary commitments to extend the powers of EPPO and Europol,' she added.
Until the Commission defines what success and budgetary commitments look like in fighting fraud, its financial credibility and political leverage will remain exposed, lawmakers fear.
'The fight 'against misspent money' is essential, indispensable even, to guarantee the integrity and efficiency of public finances. But it alone cannot be the answer to today's EU budgetary challenges, which also require clear political choices, rigorous management and a long-term strategic vision,' centrist MEP Boyer said.
(mm, ow)