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Euro fraud cops crush garlic tax evaders

Whistleblowing site roots out fraudsters

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The European Anti-Fraud Office (OLAF) says its new whistleblowing website has helped it extinguish a cigarette-smuggling ring and sniff out falsely labelled garlic.

Since OLAF launched the internet-based Fraud Notification System last year, the number of fraud tip-offs has increased: previously, whistleblowers could leave a message on a freephone tip-line, but the system didn't allow for any dialogue with the tipster which made it tough to follow up clues and launch probes, Olaf said in its annual report.

With the success of the online system, the office is closing its phone line:

This [online] system has the advantage of helping OLAF better to assess the credibility of anonymous reports of corruption and fraud. It also makes abuse of the system more difficult.

In 2010, with the help of both web fraud notifications, the phone line and other sources, as well as official reports from EU bodies and member states, OLAF received 983 different scraps of information on fraud and 225 new investigative and operational cases were opened.

Particular cases that OLAF highlighted in its report included consultants selling inside information to clients so that they could bid for contracts for the delivery of goods, and irregular use of European Regional Development Funds (ERDF) in Italy.

The office also aided Spanish Customs in "dismantling the largest ever counterfeit cigarette network uncovered in the EU", and the slightly strange case of helping Austrian Customs to "identify misdeclared garlic".

Falsely declared garlic may be somewhat peculiar to the average reader, but it's nothing to turn your nose up at. OLAF explained:

Importers of fresh garlic of the species Allium sativum must pay 9.4 per cent in ad valorem customs duty plus a specific duty of €1,200 per tonne. Allium sativum is the species that the general public commonly considers 'garlic'.

The fresh version of other garlic-like species, for instance Allium ampeloprasum, only attracts a 10.4 per cent ad valorem customs duty, with no specific duty in addition. Subsequently, by misdescribing fresh garlic, the importer can avoid paying nearly €1,200 per tonne or €30,000 per container.

Now you know.

After being alerted by Austrian Customs that there was something dodgy going on with garlic imports, OLAF naturally sent two specimens of the offensive material to independent DNA labs in Italy and Germany to be tested. They were both found to have been misclassified.

At this time, OLAF realised that these labs were among only three in the whole of Europe "able to undertake the DNA testing necessary to determine the species of the garlic", so the office shouted out to all member states to gather up their garlic and send it in so the office could arrange for testing.

While all this sounds like an extremely odd detective melodrama, the testing actually found that all the samples had been misnamed to avoid customs, which, incredibly, cost the EU around €1.6m.

It is also not the first time someone has tried to slip Allium sativum past the European authorities; earlier this year OLAF seized 144 tonnes of Chinese garlic in Poland, which had been labelled as onions to pull the same switcheroo on Customs. ®

Internet Security Threat Report 2014

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