The European Unions anti-fraud watchdog, OLAF, has uncovered serious abuse of international aid with major donors being overcharged for projects and money being siphoned off into secret private bank accounts, reports the World Bank press review Friday.
The 25-nation bloc is one of the worlds largest aid donors and in its annual report, published on Friday, OLAF said the EUs humanitarian and development aid to third countries was a victim of “complex and well-organized” financial fraud.
– Such fraud takes an advantage of the lack of coordination in the monitoring and auditing activities between the various international donors, the OLAF report said adding: – The combination of multiple sources of financing and other factors has increased the complexity of accounting and reporting requirements and so made it easier to divert funds for personal or criminal benefit.
Two of the examples cited in the agencys annual report relate to water projects.
In Lesotho, OLAF opened an investigation into misuse of aid for constructing a dam, which was to provide water to neighboring South Africa. Bank accounts containing 3 million euro in suspected bribes to a Lesotho official were detected in Switzerland. The scheme had been allocated more than 180 million euro in EU aid, as well as money from the World Bank.
In Paraguay, an external audit revealed that 90 percent of EU funds transferred to a project aimed at improving water supplies to 50 local authorities had been diverted to a foundation with no involvement in it. When OLAF launched further investigations it found that sub-contractors who had been paid were fictional.
Despite the criticisms about donors lack of coordination, the report states that the number of cases OLAF is pursuing on the work of EuropeAid, the Commissions external assistance office, has declined sharply – from 30 in 2002-03 to nine in 2003-04.
Kilde: www.worldbank.org
