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Flax case: European Court ruling backs OLAF investigation
Jul '09
In a judgement handed down the European Court of First Instance backs the findings of an European Anti-Fraud Office (OLAF) investigation into EU subsidies wrongly paid for the production of flax in Spain. The OLAF investigation had established a number of irregularities and was the main basis for a Commission decision to make Spain reimburse more than 110 million Euros wrongly paid out to companies in the sector. The European Court of First Instance ruled on Spain's complaint against this decision.

In ruling in case T-259/05 the Luxembourg judges rejected all arguments brought forward against the OLAF investigation opened in May 2000 and closed in March 2001. During the investigation OLAF undertook a series of on-the-spot checks in Spain and established widespread irregularities in the Spanish flax sector. According to OLAF's findings a very significant amount of EU subsidies for flax production had been wrongly disbursed. The final case report was sent to the European Commission and to the Spanish judiciary.

OLAF's findings about irregularities and the existence of major shortcomings in the national control system were the principal basis for a Commission decision for a financial correction of 113.4 million Euros concerning Spain in the annual clearance of accounts procedure with Spain in 2005. This amount represents 100 % of all EU subsidies paid out by Spain to its flax sector in the 1998/99 and 1999/2000 campaigns. The Court of First Instance confirmed this Commission decision. Proceedings in Spain, however, had not been able to establish sufficient evidence of fraud before the criminal courts.

The judgement of the European Court of First Instance can still be appealed.

European Anti-Fraud Office

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