EuroparlTV follows an international fraud investigation to find out how the European Union is tracking down its missing millions.

Reporter: Catching the EU budget fraudsters

https://api.multimedia.europarl.europa.eu/documents/20125/16150920/m003-0222-en.srt

European budget fraud cost taxpayers  404 million euros in 2011,

according to the European Commission.  How do the fraudsters avoid detection?

EuroparlTV investigated  a transnational fraud

The investigation started with a tip-off  given to OLAF, the EU's anti-fraud office.

The fraud concerned  a budget of 50 million euros

The fraudsters often are  well-prepared and skilled.

They knew the system at the European  Commission very well, the procedure,

and this of course facilitated the fraud.

The investigators from OLAF  found the fraud was international.

The people behind it were Italians  based in Milan.

The money went through shell companies  formed in several EU countries.

OLAF informed the Guardia di Finanza  in Milan so they could investigate further.

Ten people started to investigate  with the help of phone taps,

and they went through the accounts  of the companies involved.

had an in-depth knowledge  of the mechanisms for granting money.

Therefore, these projects - at least  at first sight - were credible.

But the peculiarity was that the project  lacked the later stages of implementation.

The work of the investigators was  to prove at a national and European level

that although  the project was credible,

and the partners, the consortia, the Italian  and foreigner companies were credible -

some had no requirements  as we found out later -

that the implementation of the activities  planned in the projects was hardly existent.

Indeed, the unusual thing  about scientific projects

is that they're not required  to produce results in the short term.

We went to the Milan prosecutor's office.

These two judges received the confession  of one man behind the fraud.

Over three days  he told the judges everything.

This chapter is closed  from a legal point of view.

Of all the defendants,  14 have entered into plea bargains.

For two of them the case has been  transferred to the jurisdiction of Rome.

For four of them the evidence is enough  for them to be sent for trial.

They will be the only people  going through the ordinary proceedings.

Among those who agreed to a plea bargain  was Giorgio Basaglia.

Basaglia was a consultant  to the EU Commission for 10 years.

Basaglia accepted a suspended prison  sentence of one year eight months,

The sums seem huge, but if you check  the documents one by one -

I'm referring to the position of Mr Basaglia -

there is an error of 70,000 euros  in the calculation, full stop.

The European Commission  sent some inspectors

who every six months checked  the evolution of the project

and who always said  everything was in order.

Then, suddenly,  it came out that it was fraud.

How was it that the Commission's  checks detected nothing for years?

If OLAF hadn't been tipped off  by an external source,

would the fraud have carried on?  In the EP, there have been calls

for checks on EU funds  to be strengthened.

OLAF and Eurojust come after  the fraud has been committed,

And that's too late.  We need to reform the Commission.

The Commission should assume  the responsibility,

Following this fraud, the Commission  has improved its methods of checking.

The investigation is continuing  in the other countries

where the companies implicated  are based.

So far, a little under 10 million euros  has been recovered from the fraudsters.

The remaining 40 million  should also be recovered.