The money will be recovered because of inadequate control procedures or non-compliance with EU rules on agricultural expenditure. Member States are responsible for paying out and checking virtually all expenditure under the Common Agricultural Policy (CAP), and the Commission is required to ensure that Member States have made correct use of the funds.
"European taxpayers' money has to be properly spent," said Mariann Fischer Boel, commissioner for agriculture and rural development.
"As today's decision shows, the Commission is not prepared to compromise on this issue and will continue to take a tough stance to stamp out malpractice and lax controls. We will not hesitate to recover misspent money from the Member States."
The ruling comes as increased pressure grows to ensure tighter regulation of EU funds and achieve greater efficiency in the food production sector.
This regular audit procedure is a vital instrument for controlling CAP expenditure, permitting the recovery of sums paid out without sufficient guarantees as to the legitimacy of the payments or the reliability of the control and verification system in the Member State concerned.
Under this latest decision, funds will be recovered from Belgium, Germany, Denmark, Greece, Spain, France, Italy, Netherlands, Portugal and the United Kingdom. The most significant individual recoveries include €113.40 million charged to Spain for major shortcomings in the control system and general fraud, €68.71 million charged to Italy mainly for exceeding the ceiling for maximum actual production of olive oil in marketing years 1998/1999 and 1999/2000 and €25.36 million charged to Greece mainly for insufficient assurance that claims are regular in the arable crops sector.
The Member States are responsible for making practically all the payments, charging all the levies and recovering all undue payments within the framework of the EAGGF (European Agricultural Guidance and Guarantee Fund) Guarantee Section. The clearance of accounts procedure requires the Commission to ensure, primarily by means of on-the-spot inspections, that the Member States have made correct use of the funds placed at their disposal by the EAGGF.
The Commission carries out over 200 inspections in the Member States each year.
The system for recovering misspent sums was overhauled in 1995 with the aim of making it more efficient. It is now based on two separate procedures.
The first is purely financial, focusing on audits by Commission staff (based on the certification of accounts proposed by independent bodies) relating to the correctness and completeness of the accounts and the paying agencies' compliance with the European Union's standards. This procedure must be completed by 30 April each year.
The second relates to inspections by the Commission and involves the recovery of all or part of the expenditure claimed for the previous 24 months if it is found that payments do not conform to the EU rules. Amounts may be recovered in specific cases where anomalies or systematic failings are found. If the losses for the Community cannot be calculated precisely, the recovery may be set at 2 per cent, 5 per cent, 10 per cent or 25 per cent of the expenditure in question, or even more. There is thus a strong incentive for the Member States to improve the quality of their monitoring and audit systems.