DGWB_Square_LIFT_small.jpgI almost fell off of my seat on the train when I read what I think may well be the official Tomorrow’s Transactions Burgundy Ribbon favourite newspaper story of the year. Yes, the head of a bank being a #crystalmethodist was good and #Higella’s revelations about Charlie and cash were good, but I think that it is very hard for anyone in the world of digital identity and digital money to top the story of the Romanians who claimed over half a million dollars in agricultural subsidies for their cows… in Farmville.

Now, as far as I am concerned the story could have stopped right there and it would have featured in Old Dave’s Almanac, or the Tomorrow’s Transactions Reader for 2014 to give it its official name, but the story went on. The government stopped the subsidies, so now the “farmers” are suing them on the grounds that they were not told that the cows had to be real. Solid gold. That’s no.1 right there. With a bullet. I cannot even imagine a story that will knock this off its perch unless it turns out that the Queen has sold the Crown jewels and put the money into Bitcoin instead.

A gang of Romanian Farmville enthusiasts insist they never realized that the government funds given for farming are actually for real animals and not virtual ones

[From Farmville Gang Cons Romanian Government for $681,000 (€500,000) Virtual Cows Funds]

Now, obviously, what was not amazing about the story was that transylvanian hillbillies were defrauding European taxpayers through the mechanism of agricultural subsidies. This is the prerogative of yokels from Norwich to Naples and the Romanians are part of the gang, so there is no shame on them in joining this particular gravy train. Well, meat and potatoes and gravy train with a boxcar full of champagne behind it. Everyone does it.

thousands of pounds was paid out to livestock owners in Slovenia for “non-existent” cattle.

[From Imaginary cows and non-existant lemon groves ‘cost EU taxpayers £1.2bn’ – Telegraph]

These were, of course, non-existent real cows as opposed to non-existent virtual cows. In legal terms, this seems not to make a difference, since fraud involving imaginary agricultural assets is not, apparently, a crime in Europe so I can’t see it being material whether they are in your head or in your computer’s RAM.

The CJEU has previously held that penalties laid down in rules of the common agricultural policy, such as the temporary exclusion of an economic operator from the benefit of an aid scheme, are not of a criminal nature

[From Has the Court of the European Union let subsidy fraud off the hook? | Rosalind English | Law | theguardian.com]

I must ask a lawyer about this, because if it is not crime, then I don’t really understand what the EU’s new prosecutors are supposed to do all day. Only this year, the EU kicked off a new effort to try and get the fraud under control. Rather than adopt the inexpensive and obvious path of eliminating the boondoggies by eliminating the subsidies themselves, they have decided to set up CSI:CAP to bring offenders to justice.

The European Union loses a lot of money each year through corruption and subsidy fraud. Now, a new institution is supposed to clamp down on the problem and prosecute offenders across EU borders.

[From New EU prosecutors to fight fraud | Europe | DW.DE | 18.07.2013]

Now, I certainly don’t want to suggest that our rustic rustlers are uniquely bad. Far from it. The US, for example, is no stranger to the fantastical, bizarre, absurd and criminal world of farm subsidy. Farm subsidies in the USA are tens of billions of dollars.

The federal government pays millions of dollars in farm subsidies each year to farmers who have died, because the Agriculture Department lacks the proper controls to make sure the money it sends is going to the right people, a government audit has found.

[From Millions in U.S. Subsidies Go to Dead Farmers – NYTimes.com]

This is a blog about transactions, not politics, so it is not for me to say whether agricultural subsidies are a good thing or a bad thing. For all I know, it may entirely reasonable and a vital public policy goal to support beekeepers, for example — I think it was (ie, I can’t find out after 30 seconds googling) P. J. O’Rourke who once wrote, “remember when the US economy was rocked by wild swings in the price of honey”? — But it is undeniable that the subsidies involve colossal amounts of my (and your) cash being sprayed around.

The U.S. Department of Agriculture last year spent about $14 billion insuring farmers against the loss of crop or income, almost seven times more than in fiscal 2000, according to the Congressional Research Service… The arrangement is a good deal for everyone but taxpayers.

[From Taxpayers Turn U.S. Farmers Into Fat Cats With Subsidies – Bloomberg]

So fraud involving these antiquated transfers is going to be colossal as well. Some something has to be done. Of all the options, I rather like the proposal to use (sadly unarmed) drones to police Europe’s pastoral pirates.

EU regulators are exploring potential aerial systems that can help them spot farm subsidy cheats and violators of Common Agricultural Policy rules.

[From The EU is Considering Using Drones to Police Farm Subsidies, Enforce Environmental Rules | Popular Science]

So how can we, the electronic transactions industry, help? After all, while drones are a plausible mechanism for finding real cows — unless astute agronomists start making dummy cows that look convincing from the air (we did it with tanks and such like in WWII, I’m sure we could do it with cows) or start planting concrete cows in strategic rural locations (oh, wait…) — I wonder how they are going to check for virtual cows? It is only a matter of time before the European Court of Human Rights rules that tending a virtual cow is a part of family life in certain areas.

I was under the impression that all cows in Europe had to be traced and tracked because of mad cow disease, in which case I can’t see why we don’t just chip the lot of them and use RFID to identity them for auto-subsidies. No chip, no cash, even if you are Romanian and pathologically fond of your computer-generated calves. If the EU is serious about cutting fraud, I’m sure the electronic transactions industry can help.

By the way, in farming (as in banking and journalism) this whole “real/virtual” thing is very confusing. Which is why I prefer the word “mundane” for things that still outside once my computer is switched off.

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

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