From building schools and hospitals to green investments and support for SMEs European Structural and Investment Funds (ESIF) promote initiatives to boost economic growth and raise living standards across the Member States.
These projects are often worth millions of euros of taxpayers’ money and their implementation requires the cooperation and coordination of several public and private sector parties – often across borders. Good governance and transparency are vital to ensure these funds are put to their intended use, promoting economic, social and territorial cohesion in Europe.
Measures to prevent, detect, report and prosecute fraud and corruption are a necessary part of such initiatives. They help protect public institutions from the reputational damage fraud and corruption can inflict. Safeguarding citizens’ trust in EU institutions and the national administrations managing the EU Funds is vital to the credibility of the Cohesion Policy and, arguably, the European Union project as a whole.
Counting the costs
As an indication of the extent of the problem, in the 2014-2020 programming period, a total of EUR 450 billion was allocated to Member States through the ESIF, representing about one-third of the EU budget. In 2019, the fraud reported in ESIF spending amounted to around EUR 461 million.[1]
However, according to a 2019 special report by the European Court of Auditors, fraud cases are under-reported, which affects the reliability of the statistics published by the European Commission. Nevertheless, the report also found that Managing Authorities have improved fraud risk assessment and the design of measures to prevent it.
But there is still room for improvement, especially in fraud detection and response by Managing Authorities – and coordination of these efforts among various bodies. Insufficient proactive fraud detection and use of data analysis tools is a particular weakness which must be rectified since the only real deterrent to fraud is the threat of losing EU funding.
Bridging the knowledge gap
The new Anti-Fraud Knowledge and Resource Centre responds to the need to improve the capacity of responsible authorities to detect and prevent the fraudulent use of EU funds. The online tool – the result of cooperation between DG REGIO, the European Anti-Fraud Office (OLAF) – aims to promote cooperation and knowledge-sharing among all those involved in combating fraud.
It includes information, educational material, handbooks and case studies covering the entire anti-fraud cycle: prevention, detection, reporting and prosecuting
A to Z of the anti-fraud cycle
The online resources include video modules, a library of good practices and case studies, useful tools, definitions and a glossary, legislation, and ‘judgement tests’.
To ensure a holistic view, the video modules cover all stages of the anti-fraud cycle, from prevention, detection, reporting and prosecution, to sanctioning and asset recovery. Each module lasts about five minutes and includes insights from professionals working at an anti-fraud service or authority.
The library provides good practices and case studies. There are links to 37 good practices in combating fraud in Member States, and 11 case studies covering offences including money laundering and procurement fraud. These were chosen by the European Commission based on their relevance to other Member States.
Five judgement tests present the reader with a variety of hypothetical project scenarios, such as the demolition of a building that was meant to have been renovated and turned into a museum. Multiple choice questions test the reader’s knowledge of the appropriate procedure to be followed and feedback is provided along with the legislation that underpins the correct response.
Further multiple-choice topics include risk assessment, investigation of fraud and the reporting of irregularities.
The website includes a ‘useful tools’ tab divided into European-level and national resources. The former includes links to various databases, such as VIES, a search engine developed by the European Commission to verify VAT numbers issued by a Member State.
[1] 31st Annual Report on the protection of the European Union’s financial interests — Fight against fraud – 2019, European Commission, https://ec.europa.eu/anti-fraud/sites/default/files/pif_report_2019_en.pdf .
Good governance should be at the heart of the Cohesion Policy implementation. Good governance is fundamental to economic, social and territorial cohesion in Europe.
