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Fighting Fraud and Corruption in European Structural and Investment Funds

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Fraud and Corruption in EU Funding

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Abstract

The aim of this study is to identify indicators at country level that could prove useful in improving the effectiveness of fraud detection in European Structural and Investment Funds. The chapter analyses EU funds, belonging to the period 2014–2020, from and the study suggests the convenience of tracking funds, especially in countries with higher GDP and higher transparency levels, and the lesser relevance of the number of irregularities for countries with higher GDP and those receiving larger funds. Fraud and fraud detection rates in individual funds vary significantly across states. Federal states, such as the Federal Republic of Germany, are comparatively successful in detecting fraud in EU funds.

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Notes

  1. 1.

    Article 1(2) of Regulation (EC) No 2988/95 defines “irregularity” as follows: “The notion of irregularity arises in respect of any infringement of a provision of Community law resulting from an act or omission by an economic operator which has, or would have, the effect of prejudicing the general budget of the Communities or budgets managed by them, either by reducing or losing revenue accruing from own resources collected directly on behalf of the Communities, or by an unjustified item of expenditure.” (Europäische Kommission 2014).

  2. 2.

    For the purposes of Council Regulation (EC) No 2988/95 of 18 December 1995 on the protection of the European Communities' financial interests, the concept of irregularity is very broad: The term covers both intentional and non-intentional irregularities committed by economic operators.

  3. 3.

    In the following sections of Chapter 2 and in this Chapter 3, the further explanations refer in particular to the area of corruption.

  4. 4.

    In 2007, the European Parliament launched its own Eurobarometer series. The opinion polls cover a wide range of topics, focusing on how citizens perceive EU action, what they expect in this respect, and what they see as the main challenges facing the Union.

  5. 5.

    Monitoring is explained in more detail in Sect. 4.

  6. 6.

    OLAF is explained in detail in Sect. 3.2 as part of the EU's anti-fraud strategy and other institutions with which it cooperates, such as the European Parliament or the European Court of Auditors.

  7. 7.

    The forthcoming cooperation with EUStA (European Public Prosecutor's Office) is discussed in Sect. 3.3 of this analysis.

  8. 8.

    48 European states, including all member states of the European Union and the United States of America.

  9. 9.

    In total, Germany thus has EUR 45.5 billion at its disposal, cf. Chapter 4.2 as well as Europäische Kommission (2020c).

  10. 10.

    EDES stands for Early Detection and Exclusion System; for further information see European Commission (2019c) and OECD (2019).

  11. 11.

    French, PIF: Rapport annuel sur la protection des intérêts financiers de l'Union européenne.

  12. 12.

    Cf. Europäischer Rechnungshof (2019b), Sonderbericht Nr. 06/2019 (special report No. 06/2019).

  13. 13.

    Executive agencies are set up by the European Commission for a limited period of time to carry out specific tasks related to EU programmes.

  14. 14.

    On the tasks and significance of AFIS, cf. e.g. European Commission (2020a), p. 16.

  15. 15.

    Europe 2020 is a ten-year economic programme of the European Union, officially proposed by the European Commission on 3 March 2010 and adopted by the European Council in June 2010. Its goal is “smart, sustainable and inclusive growth” with better coordination of national and European economies. Europe 2020 is the successor programme to the Lisbon Strategy, which was pursued from 2000 to 2010.

  16. 16.

    Translated verbatim from the German source Amtsblatt der Europäischen Gemeinschaften (1995), p. 1.

  17. 17.

    . Following the definition of the European Commission, fraudulent irregularities in the following analysis also include both expected and detected fraud offences. For a detailed definition, see European Commission (2020c), p. 28 (footnote 47).

  18. 18.

    Currently, Germany does not receive any structural funds from the Cohesion Fund (CF) or the Youth Employment Initiative (YEI); see European Commission (2021).

  19. 19.

    Support for agriculture (SA) finances direct payments to farmers (DA) and market support measures (MM).

  20. 20.

    Finland could show a CPI of 86 in 2019, Sweden a CPI of 85.

  21. 21.

    This suspicion is also suggested by the European Court of Auditors: In a special report it comes to the conclusion that not all potential fraud cases in the IMS are properly reported to the Commission by the administrative authorities, so that on the basis of the publications in the annual PIF reports no consistently reliable statements can be made about the actual country-specific FDR. Cf. Europäischer Rechnungshof (2019b), pp. 35 ff.

  22. 22.

    CPI values 2019 for the following countries: Bulgaria (43), Czech Republic (56), and Portugal (62).

  23. 23.

    Cf. for example the findings of Europäischer Rechnungshof (2019b), pp. 19 ff.

  24. 24.

    If a criminal offence is suspected, the public prosecutor's office is called in.

  25. 25.

    One exception is the federal ESF programme, where the audit authorities are located at the Federal Ministry of Labour and Social Affairs (BMAS).

  26. 26.

    The administrative authorities are supported in the implementation of the programme by various promotion units and the Investitions- und Strukturbank (ISB) as intermediary bodies. The promotion units are located in various federal ministries.

  27. 27.

    In Baden-Württemberg, the operational audit of the ERDF and the ESF is the responsibility of the Karlsruhe Regional Finance Office.

  28. 28.

    For example, the Federal Court of Auditors at the federal level and the respective state Courts of Auditors at the state level carry out operational audits.

  29. 29.

    For Article 6(3) of Regulation (EC) No 1290/2005, see Amtsblatt der Europäischen Union (2005) in conjunction with Article 4 of Regulation (EC) No 885/2006, Amtsblatt der Europäischen Union (2006).

  30. 30.

    Cf. EFRE-Verwaltungsbehörde Bremen (2019), p. 12.

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Authors and Affiliations

  1. Faculty of Economics, University of Valladolid, Valladolid, Spain

    Jorge Gallud Cano

  2. Faculty of Business Administration, Industrial Engineering, Offenburg, Germany

    Thomas Baumgärtler & Philipp Eudelle

Authors
  1. Jorge Gallud Cano
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  2. Thomas Baumgärtler
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  3. Philipp Eudelle
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Correspondence to Jorge Gallud Cano .

Editor information

Editors and Affiliations

  1. Business Department, University of Burgos, Burgos, Spain

    David Blanco-Alcántara

  2. Department of Public Law, University of Burgos, Burgos, Spain

    Fernando García-Moreno Rodríguez

  3. Department of Economics, University of Burgos, Burgos, Spain

    Óscar López-de-Foronda Pérez

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Gallud Cano, J., Baumgärtler, T., Eudelle, P. (2022). Fighting Fraud and Corruption in European Structural and Investment Funds. In: Blanco-Alcántara, D., García-Moreno Rodríguez, F., López-de-Foronda Pérez, Ó. (eds) Fraud and Corruption in EU Funding. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-19051-3_3

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  • DOI: https://doi.org/10.1007/978-3-031-19051-3_3

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-19050-6

  • Online ISBN: 978-3-031-19051-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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