The European Union Institutional Network on Anti-Fraud

Abstract

Protection of the financial interests of the European Union (EU) is a key element of the EU policy agenda. Transparent use of public money is crucial for two separate reasons: first, for strengthening citizens' confidence in the activities of the EU; second, to offer companies a healthy framework in which to grow and be competitive. According to the European Commission, risks from fraud against the EU’s financial interests amount to about €3 billion per year, roughly 2% of the EU's annual budget. Cohesion policy is considered to be one of the most critical sectors, with regional development policy being the most affected by fraudulent behaviour. To the contrary, tax fraud in all its forms – according to the European Commission's estimates – amounts to €1 trillion a year in the EU, or €2 000 per European citizen. Following the entry into force of the Treaty of Lisbon, the instruments available to protect the EU’s financial interests were substantially strengthened. A composite institutional architecture was designed to prevent and combat fraud. This study is devoted to the description of the institutional architecture designed to tackle EU budget fraud and its criticalities. The anti-fraud system related to the EU budget is based on a multi-layered network of cooperation. The first layer is composed of horizontal cooperation among EU institutions and other EU bodies (e.g. EU agencies). The second and third layers are based on vertical relationships: between EU bodies and national authorities, and between EU bodies and international organisations. Cooperation between EU bodies and national administrations consists of mutual efforts to prevent, detect and correct irregularities and fraud that might affect the use of EU funds. National authorities prosecute and report on cases of fraudulent use of EU funds to the European Commission. Cooperation between EU and international organisations is aimed at, first, coordinating efforts to monitor and combat fraud and, second, at encouraging harmonisation of normative frameworks on fraud, corruption and mismanagement of public funds. Nine EU bodies are specifically dedicated or entitled to carry out tasks concerned with detecting and sanctioning fraudulent behaviour. These are: (1) the European anti-fraud office; (2) the European Commission; (3) the European Parliament (and specifically the Committee on Budgetary Control); (4) the Council; (5) the European Court of Auditors; (6) Eurojust; (7) the European Police Office; (8) the European Court of Justice; and (9) the EU Ombudsman. These EU bodies perform four key tasks with regard to combating fraud: (1) policy-making; (2) scrutiny; (3) assistance; (4) reporting. Depending on which EU body is involved, the moment at which tasks are carried out (e.g. before a fraud is detected, rather than when fraudulent behaviour is sanctioned) and the typology of fraud concerned, cooperation, overlap, or even contrast may characterise the EU institutional architecture against fraud. The debate as to how to improve the efficiency of the EU institutional architecture aimed at protecting EU financial interests is ongoing. At the institutional level, the main topic of discussion concerns the establishment of the European Public Prosecutor's Office. Further improvements are expected through the digitalisation of administrative procedures, and by closer intra-institutional cooperation.