Protection of EU funds: EU should do more to detect, prevent and recover frauds

In the report, adopted on Monday by 17 votes in favour, none against and 2 abstentions, the Budgetary Control Committee stresses the great risk to the EU’s financial interests posed by nepotism used when procuring EU funds.

MEPs on the committee are also concerned about the latest data showing that journalists’ safety in the EU has deteriorated and call for better protection of investigative journalists who can significantly contribute to fighting corruption and impunity.

Ukraine

The adopted text says that the EU funds for assistance in non-EU countries and the money allocated for Europe’s response to Russia’s aggression against Ukraine are not adequately monitored and controlled. They call on the Commission to carry out more thorough checks to ensure that EU funds end up going to those most in need.

Particularly, MEPs are concerned about the peak in irregularities affecting the Instrument for Pre-Accession assistance (IPA) and call on the Commission to also fraud-proof any future actions, such as in the case of Ukraine, which will receive significant resources from IPA and Horizon Europe.

Rule of law in Hungary and Poland

The committee raises the alarm about the Commission’s reported plans to disburse the suspended 6.3 billion EUR from the Recovery and Resilience Facility (RFF) to Hungary in exchange for its endorsement of the aid for Ukraine. The suspended funds must be released to Hungary only if the remedial measures adopted by Hungarian Government have proven effective in practice, MEPs say.

On Poland, they reiterate their concerns over the findings on serious shortcomings in the judiciary and the media sector and ask the Commission to release funds from the RRF only once all the requests related to the respect of the rule of law have been fulfilled.

European Public Prosecutor’s Office

MEPs insist that Denmark, Hungary, Ireland, Poland and Sweden should join the European Public Prosecutor’s Office without delay. The EU Prosecutor should be granted an autonomous budget, they urge, to best protect the European Union’s interests.

Recovery and Resilience Facility

MEPs are still concerned that the EU’s financial interests are not robustly protected in the RRF, due to flaws in member states’ reporting and control systems, the inherent characteristics of the RRF spending model, which presents difficulties when assessing error rate, and the limitations of the Commission’s payment suspension methodology.

While there are significant differences between member states’ reporting and follow-up of suspected fraud, MEPs ask in particular Finland, Ireland and Poland to adopted national anti-fraud strategies to show that they take the protection of EU funds seriously.

Background

The 2022 EU surveys on corruption show that corruption remains a serious concern for EU citizens and businesses in the EU, with many citizens believing that corruption is widespread in their country (68%) and that the level of corruption has increased (41%).

The number of cases of fraud and irregularities reported by EU and national authorities slightly increased in 2022 compared to 2021, while at the same time the affected financing related to these cases in 2022 decreased to EUR 1.77 billion (from EUR 3.24 in 2021).

The overall recovery rate in 2022 for both fraudulent and non-fraudulent cases was only 48% (compared to 54% in 2021) and that the figure for fraudulent cases was only 2%.