This year, the EU is distributing more aid money than ever before. At the same time, monitoring the use of support funds has become considerably more difficult.
Director General of OLAF, the EU’s anti-fraud agency Ville Itälä warns that criminals and scammers are on the move now that there is a lot of money available for new types of projects. The “extra” support money comes from the recovery package created during the corona pandemic.
– Criminals still haven’t reinvented the wheel, they use the same methods to defraud money as always before, Itälä says.
But what is new is the amount of money and the high speed with which the subsidy is distributed. Itälä has been involved in the construction of control mechanisms from the very beginning.
– Here [elpymistukien valvonnassa] an extraordinary amount of power has been given to the member states also in terms of control, which complicates the process, says Itälä.
Normally, the EU spends just under 200 billion euros a year. In the coming years, the amount will roughly be doubled, when the recovery funds established as a result of the corona pandemic come on top.
Environmental money fraud on the rise
At the same time, new ways of using EU funds have emerged. When, for example, there is suddenly clearly more support for environmental and climate protection than before, criminals have found it.
– Of course, when more and more money goes there, ways are found to cheat that money, Itälä says.
In the financial period 2021–2027, around 2,000 billion euros of money flows between Brussels and the member states.
– When the amount of money is so much larger, it is challenging when the resources of the investigation have not increased as the workload has increased.
On the contrary, the resources of the Anti-Fraud Office have been reduced in recent years. According to Itälä, Olaf had to give 45 posts to the newly founded prosecutor’s office EPPO last year.
It was due to the fact that the member states did not want to increase the size of the EU budget. The prosecutor’s office was wanted, but the existing resources had to be enough.
Now we have only seen the beginning
So far, about one-eighth of the stimulus money has been distributed to member countries. We are only at the beginning: so far mainly administrative projects have been financed with subsidies.
Olaf has already been scarred by three fraud cases of recovery funds, but Itälä cannot tell you more about them as the investigation is ongoing.
The real pain points of supervision will only be properly tested in the coming years.
– Only later will there be investment projects that are more about the use of funds, the financial advisor of the Ministry of Finance Laura Vartia tells.
The member states did not want an IT system
The Anti-Fraud Office proposed a pan-European information system for monitoring recovery funds. It would have been possible to monitor exactly what was happening everywhere.
– But the member countries wanted to have the opportunity to choose their own systems. The most important thing for us would have been to be able to see right down to the last beneficiary, because frauds happen at that level.
Itälä was unclear why the member states did not want a common IT system.
– For some, it’s a question of resources and for some it’s a political question, he says.
Haste makes it difficult
Controlling the recovery funds is more difficult than the normal budget, because the money is used in a hurry.
– One of the problems here is that the pace is fast. Of course, that is one risk factor that needs to be monitored. However, Olaf was involved in designing these systems and making sure that nothing gets into the wrong hands, Itälä says.
In his opinion, it is the reputation of the entire EU funding in the eyes of citizens.
– System control is really important. That citizens can trust that the money goes to the right place.
The Finnish Ministry of Finance shares the same opinion. The ministry believes that money control does work. There are several control rounds and member countries have to submit documents at many different stages.
– It would be terribly disappointing if major abuses were discovered there. RRF [elpymisvälinettä] has been considered at the EU level as a good example of promoting reforms and investments, and if abuses were revealed there, it would be terribly difficult for the credibility of the entire instrument, says Laura Vartia.
Member countries are not able to monitor the implementation of each other’s projects at the grassroots level.
– But we see what others promise and how they show that the plans have come true, Vartia describes.
The most fraud is where there is the most money
Criminals go after money – where there is money, there are crimes, defines Itälä.
Greece, Croatia and Spain receive the most money per citizen, but the largest individual money pots go to Italy.
– Those countries that have more money, more frauds also happen there. It’s a pretty simple equation in this regard, Itälä says.
In order for a member state to apply for funding from the recovery support instrument, it must draw up a plan for financed investments by August 2026. The plan will be approved in Brussels.
Then the member state submits separate payment requests as the projects progress. They are monitored in the Member States’ working groups.
If there is a perception that a member country has not achieved its goals, the matter can be referred to the Council (member countries).
In addition to Olaf, the authorities of the member states, the Commission, Europol, Eurojust and the EPPO prosecutor supervise the use of funds in their own roles.
Hungary has been one of the countries where significant amounts of EU aid end up in the hands of a prime minister who leads the country autocratically. Viktor Orbán to the close circle. operating in Budapest of the investigative journalism center Direkt36 (you will switch to another service) editor-in-chief András Pethő told about the abuses in November.
Does the control of EU funds raise thoughts? You can discuss the topic on 6.12. until 11 p.m.
More on the topic:
We found out who gets money from the EU’s giant recovery fund and how the use of the money is controlled – read six questions and answers
The corona pandemic increases the EU’s power in the economy, the recovery fund makes Brussels a more important economic actor than before – read the essential changes here