REPORTING SUSPECTED FRAUD AND
CORRUPTION
OLAF.D.2 – Fraud Prevention, Reporting and Analysis Unit
Budapest – 11 December 2015
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Content
 Definitions from legal framework on reporting obligations
 Overview of the situation based on the analysis of reported cases
(PIF Report)
 Fraud detection and reporting obligations – key clarifications
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Legal basis for reporting irregularities and
suspected fraud
Cohesion Policy Funds (2007-2013)
 Council Regulation (EC) No 1083/2006 (Article 70)
 Commission Regulation (EC) No 1828/2006 as amended by
Commission Regulation (EC) No 846/2009
Structural and Investment Funds (2014-2020)
 Council and EP Regulation (EU) No 1303/2013 (Article 122)
 Commission Delegated Regulation (EU) 2015/1970
 Commission Implementing Regulation (EU) 2015/1974
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Article 122 of Council and EP Regulation (EC)
No 1303/2013
 Member States must notify to OLAF all irregularities which
exceed EUR 10 000 in EU contribution (Article 122)
 DA and IA on the reporting of irregularities ongoing
 NB: obligation to report suspected fraud and/or corruption by
qualifying the irregularity in the Irregularity Management
System (IMS)
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Definition of irregularity(Regulation
1303/2013)
ARTICLE 2
(36)
'irregularity' means any breach of Union law, or of national law
relating to its application, resulting from an act or omission by
an economic operator involved in the implementation of the ESI
Funds, which has, or would have, the effect of prejudicing the
budget of the Union by charging an unjustified item of
expenditure to the budget of the Union.
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Definition of suspected fraud
(Regulation 1828/2006)
An irregularity which has been subject of a primary administrative
or judicial finding giving rise to the initiation of proceedings at
national level in order to establish the presence of intentional
behaviour, in particular fraud as is referred to in […] the
Convention […] on the protection of the European Communities’
financial interests […]
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The Convention on the protection of the EU's
financial interests, fraud definition
 the use or presentation of false, incorrect or incomplete
statements or documents, which has as its effect the
misappropriation or wrongful retention of funds from the
general budget of the European Communities or budgets
managed by, or on behalf of, the European Communities,
 non-disclosure of information in violation of a specific
obligation, with the same effect,
 the misapplication of such funds for purposes other than those
for which they were originally granted
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Corruption definition
Corruption is defined as the abuse of (public) position for private
gain.
 Bribes and kickbacks refer to the giving (active bribery) or
receiving (passive bribery) of a "thing of value" to influence
an official act or a business decision.
 The "thing of value" need not be money, and often is not (the
ambiguity remains and the perpetrator can more easily invent
excuses if needed).
 As a consequence, the act of bribery is difficult to detect.
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Most common types of irregularities
reported as suspected fraud in 2014
Source: Commission Staff Working Document, Statistical evaluation of irregularities reported for 2014 Own Resources,
Natural Resources, Cohesion Policy, Pre-accession and Direct expenditure, p. 62
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Increased effectiveness of administrative
controls detecting fraudulent irregularities
 Programming period
2007-2013, 64 % of
the irregularities
reported as fraudulent
were detected by
administrative controls
 Previous programming
period, under 20 %
Source: Commission Staff Working Document, Statistical evaluation of irregularities reported for 2014 Own Resources,
Natural Resources, Cohesion Policy, Pre-accession and Direct expenditure, p. 63
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Number of irregularities reported as
suspected fraud 2014
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Source: Commission Staff Working Document, Statistical evaluation of irregularities reported for
2014 Own Resources, Natural Resources, Cohesion Policy, Pre-accession and Direct
expenditure, p. 67
Situation in Hungary
Source: Commission Staff Working Document, Statistical evaluation of irregularities reported for
2014 Own Resources, Natural Resources, Cohesion Policy, Pre-accession and Direct expenditure
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Reporting fraud and corruption
 Law Enforcement (LE) and Jucial Authorities (JA) competent for
investigating fraud
 Managing Authority (MA) detecting cases of possible fraud or
corruption have to report them to competent LE or JA. This
implies, suggests and requires:
 Structured two-way communication (Memoranda, Agreements,
Working arrangements, etc.) establishing
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Means of transferring of initial information
Follow-up and feedback by LE or JA
Modalities for nulla osta from JA to enable reporting to EC
Regular updates on evolution of cases to fulfill reporting
obligation
 Exchange of data, expertise and know-how to further foster fraud
detection and enhance the protection of the EU financial interests
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QUESTIONS?
Frank Michlik – Head of Unit
OLAF.D.2 – Fraud Prevention, Reporting and Analysis Unit
OLAF - European Anti-Fraud Office
European Commission
Rue Joseph II 30
B–1049 Brussels
frank.michlik@ec.europa.eu
http://ec.europa.eu/anti_fraud
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