17/12/20091 european investment bank the eib and fraud: how the eu bank combats and prevents fraud...
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17/12/2009 1European Investment Bank
The EIB and Fraud:How the EU Bank combats and prevents
Fraud and Corruption
Jan Willem van der Kaaij (EIB Inspector General)
4th ICAC SymposiumHong Kong, 15-17 December 2009
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The EIB Group – The EIB
EIB – The EU Bank:
Providing long-term finance for projects promoting European objectives;
Supporting EU Development and Cooperation Policies in Partner Countries.
2008 key figures:
Total Lending: EUR 57.6 bn- European Union: EUR 51.5 bn- Partner countries: EUR 6.1 bn
Borrowings: EUR 59.5 bnSubscribed capital: EUR 232.4 bn(at 01/04/2009)
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EIB lending 1958-2008
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The European Investment Bank (EIB)European priority objectives
Within the Union:Cohesion and convergence
Small and medium-sized enterprises (SMEs)
Environmental sustainability
Knowledge Economy
Trans-European Networks (TENs)
Sustainable, competitive and secure energy
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The European Investment Bank (EIB)European priority objectives
Outside the Union:Private sector development
Infrastructure development
Security of energy supply
Environmental sustainability
Support for EU presence in Asia and Latin America via Foreign Direct Investment (FDI)
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EIB Activities Outside the Union
Supporting EU Development and Cooperation Policies in Partner Countries EIB external mandates:
Pre-accession countries:Candidate countries - Croatia, Turkey and Former Yugoslav Republic of MacedoniaPotential candidate countries - Western Balkans
European neighbourhood:Mediterranean Neighbourhood (FEMIP)Eastern Europe, Southern Caucasus, Russia
Development: Africa, Pacific and Caribbean (ACP)South AfricaAsia and Latin America (ALA)
Loans of EUR 6.1bn in 2008
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Asia and Latin America
EIB can lend up to EUR 3.8 bn during 2007-2013:
Support for EU presence in Asia and Latin America through Foreign Direct Investment and technology transfer
Environmental sustainability (climate change mitigation)
EU energy security
Loans of EUR 470 m in 2008
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The Project Cycle at the EIB
N.B.: Fraud/corruption can affect each phase of the project cycle.
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EIB Fraud Investigations (1)Investigations of allegations of the following in EIB-financed contracts (as well as Bank staff cases of internal fraud, if any):
fraud; corruption; collusion; and coercion.
Key features: independent in the exercise of its responsibilities; work cooperatively with OLAF; fair/impartial with due regard to rights of persons involved; all information/documents kept strictly confidential; right to examine/copy promoter/contractors’ books and records.
N.B.: Investigations are administrative, fact–finding inquiries.
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EIB Fraud Investigations (2)
Standard Process: receipt, registration and evaluation of an allegation results in decision whether to open a case;
Sources of Information incl. documents, electronic data, site inspections/audits, and statements from witnesses;
Findings: based on both exculpatory (disprove) and inculpatory (prove) information;
Standard of Proof: “more probable than not”;
Obstruction of investigation: false statement or act to impede the investigation by staff member is sanctionable;
Case reports simultaneously to President and VPs, the Audit Committee and OLAF.
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EIB Fraud Investigations (3)
2006 2007 2008 3rd Q 2009
Total complaints received 44 24 38 41
Cases reviewed without basis 21 3 17 27
New investigations opened 23 21 21 14
On-going investigations from previous years
16 19 24 23
Total investigations worked on 39 40 45 37
Investigations closed 20 16 18 5
Investigations open year end 19 24 27 32
Field missions 7 7 8 7
(of which with OLAF) 5 3 5 5
Cases leading to prosecution - reimbursement
3 2 4 5
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EIB – OLAF Cooperation (1)
OLAF and EIB:
Legal basis – ECJ decision in 2004 concerning access to EIB in “financial interests of the community”;
OLAF expertise : investigation;prosecution;contact with countries’ judicial systems.
Working together: EIB banking expertise plus OLAF investigative/prosecution expertise;
Pooling of resources is more efficient.
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EIB – OLAF Cooperation (2)
Systematic & Routine: When complaints are received, two possibilities:
(1) Cases not valid OLAF can review the list;
(2) Cases opened OLAF informed by e-mail;
Monthly reporting to OLAF at same time.
Cooperation:
Regular meetings (Brussels and Luxembourg);
OLAF can join any site visit and EIB joins OLAF missions;
EIB files and staff open to review by OLAF;
EIB staff can report suspicions directly to OLAF.
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EIB’s Anti-Fraud Policy (1)
Anti-Fraud Policy approved by Board of Directors in 2008 is published on the EIB website.
The Policy includes:
Harmonised IFI definitions of fraud, corruption, collusion and coercion (WB, AfDB, etc… signed the Uniform Framework Agreement in September 2006 in Singapore);
Money laundering & terrorist financing plus referral of suspicious transactions to local authorities.
Also, EIB uses a bespoke version of harmonised IFI Investigation Procedures (also part of the Uniform Framework) – Now, all IFIs investigate the same things in same way.
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EIB’s Anti-Fraud Policy (2)
In addition, EIB also:
updated its whistleblower protection;
is training all operations staff (and all newcomers) in fraud awareness / red flags;
is developing a sanction/debarment process;
will recruit additional staff - also to increase proactive capacity.
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Fraud Awareness/Red Flags
We advise EIB staff and project officials to:
- enforce the rules and controls;
- use “professional scepticism” – if something looks odd, it
probably is!
- not rely on appearances – look behind the paperwork and beneath the surface (e.g. conduct random sampling);
- assume corrupt parties know “the system”;
- train staff to recognise red flags (officials living beyond their means, unusual unit prices, odd bidding
patterns, sham firms winning contracts, etc…) and deal with fraud/corruption issues;
- reward staff for reporting fraud or corruption by including governance issues in staff appreciation.
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Increasing deterrence (1)
Deterrence: not only identifying the fraudster/briber, but alsoincreasing the risk for him/her by:
regulatory/audit/financial follow-up; criminal investigation/prosecution; reputational risk, media coverage, etc…; debarment.
In particular, EIB will:
recover misapplied funds, suspend disbursements, and implement rectification measures.
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Increasing deterrence (2)
As a key player in international financial community, EIB:
exchanges information with other IFIs and other parties;
raises awareness of fraud and corruption issues;
works with IFI’s to further harmonise approaches to key issues (disclosure of previous sanctions, agents fees etc.);
reviews/updates its policies & procedures to ensure they are robust and match ‘best practice’;
continues dialogue with civil society, NGOs, contractors, etc…
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EIB’s Cooperation with National Authorities
We are committed to cooperate and will:
Refer cases for investigation/prosecution to national authorities; Assist with requests for information/documents and training; Provide witnesses and/or evidence for criminal proceedings
(subject to immunities and privileges);
Cooperation is two-way - EIB expects:
Early notification of fraud or corruption issues affecting EIB-financed activities; and
Cooperation to assist EIB investigations.
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Contact Us
Please do not hesitate to contact us at:
EIB Investigations Division,
98-100 boulevard Konrad Adenauer,
L-2950, Luxembourg
(+352) 4379 84238 (+352) 4379 64000
or
and also http://www.eib.org/about/news/how-to-report-fraud-or-corruption.htm
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Thank you