On Monday 23 May, the EU Court of Auditors found that blacklisting is not being used effectively to prevent EU funds from going to individuals, companies or public bodies that are allegedly guilty of illegal acts such as fraud and corruption.
In a report on the effectiveness of the Early Detection and Exclusion System (EDES), the Court regrets that the European Commission has put very few names on its blacklist. “The US federal government excludes over fifty times more counterparties than the EU does under the EDES”, the report states.
Furthermore, EDES does not apply to areas such as agriculture and cohesion, which are under shared management between the Commission and Member States and constitute the bulk of EU spending.
The Court found shortcomings in the arrangements for identifying those who should not be allowed to apply for EU funds. Furthermore, although Member States execute most of the EU’s expenditure, they are not required to establish blacklisting systems as such, and their approaches to protecting the Union’s financial interests differ. This patchwork of exclusion arrangements undermines the overall effectiveness of the blacklist and results in the uneven protection of the EU budget across Europe.
In the case of direct management, the Court found that shortcomings in the identification of counterparties who are in an exclusion situation are partly responsible for the low level of exclusions. The Commission services face legal and technical difficulties in accessing Member States’ data on exclusion situations (trade registers and criminal records).
Even if relevant data exist at EU level, for example in relation to anti-fraud investigations, they are not always used.
In practice, the Commission relies to a large extent on the declarations on honour made by EU counterparties that they are not in an exclusionary situation. In this context, the auditors found that there was little central monitoring and follow-up of case identification and registration in EDES.
As regards indirect management, the number of exclusion cases recorded in EDES at the initiative of the implementing partners is low.
In the case of shared management (agriculture and cohesion), which is not covered by EDES, the visits to four Member States showed that approaches to exclusion differed considerably. The Court found that some Member States could make better use of the data on fraud and irregularities and the data mining and risk calculation tool (Arachne).
Link to the report: https://aeur.eu/f/1rs (Original version in French by Lionel Changeur)