Procurement Fraud and Corruption

Description

COURSE OVERVIEW

Public procurement, the largest channel of public spending, constitutes an area that is particularly vulnerable to fraud and irregularities. The European Anti-Fraud Office (OLAF) investigative experience shows that public procurement is still an attractive area for fraudsters. OLAF cases have revealed several underlying issues that make this particular area more prone to fraudulent activities: unclear or complicated applicable national public procurement laws that are difficult to apply, lack of administrative capacity and expertise of authorities who are to implement the rules in a coherent and consistent way, insufficiently qualified members of the evaluation committees (especially in complex infrastructure tenders), inadequate level of audits, controls and checks conducted by the regulatory authorities etc. Furthermore, corruption remains an almost universal aspect of fraudulent procurement cases; at the same time, there is an increasing trend to use off-shore accounts in order to hide the proceeds of such crimes.

The aim is to select each year a topic to discuss, to exchange good practices and to draw up a practical documentation that Member States and the Commission may use as administrative tools, guidance or support to strengthen their anti-fraud measures/strategies. The procedure is implemented by the organization of working groups involving experts from the Member States, OLAF and Commission departments concerned. After issuing guidance notes on various subjects1, such as for instance ‘Conflict of Interest’ and ‘National Anti-Fraud Strategies’, in 2017 the topic ‘Fraud in Public Procurement’ was in the focus.

The current document represents the latest result of this collaboration. The aim of this year’s working group was to approach the issue of fraud in public procurement from a rather pragmatic viewpoint and hence, to collect case examples, red flags, solutions and best practices. Red flags are warning signals, which can indicate the existence of irregularity or fraud. Yet, a red flag does not mean that fraud has been committed; it rather points out that a certain area of activity needs extra attention to exclude or confirm potential fraud. They have a particular nature from the perspective of the anti-fraud cycle: red flags are linked both to the prevention and to the detection of irregularities and fraud. Red flags can serve the identification of fraud and therefore it is part of the detection, on the other hand, they could be seen as alert signals to prevent fraud.

In this document, red flags were collected with the view to prevent future irregularities or fraud from happening. Besides, the reader will find ample number of case examples, solutions, including best practices. Best practices have a special added value, as they serve as concrete examples of measures that have already proven to be fruitful. Member States can learn from each other’s experience and develop their own anti-fraud methods based on existing know-how. Any best practice example quoted in the document is illustrative; therefore it does not exclude the possibility that other Member States have similar practice in place (e.g. implementation of EU law or procedures).

COURSE OBJECTIVE(S)

The objective of this Fraud and Corruption in Procurement course is to:

• Introduce students to fraud and corruption in Procurement.

• Provide students with understanding of sources of fraud and corruption in procurement.
• Assist students to understand the fraud and corruption in the tendering procurement.
• Enable students identify red flags of fraud and corruption in corruption.
• Assist students to enhance integrity in procurement.