and Integrity at the EIB Andreja Neral Lamza & Mirela Lascu, - - PowerPoint PPT Presentation

European Investment Bank

Overview of Procurement and Integrity at the EIB

Andreja Neral Lamza & Mirela Lascu, European Investment Bank

The EIB: the EU bank

 Shareholders: 28 EU Member States  Around 90% (EUR

75.4bn) of lending

within the EU  Around 10% (EUR

8.38bn) of lending

• utside the EU

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The EIB: Integrated in the EU accountability system

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Treaty on EU Treaty on the functioning of the EU EIB Statute Integral part of the Treaties The EIB is accountable in front of: European Ombudsmen European Court of Justice

Inside EU Outside EU GtP principle based

The EIB’s Guide to Procurement (GtP)

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ETHICAL CONDUCT For entities or individuals found to have engaged in fraud or corruption in EIB financed projects the Bank… … may declare and individual or an entity ineligible. … may cancel all or part of the Bank financing.

 Zero Tolerance Policy which applies to

all EIB activities, staff members and counterparts

 Policy established in close

consultation with Civil Society, NGOs and also OLAF (public consultation)

EIB’s Anti-Fraud Policy

• reflected in the GtP -

Fair and transparent process – respondent has opportunity to review the evidence and comment Following the Treaty principles (equal treatment,

non-discrimination, mutual recognition, proportionality and transparency)

No standard templates and tender documents like most of other MDB’s have National Law implementing EU Directives

The Covenant of Integrity (CoI): GtP Annex 3

It is important that all links in the chain stay strong → it is vital that all parties report any suspicions of fraud or corruption immediately!

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CoI

Applicable to all contracts outside the EU (no threshold; public & private sector included) Obligation for tenderers (extended to the sub-contractors) to declare if they have been excluded by the EU Institutions or the main MDBs Obligation of keeping records for possible auditing (extended to the sub-contractors)

EIB’s Inspectorate General

European Investment Bank Group

Inspector General Operations Evaluation Fraud Investigations Complaints Mechanism

• Ex-post evaluations of

EIB Group’s Operations

• Handles allegations of

maladministration

Fraud Investigations

• Mandate: investigates fraud,

corruption, collusion, coercion,

• bstruction, money-laundering and

financing of terrorism

• Legal basis: EIB’s Anti-Fraud Policy

approved by Board of Directors

• Source of allegations may be internal or

external

• Right to examine/copy relevant books

and records held by EIB’s borrowers/ promoters/ contractors/ suppliers etc.

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IG/IN’s Investigation Activity

PROACTIVE

(PIRs)

REACTIVE

The Fraud Investigations Division (IG/IN)

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PROACTIVE INTEGRITY REVIEWS

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PIRs of EIB loans to Financial Intermediaries – schemes and indicators of misuse of funds

PIRs of EIB loans to Financial Intermediaries:

Control issues

Examples of institutional problems identified at some Financial Intermediaries - Commercial Banks as well as Public Promotional Banks:

• Weaknesses of internal control systems
• Weak or lacking AML/CFT policies, absence of compliance
• fficer, no PEP policy
• Inadequate monitoring of related parties and PEPs
• Some Public Promotional Banks are not regulated by the local

Banking Agency

• Political

committees

• f

government ministers

• verriding

negative credit decisions without adequate business rationale justification

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PIRs of EIB loans to Financial Intermediaries – Irregularities identified

• Indications of money laundering
• Irregularities with regard to the purpose of the

allocations

• Final Beneficiaries acting as front companies set up to
• btain funds to the benefit of other related entities,

which by themselves would not be eligible for SME funding

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PIR on a road project in the Balkans – A motorway project

Annex Fieldwork

PIR on a road project in the Balkans – A motorway project

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Findings: EIB found evidence of fraud in the selection of subcontractors: entity appointed to deliver metal barriers turned out to be a bar Implementation: The borrower implemented the requested changes (additional controls, composition of the PIU, external supervising engineer) and the EIB resumed lending for the new project. Remedies:

• 1. Repayment of approx. Euro

1m (the amount

• f

irregularities identified) 2. Modifications to the requirements for another motorway project to be financed by EIB

PIR in the Balkans - Actions taken

• 1. For another ongoing

project with the same borrower

• 2. For future projects

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PIR in the Balkans - Preventive measures for another ongoing road project

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TA Consultant’s MONITORING

• Controls &

checks performed by Technical Assistance Consultant

REPORTING

DIRECT REPORT OF ANOMALIES

OBJECTIVE = confirm a transparent procurement process + prevent appointment of subcontractors that :

• do not hold the necessary certificates/licenses or
• are affiliated to political parties or
• have no relationship with civil construction business
• To all co-

financers,

• Update min.

every 6 months OR when major sub contract awarded

• Prompt report

to the Promoter  who must promptly report to EIB’s IG/IN

PIR in the Balkans - Recommendation of preventive measures for future projects

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• Procurement policies
• Rules governing use of subcontractors
• Identification and reporting of irregularities
• Code of Ethics