Application and Project Selection

In this initial stage of the project cycle, potential fraud and corruption risks lie in both the application and project selection processes, and these risks are heightened due to the discretion of officials at this stage. Indeed, conflict of interest, exercise of undue influence and capture during the preliminary stages threaten to divert funds away from OPs. In an attempt to win projects and funds, an applicant may submit a false declaration to make sure their application is stronger. In reality, the applicant may not possess the expertise or have the capacity to properly carry out the project. When it comes to selecting projects, an applicant may try to influence members of the Evaluation Committee to ensure their project is selected. In some cases, applicants may even bribe officials. Alternatively, members of the Evaluation Committee may have a connection to, and in some cases collude with the applicant to help them win the project. They don’t declare their conflict of interest, increasing their chances of influencing the award of the project to favour a particular applicant.

  • Conflict of interest
  • Influence peddling
  • Bribery
  • Unfairly awarding projects
  • Manipulating documents

Project Implementation

The implementation stage of the project cycle brings with it numerous fraud and corruption risks due to the number of actors potentially involved in project implementation and the complexity of some of the processes at this stage. For projects with high investment value, such as large-scale infrastructure projects, this stage becomes even more vulnerable to fraud and corruption . Furthermore, tenders put out either directly by the MA or beneficiary are common during the implementation stage, and procurement processes are notoriously prone to fraud and corruption. There are a number of procurement specific risks that occur at this stage. For example, members of an MA or beneficiary may tailor tender specifications or leak commercially sensitive tender information

  • Avoiding genuine competition
  • Manipulating documents
  • Creating fictitious companies
  • Withholding documents
  • Inflating staff costs
  • Modifying contract data
  • Fabricating fictitious works/activities
  • Providing faulty products
  • Collusive bidding
  • Bribery
  • Bid rigging
  • Substituting products

Project closure and evaluation

Although opportunities for fraud and corruption are fewer during the project closure and evaluation stage, this phase is still vulnerable. Perpetrators can attempt to cover up fraudulent or corrupt activity that took place earlier on during the project selection or implementation phases. One particular risk that is present at this stage, and indeed throughout the whole projectcycle, is conflict of interest. A potential conflict of interest may be identified when experts that participated in the project selection stage are also involved in its evaluation. Such individuals may then attempt to influence the outcome of the evaluation, particularly if they have colluded with a beneficiary or other party to carry out fraudulent activities during the project cycle. Alternatively, perpetrators may try and bribe auditors or evaluators to influence their findings. More commonly, beneficiaries or third parties may submit false or forged documentation to conceal corrupt or fraudulent practices that occurred previously.

  • Bribery
  • Conflict of interest
  • Forging documents

Key Trends in 2020

Key trends identified in 2020 related to the manipulation of procurement and tendering processes to pocket EU funds- often with cross-border dimensions and underpinned by complex money laundering schemes. Conflicts of interest and collusion between beneficiaries and contractors were often at the heart of such frauds.

Other trends included the use of false or inflated invoices, corruption and conflicts of interest targeting agricultural and rural development funding as well as (increasingly) fraud associated with EU research funding

Key Questions for Public Procurement

  1. Is there strong inertia in the composition of the evaluation team of the tender supplier?
  2. Is there any evidence for conflict of interest for members of the evaluation committee (for instance because the public official holds shares in any of the bidding companies?)
  3. Are there multiple contact offices/persons?
  4. Is the contact office not directly subordinated to the tender provider?
  5. Is the contact person not employed by the tender provider?
  6. Are there any elements in the terms of reference that point at a preferred supplier?
  7. Was there a shortened time span for the bidding process?
  8. Has the procedure for an accelerated tender been exercised?
  9. Is the size of the tender exceptionally/unusually large (e.g. packaged)?
  10. Is the time-to-bid allowed to the bidders not conform to the legal provisions?
  11. Are bids submitted after the admission deadline still accepted?
  12. How many offers have been received?
  13. Are there any artificial bids (e.g. bids from non-existing firms)?
  14. Are there any (formal or informal) complaints from non-winning bidders?
  15. Are there any connections between bidders that would undermine effective competition?
  16. Are all bids higher than the projected overall costs?
  17. Are not all bidders informed of the contract award and on the reasons for this choice?
  18. Are the contract award and the selection justification documents not all publicly available?
  19. Are there inconsistencies in reported turnover or number of staff?
  20. Is the winning company listed in the local Chamber of Commerce?
  21. Awarded contract includes items not previously contained in the bid specifications?
  22. Are there substantial changes in the scope of the project or the project costs after award?
  23. Are audit certificates issued by unknown/local auditor with no credentials?
  24. Is there any negative media coverage about the project (e.g. failing implementation)?

Add new comment