Until EU Regulation n. 883/2013 came into force, safeguarding the financial interests of the European Union had always been an important – but not central – issue, not least because the European budget was much more modest than those of the MS themselves. The legal and economics sciences, however, have tended to show little interest in the topic, which has been examined mainly from the criminal law perspective as a means of combating fraud.
The Next Generation EU (NGEU) has brought about a significant shift in the paradigm of European economic governance and has revitalized the European integration process through the Community method, placing the protection of the European Union’s financial interests at the core of the European legal order. It can be argued that protecting the financial interests of the European Union has contributed to the further evolution of the financialization of legal and political arrangements, fostering the process of European integration and becoming one of its guiding principles. Under certain circumstances, the standard of protection for the financial interests of the European Union is today not solely determined by referring to the level of protection at the national level. This contrasts with the usual practice when implementing the assimilation principle. Rather, the European rules contribute to shaping the national system for the protection of public financial resources. This seems to be happening under the not-too-gentle pressure of EU law, both on the administrative side (due, for example, to the management of the vast funds allocated through the RRF) and, in certain jurisdictions/cases, from the criminal law perspective (in the contest of the implementation of the PIF Directive and of the EPPO regulation). Given the high stakes involved, generating specialized knowledge around the protection of the EU’s financial interests is now more urgent than ever.
In this context, Better Knowledge for the Next Generations (BETKONEXT) will showcase and advance the results of a previous Hercule III funded project, Better Knowledge for Better Solutions (BETKOSOL: available below key information about the old project), by pursuing two main research objectives: assessing the suitability of the normative tools in place to ensure multilateral and multilevel cooperation and update the BETKOSOL project’s final recommendations a year and a half after the ‘birth’ of the EPPO.
In addition to the work-packages described below, we aim to build a network to share best practices across Europe and collect practical solutions to enhance cooperation between national and EU levels. It will do so through the lens of an innovative comparative study, which will additionally benefit from the involvement of selected national institutions operating in the sector in question (i.e., the Italian Anti-Fraud Co-ordinating Structure of the Presidency of the Council of Ministers – AFCOS; see “Other annexes”).
In this way, the results from the comparative law study could be tested in operative scenarios and serve both for “law in the book” and for “law in action”. The general objectives include the following points: – to critically analyse the different institutional cooperation strategies in the sector, considering both the administrative and criminal perspectives at the EU and national levels; – to foster better knowledge, especially in terms of procedures and rules. This can support mutual understanding and the creation of a common path towards the effective protection of the EU’s financial interests; – to specify the different shades of meaning implicit in the term “financial interests” and their protection in Europe today; – trace the changes to the regulations, showing the main directions in the history/evolution of the protection of the EU’s financial interests.
The research will be articulated along 4 work packages:
WP1 addresses four selected Member States (SP, IT, BE, PO) in connection with EU institutions. On the one hand, it will outline the future of the national anti-fraud contact points network. On the other hand, the work of the new European prosecutor’s office for the protection of the EU’s FI will be addressed, as its activity raises several questions in terms of institutional coordination, to be further addressed one and a half years after it came into operation. The project will also focus on institutional cooperation between the various EU bodies involved in the sector, with a special focus on OLAF’s work, trying to analyse also the efficiency of the OLAF Regulation.
WP2 will cover other key topics. From the administrative law perspective, the so-called PACA system, the role of new digital platforms, such as those under the Recovery and Resilience Facility (RRF), the adoption of a model of controls based on risk assessments for irregularities and fraud, and the role of fair financial management and financial reporting, will be analysed. On the criminal law side, the focus will be on the full implementation of the PIF directive, so to identify the most recurrent conformity issues in the selected MS to see how they intersect with the EPPO’s work.
WP3 is entirely dedicated to a case study approach for the analysis of significant and/or recent fraudulent schemes affecting EU FI, giving priority to the following sectors: green economy, digital market, new own resources, the RRF, and some aspects related to money laundering.
WP4 will be dedicated to the dissemination and re-elaboration of previous materials, showcasing the inputs from workshops and seminars with the institutions.
BETKOSOL took place at the LUISS-Libera Università degli Studi Sociali “Guido Carli” during the course of 18 months, from January 2021 to June 2022. The LUISS “Guido Carli” was the leaders of the comparative law study but, as important research experts and research centers, the Department of Criminology, Criminal Law and Social Law (UGent) was involved too.
BETKOSOL aims to investigate the limits and perspectives of an improvement of the current regulatory framework in the fight against frauds affecting EU financial interests, in particular in the social, health, and economic sectors, and taking into account how the COVID-19 crisis may affect the status quo. The first step is a legal analysis, both at the EU level of government and at selected national experiences (Belgium, Germany, Italy, and Poland) in a comparative perspective. The MS are chosen for their different economic, administrative, and welfare systems. They also vary in terms of the impact of the COVID-19 crisis. This will ensure greater awareness of the European context. The second is to study how the COVID-19 crisis modifies the multilevel framework. In this view, BETKOSOL will examine the new multiannual financial framework, especially public procurement for sanitary equipment in ESM and RF expenditures; EUSF; SURE; ESF; EIF; ERASMUS+. The third step is to highlight the new risks and causes of fraud, considering that the extreme historical contingencies provide a newfangled point of view to show challenges with the protection of the EU’s financial interests in quite ‘new’ sectors. These steps will be analyzed transversely in the first 3 correspondents WP’s and through a mixed-method (doctrinal/empirical). The WP4 (better regulation) will be based on the outputs from the previous ones (better knowledge and funding). A strategy to improve the long-term outcomes of the European anti-fraud policy will be proposed, in the direction to face risks that the new health crisis will show. The main focus will be on the functioning of (i) the shared administration to prevent fraud; (ii) the territorial control network (iii) the inspection activity for the detection of a (limited) number and typology of cases to be addressed by OLAF and EPPO. BETKOSOL will also have a social impact, involving students (Open Days) and citizens (empirical study).
The research will be articulated along 4 work packages:
- WP1 “examination of the EU framework” will run from M1 to M4 in LUISS in collaboration with the external partner;
- WP 2 “comparative legal analysis of the MS’ framework” will run from M1 to M4
- WP3 “empirical comparative research” will run from M5 to M16;
- WP 4 “recommendations” will run from M17 to M18 at LUISS.
The main objective of BETKOSOL is to contribute to the protection of the public spending of the Union, and thus of its taxpayers by respecting and/or adjusting the existing legal framework. In this historical fragment, dominated by the COVID-19 crisis, proper use of European resources will also guarantee stability, recovery, and solidarity and show a sense of responsibility. This attention for European citizens’ interest is evident under many aspects: the centrality of the social sector, the role of the territorial dimension, and its involvement in the chain of controls. In addition to this, one of the tasks of BETKOSOL is the dissemination in favor of students but, also, the design of empirical research, involving target groups from the civil society in addition to civil servants. From the operational point of view, the joint research aims to provide some directions to improve the detection of frauds and irregularities. For example, it aims to suggest how to shape the procedures under the new multiannual financial framework ex-ante or in itinere or, also, how to prevent fraud, specifically in social sectors. To this end, transnational and multi-disciplinary cooperation is considered of major importance, as well as facilitating the exchange of information, experiences, and best practices. From the legal point of view, BETKOSOL wants to enhance the degree of development of specific legal tools in the field of financial protection using a comparative dimension (administrative control practices, monitoring of the administrative capacity, systems of early warning by citizens, etc.). In this way, BETKOSOL will answer these relevant questions: are European and national current tools sufficient? Is the interplay between both well-balanced? Or do they need to be improved, considering also that the EU has supporting competencies in those sectors at the moment under stress and that will receive a large amount of money in the next years (i.e. health care)?
BETKOSOL team will give more general suggestions on how to improve the European anti-fraud policy in the long term. Firstly, the study will focus on how to improve shared administration in order to prevent fraud and, also, how to strengthen the coordination role of the EC and that of OLAF. Secondly, it will explore the possibility to improve the territorial network of controls in the medium term, in the sense that each actor should have an advantage in controlling (i.e. the discussion of an anti-fraud strategy during the negotiation for MS-EC partnership on EISF). Thirdly, the research wants to understand how to favor a deterrent action in the long term and to highlight experimental administrative procedures to limit the number of cases that will arrive in front of OLAF and EPPO (also investigating how these cases should be selected, whether on the basis of probability, seriousness or supranational relevance and on the basis of risk responsiveness and proportionality). Again, the policies sector analyzed in the first part of BETKOSOL will give fruitful examples. Through this, citizens will benefit from the better spending of EU resources in the future and they will not be penalized by illegal behaviors. The research will not undervalue possibilities of their more direct involvement, mainly through empirical research.
European add value
The European dimension is two-tiers. On the one end, there is a territorial relevance, since the selected MS represents the axes South-North and East-West. On the other hand, there is a “topic” relevance, since not only the new multiannual financial framework is taken into consideration, but also the way in which the COVID-19 emergency overlaps with it. These two levels give BETKOSOL the opportunity to provide context, keeping in mind the financial interest of the EU and that of its citizens and unveiling the core of the problem in the main sectors to which resources will gravitate in the next years. The added value comes precisely from the timeliness of the analysis. Until now, the chosen countries govern differently and have tackled the COVID-19 crisis differently. This allows to BETKOSOL team to distinguish problems more easily and the links between them.