March 4. 2024. 10:38

The Daily

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CAP funding still vulnerable to conflicts of interest, say auditors

The EU’s Common Agricultural Policy (CAP) still remains vulnerable to conflicts of interest thanks to transparency loopholes and a lack of measures to detect situations at risk and protect whistleblowers, according to a new watchdog report.

The new report, published on Monday (13 March) by the European Court of Auditors, explored how the issue is addressed in agricultural and cohesion policies, the two biggest spending areas in the EU which together amount to around half of the EU budget.

While the auditors noted there is a framework in place to prevent and manage conflicts of interest in EU spending, loopholes in promoting transparency and in detecting situations at risk remain, leaving the CAP vulnerable to conflicts of interest.

“We found that efforts were made to address the issue, but gaps remain,” said Pietro Russo, the ECA member who led the audit, stressing that the reporting of cases should be improved “to give a clear overview of the amounts affected by conflicts of interest”.

According to the report, there is currently no overview of how much EU money is affected by this issue, while sufficient measures to improve transparency and protect whistleblowers are not yet in place.

Meanwhile, many member states are late in transposing the rules for the protection of people who report breaches of EU law, they note.

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EU rules require all people involved in managing EU funds at both the EU and national levels to avoid any conflict of interest arising from political or national affinity, economic interest or any other direct or indirect personal interest.

When a perceived or actual conflict of interest is identified, the relevant authority is obligated to ensure that the person in question ceases all activity associated with the matter.

However, at the national level, these declarations are most commonly self-reported, meaning they can prove unreliable.

Moreover, cross-checking the information can be difficult due to insufficient administrative capacity, data protection rules, and general difficulties associated with achieving full transparency, the auditors noted.

For example, in the countries examined – Germany, Hungary, Malta, and Romania – self-declarations were not mandatory for members of government involved in making decisions about EU programmes and allocating related funding, despite the fact that regulations have explicitly required this since 2018.

The report also took aim at the ‘revolving doors’ culture of staff moving from official public roles to private-sector roles in the same area, which it says “intrinsically create a risk of conflicts of interest”.

Calling for a ‘more active management’ of such cases, auditors criticised the fact that national authorities do not always pay sufficient attention to certain red flags, such as competition in contracts negotiated without competitive tendering or applicants linked to other stakeholders involved in EU-funded projects.

The report also takes aim at publicly available sources of information, including the Commission’s online platform Kohesio, which they say “currently contain no information on ultimate beneficiaries behind legal persons”, nor on the scale of conflicts of interest and the frequency or magnitude of the issue, thus limiting public scrutiny.

This is also because not all irregularities are reported, for instance when the amount involved is below €10,000 or they are detected and corrected at national level before money is requested from the Commission.

For its part, a Commission spokesperson said that it ‘takes note’ of the findings of the publication, stressing that the EU executive has put in place “several key measures” to fill in these gaps in the current programming period.

“We are improving the collection and interoperability of data by member states on recipients of EU funding where the budget is implemented under shared management,” the spokesperson said, adding that is also working to provide guidance and share best-practices to managing authorities.

The spokesperson said the Commission had accepted the two recommendations from the auditors to improve the capacity to prevent, detect and report conflicts of interest and promote transparency.