overview of procurement and integrity at the...

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

outside the EU

22/05/2017 European Investment Bank 2

The EIB: Integrated in the EU accountability

system


Treaty on EUTreaty on the

functioning of the EU

EIB Statute

Integral part of

the Treaties

Th

e E

IB i

s a

cco

un

tab

le

in f

ron

t o

f:

European Ombudsmen

European Court of Justice

Inside EU Outside EU

GtP

principle based

The EIB’s Guide to Procurement (GtP)


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!

European Investment Bank22/05/2017 5

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,

obstruction, 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.

6

European Investment Bank Group7

IG/IN’s Investigation

Activity

PROACTIVE(PIRs)

REACTIVE

The Fraud Investigations Division (IG/IN)

7

PROACTIVE INTEGRITYREVIEWS

8European Investment Bank Group

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 FinancialIntermediaries - Commercial Banks as well as Public PromotionalBanks:

‣ Weaknesses of internal control systems‣ Weak or lacking AML/CFT policies, absence of compliance

officer, no PEP policy‣ Inadequate monitoring of related parties and PEPs‣ Some Public Promotional Banks are not regulated by the local

Banking Agency‣ Political committees of government ministers overriding

negative credit decisions without adequate business rationalejustification

European Investment Bank Group 9

PIRs of EIB loans to Financial Intermediaries –Irregularities identified

‣ Indications of money laundering

‣ Irregularities with regard to the purpose of theallocations

‣ Final Beneficiaries acting as front companies set up toobtain funds to the benefit of other related entities,which by themselves would not be eligible for SMEfunding


22/05/2017European Investment Bank Group 11

PIR on a road project in the Balkans –

A motorway project

Annex

Fieldwork

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


Findings: EIB found evidence of fraud inthe selection of subcontractors: entityappointed to deliver metal barriersturned 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. Euro1m (the amount ofirregularities identified)

2. Modifications to therequirements for anothermotorway project to befinanced by EIB

PIR in the Balkans - Actions taken

1. For another ongoing project with the same borrower

2. For future projects


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


TA Consultant’s MONITORING

• Controls & checks performed by Technical Assistance Consultant

REPORTINGDIRECT 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

European Investment Bank Group15

Procurement policies

Rules governing use of subcontractors

Identification and reporting of irregularities

Code of Ethics

overview of procurement and integrity at the...

Documents