Fraud and Corruption in EU Funding : The Problematic Use of European Funds and Solutions

This book provides systematic comparative research of antifraud laws and context at EU countries using a Artificial Neural Network (ANN) model to predict illegal activities in ERDF and CF. It also details a map of corruption risk with the goal of reducing corruption and fraud in the management of European Regional Development Funds and Cohesion Funds through the incorporation of adequate measures and strategies derived from the resulting of EUMODFRAUD EU Project. The authors analyse the specific situations, observe the risks and finally, propose an innovative method that allows predicting fraudulent acts, which will be of interest to both academics, researchers, and policy makers in financial services, public finance, and financial crime. David Blanco-Alcantara is a Senior Lecturer in Corporate Finance at the University of Burgos, Spain. Fernando Garcia-Moreno Rodriguez is a Senior Lecturer in Administrative Law in the Faculty of Law, University of Burgos, Spain. Oscar Lopez-de-Foronda Perez is a Senior Lecturer in Corporate Finance and Accounting at the University of Burgos, Spain Contents Notes on Contributors List of Figures List of Tables 1 The Corruption Problem in Europe 1 Presentation 2 Corruption Problem 3 Types of Corruption 3.1 Corruption into the EU Institutions and in Public Administrations 3.2 Corruption into the EU Companies 3.3 Money Laundering 3.4 Speculation and Tax Havens 4 Pestel Analysis 4.1 Political and Legal Factors 4.2 Economic and Sociocultural Factors 4.3 Technological and Environmental Factors References 2 An Analysis of the Efficiency of European Funds 1 Introduction 2 European Funds and the Hypotheses Among Corruption, Rule of Law and Government Efficiency 3 Measures of Efficiency, Corruption, Rule of Law by Each Country and Research Method 4 Results and Discussion Appendix: Variables Definition References 3 Fighting Fraud and Corruption in European Structural and Investment Funds 1 Introduction 1.1 Problem 1.2 Aim and Task 1.3 Course of the Investigation 2 Fundamentals of Fraud and Corruption Prevention 2.1 Definitions 2.2 Fraud 2.3 Corruption 2.4 Forms of Corruption 2.5 Measuring Corruption 2.6 Anti-corruption Regimes and Institutions 3 Anti-corruption Measures and Strategies of the European Union 3.1 Legal Regulations on Anti-corruption 3.2 Legal Acts of the EU and Other Anti-corruption Regimes 3.3 Legal Regulations in Germany 3.4 Performance of Anti-corruption Regimes 3.5 EU Anti-fraud Strategy with Regard to Financial Resources 3.6 Description of EU Grants 3.7 European Anti-fraud Office 3.8 The European Union’s Anti-fraud Strategy 4 European Structural and Investment Funds 4.1 European Structural and Investment Funds at a Glance 4.2 European Regional Development Fund 4.3 European Social Fund 4.4 Cohesion Fund 4.5 European Agricultural Fund for Rural Development 4.6 European Maritime and Fisheries Fund 4.7 Regional Distribution of Resources from European Structural and Investment Funds 5 Analysis of Fraud Offences in Eu Member States 5.1 Fraudulent and Non-Fraudulent Irregularities 5.2 Fraudulent Irregularities in Selected European Structural and Investment Funds 5.3 Fraudulent Irregularities in the European Agricultural Fund for Rural Development 5.4 Fraudulent Irregularities in the European Regional Development Fund 5.5 Fraudulent Irregularities in the European Social Fund 5.6 Interim Conclusion 6 Germany’s National Anti-Fraud Strategy Under the European Structural and Investment Funds 6.1 Agencies Involved in the Programme 6.2 Testing System in Germany 6.3 Institutional Cooperation 6.4 Special Features in Germany as a Federal State 6.5 Risk Assessment Tools in the Operational Programmes 6.6 ARACHNE Tool 6.7 Self-Assessment Tool 7 Fraud and Corruption Prevention Using the Sample of the Operational Programme Esf Bund Germany 2014–2020 7.1 Principles of Preventing and Combating Fraud and Corruption Within the Framework of the Management and Control Systems 7.2 Application of the Self-Assessment Tool 7.3 Reporting Obligations and Reporting System 8 Discussion of the Chapter References 4 Innovative Methods for Predicting Fraud and Corruption 1 Introduction 2 Corruption in Public Procurement 3 Risks of Corruption in Public Procurement 3.1 Red flag definition 3.2 List of Red Flags 3.2.1 Risks Related to the Contracting Authority 3.2.2 Risks Concerning the Restriction of Competition 3.2.3 General Risks 4 Award Criteria in Public Procurement 4.1 European Normative 4.2 Award Criteria: MEAT Versus Price 5 Empirical Part 5.1 Sample 5.2 LDA Model 5.2.1 Criteria Groups using LDA Model 6 Red Flag Analysis 6.1 Analysis of the Duration of the Public Contract 6.2 Analysis of the Final Value of the Public Contract 6.3 Analysis of the Offers Received at the Tender Notice 7 Innovative Method for Predicting Fraud and Corruption Risks 7.1 Latent Dirichlet Allocation Model 7.2 Self-organizing Map or SOM 8 Conclusions References 5 Conclusions Bibliography Index