New financial rules agreed: EU decides on better anti-corruption rules - but not until 2028
Late on Thursday evening, negotiators from the European Parliament, Commission and Member States agreed on the revision of the EU Financial Regulation. The regulation sets out the rules for the disbursement of all EU funds. Even though it may sound quite technical, the current proposals have the potential to make the EU budget a central tool for combating corruption. Unfortunately, some of Parliament’s central demands could not be achieved due to the reluctance of the Member States: among others, national governments are not prepared to assist the Commission with the recovery of EU funds lost due to errors or fraud in relation with EU projects. Furthermore, Member States have tried to delay the entry of force of several provisions and demanded long transition periods on many points. Ultimately, however, the Parliament was able to achieve some important successes, which as a negotiator for the Greens, I was particularly committed to:
- – Extension of the EU ‘blacklist’. Anyone who frauds EU funds should no longer receive any. Until now, however, the EU’s Early Detection and Exclusion System (EDES) only applied to around 20% of funds. In the negotiations, we achieved that from 2028, the recipients of all EU funds will be blacklisted if they are guilty of serious crimes such as corruption, fraud, child labour or terrorist financing.
- – Centralized database for the largest recipients of EU funds. Due to the fragmented availability of data, the EU currently does not really know who in the member states ultimately receives money from the budget. With the revision of the Financial Regulation, a centralized database of recipients is now to be created on the basis of the existing risk scoring tool ARACHNE. From the next Multiannual Financial Framework, the member states are obliged to feed data into the system.
- – Green success: The “do-no-significant-harm” principle in the Financial Regulation. This principle refers to the obligation to avoid economic activities that do significant harm to any environmental objective. In future, the implementation of the EU budget must adhere to this principle, thus allowing for strategic lawsuits, for example against EU-funded fossil fuel infrastructure.
Daniel Freund, the Greens’ rapporteur on financial regulation, comments:
“The EU is making progress in the fight against fraud with EU taxpayers’ money. It is time to finally make it possible to see who in Europe benefits from EU funds in the first place. This will reveal whether the recipients of EU funds have contacts in politics and whether there have been conspicuous clusters in the allocation of funds. However, it is absolutely negligent not to allow these important rules to take effect for another four years. It is completely incomprehensible why the member states want to give potential fraudsters a grace period until 2028. The attitude of the Member States in refusing to allow the Commission to recover money obtained through fraud is completely bizarre. It must be absolutely clear in the EU that there are severe penalties for those who commit fraud with EU funds. In cases of fraud and corruption, everyone must work together: EU Commission, European Parliament and Member States.”
t must be absolutely clear in the EU that there are severe penalties for those who commit fraud with EU funds.