Author: Nicola Sharp 28 June 2021
Nicola Sharp of financial crime specialists Rahman Ravelli considers the challenges facing member states.
The European Union’s fraud chief has warned that its €800 billion pandemic recovery fund is at risk of abuse because some countries will not join an EU-wide database of transactions.
Ville Itala, director general of the European Commission agency Olaf, said the stance taken by some EU states could lead to a lack of central supervision, making it difficult to monitor the way the money is used.
He said: “It is a huge amount of money, prevention is important. We see that it is a great risk, that’s for sure. Because we don’t have the same possibilities of following the flows of money and information and finding the final beneficiaries. “
His comments reflect anxiety within the EU about the potential for fraudulent use of the fund, which is supposed to be used to help the 27 member states recover from the economic damage caused by COVID-19.
This month has seen the European Commission begin its loan programme, which is aimed at raising EU funds for the next generation with the issuance of €20 billion of debt. This is seen as a first step towards spending the total of €800 billion to help revitalise pandemic-ravaged economies.
The use of the recovery fund is clearly going to require close monitoring in order to prevent potential misuse of EU funds. But this is definitely going to be made more difficult if all member states are not using the same database. However, requirements for individual states to set up their own internal systems to record the use and destination of recovery funds could well tackle some of the risk.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.