No 2 | 2019 Fraudand Corruption Ethicsand THEME Integrity Journal ...integrity is the biggest “ asset on our balance sheet Table of contents NUMBER 2/2019 13 17 INTERVIEW INTERVIEW Günther Oettinger, Commissioner for Budget & Juhan Parts, ECA Member Human Resources Calling for strategic European values – we all have to fraud management fight for them! Finding and rectifying a fraud case while auditing EU funds By Orsolya Szarka, Investment for Cohesion, Growth and 49 Inclusion Directorate 04 EDITORIAL 37 How criminals evade VAT and how we use 08 Fraud and corruption in the EU - the need for new techniques to detect it a more multi-faceted approach By Carlos Soler Ruiz, Regulation of Markets and By Professor Michael Levi, Cardiff University Competitive Economy Directorate 13 European values – we all have 45 The ECA Statement of Assurance - to fight for them! separating errors from alleged fraud Interview with Günther Oettinger, Commissioner By Nikolaos Kilonis, Financing and administering the for Budget & Human Resources Union Directorate By Gaston Moonen 49 Finding and rectifying a fraud case while 17 Calling for strategic fraud management auditing EU funds Interview with Juhan Parts, ECA Member By Orsolya Szarka, Investment for Cohesion, Growth By Derek Meijers and Gaston Moonen and Inclusion Directorate 23 ECA Opinions on the Commission’s 52 Private sector auditors in the fight against legislative proposals for fighting fraud fraud: from audit to forensic investigation By Eva Lindström, ECA Member By Lilian Grooten and Gérard Zolt, EY Luxembourg 26 Fraud risk for the EU budget – what the ECA 58 Cooperation is key to make the fight against recommends fraud successful By Judit Oroszki, Financing and Administering the Interview with Ville Itälä, Director-General of the EU Union Directorate Anti-Fraud Office - OLAF By Gaston Moonen 33 Tackling fraud in EU cohesion policy spending – looking behind and beyond the 65 New kid on the block: the European Public audit Prosecutor’s Office By Dana Christina Ionita and Jorge Guevara López, By Oliver Salles, European Public Prosecutor’s Office investment for Cohesion, Growth and Inclusion 70 EPPO, OLAF and CJEU - a brief look at their Directorate interplay By Jan Inghelram, Court of Justice of the European Union 2 58 73 INTERVIEW INTERVIEW Ville Itälä, Director-General of the EU Inge Gräßle, Member of the European Anti-Fraud Office - OLAF Parliament and Chair of its Budgetary Control Cooperation is key to make Committee the fight against fraud Upholding the rule of law to successful preserve the EU’s key values INTERVIEW Interview with Alexander F. Wagner, Associate Professor at the University of Zurich Honesty as a value that matters 113 for business 73 Upholding the rule of law to preserve the 101 Moral leadership as an answer to EU’s key values corruption and fraud Interview with Inge Gräßle, Member of the By Alex Brenninkmeijer, ECA Member European Parliament and Chair of its Budgetary 105 Auditing the ethical framework of EU Control Committee institutions: easier said than done By Gaston Moonen By Mihails Kozlovs, ECA Member 80 GRECO – States responding to the global 110 We need people with moral courage threat of corruption Interview with Anton Colella, Global CEO of By Agnès Maîtrepierre, Ministry of Europe and Moore Stephens International Foreign Affairs of France By Gaston Moonen 84 The fight against tax fraud: an EU action 113 Honesty as a value that matters priority for business By Cécile Remeur, European Parliament Interview with Alexander F. Wagner, Associate 89 Corporate bribery – EU needs to step up Professor at the University of Zurich to the plate By Derek Meijers and Gaston Moonen By Branislav Hock, University of Portsmouth 119 DIRECTOR'S CUT 93 AFCE International Fraud Conference Making sure fraud risks are on our radar Zurich Interview with By Derek Meijers and Gaston Moonen Mariusz Pomienski and Zac Kolias, ECA directors 99 Fraud fighters: anti-fraud training By Derek Meijers and Gaston Moonen for ECA auditors By Robert Lamers, Head of European Partnership development, Association of Certified Fraud Examiners 3 Table of contents 141 129 Flipping the narrative:from fighting corruption to building integrity Integrity risks and remedies By Ina de Haan, Netherlands Court of Audit in the EU institutions By Carl Dolan, Open Society European Policy Institute 125 Standards of public life, and attitudes 166 Fraud and corruption in the EU: top four to ethical behaviour cases in recent times By Amita Patel, Audit Quality Control Committee By Camilla Barlyng, Directorate of the Presidency Directorate 169 FORESIGHT AND AUDIT 129 Integrity risks and remedies in the De-cluttering data to make the fight EU institutions against fraud more effective By Carl Dolan, Open Society European Policy Institute By Lara Dobinson, European Anti-Fraud Office (OLAF) 133 Whistleblowing- a key issue for all EU 172 FORESIGHT AND AUDIT / LONG READ institutions and bodies Big data analytics as a tool for auditors to By Christophe Lesauvage, ECA Legal Service identify and prevent fraud and corruption 137 Whistleblowing in the private sector: in public procurement the how matters By Isabelle Adam, Government Transparency Institute, By Moritz Homann, EQS Group AG and Mihály Fazekas, Central European University and Government Transparency Institute 141 Flipping the narrative: from fighting corruption to building integrity REACHING OUT By Ina de Haan, Netherlands Court of Audit 180 The Hague 2: SAIs meeting again to discuss 145 It’s ethics, stupid! - or why legal is accruals accounts in the public sector not enough By Peter Welch, Sustainable Use of Natural Resources By Luis Alvarez Arderius, Canary island Regional Audit Directorate Institution, and Julio García Muñoz, University of 182 ECA meets key stakeholders in Lithuania Castilla-La Mancha By Aušra Maziukaitė, private office Rimantas Šadžius, 149 Why, why, why? Analysing the root causes of ECA member fraud and corruption 185 Budgetary control commission of the By James C. Paterson, Director of Risk & Assurance German Bundestag visits the ECA Insights Ltd (RiskAI) By Roberto Gabella Carena, Directorate of the 155 ‘The Panama Papers’ - tackling Presidency transnational white collar crime through 186 ECA participates in SIGMA /OECD meeting cross-border journalist collaboration on reporting practices to increase impact Interviewing the two authors of the bestseller By Marton Baranyi, Directorate of the Presidency book ‘The Panama Papers,’ Frederic Obermaier and Bastian Obermayer 188 Auditors Alliance Meeting 2019, By Gaston Moonen and Judith Stein, Directorate of OECD, Paris the Presidency By Daniel Tibor, Directorate of the Presidency 162 The role of investigative journalists: 189 European Parliament grants discharge the need for accountability, justice on the 2017 EU budget and sustained EU pressure By Helena Piron Mäki-Korvela, Directorate of the Presidency By Tom Gibson, Committee to Protect Journalists 191 ECA contributing to Eurofi's high-level seminar in Bucharest By Victoria Gilson, private office of Rimantas Šadžius, ECA Member 4 155 INTERVIEW Interviewing the two authors of the bestseller book The Panama Papers, Frederic Obermaier and Bastian Obermayer ‘The Panama Papers’ - tackling transnational white collar crime through cross-border journalist collaboration 193 6th Global Audit Leadership Forum (GALF) 204 ECA goes back to school – ECA auditors – from small to big participating in the EU B2S programme By Martin Weber, Directorate of the Presidency Ágnes Godány, Directorate of the Presidency 196 ECA hosting a European Coordinators FOCUS meeting – discussing Transport Flagship 208 ECA publications in March/April /May 2019 Infrastructure projects 212 NEXT EDITION By Guido Fara, Investment for Cohesion, Growth and Inclusion Directorate 198 Jacques de Larosière visits ECA to speak about the viability of the Eurozone By Laura Lalikova, private office of Alex Brenninkmeijer, ECA Member 200 ECA participates in conference on EU audit innovation in Bucharest By Marc-Oliver Heidkamp, private office of Klaus- Heiner Lehne, ECA President 202 Europe Day 2019 – sharing cake and a sense of belonging Gina Wittlinger, Directorate of the Presidency PRODUCTION Editor in chief: The contents of the interviews Past editions of the Journal Gaston Moonen and the articles can be found on ECA’s website: Tel.: +352 4398 - 45716 are the sole responsibility eca.europa.eu/en/Pages/Journal.aspx E-mail: of the interviewees and authors [email protected] and do not necessarily Deputy editor: reflect the opinion of the Derek Meijers European Court of Auditors E-mail: [email protected] Unless indicated otherwise, all pictures and graphical visuals Desktop publishing: Nicolas Toulas originate from the ECA distribution: Directorate of the Presidency For more information: Photos: European Court of Auditors Reproduction prohibited 12, rue Alcide De Gasperi 1615 Luxembourg, eca.europa.eu © ECA LUXEMBOURG © European Union, 2019 @EU auditors Reproduction is authorised [email protected] provided the source is acknowledged 5 Editorial Putting ethics and integrity up front Last month, I got to talk with a friend of mine - with whom I get along increasingly well since we started sharing the same hobby – about the work he is doing. The more I heard, the more I had the feeling that he is - as he put it himself – ‘in the wrong business.’ He works in the Trust business, dealing not with ethics, but with all kinds of financial structures. It’s a business which has become quite an important sector in some Member States. It is also a funny name for a business where for many people the details of its activities often trigger the complete opposite of trust. Some of the ugly sides to this business were revealed in the book The Panama Papers, whose authors, Bastian Obermayer and Frederik Obermaier, we interviewed for this Journal. Reading the book was like stepping into a different world. Quite convincingly, the two investigative journalists explain how the super rich of this world can cloak their wealth, shielding it from taxation anywhere in the world, with no real fiscal or legal checks whatsoever.