Control, audit and investigation of fraud with European Structural and Investment Funds – Dichotomy between fraud prevention and swift execution of European funds

Nuno Almeida (Master’s in EU Law at the University of Minho)

The European Structural and Investment Funds (ESIF) made available by the European Union will be the highest ever, a fact that will raise new challenges regarding their control and effectiveness. [i] The European Court of Auditors has already expressed its concern about the inefficiency shown by the management authorities of operational programs in the control of the application of European funds, a fact duly expressed in its Report No. 6/2019, prepared on the basis of the audit of the activity of the managing authorities of Member States at the different procedural stages. Thus, in terms of fraud prevention, detection and combat, there was a small number of identified cases in the 2007-2013 programming period, with fraud detection rates between 0% and 2.1%[ii]. According to the European Court of Auditors, this figure is not representative of the level of fraud identified, as several cases of fraud were detected but not communicated to the competent authorities. As a result, it will be necessary to assess the current capacity of national institutions with control and auditing functions, especially regarding their real effectiveness in detecting irregular or illicit situations, since, as it should be recalled, approximately 80% of European funds are executed by Member States. Furthermore, given the exceptional need for swift execution of European funds, it is important to consider whether the pressure that will be placed on the authorities involved in this plan will inevitably lead to a concentration of all means in the execution area. In fact, it is expected that there will be predetermined levels or objectives for the execution of operational programs, a fundamental factor for the evaluation of the activity of these entities, which may weaken the identification of irregular or illicit situations, that is, a prevalence of execution in relation to prevention, a dichotomy that will require measures from the responsible entities if proven true.

On the national level, on May 21, 2021, Law No. 30/2021 approved special public procurement measures for projects financed or co-financed by European funds, a legislative change arisen from a need for speed in execution and application of European funds made available by the European Union, by simplifying public procurement procedures, as well as from the need to reinforce the fundamental principle of transparency, achieved through the implementation of mandatory electronic disclosure procedures and the reinforcement of the Court of Auditors’ intervention in the oversight of procedures.

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Editorial of October 2021

By Alessandra Silveira (Editor) and Tiago Sérgio Cabral (Managing Editor)

Strange times and the need to remember the obvious…on the recent decision of the Polish Constitutional Court

The recent judgment of the Polish Constitutional Court calls into question one of the base pillars of the European legal order – namely the primacy of EU law over national law. As a result, it is likely that the European Commission will bring infringement proceedings against Poland. If the CJEU finds that Poland has not complied with its judgment, it may impose a financial penalty.

However, there is a possibility for de-escalation which would allow for this imbroglio to be first be resolved politically. This was the case regarding the German Constitutional Court’s astonishing decision of 5 May 2020, concerning the ECB’s bond buying programme for purchasing Member States’ public debt on the secondary market. The crux of the matter was that the German Constitutional Court’s judgment followed a judgment by CJEU which settled the issue of the validity of the ECB’s bond buying programme. The German Constitutional Court in its decision disregarded the decision of the competent court under Article 19(1) TEU, according to which the CJEU ensures that the law is observed in the interpretation and application of EU treaties. It did not take long for the so-called “illiberal democracies” in Europe to welcome the ruling of the German Constitutional Court, using it to subvert judicial independence and freedom of expression as recognised by the EU. Fortunately, the good sense of the German governmental and parliamentary authorities under Angela Merkel’s leadership prevailed – and the European institutions did not have to act accordingly (at least immediately). It is important to note that in a second decision regarding the ECB’s bond buying programme also appeared to walk back from the edge of the cliff.

In any case, such episodes recommend revisiting the elementary notions of European integration law, because there are occasions when certain civilisational achievements still need to be defended, and the reason behind some choices needs to be recalled. What functional reason justifies the primacy of Union law over national law? Does Union law take precedence over national constitutional norms (or, on the contrary, can it be declared unconstitutional or set aside on the grounds of alleged unconstitutionality)?

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Summaries of judgments: Commission v Poland (Régime disciplinaire des juges) | Wabe

Summaries of judgments made in collaboration with the Portuguese judge and référendaire of the CJEU (Nuno Piçarra and Sophie Perez)

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Judgment of the Court (Grand Chamber) of 15 July 2021, European Commission v Republic of Poland, Case C-791/19, EU:C:2021:596

Failure of a Member State to fulfil obligations – Disciplinary regime applicable to judges – Rule of law – Independence of judges – Effective legal protection in the fields covered by Union law – Second subparagraph of Article 19(1) TEU – Article 47 of the Charter of Fundamental Rights of the European Union – Disciplinary offences resulting from the content of judicial decisions – Independent disciplinary courts or tribunals established by law – Respect for reasonable time and the rights of the defence in disciplinary proceedings – Article 267 TFEU – Restriction of the right of national courts to submit requests for a preliminary ruling to the Court of Justice and of their obligation to do so

Facts

In 2017, Poland adopted a new disciplinary regime concerning judges of the Sąd Najwyższy (Supreme Court) and judges of the ordinary courts. In the context of that legislative reform, a new chamber, the Izba Dyscyplinarna (‘the Disciplinary Chamber’), was established within the Supreme Court and was made responsible, inter alia, for hearing disciplinary cases relating to judges of the Supreme Court and, on appeal, those relating to judges of the ordinary courts.

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Venezuela as a third country before the ECJ

Tiago Paixão (Master’s in Administrative Law)

The Bolivarian Republic of Venezuela (“Venezuela”) brought an action for annulment before the General Court to annul certain restrictive measures imposed by the Council of the European Union here. Those restrictive measures were imposed because of concerns about democracy, rule of law and human rights principles and are set out on Regulation 2017/2063, Regulation of Execution 2018/1653 and Decision 2018/1656.

Concretely, the General Court had to solve two major questions, before the substance of the annulment. On the one hand, to determine if Venezuela is a legal person for Article 263 TFUE and, in case of having given a positive answer, if Venezuela is directly affected by those measures.

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The priority of the EU law in Romania: between reality and Fata Morgana

Dragoș Călin (Judge at the Bucharest Court of Appeal and co-president of the Romanian Judges' Forum Association)

1. Are ordinary judges afraid to apply CJEU judgments?

The judgment of the Grand Chamber of the Court of Justice of the European Union, delivered in the joined cases C-83/19, C-127/19, C-195/19, C-291/19, C-355/19 and C-397/19, Asociația Forumul Judecătorilor din România și alții, on 18 May 2021, has caused a real earthquake in Romania.

It was so intense that, in order to maintain the previous state of affairs, the Constitutional Court of Romania immediately intervened, by Decision no. 390/2021, contrary to the CJEU judgment, ordering that national ordinary judges may not analyse the conformity of a national provision, which has already been found to be constitutional by a decision of the Constitutional Court, in relation to the provisions of European Union law.

More specifically, invoking the disregard of the national constitutional identity, “as a guarantee of a fundamental identity nucleus of the Romanian Constitution and which should not be relativised in the process of European integration”, the Constitutional Court of Romania found that “the CJEU, declaring the binding nature of Decision 2006/928/EC [establishing the Cooperation and Verification Mechanism (CVM) for Romania], limited its effects from a double perspective: on the one hand, it established that the obligations resulting from the decision fall within the responsibility of the competent Romanian authorities that have the competence to cooperate institutionally with the European Commission (paragraph 177 of the decision), therefore within the responsibility of the political institutions, the Romanian Parliament and Government, and, on the other hand, that the obligations shall be exercised under the principle of sincere cooperation, provided by Article 4 of TEU. From both perspectives, the obligations cannot be incumbent on the courts, State bodies that are not authorized to cooperate with a political institution of the European Union.” It was therefore established that the “implementation of paragraph 7 of the operative part of the judgment, according to which a court is authorized to set aside ex officio a national provision falling within the scope of Decision 2006/928 and which it considers, in the light of a Court judgment, to be contrary to this decision or to the second subparagraph of Article 19 (1) TEU, has no basis in the Romanian Constitution”.

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What to expect from the European Platform on Combating Homelessness?

Cecília Pires (PhD Candidate at the University of Minho)

On 21 June of 2021, under the fourth Portuguese Presidency of the Council of the European Union (“EU”), its Member States, European institutions, political representatives, homeless people, and civil society signed the Lisbon Declaration on the European Platform on Combating Homelessness, during the High-Level Conference on the European Platform on Combating Homelessness.

The initiative is a result of the orientation at Article 3 of the European Pillar of Social Rights Action Plan, which predicts the urgency of European practices and policies that can promote access to not only the quality and affordable houses but also the essential services. It is aimed to guarantee the human right to adequate housing.

The primary basis of the commitment is: Article 3 of the Treaty on European Union (“TEU”), which mandates the Union to combat social exclusion and promote economic, social, and territorial cohesion; principle nº 19 of the European Pillar of Social Rights (“EPSR”), that addresses the need for action to ensure housing; housing assistance, adequate shelter and services for those in need and people experiencing homelessness; and the principles nº 1 and nº 11 of the 2030 United Nations (“UN”) Sustainable Development Goals (SDGs), which deal, respectively, with the duty to end extreme poverty, including homelessness, and to make cities and human settlements safe, resilient and sustainable with ensuring access to all adequate, safe and affordable houses. 

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Defining disinformation in the EU: a matter beyond linguistics

Miguel Pereira (Master’s student in European Union Law at the School of Law of the University of Minho)

The EU has been a trailblazer in what regards combating disinformation. Through initiatives involving online platforms and drafting of long-term strategies tackling multiple fronts, it has recognized the issue and attempted to address it through non-regulatory policy making. The instruments that have been put forth to combat the phenomenon are often controversial (as is to be expected in all discussions impacting freedom of expression and information) and their effectiveness hard to assess. The debate surrounding these instruments tends to absorb most of the attention, leaving less room to discuss the actual definition of disinformation. This concept is, nonetheless, vital to the successful implementation of policies in this area and to an adequate protection of fundamental rights in the EU, meriting a closer look.

Disinformation is often wrongly equated to, and used interchangeably with, “fake news”. This approach muddles the debate with imprecision and can be particularly pernicious for two reasons. On one side, it does not adequately capture the full scope of the problem which goes well beyond fake news reporting and includes a wide array of:

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Editorial of September 2021

By Tiago Sérgio Cabral (Managing Editor)

On the recent Polish challenges to the primacy of EU Law

1. Some recent progress

On 14 July 2021 the Court of Justice of the European Union (hereinafter, “ECJ”) issued an Interim Order declaring that the Polish State should suspend the activity of the, widely regarded as breaching the principle of the independence of the judiciary, Disciplinary Chamber of the (Polish) Supreme Court. The ECJ’s decision came as no surprise both due to the nature of the Chamber itself and the fact the same Court had already issued a similar order a few months before. One day after, on 15 July 2021, the ECJ would issue a judgment confirming that the Chamber was in breach of Article 19(1) TEU and Article 267 TFEU.

What could be seen as a surprise is the fact that the Polish Constitutional Tribunal, whose level independence could hardly be called adequate after the reforms by the current ruling party, directly challenged (deciding on the previous order) the ECJ. The Polish Constitutional Tribunal argued that the interim measures ordered by the ECJ should be considered as incompatible with the Polish Constitution and therefore not enforced.

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Holiday break

By Editorial Board 

Dear readers,

We will be taking a short 2-week break for holidays. We will resume our regular publishing schedule on 24 August 2021.

In the meantime, we are always open to receiving new academic contributions from our readers. If you have an innovative, dynamic, thoughtful piece that you believe would fit in this blog, feel free to send it to us at: unio.cedu@direito.uminho.pt

If you would like to catch up on some reading on EU matters please check our news, commentsessaysreviews, and case law of the ECJ sections.



Pictures credits: stux.

Editorial of August 2021

By Daniel Silva (Master’s student in EU Law, UMinho) 

The fight against greenwashing in the EU

In January of 2021, the European Commission and national consumer authorities shared their conclusions pursuant to a screening of websites performed to identify breaches of EU consumer law in online markets focused on greenwashing practices[1]. This screening included a variety of online green claims from a wide range of business sectors, including cosmetics, clothing, and household equipment. The results estimated that 42% of analyzed claims were exaggerated, false or deceptive and could even potentially be considered unfair commercial practices under EU law. The sweep also concluded that the practice of greenwashing has been growing as consumers demand in green products also grows.

The term greenwashing was coined by the American environmentalist Jay Westerveld in 1986, at the time regarding the practice of the hotel industry incentivizing the reuse of towels for environmental reasons, when in fact it was a ploy meant to increase their margin of profit[2]. The EU defines greenwashing as “companies giving a false impression of their environmental impact or benefits”. This, however, does not seem to encompass the magnitude and many facets that greenwashing has. There is not a unanimous agreement on a precise definition of the term, however, most definitions agree on two aspects about greenwashing: there is repression on information that suggests the company might be environmentally unfriendly and a strong push on having an environmentally friendly image. Hence, we can see greenwashing as a phenomenon of selective information disclosure on the environmental impact of a certain product or service that does not necessarily correspond to reality or is even false. We can look at greenwashing as somewhat of a marketing strategy, capitalizing on the growing consumer environmental conscience that has been on the rise in recent years. Therefore, the companies that practice greenwashing do not actually have any real environmental concern, focusing purely on economic gain.

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