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Preventing and investigating corruption and fraud: the Anti-Fraud Office of Catalonia

Workshop on "Fighting against corruption" Tunis, 20-21 May 2014TAIEX JHA 48941European Commission / Ministère de la gouvernance et de la lutte contre la corruption

Index of the session

Introduction to the Anti-

Fraud Office

• Background.• Nature & Independence.• Purpose: General Competences.

Investigations Activities

• Sphere of Action.• Collaboration.• Specific Investigative

Competences.• Investigative powers.• Procedure.• Result of the proceedings:

• RecommendationsPrevention Activities

• Training.• Legal reports for legislative initiatives.• Following up of the proceedings.

Background | Implementing UNCACUnited Nations Convention against corruption

Article 6October 31, 2003

• To prevent and to investigate.• To provide advice and to make

recommendations.

General Purpose:

Act 14/2008 on the Anti-Fraud Office of CataloniaNovember 5, 2008

Article 6,1: Each State Party shall, in accordance with the fundamental principles of its legal system, ensure the existence of a body or bodies, as appropriate, that prevent corruption by such means as:

a) Implementing the policies referred to in article 5 of this Convention and, where appropriate, overseeing and coordinating the implementation of those policies;b) Increasing and disseminating knowledge about the prevention of corruption.

Article 5,1: “Each State Party shall, in accordance with the fundamental principles of its legal system, develop and implement or maintain effective, coordinated anti-corruption policies...”

The Anti-Fraud Office| Nature & Independence

Legal personality of its own.

Reports to the Parliament of

Catalonia.

• Doesn’t receive instructions from any authority.• Chosen by Parliament at Government’s

proposal.• The candidate must appear before the

parliamentary committee for a hearing.• Chosen by a majority of 3/5 of the members,

or the absolute majority of the members of the chamber in a second voting.

• The mandate is for 9 years and cannot be renewed.

Acts independently. The regulation of the

Director position is the first evidence of the

institution’s independence:

Administrative External Controlling Body

The Anti-Fraud Office| Purpose

To investigate specific possible cases of:

• Irregular use or allocation of public funds,

• Behaviour contrary to probity or to the principles of objectivity, efficacy and full submission to the statutes and the law.

To prevent and to alert about conducts by personnel and senior officers that results or might result in:Irregular allocation or use of public funds, or Any other appropriation in breach of the legal system, that involves:• Conflict of interests,• Use for private advantage of

information they possess by reason of their functions, and/or

• Abuse in the exercise of those functions.

GENERAL COMPETENCES

The Anti-Fraud Office| Purpose

At the request of the Parliamentary Committee or the president of Parliament or the bodies pertaining to Institutions laid down in the Statute of Autonomy, it can investigate Government activity and public funds management of the Parliament and such other institutions laid down in the Statute of Autonomy.

At the request of Parliamentary investigation committees or the Deputies’ Statute Commission, it can collaborate in drawing up verdicts on matters in which there are signs of irregular use or allocation of public funds, or illegitimate use for private advantage from the public status of a post.

SPECIFIC INVESTIGATIVE COMPETENCES

The Anti-Fraud Office| CollaborationDuty to Collaborate With the Anti-Fraud Office of Catalonia

• Administrations, bodies, entities, institutions, etc. as well as private individuals or legal entities included in the sphere of action of the AFO must collaborate with it.

• Infringement of such duty might result in:• Express notation in the Anti-Fraud Office annual report.• Eventual responsibilities laid down under current legislation.

Reciprocal Duty of the Anti-Fraud Office of Catalonia to Collaborate With

• Any institution or body with competences in monitoring, supervising and safeguarding public and private legal persons.

• Judicial authorities.• Public Prosecutor’s Office.

• Since 2011, 24 referrals have been sent to the Public Prosecutor’s Office, 11 dropped, 6 filed with the Court, of which 1 is in oral trial phase, 5 in preliminary proceedings; the rest are being investigated by the Public Prosecutor’s Office.

• Circuit in reverse: 10 AFO investigations have been initiated by communications from the PPO stating that there might be administrative irregularities.

• 8 reports submitted to the PPO and Courts as a part of the duty to collaborate.

The Anti-Fraud Office| Sphere of action

Act 14/2008 on the Anti-Fraud Office of CataloniaArticle 2

November 5, 2008

AFO Sphere of Action

Concession-holders

Subcontractors

Recipients of grants

Private Foundations & Consortia

Public Sector

The Anti-Fraud Office| Sphere of action

Act 14/2008 on the Anti-Fraud Office of CataloniaArticle 2

November 5, 2008

8 public universities.

* Source: 2014 Generalitat de Catalunya Budget.** Source: Register of Local Entities of Catalonia.

Generalitat

Local Entities

Public Universitie

s

PUBLIC SECTOR OF CATALONIA

Respecting its autonomy

(constitutionally recognized)

Including, in its case, their dependent:• Public bodies or

entities• Public companies• Foundations• Consortia

4 Provinces.41 Regions.947 Municipalities.1037 bodies, entities, companies, foundations & consortia* majority owned, or where the majority of directors are appointed by local entities**.

Government.Parliament.190 bodies, entities, companies, foundations & consortia* majority owned, or where the majority of directors are appointed by the Generalitat.

The Anti-Fraud Office | Limits to its sphere of actionExternal controlling bodies• Non-collision with functions fulfilled by external administrative monitoring

institutions such as:• General Inspectorate of the Government Catalonia. • Síndic de Greuges (Ombudsman).• Sindicatura de Comptes (Accounts Inspectorate).• Tribunal de Comptes (Court of Auditors).• Other:

• Equivalent institutions for monitoring, supervision and safeguarding of instrumental public companies and private individuals.

• Those institutions pertaining to the necessary or complementary local entities monitoring bodies.

Judicial authorities / Public Prosecutor’s Office / Judicial Police• Exclusion of their competences.• To avoid investigating cases they are investigating: Knowledge of their

investigation imply the Anti-Fraud Office of Catalonia must:• Halt such investigation.• Furnish all information in its possession.• Provide support.

The Anti-Fraud Office| Investigative powers Following a check on the likelihood of the facts, it can carry out, among other ordinary actions

such as request documents, certificates or reports, the following:

Inspection visits, without prior notice, to any office or centre coming under a public service in order to carry out on-the-spot

checks or to examine documents kept on any medium.

Personal interviews with anybody who might provide information relevant to the investigation that is under way or

with those persons who may have had an individual involvement in the events investigated by the Anti-Fraud Office.

Access to the information of banking entities related to current accounts that might have been used for making payments or

provisions of funds related with public contract award procedures or the granting of public subsidies, by means of the

appropriate summons.

Access to the Register of Assets and Interests of the Generalitat de Catalunya

Access to the Land Register and the Trade and Companies Register (cooperation agreement signed with the Registers’

Governing body).

Actions in exercise of investigative powers 2013 201

2

Requests of documents 174 116

Requests to Public Registers 34 20

Personal Interviews 15 13

Inspection Visits 3 4

The Anti-Fraud Office| InvestigationReporting and detection

Receive complaints aboutpublic servants and citizensDetect suspicious activities

Prior determination of plausibility

InvestigationGoverning principles

Discretion and confidentialityDiligence and speedProporcionality

Results of the investigationEvidence of wrongdoing

Communication to Prosecutor’s Office

or Judicial or Administrative

Authorities

Administrative irregularities,

propose disciplinary proceedings

Reasoned report to

Pertinent body

Non-punishable behaviour

Recommendations to

Pertinent body

Absence of supporting evidence

Case dropped

Case dropped

Whistle-blower protection

Adopt preventive measures

Reservation of identity

The Anti-Fraud Office| Result of proceedingsSTATUS OF THE INVESTIGATIONS’ PROCEEDINGS PER PUBLIC SECTOR (ANNUAL REPORT 2013)

Affected Public Sector2012 2013

Not concluded Initiated Concluded Not concluded

Generalitat de Catalunya 21 5 11 15

Local Entities 52 39 30 61

Public Universities 2 1 1 2

Total 75 45 42 78

Reasoned reports49%

Recommendations8%

Communications to the Administra-tive Authority

24%

Communications to the Public Prosecutor

19%

Results of the Investigations’ Proceedings concluded on 2013 and not dropped

The Anti-Fraud Office| Result of proceedings

Result of the Investigations’ Proceedings Concluded

2011 2012 2013

Communication to the Public Prosecutor’s Office 6 6 12Communication to the competent Administrative Authority

- 2 15

Reasoned reports 13 21 30Reasoned recommendations 3 14 5Cases dropped 6 17 8Total 28 60 70

Public procurement 13Public service 10Conflicts of interest and incompatibilities 7Planning and development 6Public grants 1Public Resources Management 1

Public Procurement 2Public service 1Public Grants 1Public Funds Management 1

Public Procurement 4Public service 3Public Grants 2Planning and Development 2Conflicts of interest and incompatibilities 1

Reasoned Recommendations Law 14/2008, November 5th, Art. 21. Result of the proceedings, paragraph 3

Chapter V. Authority to issue guidelines. Article 31

«The Anti-Fraud Office can send reasoned recommendations to the government of the Generalitat suggesting the alteration, cancellation or incorporation of criteria for the purpose of avoiding dysfunctions or administrative practices that could be improved upon, within the cases and areas of risk of detected irregular conduct.»

«The Anti-Fraud Office, by means of recommendations, makes suggestions to government departments, and to the natural persons and entities and private companies included within its sphere of action, for modification, cancellation or incorporation of criteria that can prevent dysfunctions or improve certain practices, within the hypotheses and areas of risk of irregular conduct noted as a result of the action taken by the Office.»

Result of the Investigations’ Proceedings

2013 2012 2011

Reasoned recommendations 5 14 3

Specific reasoned recommendations (I)

• It is recommended the amendment of art. 2 of the Decree 52/2005 that creates and regulates the registry of collaboration and cooperation agreements to include the registration and control of agreements signed by public entities with private entities (only the registration between public entities is foreseen).

• This recommendation’s aim is:– To minimize the possibility of duplicity in the object of the agreement.– To facilitate the control of grants and subsidies.– To increase transparency.

Addressed to: Presidency Department of the Generalitat.Area: Public Grants.Date: October 2012.

• The application of the legally foreseen possibility to attribute directly a grant or subsidy to a beneficiary, which implies avoidance of prior publication in official journals and competition must be duly justified in detail in the file.

• The attribution of a grant or subsidy directly to a beneficiary does not exclude the obligation to publish ex-post in official journals the notice of its attribution.

• If a grant or subsidy if attributed to a beneficiary by means of a public/private agreement, the file of its approval process must include a report justifying its background, objectives, as well as legal and economic reports on the means of control, the reciprocal duties assumed and, in its case, the costs assumed by the administration.

Addressed to: Department of Culture of the Generalitat.Area: Public Grants.Date: September 2013.

Specific reasoned recommendations (II)Addressed to: Department of Governance and Institutional Relations of the Generalitat.Area: Conflict of interests.Date: May 2012.• Ex-ante control: It is recommended to establish a control ex-ante of possible conflict

of interests and incompatibilities of appointed high public officials, foreseeing their declaration at the Registry of Activities of those professional activities performed before the appointment (the law does not currently foreseen this aspect).

• It is also recommended the definition of conflict of interests, defining in a more specific manner the incompatibilities regime and the abstention causes.

• We consider necessary to define the “conflict of interest” concept including a comprehensive and more severe regulation of incompatibilities and causes and situations to abstain from.

Addressed to: Department of Governance and Institutional Relations of the Generalitat.Area: Conflict of interests.Date: July 2012.

• Ex-post control: The Anti-Fraud Office of Catalonia deems necessary:– To foresee exceptions to the maximum 2-year term after leaving the public post,

to which private activities are forbidden within certain limits, in cases which the effects of its intervention or the public knowledge is posterior. That term may be insufficient.

– A broader limitation of private activities is deemed necessary.• It’s also convenient to strengthen the independence of the administrative body

competent in controlling incompatibilities.

Specific reasoned recommendations (III)

Addressed to: Department of Justice of the Generalitat.Area: Other.Date: May 2012.

• It is recommended the regulatory development of the Law 7/2006 of the practice of liberal professions and professional associations and/or societies, in particular: – The law imposes the obligation to issue to the Catalan Government the annual

report of management amongst other data. Means to fulfill this obligation must but hasn’t been developed by regulations.

– In the investigated case, it was proven that the report was not available.

• It is recommended to the Catalan Government and the Interior Department and Governance and Institutional Relations the adoption, according to art. 61.4 of the Law 7/2007 of the Basic Statute of the Public Employee of Catalonia to appoint the School of Public Administration of Catalonia as a central for the selection of public employees through the creation of permanent and specialized bodies for the organization of the selection procedures.

• This recommendation’s aim is:– To minimize the avoidance of the principles of capacity and merit when selecting

public employees.– To ensure the objectivity and independence of the selecting body.

Addressed to: Department of Governance and Institutional Relations, and Department of the Interior of the Generalitat.Area: Public Service.Date: November 2011.

Specific reasoned recommendations (IV)

Addressed to: Department of Justice of the Generalitat.Area: Other.Date: May 2012.

• It is recommended the regulatory development of the Law 7/2006 of the practice of liberal professions and professional associations and/or societies, in particular: – The law imposes the obligation to issue to the Catalan Government the annual

report of management amongst other data. Means to fulfill this obligation must but hasn’t been developed by regulations.

– In the investigated case, it was proven that the report was not available.

• It is recommended to implement rotation of the public servants in charge of public procurement to avoid their exposure and contact to economic operators.

• Objective parameters must be defined so it is possible to decide when an offer is abnormally low.– When a tender is identified as likely to be abnormally low, the economic operator

must be allowed to explain the offer and its costs, avoiding the automatic labelling as abnormally low.

• To enhance competition, the division of large contracts into lots is encouraged. Such division must be duly justified in a legal report.

Addressed to: Department of Justice of the Interior of the Generalitat.Area: Public Procurement.Date: February 2014.

The Anti-Fraud Office | PreventionLEGAL

REPORT

S FOR LEGISLATIVE

INITIATIVES

TRAINING

Thank youMerci beaucoup

tfranch@antifrau.cat | www.antifrau.cat

Annual Report: http://antifrau.cat/images/stories/documentos/documents_pdf/memoria_2013/Memoria_2013_English.pdf

Name of your presentation

Numerus apertus checklist (I)Phase Threats Vulnerabilities Red Flags Remedies

Preparation Specification

Lock outs Lack of know-how Inadequate evaluation or planning of needs.Defective or no previous definition of the project.Artificial creation of goods or services.Vague specsAmbiguous specsVery detailed specifications (discrimination)Broad object of the contract (discrimination)Questionable or incorrect procedure

Training

Publication of Call Info leak LeaksLack of know-how

Info requests before dateTimingInadequate publicationLack of publication on official website

Training

Submission of proposals

Collusion Rules not applied Small # proposalsPerfect proposalsShort deadlinesIncomplete proposalsLay-out & signaturesLow number of proposals compared with requests for information

Enforcement

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Numerus apertus checklist (II)

Phase Threats Vulnerabilities Red Flags Remedies

Evaluation and Negotiation

Conflict of Interests Non-implement. # calls evaluatedInadequate steps to prevent conflict of interests – Lack of coordination between administrative bodies and also with judicial authorities to provide informationIndividuals involved (conflict of interest, non-suitable individuals)TimingAmendments, handwritten correctionsUndocumented procedures (negotiated procedure without publication of contract notice may hide a direct allocation) Abnormal price distribution of props.Introduction of subcriteria

Declaration

Implementation False doc. Time-sheets # contractsNon-original invoicesUndetailed invoicesChange of invoicing criteria or item descriptionIncomplete projectsDe facto amendment of projects

Monitoring

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Sensitive Areas & Prevention Mechanisms

• Sensitive areas:• Careful scrutiny of the preparation of specifications

phase: Domino effect.• Defective preparation may be the 1st indicator of

actual corruption. Otherwise facilitates it.• Proper and extensive use of online information

procedures.

• Best prevention mechanisms:– Rotation.– Interaction between internal auditors & external

auditors and investigators:• To raise awareness.• To provide technical support.