How to avoid and manage situations of conflict of interests Laurentiu Costin Legal Officer European Commission DG Budget Why avoid conflicts of interests Protect sound financial management ID: 1028920
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1. For better use of EU fundsHow to avoid and manage situations of conflict of interestsLaurentiu Costin, Legal Officer European CommissionDG Budget
2. Why avoid conflicts of interests?Protect sound financial management of EU fundsEnsure impartiality of staff involved in the implementation of EU fundsPreserve public trust in EU and national administrations
3. What is a conflict of interests?Regulation EU 2018/1046 of 18 July 2018: the Financial RegulationDefinition: ‘where the impartial and objective exercise of the functions … is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other direct or indirect personal interest’Also: ‘situations which may be objectively perceived as a conflict of interests’‘Perception’ comes from Procurement Directive 2014/24 (01/01/2016)‘Objectively’ (added in Financial Regulation): verifiable (auditable) link between the functions and the personal interest
4. Who is concerned?Financial actors and other persons, including national authorities at any level, involved in budget implementation under direct, indirect and shared management, including acts preparatory thereto, audit or control.In shared management:National, regional and local authorities, staff or members of these authorities including government members.Involvement in the implementation of EU funds: importance of the functions and the ‘proximity with decision making process’.
5. Obligations for those concernedRefrain from action which may bring a person’s interests into conflict with those of the UnionPrevent conflict of interests from arising in the functions under a person’s responsibilityAddress situations which may objectively be perceived as conflict of interestsProcedure if member of EU staff or national authority is concerned:Information of hierarchical superior - confirmation - cessation of activities - further action
6. Shared management: who does what?Member States to act first:Establish internal control systems including avoidance of conflict of interest, and audit these systemsEstablish prevention measures (e.g. declaration of absence of conflict of interests, assets disclosure)Establish whether a conflict of interest exists in a given case and apply mitigation measures if conflict is confirmedCommission to:Monitor conformity of national systems with EU requirementsAudit Member State internal control systems (on risk basis)Apply appropriate measures to protect the Union budget: suspension of payments, correctionsif breaches of applicable law are identified
7. Examples of mitigating measuresRestrictions on ancillary employmentDeclaration of personal and family incomeDeclaration of personal and family assetsPublic disclosure of income and assetsRecusal and routine withdrawal from public dutyPersonal and family restrictions on property titles of private companiesDivestments (sale of business or blind trust)
8. ConclusionCompliance with EU rules on conflict of interests when Member States implement EU funds is a shared responsibility (interplay EU law - national law)Need for guidance to create a level playing field for the protection of EU funds in all Member StatesImportance of further exchanges of best practices