“Influence peddling” is the use of position or political influence on someone's behalf in exchange for money or favours. It is often used as a modus operandi in order to secure EU financing. It is also known by the name “traffic of influence”. It is often associated with corruption practices.
Influence peddling is also subject to international obligations by the Member States of the EU in their capacity of members of the Council of Europe and the United nations, as follows:
Article 12 – Trading in influence, Criminal Law Convention on Corruption of the Council of Europe
Each Party shall adopt such legislative and other measures as may be necessary to establish as criminal offences under its domestic law, when committed intentionally, the promising, giving or offering, directly or indirectly, of any undue advantage to anyone who asserts or confirms that he or she is able to exert an improper influence over the decision-making of any person referred to in Articles 2, 4 to 6 and 9 to 11 in consideration thereof, whether the undue advantage is for himself or herself or for anyone else, as well as the request, receipt or the acceptance of the offer or the promise of such an advantage, in consideration of that influence, whether or not the influence is exerted or whether or not the supposed influence leads to the intended result.
Article 18. Trading in influence, United Nations convention against corruption
Each State Party shall consider adopting such legislative and other measures as may be necessary to establish as criminal offences, when committed intentionally:
(a) The promise, offering or giving to a public official or any other per-son, directly or indirectly, of an undue advantage in order that the public official or the person abuse his or her real or supposed influence with a view to obtaining from an administration or public authority of the State Party an undue advantage for the original instigator of the act or for any other person;
(b) The solicitation or acceptance by a public official or any other person, directly or indirectly, of an undue advantage for himself or herself or for another person in order that the public official or the person abuse his or her real or supposed influence with a view to obtaining from an administration or public authority of the State Party an undue advantage.
Source: Art. 12 Trading in influence of the Criminal Law Convention on Corruption of the Council of Europe
Source: Art. 18 Trading in influence of the United Nations Convention on Corruption
An Integrity Pact is both a signed document and approach to public contracting which commits a contracting authority and bidders to comply with best practice and maximum transparency. A third actor, usually a civil society organisation, monitors the process and commitments made. Integrity Pacts are developed as a tool for preventing corruption in public contracting.
The European Commission's Directorate-General for Regional and Urban Policy (DG REGIO) and Transparency International have joined forces since 2015 to promote the use of Integrity Pacts (IP) as a tool to increase transparency and accountability, enhance citizens’ engagement and trust in public institutions, bring cost savings and improve competition and promote awareness and better understanding of public procurement.
The intentional conduct (intent) is the subjective state of the mind that must accompany the acts of certain crimes to constitute an infringement of the law. The Latin phrase actus reus non facit reum nisi mens sit rea means that "the act is not culpable unless the mind is guilty".
This is the major difference between irregularities with EU funds, which constitute a non-intentional violation of the rules and fraud with EU funds which constitutes a criminal offence because of the presence of intentional conduct.
All PIF offences required intentional conduct in order to be prosecuted. According to the PIF Directive 2017/1371 Member States shall take the necessary measures to ensure that fraud affecting the Union's financial interests constitutes a criminal offence when committed intentionally.
Example: Irregularity occurs when the beneficiary involuntarily does not follow correctly a specific rule applicable to the implementation of its project.
Example: Fraud occurs when the beneficiary intentionally presents a falsified document in order to obtain a bigger grant under a EU scheme.
Source: Art. 3 (1) of the PIF Directive 2017/1371
The European Anti-Fraud Office (OLAF) is mandated to detect, investigate and stop fraud with EU funds in order to protect the financial interests of the European Union. This control function is performed through two types of investigations – internal – within the EU institutions, offices and agencies and external – within the territory of the Member States, third countries and within the premises of international organizations.
When performing external investigations OLAF shall exercise the power conferred on the Commission by Regulation (EURATOM, EC) No 2185/96 to carry out on-the-spot checks and inspections in the Member States and, in accordance with the cooperation and mutual assistance agreements and any other legal instrument in force, in third countries and on the premises of international organisations. With a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union in connection with a grant agreement or decision or a contract concerning Union funding, the Office may, in accordance with the provisions and procedures laid down by Regulation (EURATOM, EC) No 2185/96, conduct on-the-spot checks and inspections on economic operators.
When performing internal investigations OLAF shall carry out administrative control activity within the institutions, bodies, offices and agencies of the European Union. Those internal investigations shall be conducted in accordance with the conditions set out in Regulation 883/2013 as amended by Regulation 2020/2223 and in the decisions adopted by the respective institution, body, office or agency. In accordance with the provisions and procedures laid down by Regulation (EURATOM, EC) No 2185/96, the Office may carry out on-the-spot checks and inspections at the premises of economic operators in order to obtain access to information relevant to the matter under internal investigation within the institutions, bodies, offices and agencies.
Source: Art. 3 and 4 of Regulation 883/2013 as amended by Regulation 2020/2223
“Irregularity” means any breach of Union law, or of national law relating to its application, resulting from an act or omission by an economic operator involved in the implementation of EU Funds, which has, or would have, the effect of prejudicing the budget of the Union by charging an unjustified item of expenditure to the budget of the Union.
Irregularities may stem from action or lack of action (i.e. ‘an act or an omission’) and may be categorized according to whether they
Irregularities may be detected by any competent national (Managing authority, Certifying Authority, Audit Authority, AFCOS, Court) or EU (Commission services, OLAF, European Court of Auditor, other) authority. An irregularity may occur at any moment in the project cycle, from programming through to audit, ex-post monitoring or evaluation.
EU legislation requires Member States to report cases of irregularities and suspected fraud which have been the subject of a primary administrative or judicial finding (premier acte de constat administratif ou judiciaire —PACA)
Source: Art. 1 (2) of Regulation 2988/95
Source: Art. 2 (36) of CPR Regulation 1303/2013