Essential Reading for Enforcers: The EIB Fraud Investigation Unit and CPS Inspectorate Reports

Enforcing the anticorruption laws is the backbone of the fight against corruption, and improving enforcement agencies’ performance is thus critical.  Two recent reports, one by the European Investment Bank’s Fraud Investigation Unit and a second by the Inspectorate of the United Kingdom’s Crown Prosecution Service, offer a wealth of data, analysis, and tips from which all enforcement agencies can profit.  Highlights from each below.

Fraud Investigations Activity Report 2018.  This latest report of the EIB’s Fraud Investigations Unit documents the Unit’s fight against fraud and corruption in projects funded by the lending arm of the European Union, the world’s largest development finance agency. Compliance and investigative personnel in other bilateral and multilateral financial institutions will find much useful data for benchmarking their performance against the EIB unit. Case studies of different fraud and corruption schemes it has uncovered will help investigators in other institutions spot similar types of wrongdoing.

Most interesting to this reader was the description of the Proactive Integrity Reviews (PIRs) the Fraud Investigation Unit conducts.  All active operations in the Bank’s portfolio are scored each year against 30 risk factors to identify corruption and fraud vulnerabilities, and a PIR conducted on two or three of the operations most at risk.  Of the 27 projects subjected to a PIR, the unit found five, almost 20 percent, where funds have been misused.

Would a similar intensive review of a small number of World Bank, Asian, Inter-American, or African Development Bank produce similar numbers?  Will the new United States International Development Finance Corporation follow the EIB’s lead and institute a similar review?

Case Progression in the Serious Fraud Office. The Serious Fraud Office is the United Kingdom’s version of an anticorruption agency, with investigators, accountants, IT specialists, and prosecutors who work in teams to investigate complex fraud and corruption cases.  Case progression is the U.K. term to describe the time it takes for a team to reach a conclusion about a case, from opening an investigation to a decision either to file a criminal charge or to drop the matter altogether. The Crown Prosecution Service Inspectorate recently examined the procedures the SFO uses to ensure cases move through the system in a timely manner.  Other anticorruption agencies wanting to improve their performance will find a wealth of useful information and practical tips. Some of the key observations:

* Recognize that in a lengthy case there will be staff turnover. Maintain a key documents folder for those joining the team so they can get up to speed quickly.

* A unit with the technical skill to decrypt and download data kept on cell phones, computers, and other electronic devices is essential.  But realize that decryption can take enormous time.  Don’t overload the unit by seizing equipment of only secondary or passing interest.

* Periodic review of the progress of each case is essential to ensure deadlines for achieving key objectives or stages in the case are set, and met, and unfruitful lines of investigation abandoned. The SFO exercises oversight in several ways.  How each one works and suggestions for improving each will be of value to any anticorruption enforcement authority.

* The average number of days from the acceptance of a case to charging has been reduced from 41 months to 38 months, or 7.5%.

4 thoughts on “Essential Reading for Enforcers: The EIB Fraud Investigation Unit and CPS Inspectorate Reports

  1. Thank you for the amazing and very useful post. The coordination of law enforcement agents is crucial to handle complex anticorruption cases efficiently. The report about the Serious Fraud Office activities provides great lessons to everyone who works in this area. However, I think it is also relevant to highlight that in some countries, like in Brazil, the slow-moving progression of complex anticorruption cases happens also and especially in judicial proceedings before courts, after the end of investigations. Brazilian authorities have been trying to improve the system speed, through informatization, for example, but I do not see meaningful achievements in the anticorruption field.

  2. Detecting suspicious corrupt activity through quantitative measures sounds very interesting. While I am not aware of the details, I wonder whether aggregating 30 different risk factors is not necessarily random? How could anyone formulate the correct aggregation method? It would be interesting to see whether in the future, as more cases pile up, they may move to use learning algorithms to address this potential problem

  3. Thank you so much for flagging these useful and timely resources for those looking at ways to monitor corruption more precisely and develop a starting toolkit for best practices. I realize that the point of your post was to give quick overviews of these tools but I had a few questions about how they are used by the organizations that employ them. For example, the EIB Fraud Investigation Unit 2018 report, through its use of PIRs, reveals misuse of funds in about 20% of projects but I would like to know how are those project relationships altered going forward to prevent further abuse? Are projects stopped or perpetrating parties punished in some way? I am also curious to see if upon examining PIRs, the team found common trends that showed where the misuse of funds took place, meaning at what stage of the project, with what type of personnel, etc. Finally, like Haggai. I would also like to know more about the data used to come up with comprehensive risk factors that could be used to apply to diverse countries and contexts.

  4. Just a quick note on the first key observation – stating the obvious is still so important, a.k.a maintain documentation. No matter what gains are made in paperless governance, there is no substitute for indexed and updated documents folders. In a very different iteration, access to and maintaining documents remain the key enabling step for social audits, carried out by village councils to detect frauds and wrongdoing on government welfare expenditure in India.

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