Be your own captain, sailor, and ship

When a Beneficiary thinks of conflict of interest, the first thing that comes to mind is the principle of competitiveness and the two basic requirements of not awarding contracts to entities with capital and personal links and ensuring that persons performing activities related to the contractor selection procedure on behalf of the contracting authority have no personal or capital links with contractors who have submitted tenders. They should be impartial and objective persons.

Meanwhile, the conflict of interest should first be considered in relation to the activity of the Intermediate Body or the Managing Authority, as they are the architects of the system of distributing EU funds. These institutions establish descriptions of priority axes, regulations of competitions, select projects for co-financing, conclude agreements, control the implementation of these agreements, but also impose corrections, terminate agreements and carry out fund recovery.

Outline of EU regulations on avoidance of conflicts of interestWith these considerations in mind, the EU legislator, in Article 61(1) of the Financial Regulation[1], has prohibited persons or national bodies taking part in the implementation of the budget under direct, indirect and shared management, including the related preparatory actions, as well as audit and control, from taking any action which may bring their own interests into conflict with those of the Union. They must also take appropriate measures to prevent conflicts of interest from arising in the functions under their responsibility and to respond to situations which may objectively be perceived as conflicts of interest.

In refining the concept of conflict of interest, the EU legislator adopts in Article 61(3) of the Financial Regulation that a conflict of interest exists where the impartial and objective exercise of the functions of a financial actor or other person, as referred to in paragraph 1, is compromised for reasons involving family, emotional life, political affinity or connection with any country, economic interest or any other direct or indirect personal interest.

Recognising that the avoidance of conflicts of interest is of fundamental importance, the European Commission, building on the above-mentioned regulations from the Financial Regulation, has developed Guidelines on the avoidance and management of conflicts of interest under the Financial Regulation (2021/C 121/01) Referring to the definition of conflict of interest under Art. 61 of the Financial Regulation, the Guidelines specify that a conflict of interest may arise even where the person concerned does not actually benefit from the situation – it is sufficient that the circumstances would jeopardise the impartial and objective performance of the functions entrusted to him/her. Such circumstances must, however, have a specific, identifiable, individual connection with (or impact on) specific aspects of the person’s conduct, behaviour or relationships.

The scope of the regulations on avoidance of conflicts of interest coversentities authorised for financial action as well as other persons (at EU or national level), including national authorities, insofar as they participate in the implementation, at any level, of the EU budget under direct, indirect and shared management (including preparatory actions, audits or controls).

The Guidelines indicate that for assessing the personal scope of conflict of interest regulations, in addition to the degree of participation in the decision-making process, other important aspects such as the nature and importance of the duties performed (including whether they are political, administrative, legislative or executive), existing functional or hierarchical links, the nature of the decision-making process and its transparency and openness to public scrutiny should also be taken into account, as they affect the objective perception of conflict of interest.

The Guidelines emphasise that the activities of persons or entities entitled to financial action should be impartial and inspire public confidence, and that any action or action that frustrates these objectives can be seen as a conflict of interest.

The interest must be significant enough to be perceived as likely to ‘compromise’ the ‘impartial and objective performance of the function’.

The Guidelines recognise that the greater the responsibility and accountability, the greater the interest or the greater the participation in budget execution, the greater the likelihood of an alleged conflict of interest.

Amongst other things, the Guidelines highlight the use of the authority of those responsible for the management of funds affecting the broader interests of those individuals.

If it appears that the impartial judgement of a person involved in the implementation of the EU budget may be impeded by vested interests, either by favouring a particular choice or by being overly critical or hostile in order to avoid being accused of favouritism, the situation should be addressed immediately before it could lead to any unlawful action.

Meanwhile in Poland, the EU legislator is preparing extensive regulations on avoiding conflicts of interest, while in the Vistula River in a Certain Regional IZETECE these regulations have not been adopted.

This Pewna Regionalna IZETKA has in its ranks an orchestra man, a person of many talents, simply a Renaissance man – the Director of a Certain Department in Pewna Regionalna IZETKA.

The tasks of a Certain Department in a Certain Regional IZETKA, at the head of which this Director stands, include the following.:

1. preparing project selection criteria,
2. verifying and accepting competition regulations and annexes,
3. providing explanations on the content of competition regulations,
4. accepting information on changes in competition and non-competition projects issuing
5. opinions on draft resolutions prepared by the IB for the Voivodeship Board meetings containing lists of projects directed for funding under individual competitions and their changes
6. monitoring the evaluation process,

1. selection of projects, signing and implementation of co-financing agreements under the competition and non-competition mode, except for financial matters, development and updating of implementation documents,
2. coordination of matters related to the development, updating of implementation documents, including:

1. • MA implementing instructions, implementing instructions submitted by IB and their approval,
   • Description of Functions and Procedures
   • ,
   • Detailed description of Priority Axes
   • , templates of contracts and decisions on co-financing projects from ESF and ERDF,
   • template of agreement on co-financing a project implemented by state budgetary unit co-financed from ESF and ERDF,

1. • application form for co-financing
   • monitoring the recovery process as well as pending court and administrative cases under the Operational Programme,
2. conducting matters related to the implementation and closure of Operational Programmes implemented under the 2014-2020 Perspective,
3. giving opinions and accepting the Rules of Procedure for the work of the Project Evaluation Committee and its amendments
4. preparing proposals for areas to be covered by the Annual Plan of Systemic Controls of Operational Programmes,

1. preparing draft replies to controls and audits covering the Operational Programmes,
2. handling matters related to irregularities detected under the Operational Programmes, analysing results of controls and audits, preliminary administrative findings, other documents on the implementation of the Operational Programmes in terms of irregularities,

1. conducting administrative appeal proceedings – examining appeals of beneficiaries against administrative decisions issued by the IB and issuing decisions in the second instance on the authority of the Voivodship Board and preparing answers to the complaints of beneficiaries to the Voivodship Administrative Court in Warsaw and submitting them to the Voivodship Board for approval, as well as forwarding the complaints together with the case files to the Voivodship Administrative Court in Warsaw

.

In addition, the tasks of the Certain Department of the Regional IZETKA also include the formal assessment of candidates for experts.

In turn, the Director of a Certain Department of a Certain Regional IZETKA and his deputies are members of the Qualification Committee, whose tasks include substantive evaluation of candidates for experts, expansion of the areas within which the expert will conduct the evaluation (and thus increases the chances of higher remuneration for the expert), application for deletion of a negatively evaluated expert from the list.

SummaryIt follows from the above summary that the Director of a Certain Department of a Certain IZETKA exercises direct or indirect supervision over the development of assumptions of Operational Programmes, participates in the selection of experts who evaluate projects in the course of competitions or in the course of their relations, participates in the development of control planning submissions, conducts administrative appeal proceedings and issues decisions.

The accumulation of so many functions of importance for the implementation of operational programmes in one hand should be assessed unequivocally negatively.

Serious doubts should be raised concerning the permissibility, in the light of the abovementioned EU regulations, of the overlapping of tasks relating to programming, project monitoring and control, the identification of irregularities and the recovery of funds.

Such a large accumulation of competences in one hand, also raises serious doubts as to the impartiality of persons directly or indirectly subordinate to this Director.

This second category of persons also includes experts evaluating projects at the competition stage or their subsequent implementation. Opinions of experts often constitute the basis for conducting inspections (or are prepared in the course of them) or terminating contracts with Beneficiaries, and are subsequently evaluated in the course of administrative proceedings, including appeal proceedings conducted by the aforementioned Director.

The separation of the aforementioned functions should therefore be postulated, in particular with regard to the selection and evaluation of experts and adjudicatory activities.

In the context of reimbursement proceedings, the issue of issuing administrative decisions in appeal proceedings under the authority of the Regional Board is particularly interesting. This topic is so momentous that I will discuss it in my next post. cont....[1] Regulation (EU, Euratom) No 1046/2018 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 966/2012 (Official Journal of the EU of 30.07.2018, L 193/1, hereinafter the “Financial Regulation”);Author: Michał Dróżdż