The new legal framework for public integrity following the Whistleblowers Directive and Order HFP 1030/2021. The role of Anti-Fraud Agencies
On September 29, the Ministry of Finance and Public Function approved Order 1030/2021 configuring the management of the Recovery, Transformation and Resilience Plan, PRTR in the future, with the aim that The Public Administrations adapt the management procedures and the control model in accordance with the standards required by the European Union both from the formal and operational point of view. and all this is limited exclusively to the management of European funds.
According to the aforementioned Ministerial Order, the procedures to which it refers must contemplate the requirements established to achieve effective equality between men and women, territorial cohesion, respect for the environment, incentives for digitalization, the fight against fraud and corruption, and must be identified. the ultimate beneficiaries of the aid, as well as contractors and subcontractors. The Order itself thus recognizes that the requirements stated are not contemplated in the Spanish public administrations, immersed in their dynamics of “traditional management”, with the scope required by the European Union, and therefore must necessarily be introduced in order to achieve the objectives planned for the implementation of the funds from the NextGeneration Programme (EU). In other words, and as far as the fight against fraud and corruption is concerned, the Order would say:
- That Spanish Public Administrations lack mechanisms comparable to the minimum standards required by the EU in the fight against fraud, corruption and conflicts of interest.
- That the area to which the aforementioned Order is addressed is exclusively to the management of the European funds of the PRTR.
- That the rest of the funds and especially the own funds whose origin is the taxes of all Spaniards, being outside the scope of the Order, do not interest anti-fraud plans and can continue to be managed in the “traditional” way.
The Ministry of Finance and Public Function itself recognizes as true that the Spanish State lacks a global strategy to prevent and combat fraud and corruption and it is discouraging that this opportunity to extend anti-fraud plans to all public activity regardless of the origin of the public resources that are managed is missed. Moreover, the arrival of European funds and the demands for guarantees by the EU for an effective, efficient management free of fraud and corruption, would be a magnificent opportunity for Spain to approach European standards in terms of the fight for integrity and public ethics and good practices in our public sector.
The Ministerial Order, despite being so unambitious, has raised surprises and controversies exacerbated by the very short period granted to the administrations to present their respective anti-fraud plans: 90 days that expire at the end of this month of January. Part of this period has elapsed with the recipients wondering what an anti-fraud plan is, how it is done and who executes it. For public administrations, the Order creates new functions that must be integrated into a terrible civil service context, of staff decimated by the limitations imposed by the postery budget laws to the great crisis of 2008 that over the years have created a great gap in the transmission of knowledge and in the generational renewal of the institutional human factor. In this context, any new burden without solving these shortcomings implies further straining public organizations that, lacking selection processes, renewal and training of career officials have had to resort to outsourcing or the figure of interims who have become precarious. especially the local, regional and to a lesser extent the state administrations.
In this context, all those administrations or related public entities that are going to manage or execute PRTR funds must have, within the aforementioned period of 90 days, their corresponding Plan of anti-fraud measures that allows them to guarantee and declare that, in their respective field of action, the funds have been used in accordance with the applicable rules and in particular with regard to prevention, detection and correction of fraud, corruption and conflicts of interest.
For the purposes of defining the concepts of fraud, corruption and conflict of interest, the Ministerial Order refers to the EU’s own rules and in particular to its Directive 2017/1371 which limits corruption to the conduct of bribery or bribery of officials in its broadest sense which includes the authorities themselves; fraud, referring to the conduct of deception and falsehood carried out by the beneficiaries of the funds in their justifications; and the conflict of interest to the existence of a particular interest that prevails and influences the general interest by diverting the action of officials and authorities from their public objectives. To these behaviors, we must add the others typified in our criminal code as crimes against the public administration, especially embezzlement, influence peddling, negotiations prohibited to officials or prevarication itself.
The Order establishes a methodology based on a test model that starts with the declaration at the highest level of each public administration of its firm commitment to the fight against fraud and corruption; a self-assessment where the specific risks, their impact and probability of occurring in the key processes of the development and execution of the PRTR are identified. with a follow-up of periodic review; and a structure around four elements of the so-called anti-fraud cycle: prevention, detection, correction of irregular conduct, prosecution and recovery of improperly executed funds.
Likewise, it is inferred, although partially, in principles and foundations that are typical of integrity plans such as transparency, the existence of a code of ethics and conduct for the entire organization; the provision of training on public ethics to its employees and authorities; and the existence of procedures to identify and resolve conflicts of interest. In this sense, the Valencian Anti-Fraud Agency has prepared, published and made available to all Public Administrations basic materials such as the “Guide to develop a Public Integrity Plan: Roadmap and Facilitating Annexes“ that together with previous works of the Agency such as “ Reflections on conflicts of interest: their ignorance, the prelude to corruption” or the General Recommendation on “Planning as a key tool to prevent corruption” are important contributions to promote more ambitious integrity plans among Public Administrations and dependent entities and consistent with the principle of the right of all citizens to good administration and with the IV Open Government Plan 2020-2024 whose main axes include the construction of a system of public integrity that strengthens ethical values and mechanisms that strengthen integrity in public institutions and strengthen the trust of citizens.
Going into more specific aspects related to integrity plans and anti-fraud measures, special mention should be made of the obligation to create channels or channels through which any person from the organization itself or external to it, who has knowledge of an irregularity, can report or denounce guaranteeing their indemnity.
This requirement, which entails the need to have a minimum structure responsible for receiving and examining complaints and proposing measures, links Order HFP1030/2021 without intending it with another rule of extraordinary importance, Directive (EU) 2019/1937 of the European Parliament and of the Council, of October 23, 2019, on the protection of persons who report on infringements of Union law, also known as the Whistleblowers Directive (“whistleblower” in colloquial English) whose deadline for transposition into our national law expired on December 17 without that until the time of writing these lines, has already reached the Congress of Deputies no bill for transposition.
Consequently, and after the two-year period that Spain had to make the transposition without it having been carried out, and in application of old and rebutted jurisprudence of the Court of Justice of the European Union, the direct effect occurs. for the application of the same, which implies that the law emanating from the Europeo Parliament has already come to generar obligations enforceable for Spain and, what is equally important, has also created and recognises rights for citizens who, on the basis of this direct effect, can demand them and directly invoke the Directive before the national and European courts which, in any event, must interpret the judicial application of the national rules in accordance with the principles proclaimed by the Directive not yet transposed.
Unlike the limited and transitory impact of the Order that, as we have said, is limited to the Public Administrations that are going to receive funds from the PRTR, the Directive extends its effects permanently and to all Public Administrations without any distinction except when the State legislates, at the time of the which may optionally leave out of its application municipalities of less than 10,000 inhabitants. Consequently, as soon as there is no transposition, the direct effect of the Directive binds all local authorities regardless of the number of inhabitants they have.
The Directive recognises that public complaints and disclosures are one of the components at the root of compliance with Union law and policies as they provide information to national and European systems responsible for the application of the law, which in turn makes it possible to effectively detect, investigate and prosecute breaches of Union law, thus improving transparency. , accountability and defence of the Union’s financial interests.
The Directive considers that persons working in or in contact with a public or private organisation in the context of their work activities are often the first to know of the threats or harm to the public interest that arise in that context and that in reporting or reporting such threats they play a key role in preventing and uncovering such infringements while protecting interests and well-being. of society. However, potential whistleblowers often give up reporting or reporting for fear of reprisals, or because the channels for channeling complaints are unreliable and do not deserve trust, or even because they think that the complaint will compromise them and in the end will be of no use. Indeed, if we closely examine the multitude of cases of corruption in Spain, there is not a single one that could not have been denounced in time, either by the “traditional” control systems or by the very work environment where they occurred. Causes that we can consider attributable to a culture of permissibility with corruption that has much to do with its historical systemic character in Spanish politics, have led to the dominance of the “law of silence”, to look the other way, to take advantage of the perks derived from keeping silent or simply to be afraid of reprisals if the duty to denounce was faced.
The Directive aims to put an end to these situations and to create an environment where the participation of the employees themselves and interested parties in the detection and discovery of infringements affecting the public interest can be carried out with all the guarantees for their indemnity ensuring their effective protection.
The material areas to which the Directive expressly refers are first and foremost public procurement. It is clear that, in the history of corruption in Spain, public procurement occupies a prominent place that influences the execution of budgets and the efficient use of public resources. The special characteristics of contracts for works, supplies or provision of services, as well as public concessions, make it very difficult to detect fraud and corruption that continuously cause serious damage to the general interest, as they distort competition, increase costs, discourage investment in innovation, violate the interests of shareholders and investors and generate inequality between companies condemning the most efficient and law-abiding companies to lose positions in an economic area as important as public procurement, which accounts for between 17 and 20% of GDP in Spain. An important study carried out by professors Francisco Alcalá and Fernando Jiménez establishes that between 1 and 1.5% of the national GDP is lost due to corruption or bad government and illustrates how the quality of government institutions and the control of corruption are fundamental pieces for the economic development of countries, all the more so the more advanced their economies are. Institutional weakness and corruption not only have a negative impact on a country’s politics and coexistence. They also have an economic cost that goes beyond the amount of unduly appropriate public funds, as they deteriorate key elements of the functioning of an economy. Corruption and low institutional quality discourage entrepreneurship, innovation, competition and effort. These factors translate into lower productivity, higher unemployment and lower wages than would be possible with available technology and capital.
There are also other areas on which the Directive acts and which are not the Public Administrations themselves. These are strategic sectors considered to be of vital importance for the interests of the Union, such as financial services, the importance of which has become apparent in the wake of the great financial crisis and the serious shortcomings of the system; also products placed on the market by undertakings operating in manufacturing and distribution chains in respect of unsafe products, abusive or unlawful practices; transport safety which may endanger human lives; protection of the environment threatened by serious imbalances; prevention and deterrence of infringements of nuclear safety and radiation protection; food chain safety and farming, animal health and welfare; public health and consumer protection; as well as in any non-performing activity which may affect expenditure, revenue collection and other Union funds or assets.
For all these areas, the Directive is fully applicable when companies have 50 or more employees and establishes the obligation to enable channels and channels of denunciation, internal and external, with express prohibition of re-enactment or harm the to the professional career of those who denounce. As an added guarantee, the external channels that must be managed by the competent authorities in each area, allows the employee to go directly to these authorities when the internal channel is not reliable or after sending the corresponding complaint it has not worked properly.
The reporting channels involve setting up specialized units in the context of public administrations, as well as companies in the areas covered by the Directive with the function of receiving complaints, analyzing and investigating them by activating the correction mechanisms and, where appropriate, reporting to the competent authorities for the prosecution of the perpetrators of infringements of the Law and accountability.
The Directive also requires the institutionalisation of independent authorities to ensure the protection of whistleblowers, to ensure that there are no reprisals against them and, where appropriate, to punish by means of proportionate sanctions conduct that contravenes the obligation to respect their indemnity. In this context, the Spanish State should have advanced, but lacking a strategy to prevent and combat corruption as it should have been implemented at least since 2006, the year that Spain ratified the United Nations Convention against Corruption, done in New York on October 31, 2003, it has turned out that spain’s institutions and public authorities have not fully and effectively integrated into their structures the commitments arising from that convention, including those to create bodies for prevention (articles 5 and 6 of that convention) and for the fight against fraud and corruption (article 36) endowed with sufficient material and human resources independent of the public authorities. as well as those to protect at the state level people who denounce corruption; or introduce, among other obligations, the crime of illicit enrichment whose absence in our criminal system facilitates that many corrupt people get away with the cases against them or are lightly convicted of mere tax offenses.
Faced with this absence of a state strategy against corruption, some regional parliaments such as the Valencian, catalan, Balearic or Andalusian, relying on the mandates of the aforementioned Convention and the recommendations of the European Union (which in 1999 already created its own Office for the fight against corruption, OLAF) and even ahead of the Whistleblowers Directive itself, they adopted their own rules. In the case of the Valencian parliament, which in 2016 approved its law on the prevention and fight against corruption and created the Valencian Anti-Fraud Agency AVAF as an independent authority, attached to the parliament itself, responsible for preventing corrupt conduct, training, analyzing and investigating irregularities and applying when necessary, the Statute of the Whistleblower (art. 14 of the aforementioned law and 41 and following of its Regulations) to protect all those who denounce irregularities that may entail responsibilities in the field of Valencian administrations, their public sectors, contracting companies or recipients of public funds. To do this, since 2018 the whistleblowing channel accessible by anyone from the network has been operating, easy to use that guarantees confidentiality and even allows anonymity. Likewise, the power to protect people who report has been applied in 26 cases since 2017 and more than 100 people have been legally assisted, mainly public employees representing each of them experiences that confirm that corruption continues to be a latent risk in each of our administrations. and that protecting those who, in the performance of their duty, report the existence of irregularities, is the cornerstone of any anti-corruption system. In addition, the AVAF has established protocols with administrations such as the city council of Valencia or the Provincial Council of Castellón to facilitate the implementation of its integrity plans, complaints boxes and training of its officials. For its part, the Andalusian parliament also approved the creation of its anti-fraud office, thereby guaranteeing the existence of a whistleblowing channel and an authority for the protection of people who report corruption.
The delay, if not inactivity with which the Spanish State acts on an issue as important as the fight against corruption, is regrettable. Let us hope that sooner rather than later we will see the Whistleblowers Directive transposed in advanced terms that follow in the wake of the autonomous communities that have already done so and we will also see the United Nations Convention against Corruption applied to its full extent. Had it acted in this way, it would not have been necessary to improvise a Ministerial Order such as HFP 1030/2021, since all Public Administrations would already have their respective integrity plans and therefore their own plans for anti-fraud measures for a long time.
Joan Antoni Llinares Gómez
Director of the Agency for the Prevention and Fight against Fraud and Corruption of the Valencian Community.
* This article has been published in the “European Compliance & News” magazine of the European Association of Lawyers and Economists in Compliance (AEAEC) in its January 12, 2022 issue.
 Order HFP/1030/2021, of 29 September https://www.boe.es/buscar/doc.php?id=BOE-A-2021-15860
 According to the European Commission “the program NextGenerationEU it is more than a recovery plan. It is a unique opportunity to emerge stronger from the pandemic, transform our economy and create opportunities and jobs for that Europe in which we want to live. We have everything you need to do it. We have the vision, we have the plan and we have agreed to invest 806.9 billion euros together.”.
 These materials are public and accessible through the AVAF website: https://www.antifraucv.es/wp-content/uploads/2021/11/Guia_avaf_plan_de_integridad_publica.pdf