Strasbourg, 11 October 2013

Suspected fraud cases at EYF

In its effort to become increasingly transparent while also aiming for more effective use and impact of grants, the European Youth Foundation would like to inform its stakeholders (Council of Europe member States, NGOs and members of the statutory organs) of serious irregularities revealed by the Secretariat when analysing the financial documentation submitted by some youth organisations.

The irregularities discovered relate to the presentation of false statements or documents and resulted in the misappropriation of EYF funds (approximately € 50,000) by 12 NGOs from certain member States, out of total 700 grants, given to approximately 500 NGOs.

Zero Tolerance

The EYF will pursue a policy of zero tolerance and is determined to fight fraud and other irregularities. Local authorities have been informed and asked to investigate cases in which there appear to have been cases of fraud.  

Strengthening fraud control

EYF has strengthened its management of grants by taking the following decisions:

• reviewing the Operational Regulations of the European Youth Foundation (as from 1 January 2013): article 31 and article 32 address issues related to obligations, sanctions and reimbursement;
• informing the representative of the country concerned in the CDEJ and consulting with the National Youth Council (when existing) in respect of suspected fraud cases in that country;
• field monitoring: unannounced visits to projects;
• cooperating closely with local authorities if/when needed: authorities will not be asked to supervise the work of NGOs or audit their financial activities but are asked to investigate whether documents submitted are in compliance with domestic law and in case of suspected fraud, bring the facts to the attention of the Public Prosecutor's Office with a view to launching a criminal investigation.

Sanctions applied in case of fraud

1. Grant reimbursement in full due to fraud.
2. Exclusion of NGO from application process (suspension of the right to submit applications for financial support for all those who have been proven to have committed acts of fraud).
3. Warning given to youth NGOs, private and public donors, national governments and other stakeholders about defrauding NGOs.

Impact of fraud

Some of the impacts of fraud:

• loss of reputation;
• loss of funding;
• loss of trust;
• loss of credibility;
• perceived lack of accountability;
• perceived lack of transparency.

Fraud is especially harmful for the NGO sector as credibility is one of its main mechanisms for functioning.

In the European Youth Foundation's case, fraud can have a snowball effect, affecting everyone. For this reason we ask all our beneficiaries, partners and friends to come forward and directly contact us, if aware of any cases of suspected fraud.