In order to fulfill this item of the program, we are sending an appeal to the competent authorities of the European Union. Since then, the European Anti-Fraud Office (OLAF) has provided us with information regarding the Early Detection and Exclusion System (EDES).
The purpose of EDES is to protect the financial interests of the EU from unreliable business entities. In particular, the European Commission uses EDES to ensure the following actions:
— early identification of a business entity that poses a threat to the financial interests of the European Union;
-imposition of administrative sanctions by excluding unreliable business entities from procedures for receiving Union funds;
— in the most serious cases — publication on the EC website of information related to the exclusion in order to strengthen their deterrent effect (under «deterrent effect» we mean actions that will not allow the above-mentioned entities to receive EU funds in any way).
Business entities included in EDES are excluded from procurement procedures, grants or any other form of financing from the EU budget. 3 they cannot conclude any contract financed from the EU budget.
Grounds for exclusion relate to:
• fraud, corruption, participation in a criminal organization, etc;
• entities created for the purpose of evading fiscal, social or other legal obligations (creation of fictitious companies);
• serious breach of contract;
•serious professional misconduct;
• failure to pay taxes or social security contributions;
• bankruptcy and insolvency.
So, based on the answer, the «Financial Analytics UA» project acts in accordance with EU practice (exclusion criteria) and warns state bodies and society about enterprises in the «risk category» using several similar criteria:
• presence of participation of the business entity and/or its officials in criminal proceedings initiated due to the fact of appropriation/waste of budget funds;
• the presence of journalistic investigations into fraud with budget funds, unscrupulous fulfillment of contract terms, etc.;
• newly created enterprises and those enterprises that changed the type of activity or even the name, just before receiving or for the purpose of receiving a contract (such enterprises have signs of «fictitiousness»).
This is a simple and clear answer to the question why in Ukraine the vast majority of cases of fraud with budget funds, their appropriation and embezzlement are found after the fact, when the budget funds cannot be returned. While this is not possible in the EU countries, as the above shows.
⏩️In the future, we aim to introduce such criteria at the legislative level so that only business entities with a «clean» reputation can use budget funds and funds from Western partners. Implementation of these criteria at the legislative level is an important step on the way to the EU.