Overview of

Risk Mitigation Measures

to Target Corruption Risk

EEA & Norway Grants 2009-2014

 Overview of Risk Mitigation Measures to Target Corruption Risk

March 2015

Table of Contents

1. Purpose of this document ......................................................................................................................................... 3

2. Aligning anti-corruption measures with the Regulations ......................................................................................... 3
3. Country-level risk mitigation measures .................................................................................................................... 5
3.1. Improve capacity and expertise to prevent and detect corrupt practices ....................................................... 5
3.2. Establishment of an effective complaint mechanism and whistleblower protection policy ............................ 6
4. Programme-level risk mitigation measures .............................................................................................................. 7
4.1. Targeted auditing to address identified corruption risks and increased transparency of auditing ................. 7
4.2. Strengthening the selection procedure ............................................................................................................ 8
4.3. Additional monitoring of corruption risk during programme implementation .............................................. 10
5. Project-level risk mitigation measures.................................................................................................................... 11
5.1. Strengthening oversight of procurement by project promoters .................................................................... 11

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1. Purpose of this document
This document provides an overview of possible mitigation measures targeting corruption risk, for use primarily by National Focal
Points (NFPs) and Programme Operators (POs) in the EEA/Norway grants Beneficiary States. As part of the ongoing framework
agreement for collaboration with Transparency International, TI have contributed to the preparation of these measures to reduce
the risk of corruption. The framework agreement comprises work on the national integrity systems in the Beneficiary States, the
potential use of integrity pacts, carrying out corruption risk assessments in each Beneficiary State and foresees further co-
operation on improving complaint mechanisms. Pointing to relevant challenges that may arise, this overview aims to provide
practical examples of possible risk mitigation actions for anti-corruption planning. It is an entirely voluntary set of measures,
designed to address potential corruption risks affecting the management and implementation of the grants.1

This is not intended as an exhaustive list. The measures are suggestions which can be adopted by NFPs or POs where they fit the
particular circumstances of each country, programme or project. They are not binding on any of the parties named. The relevance
of the different measures will need to be considered on a case by case basis and, where appropriate, may accompany existing
measures or be further developed according to context and level of corruption risk. Feasibility and proportionality are key issues
to be borne in mind.

2. Aligning anti-corruption measures with the Regulations

The existing regulations provide a solid basis for sound management of the grant mechanism. To achieve the donors’ commitment
to zero tolerance against corruption, it is critical to ensure compliance with the regulation and a high level of transparency about
this anti-corruption commitment and the measures taken to implement it. Comprehensive and easily accessible information plays
an important role in curbing corruption, as it allows the public to identify possible cases of malfeasance and make use of available
reporting mechanisms. The Financial Mechanisms set forth Information and Publicity Requirements for the National Focal Points,
Programme Operators and Project Promoters in Annex 4 to the Regulation. This annex provides a list of information to be
published, stating which information should be available online and assigning responsibility for implementation and monitoring.
NFPs and POs should state on their websites what information they are required to publish to allow for easy external oversight
(e.g. by civil society).

Risk management is cascaded through the EEA and Norway Grants. Ownership of risk management is clearly established by level
and area of responsibility set down in the risk management strategy, available at http://eeagrants.org/Who-we-are/How-we-
work/Managing-risk.

Figure 1: Risk management levels of the EEA and Norway Grants 2009-2014

Donor
states

FMO

Country

Programme

Project

At country and programme level, it should be clear who will be in charge of enacting the risk mitigation measures. Mitigation
measures might have to be in part enacted by other national grant management institutions such as the Audit Authority. It is
then important to ensure that the necessary human resources are made available to coordinate the development and

1
This document has been prepared with the support of the Transparency International Secretariat.

Overview of Risk Mitigation Measures to Target Corruption Risk 3 / 12

implementation of the anti-corruption action plans. Resources are available under the financial mechanism to support the
implementation of necessary and relevant measures.

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3. Country-level risk mitigation measures
3.1. Improve capacity and expertise to prevent and detect corrupt practices

Description of and rationale for the measure The National Focal Points carry an overall responsibility for the implementation of the Financial Mechanisms in the
Beneficiary States. This complex task requires a high level of capacity and expertise in terms of recognising the many different
potential corruption risks. It is of utmost importance that staff at all levels and in the various institutions involved, have
sufficient capacity and relevant expertise to detect corrupt practices, and manage this risk in line with the Grants’ policy of
zero tolerance for corruption. The organisation of anti-corruption trainings should thus be considered.
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be appropriate?
Assess the capacity, approach to corruption risk management and compliance NFP All Beneficiary states
of the POs and all other relevant national entities, with a view to
recommending possible support and training; repeat assessment following a
risk-based approach.
Organise capacity building, based on identified needs, such as: NFP In priority to: Participation in training takes time and resources,
- NFP and PO staff participate in anti-corruption training available in - High/ medium corruption risk and should therefore be based on a clear need.
Beneficiary states or online; Beneficiary states; Training workshops could use examples/actual
- Trainings are combined with workshops for discussing issues which - High/ medium corruption risk dilemmas and build on the participants’ experiences.
might not have been officially reported Programmes; An e-learning course is an alternative to face-to-face
- Programmes with pre-defined projects trainings.
with a high corruption risk

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 3.2. Establishment of an effective complaint mechanism and whistleblower protection policy

Description of and rationale for the measure
Risk mitigating measure:
Possible risk mitigating actions:
Assess quality and effectiveness of Complaint Mechanisms, based on criteria
such as:
- criteria and procedures for handling, investigating and reporting
complaints;
- confidentiality;
- the “four eyes principle” (that at least two people verify/approve)
Provide training to staff responsible for handling complaints to ensure staff
understand importance and functioning of complaint mechanism
A Complaint Mechanism plays a critical role in combating corruption, and is required by the Regulation (Art. 11.8). Such a
Complaint Mechanism “shall be capable of effectively processing and deciding on complaints about suspected non-compliance
with the principles of good governance”.
The purpose of the Complaint Mechanism is to ensure that members of the public and any stakeholder wishing to complain or
report irregularities have a simple means of doing so, that their complaint is handled with an open mind and in confidentiality,
and that incidents of mismanagement and corruption are uncovered and corrected.
A visible complaint mechanism complemented by appropriate systems to deal with complaints can help to reduce corruption
risk exposure.
Establish and advertise an effective Complaint Mechanism
Who Where might the risk mitigation Additional considerations
measure/actions be appropriate?
NFP All Beneficiary states
NFP High/ medium corruption risk Beneficiary states Training on complaint mechanism can be provided
along with general capacity building training

Ensure that additional information which may prompt reporting is advertised, NFP All Beneficiary states Clearly stated procedures, statistics and examples of
such as: cases may increase external stakeholders’ trust in the
- description of investigation and follow up procedure; complaint mechanisms and in that reports are
- statistics of received and resolved complaints actually investigated.
Risk mitigating measure: Establish and advertise an effective Whistleblowing Mechanism
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be appropriate?
Establish a whistleblowing mechanism for supporting and advising officials NFP All Beneficiary states
facing incidents of corruption

Advertise whistleblowing mechanism and whistleblower protection policy NFP All Beneficiary states

Provide training to NFP/PO staff regarding whistleblowing mechanism and NFP All Beneficiary states
whistleblower protection policy

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4. Programme-level risk mitigation measures
4.1. Targeted auditing to address identified corruption risks and increased transparency of auditing

Description of and rationale for the measure According to the Regulation (Art. 4.6.1 (a), (b) and (c) audits have to be carried out on national, programme and project level.
Audits performed on national and programme level help to verify the effective functioning of management and control
systems. Audit authorities in each Beneficiary state carry the main responsibility for auditing and also prepare the Audit
Strategy and the Annual Audit Report and opinion (Art. 4.6.1 (d) and (e)).
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be appropriate?
Ensure appropriate follow up to the findings of the audits carried out by the Audit authority
national Audit authority, such as:
- By carrying out additional audits;
- Publishing a list of programmes that have been audited

= Use a sample and a risk based approach to auditing, and publish a list of all NFP
audited programmes

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 4.2. Strengthening the selection procedure

Description of and rationale for the measure One of the cornerstones of the EEA and Norway Grants is the open and transparent nature through which project selection
should take place. The selection procedures are therefore described in detail in chapter 6 of the Regulation. Despite robust
project selection procedures, conflicts of interest may still occur, and corrupt practices are possible, including bribery,
nepotism, collusion and political corruption (based on political affiliation and patronage etc.).
Corruption scenarios that could affect project selection mostly concern the distortion of fair competition between applicants,
including biased choices due to conflicts of interest in the relationship between relevant actors. Importantly, a conflict of
interest only leads to corrupt behaviour if it distorts the impartiality and objectivity of individuals involved in project selection.
Corruption risk is reduced if the conflict of interest is disclosed.
Risk mitigating measure: Managing conflicts of interest
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Based on a set of criteria, assess the precautionary measures taken by the NFP All Beneficiary states, but in
POs to disclose and handle conflicts of interest linked to the selection priority High/ medium corruption
process, such as publication and verification requirements risk Programmes

Develop an example of good practice for precautionary measures and share NFP All Beneficiary states
with POs
Request all parties in the selection process to sign an (annual) “code of PO/PPs This could prevent corruption resulting from economic or financial
conduct”. This would include all parties to provide a formal declaration of conflicts of interest, political affinities, family and emotional ties,
interests (including professional associations and political affiliations) and to or any other relevant shared interests
disclose any possible conflicts of interest in relation to other stakeholders in
the programme

Ensure that the Selection Committee (Art. 6.4) consists of a majority of PO In priority to:
persons external to the Programme Operator - Programmes under
high risk PO;

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 Risk mitigating measure: Monitoring calls for proposals and project selection
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Verify the project selection process is carried out in accordance with the NFP In priority to: Sample or risk-based approach.
Regulation (Art. 6.3-6.5) and no red flags appear, with a focus on: - Programmes under
- Calls for proposals (selective provision of information, biased high risk PO;
information, indication of collusion of PO staff and applicant) - Programmes with pre-
- Compliance with selection criteria (donors left out, changed defined projects with a
rankings of PPs, incomplete reporting) high corruption risk
(with procurements);
- High corruption risk
related to lack of
separation of functions
Increase transparency of the project selection process PO All Beneficiary states

Risk mitigating measure: Enhanced Due diligence

Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Undertake enquiries regarding hidden personal/political connections NFP In priority to: This action is particularly relevant if the Programme Operator and
between winning Project Promoters, Selection Committee members/experts - POs previously Selection Committee/experts do not actively disclose conflict of
and Programme Operator based on provided declaration of interest connected to interests in the project selection phase or has previously been
corruption or linked to corruption
corruption allegations;
- Programmes with pre-
defined projects with a
high corruption risk;
- Programmes under
high risk PO;
- Lack of DPPs

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 4.3. Additional monitoring of corruption risk during programme implementation

Risk mitigating measure: Improved programme monitoring by NFPs and POs

Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Ensure monitoring, e.g.: Programmes without DPP
- Technical meetings; NFP involvement
- Participation as observer in coordination committees or selection
committees;
- Project visits including pre-defined projects
Provide guidance to POs on project budget assessments to prevent financial NFP All beneficiary states Assessments of salaries, travel expenses, per diem allowances,
irregularities workshops, seminars, etc. may call for special attention
Training on public procurement to the POs/PPs NFP All beneficiary states
Training staff on preventing and reporting corrupt practices NFP
Ensure follow up of mitigating actions set out in Programme Agreements NFP
Risk mitigating measure: Ensure more active third party involvement
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Involve third parties (such as expert groups, independent consultants, civil NFPs Programmes rated as High
society) in monitoring the processes of funds distribution and provide them corruption risk, and/or
with sufficient access to information to do so. programmes without DPP
involvement

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5. Project-level risk mitigation measures

5.1. Strengthening oversight of procurement by project promoters

Description of and rationale for the measure The country reports identify Programmes with increased risks concerning procurement processes. In procurement, typical
corruption scenarios involve ties between the contracting authority (procurer) or an institution superior to the contracting
authority, and a bidder. Common practices are the pre-arranged combination of over-pricing and kickbacks regarding contracts
or subcontracts or the exchange of favours. The actual procurement takes place on the project level, and potential risks concern
both pre-defined projects and projects selected through open calls. The focus of risk mitigation measures therefore rests on the
Project Promoter, whose integrity is critical for applying transparent procedures in the entire procurement cycle.
Possible risk mitigating actions: Who Where might the risk mitigation Additional considerations
measure/actions be
appropriate?
Develop good practice of risk assessment and mitigation system to monitor NFP For Programmes with high/ Monitoring public procurement requires significant expertise,
whether PPs have applied adequate and effective measures to prevent medium risk related to public additional capacity may be necessary
corruption in the procurement cycle and share with POs, with a focus on: procurement
- documents to be submitted to PO;
- frequency and time period;
- use of external monitors with sufficient expertise
For Programmes with high/
Verify that POs adhere to shared good practice NFP medium risk related to public
procurement
Verify that Project Promoters comply with the applicable procurement PO For Programmes where grant
rules, indicators of irregularities in procurement may include: allocation, pre-defined projects
- concerns by Donor Project Partners; and/or Programme Operator are
- incomplete reporting; rated as medium/high risk
- non-transparent rationale for procurement decisions;
- complaints by project partners or other stakeholders
Carry out integrity pacts – binding agreements signed by the procuring NFP/ PO In high-risk Beneficiary states, Integrity pacts require a strong commitment on the part of the
entity and all bidders, stipulating that all will refrain from corrupt practices. particularly programmes, where contracting authority. The NFP, Programme Operator and Project
Breaches are penalized financially or by excluding bidders from future grant allocation is rated high risk Promoter would all have to agree to sign the Integrity Pact
tenders and an external monitor plays a key role and which include large
construction projects

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 Enhanced due diligence is carried out, focusing on revealing hidden ties NFP/PO For Programmes where grant Selection of appropriate cases is crucial due to the costs related to
between contracting authority and provider. allocation, pre-defined projects due diligence research.
and/or Programme Operator are
rated as high risk

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