The Customs Control Equipment Instrument:
An Incentive to Buy European while Using EU Funds in Line with the Rule of Law
Hybrid conference in the European Parliament in Strasbourg, 19 December 2024
Press Release
Albert Einstein: “The world will not be destroyed by those who do evil, but by those who watch them without doing anything”
(Quoted by former EIB Inspector General Jan Willem van der Kaaij during the hybrid conference in the EP on potential misuse of the 1 bn Euro CCEI fund)
The growth of ‘single bidding’ for the annual 2 trillion euro in European Union public procurement (14% of EU’s GDP) has risen from 23.5% in 2011 to 41.8% in 2021. According to Utrecht University’s Dr Vitezslav Titl – expert of Transparency International – this reflects increasing conflicts of interest around firms with political connections. Former Inspector General of the European Investment Bank Jan Willem van der Kaaij refers to ‘single bidding’ as ‘direct awards’ actions. Referring to obvious Red Flags that must inspire EU authorities to act, Mr Van der Kaaij said: “Decision makers may have undisclosed relationships with contractors or may be incentivized to direct contracts to companies in which they have a personal or financial stake. This creates a higher risk of conflicts of interest that could result in incorrect behaviour. … The lack of competition, transparency and external oversight in ‘direct awards’ increases the likelihood of fraud and corruption. This environment of secrecy and lesser transparency, together with a wider than usual field of discretion for contracting authorities, tends itself to become a fertile ground for protectionism, corruption and inefficient use of public resources.” Taking note of the case of up to 100 million euro of EU funds to be spent by Bulgaria on customs control scanning equipment at EU borders after the fall from grace of Chinese producer Nuctech, Mr Van der Kaaij remarks that the Bulgarian argumentation to choose a ‘direct award’ system for this customs control equipment under the disguise of ‘intelligence use’ is by itself “by far not sufficient”. By consequence, he said, “if there is any doubt about the integrity of the process”, he “strongly recommend[s] redoing the whole procedure with the application of an open public procurement.”
The Bulgarian border scanning equipment case
In 2022, the European Commission signed with the Bulgarian Customs Agency (BCA) a Grant Agreement under the project CCEI 2021-BG-BCAROSS – 101079791. In August 2023 the BCA published an open public procurement procedure for this project. In January 2024, following two review procedures requested by competing bidders, the BCA Contract Notice was annulled by Decision 486/16.01.2024 of the Supreme Administrative Court of Bulgaria. However, instead of complying with the ruling, adapting and relaunching the open public procurement procedure, the BCA instead decided to (i) cancel the open procedure, (ii) classify the project, (iii) categorise the CCEI equipment as such for ‘intelligence activities’, thereby excluding the applicability of Directive 2014/24/EU (as transposed into national law), (iv) use Art. 13 “Specific exclusions”, (b) “contracts for the purposes of intelligence activities” of the European Defence and Security Directive 2009/81/EU, and (v) start a secretive non-transparent and non-competitive acquisition, in what may be seen as an attempt to avoid public/political scrutiny: on 4 June 2024 the BCA contracted a company with zero experience in the production, supply and maintenance of border scanning equipment.
As a Member of the Bulgarian Parliament, Martin Dimitrov is proud that Bulgaria will be a ‘Schengen’ country as of January 2025. “This is good news for the entire transport sector within the Community as important transport routes from Asia to Europe pass through Bulgaria. Measures for increased security, including at the borders, cannot come at the cost of reducing transparency, limiting competition, and classifying public procurement. The good practice so far in Bulgaria and the EU has been to have a competitive procedure for selecting a contractor when purchasing scanners, which are relatively standard technical equipment. If we agree that such procedures should be classified, there is a risk that similar approaches may be applied to other standard technical equipment.” Bulgarian Member of the European Parliament Radan Kanev: “We are facing caretaker governments each six months. That is making our country extremely unstable at very important times when we take on the huge responsibility of being the external Schengen border of the European Union. … Bulgaria, with all its procedures and decisions, is affecting everyone in the biggest free movement space in the world which is also the wealthiest and most vulnerable.” Both Bulgarian politicians, struggling to help form a new government after 8 elections in 4 years, point at the importance of requiring Bulgaria to be as transparent and as correct as possible when using EU funds: both to positively inspire the Bulgarian nation and to discourage, as MP Dimitrov stated, “hybrid threats from Russia”. Both called on the European Commission to intensify the scrutiny of EU Funds use in Bulgaria: “The price for achieving more security in the EU cannot be non-transparent procedures because practice shows that the results of such an approach are undesirable. The European Commission can play an important role in this process by more firmly linking the allocation of European funds to the transparency and competitiveness procedures.” Besides, MEP Kanev added: “Security technologies that surround us must be Europe-made and Europe-controlled and Europe-regulated”. This remark was echoed by all speakers.
During the hybrid urgency meeting on Thursday 19th December in the European Parliament all expert speakers from politics, science and anti-fraud and corruption practice called on the European Commission to act on the events in Bulgaria and possibly other countries, particularly in view of several impactful questions from the participants. In answer to a German question, Dr Titl confirmed that AI in 90% of the procurement cases appears to correctly predict corruption through the identification of all relationships between all relevant actors. This is all the more important because one of the questions from the audience remained unaddressed. It was alleged that the Bulgarian authorities awarded the multimillion contract to a company that is accused of leaking personal data of opposition leaders to Belarusian authorities.
While supporting the guidance of former EIB Inspector General Van der Kaaij regarding the redoing of the whole Bulgarian process through an open public procurement, Member of the European Parliament Wouter Beke concluded: “At the heart of European unity is the Rule of Law.” He referred to grey zones emerging when EU laws are perhaps ineffectively transposed in national legislation. “The emerging EU customs authority aims to address these gaps. … These grey zones require us to identify and correct misguided actions by both Member States and the European Commission. Countries like Bulgaria struggle with the Rule of Law and several EU Member States exhibit a lack of transparency and enforcement of laws, weakening public trust in the European Union and opening doors for autocratic influences. Restoring faith in equality, fairness, legal certainty is imperative for the European Council, for the Parliament and for the European Commission. …. As President Ursula von der Leyen stated before the European Parliament on 18th July, and I quote, “Respecting the Rule of Law is a must for the use of EU funds”.
Conference documents
- Press release on potential abuse of CCEI 1 bn euro fund for EU border scanning equipment
- Speech Jan Willem van der Kaaij
- PowerPoint Dr Vitezslav Titl
- Speech Wouter Beke MEP
On 9 October 2023 the hybrid conference ‘Data Security of Customs Equipment at the Dutch and EU Borders‘ was organized at the press center of the Dutch Second Chamber in The Hague, The Netherlands. Click here for the conference report on ‘Nuctech’s customs control equipment leaks to Beijing and Moscow – The available EU funds should be used to procure European alternatives’