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Evaluation of OLAF's activities
Three years after the creation of the European Anti-Fraud Office, the Commission has evaluated its activities, as required by the legislation. It takes the opportunity to set out a number of recommendations for improving the Office's performance. Its proposals include setting up a registry, producing a corpus of administrative rules, applying information procedures in a uniform manner, strengthening working methods and the role of the Supervisory Committee, and developing the intelligence function.
Commission Report of 2 April 2003 on the evaluation of the activities of the European Anti-Fraud Office (OLAF) [COM(2003) 154 final -- Not published in the Official Journal].
As required by Regulation (EC) No 1073/1999 and Regulation (Euratom) No 1074/1999, on which the work of the European Anti-Fraud Office (OLAF) is based, the Commission, in the third year following their entry into force, presented a progress report on the Office's activities.
The report not only contains an overall assessment of OLAF's activities, as the title suggests, but also makes recommendations for improving its work. It reviews various aspects: OLAF's operational function, the general tasks of the Commission and OLAF's hybrid status.
The Commission looks at the impact of anti-fraud activities on the protection of the Union's financial interests, sound implementation of the budget, and healthy and rigorous financial management. The report covers the period from June 1999 to December 2002, which takes in the conversion of the former Unit for the Coordination of Fraud Prevention into OLAF as it is now.
The Office's operational task: a new approach
The Office was entrusted with on-the-spot checks and inspections in the Member States or non-EU countries (external investigations) and with the power to conduct investigations in all European Community institutions and bodies (internal investigations). It was given operational independence. This section of the report reviews internal and external investigations, the partnership with the Member States, legal assistance and judicial expertise, and cooperation at international and European Union level.
The interinstitutional agreement of 1999 between the European Parliament, the Council and the Commission extended the scope of internal investigations. However, only these three institutions have signed it. The Commission invites the other institutions and bodies to accede to it.
The new internal investigation arrangements gave rise to several disputes which were all decided in favour of the Commission. For example, the Court of First Instance rejected a case brought by 71 Members of the European Parliament who considered that the agreement undermined their parliamentary immunity and independence. Likewise, in 2002 the Advocate-General of the Court of Justice recommended the annulment of the European Central Bank (ECB) and European Investment Bank (EIB) decisions which the Commission had considered incompatible with the basic Regulations on anti-fraud investigations.
The Commission would like to see internal administrative rules established for the implementation of internal and external investigation measures to govern procedures and provide a high level of guarantee to the people concerned.
On the question of immunities, the Commission considers that it would be worth simplifying the current practice by stating clearly which authority would have the power to waive the duty of discretion or to waive immunity when the final investigation report is referred to the judicial authority.
External investigations cover not only investigations conducted by the Community outside its institutions and bodies but also investigations conducted at national level at the Community's request or with its involvement.
OLAF's reports in such cases may serve as the preparatory phase for prosecutions in national courts. In the absence of a specific cooperation instrument, the Commission considers that the Office must be able to use the various existing legal bases to carry out its investigations and that it must adapt its operational activity and develop its intelligence resources so as to make the best use of the existing legal instruments.
The Commission also considers it useful to continue the debate on the scope of external investigations, in view of the gaps which exist with respect to cooperation and coordination with the national authorities and administrative assistance and with respect to the legal means available to the Community to strengthen the protection of financial interests as regards direct expenditure. It proposes expanding the facilities for cooperation/assistance in the fields of transnational VAT, money laundering and possibly other areas. It would also like to reinforce Community powers of anti-fraud investigation.
In exercising its external powers of investigation, the Office has come up against certain difficulties related to the refusal to cooperate in terms of access to documentation. The Commission recommends that a comparative analysis be undertaken in this area so that more effective mechanisms can be prepared.
The Commission's assessment of the partnership with the Member States is positive. It recommends that the Office consider the case for extending the memoranda of understanding concluded with authorities in the Member States and developing its strategic intelligence function. This function would lead to the creation of a platform of services to better present the range of activities undertaken by the Office and to propose an inventory of the expertise available.
OLAF has encountered some difficulties in relation to legal assistance and judicial expertise. To resolve them, the Commission considers that the reporting obligation under certain sectoral Regulations should be extended to all external investigations and to the judicial follow-up to internal investigations. In the absence of Community powers of criminal prosecution, cooperation instruments should be developed. The Commission therefore invites the Council to adopt the proposal for a Directive which seeks to reinforce the criminal-law protection of the Community's financial interests through the approximation of national legislation. It would also like to see the ratification by the Member States of the Second Protocol to the Convention on the Protection of the Communities' Financial Interests.
As regards the coordination of Community action, there is a desire to improve it and the Commission proposes extending implementation of interdepartmental memoranda of agreement, in particular with departments that manage Community funds. The Internal Audit Service and the Joint Research Centre have already signed an arrangement and the Directorate-General for Employment and Social Affairs and the Cooperation Office (AIDCO) are in the process of doing so.
There are other disciplinary authorities with powers of investigation, although the Commission confirms that OLAF has priority in this area. Nevertheless, it recommends concluding memoranda of understanding reserving intervention by the Office for the detection of serious facts liable to be treated as serious economic or financial offences. The same coordination instruments are recommended for OLAF's relations with other institutions and bodies.
At the international and European Union levels, the Commission notes the signing of cooperation agreements with Europol and Eurojust in 2003. As regards relations with non-EU countries, it recommends continuing the negotiation of international agreements on mutual administrative assistance in customs matters, with a view to reinforcing exchange of information and cooperation. It also recommends including anti-counterfeiting provisions in cooperation, association and pre-accession agreements. Memoranda of understanding could also be signed with other non-EU countries.
The Commission's general tasks: a specific expertise of the Office
The Office is responsible for preparing decisions, for developing and implementing projects and for implementing the Commission's decisions. Its responsibilities range beyond the protection of the Community's financial interests to all activities connected with safeguarding Community interests from illegal conduct against which administrative or criminal proceedings may be brought.
For the anti-fraud strategy, the Commission recommends that the Office draw up its work programme, taking account of the guidelines and contributions of the institutions in connection with the fight against fraud. It considers that it can determine the broad lines of anti-fraud policy and contribute to the development of guidelines for the Office's operational strategy without affecting the Office's operational independence.
On the subject of prevention, the Commission highlights the Office's useful contribution. The Office provides regular support to other departments. It has also produced a practical guide on professional ethics, and its expertise may be particularly useful in assisting the new Member States in the fight against fraud.
As regards anti-fraud legislation, the Commission recommends examining the possibility of introducing Community administrative penalties in other areas besides the common agricultural policy and harmonising penalties in the customs field.
In order to strengthen the legal dimension, the Commission calls on the Convention on the future of the European Union to accept its proposal for the establishment of a European Prosecutor in the constitutional part of the Treaty. It feels that the Office's expertise brings added value to the preparation of legislative proposals in its field.
The Commission finds that the technical assistance provided by the Office improves administrative and financial follow-up. The Office makes a specific contribution to cooperation with the Member States, supports their national investigations and contributes to improving the training of their officials.
With respect to its representation and cooperation function, the Commission considers that OLAF must undertake a regular evaluation of the mechanisms provided for by the regulations so that it can better assess the need for adjustments. The Commission also recommends the development of cooperation with all national authorities involved in fraud prevention. In addition, the role of the Anti-fraud Advisory Committee, chaired by OLAF within the Commission, should be updated in order to develop the judicial dimension and the function of channel of communication with the police and judicial authorities.
An independent and internal service: hybrid status
The adoption of a special status for OLAF secured compatibility between its functional independence and its position as a Commission department.
With regard to its organisation and staff, the Commission recommends that OLAF define its own staff management policy in the interests of transparency.
The Supervisory Committee had asked that OLAF enjoy greater budgetary autonomy. None the less, the new Financial Regulation (June 2002) confirms that the budgetary regime applicable to the Anti-Fraud Office is attached to the Commission.
In the field of information and communication activities, the Commission notes variable practices which may engender uncertainties. For example, it considers that the possibility of delaying information to the person involved should be accompanied by procedures for informing the competent authorities so that they can give their agreement on the basis of at least a modicum of information. The Commission also stresses the need to improve information exchanges regarding internal and external investigations, primarily through standardised practice. It welcomes the Office's intention to develop the adoption of standardised practices with regard to the relevant national authorities, to all the institutions and bodies and to the persons involved in order to guarantee uniform application of information procedures. The Commission considers that it is necessary to improve information exchanges regarding internal and external investigations in full compliance with the rules applicable to the Office's activities.
The Commission also recommends that a communication unit be established to manage requests for information sent to the Office and to assist the Director.
As regards access to documents, by its Decision 2001/937/EC, ECSC, Euratom of 5 December 2001 amending its rules of procedure, the Commission adopted special provisions covering among other things the procedure to be followed for access to OLAF documents. OLAF's Director is responsible for confirmatory applications. The Director's decision requires the prior agreement of the Commission's Legal Service.
With respect to the administrative side of reviewing the investigation function, the Commission endorses the proposal by the Supervisory Committee to set up a registry within the Office to generate more rigorous management and greater transparency. It also notes that OLAF's investigations can affect the individual rights of the persons concerned, stresses the importance of reviewing the operations carried out in an investigation and refers to the different types of review which may be applied in the context of OLAF's hybrid status.
The Commission concludes that any change of strategy would be premature and would engender additional costs, that consolidation of the Office is a priority and that it is too early to call into question the situation that has emerged from the reform of 1999. The current arrangements allow economies of scale to be made and ensure greater effectiveness and visibility. Moreover, the difficulties encountered in the transition period are gradually diminishing. To consolidate the Office, the Commission believes that a period of institutional stability is needed.