The Office investigates several hundred cases each year where the EU is being cheated out of revenue or its funds have been misused. Fraud against the EU’s Structural Funds, which finance farming, social policy projects and regional development, is the biggest single category of fraud that OLAF has to fight.
Identifying smuggled goods is a job for OLAF.
In 2006, OLAF recovered €113m in total in fraud cases. Twenty people were sent to prison in 2006 as a result of judicial follow-up by EU countries of fraud uncovered by OLAF.
OLAF’s mission
OLAF’s mission is to protect the financial interests of the European Union, to fight fraud, corruption and any other illegal activity. This also includes any financial misconduct within the European institutions, though such instances are few.
OLAF officials have extensive powers of investigation. They can carry out on-the-spot checks on business premises in EU members and in some other countries as well. For the time being, OLAF cannot bring cases to court, referring them instead to the national authorities in the country where the apparent fraud has occurred. However, in future, there could be a European Public Prosecutor’s Office, which would prosecute cases directly in any member state where a case involved the EU’s financial interests.
OLAF has cooperation agreements with many countries from the United States to Uzbekistan, from China to Chile, and has close links with Europol (the European Police Office), and Eurojust, the agency set up to improve coordination of the fight against serious crime.
A hub in the fight against fraud
Watch out for the fakes.
One of OLAF’s key roles is coordination. By sitting at the centre of the investigative network, OLAF can ensure that there is a continuous chain of action along very different national investigative and judicial systems. A coordination centre in Brussels for joint customs operations led by OLAF or a member state provides technical and logistical facilities 24 hours a day, seven days a week, with real-time coordination across the EU.
Technology is vital in OLAF’s work. Information is exchanged through the EU’s Customs Information System, in which customs, police, coastguards, agricultural and public health services pool sensitive data in real time in a single database, and an Anti-Fraud Information System through which hundreds of thousands of messages are exchanged each year.
Operation Diabolo
The centre was used in April 2007 for Operation 'Diabolo' targeting counterfeit cigarettes. OLAF coordinated this operation. It involved 27 member states, Interpol, Europol, and the World Customs Organization. This operation uncovered 135 million counterfeit branded cigarettes and more than half a million other counterfeit items, including clothing, mobile phones as well as undeclared poultry meat. If the smugglers had been successful, they would have avoided €220 million in customs duties and excise taxes on the cigarettes alone.
Stopping the cigarette smugglers
Avoidance of excise and customs duties on cigarettes, generally by smuggling, is one of the major areas of fraud which OLAF has to tackle. In a single operation in March 2008, in coordination with the authorities of Germany and Poland, nearly seven million cigarettes, nearly €3 million in cash and nine kilos of gold and jewellery were seized.
OLAF and ten member states have an Anti-Contraband and Anti-Counterfeit Agreement with the cigarette manufacturer Philip Morris International which could lead to them receiving up to $1 billion between 2004 and 2015 to fund the fight against cigarette smuggling. €425m was paid in the first three years. It was split across ten member states which lost revenue as a result of the smuggling. Nearly half went to Germany and Italy.
Keeping an eye out for fake euro coins
OLAF is also in charge of the European Technical & Scientific Centre, which analyses counterfeit coins and is housed in the Paris Mint. More than 200,000 fake euro coins were found in 2007. It sounds like a lot, but is small compared to 75 billion coins in circulation and is fewer in relative terms than the number of counterfeits found in these countries before they had the euro. The coin most popular with counterfeiters is the 2-euro, accounting for over 85% of the total counterfeits in 2007.
