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Algirdas Šemeta

EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud

Presentation of anti-fraud and audit agenda

Figures and graphics available in PDF and WORD PROCESSED

European Parliament – Committee on Budgetary Control

Brussels, 31 May 2010

Dear ladies and gentlemen,

I am happy to present today my agenda on discharge, audit and anti-fraud.

I prepared this agenda in the very spirit of developing a genuine partnership with the European Parliament and with your Committee to address the essential objective to improve the protection of the financial interest of the European Union.

This means preventing errors by improving financial management, designing effective control systems and fighting any form of fraud to the EU budget.

This obviously implies that all stakeholders have to play their role and assume their responsibility: the EU institutions and their services but also the Member States.

Regarding first discharge and audit, I would like to focus on the following topics:

We need stronger tools in a revised framework

The risk of errors increases with the complexity of rules. Therefore, following the Court of Auditors recommendations and the discharge authority resolutions, the Commission approved last week the review of the Financial regulation including further simplification on grants and requirements for costs reimbursements.

This will ease the access to EU funding while preserving the sound financial management principles.

For the next generation of programmes, we will analyse the main causes of errors, the costs of control and issue guidance to streamline future legislation.

In this context, a proposal of Tolerable Risk of Error has been adopted last week covering Energy, Transport and Research and Rural development. This will be completed by the other policy areas until 2011. I do believe that this approach based on a concept developed by the Court of Auditors can provide the basis for a more performant and cost/effective control policy adapted to the different programmes.

In parallel, I will promote a qualitative approach toward the EU spending. Eligibility and regularity of transaction are important concerns. But the justification of the EU intervention and the actual delivery of the expected results seem to me equally important. Here we will focus on performance of EU actions and include the necessary objectives and indicators at the same time we design the new spending programmes.

I do intend also to enhance the role of the Commission’s internal audit function as regards the follow up of the discharge recommendations. As chair of the Audit Progress Committee, I have asked the internal audit service to develop a methodology not only to check if the actions designed to reply to the recommendations are implemented but whether the measures taken address effectively the issue and mitigate the risk.

Finally, I have proposed to include in the triennial review of the Financial Regulation a provision enabling to establish European Trust Funds for managing multi-donors contributions in the external policy area such as for emergency assistance. This should give not only more visibility to the Union’s action in the world but also enhance the control on the use of the EU budget in this context.

We need a new Partnership

A new Partnership means that all stakeholders understand their role and assume their responsibility to achieve our common objectives. This will be translated in particular through the requirement of a annual management declaration of assurance from the accredited bodied in the Member States. This declaration will be subject to an opinion of an independent audit body.

In parallel, we will assess the added-value of the annual summaries and national declarations in terms of their contributions to the Commission's general assurance.

The national Supreme Audit Institutions will be invited to be more involved in the control of the execution of the EU budget in the Member States, in the spirit of the Single Audit Model proposed in 2004 by the European Court of Auditors.

Finally, I do support and will collaborate to the organisation of a conference with all main stakeholders dealing with the execution of the EU budget and the discharge procedure as proposed in the 2008 discharge resolution. This could optimally take place at the beginning of 2011.

Improvement of recovery and financial correction

To be able to fully assume its final responsibility on the execution of the EU budget, the Commission needs an effective policy of recovery and financial corrections of amounts unduly paid.

This needs to be reflected in exhaustive and reliable information, not only regarding what the Commission is directly responsible for such as for direct management, but also what the Member States have to do.

Therefore, information on recoveries and financial correction in the accounts will be substantially improved from this year. For agriculture and Structural Funds, the figure are detailed by Member State.

Further efforts will be deployed to improve the information from Member States on their financial corrections: on-the-spot controls, recommendations, training and best practices.

This is a pre-condition if we want that the Court of Auditors takes into account the multiannual dimension of the EU programmes.


I will now turn to the other part of my portfolio: Anti fraud policy and OLAF.

Anti-fraud policy and OLAF have a major role to play in times of financial crisis. It is very important that funds are spent the right way. Irregularities, fraud and corruption have first of all to be prevented, but also to be detected. Funds paid to fraudsters have to be recovered rigorously.

Therefore OLAF needs a lot of my attention and it receives and will receive this attention.

The following points of my agenda which you have received in writing already, I would like to highlight to you today:

First, the Vacancy Notice for the Director (General) of OLAF:

It is important that we move forward quickly in finding the new Director General. The priority is to find the best possible candidate for this post. I will send you during the next days the provisional timetable for the procedure, and I look forward to your active participation in this process.

Second, the (re-)appointment of the Supervisory Committee of OLAF:

I have sent on 25 May 2010 a letter to the European Parliament and to the Council in this respect.

As all members have agreed to a second term, the re-appointment of the present members of the Supervisory Committee could be envisaged. The mandate of the present members of the Supervisory Committee would expire on 30 November 2011. I am confident that we can reach soon a common accord with the European Parliament and the Council on this issue. The selection procedure for a new Supervisory Committee has then to be launched in due time.

Thirdly, the reform of OLAF:

As outlined in my hearing it is a matter of priority to deliver the requested reflection paper on the reform of the legal basis for OLAF. It will be presented to the European Parliament and the Council before this summer break. Based on the dialogue with the European

Parliament and the Council on this reflection paper, the Commission will present an amended proposal.

I do sincerely hope that on this basis the legislative process of the Reform of OLAF can be concluded by the end of 2011.

Fourthly, the further improvement of the efficiency of OLAF:

Apart from the reform of the legal basis of OLAF the Commission will strive for further improvement of the efficiency and effectiveness of OLAF, taking due notice of the reports of the European Parliament, the recommendations of the Supervisory Committee and also of the Court of Auditors (The Court of Auditors is undertaking at the moment a follow-up of its audit report of 2005). To that end, I will also regularly meet with the Supervisory Committee.

I will also follow up the further improvement of the co-operation with the Member States on administrative level and in the context of the reform of the OLAF regulation.

Fifthly, I want to add some words on the preparation of the establishment of the European Public Prosecutor's office (EPPO) for the protection of the financial interests of the EU:

This issue requires in depth discussions to identify the best options for OLAF and the EPPO.

Vice President Reding and myself have asked our respective services to join forces on this project.

The European Parliament will be closely involved in this process. The Commission counts on your support for this major initiative which should lead to a considerable improvement of the protection of the Union's financial interests in the field of law enforcement.

Sixthly, I will see that international co-operation and instruments are re-inforced and further developed.

To efficiently combat fraud, corruption, smuggling of cigarettes and other illegal activities which have by nature a global dimension, the EU and its Member States need a solid international cooperation framework and effective instruments.

I just mention as examples specific anti-fraud and control provisions with regard to a number of Partnership and Co-operation Agreements and Association Agreements, a reinforced cooperation with African states and a closer co-operation with Latin-America, starting with a conference in Panama in October 2010, and the world-wide agreement to combat Illicit Trade in Tobacco Products.

Last, but not least, the fight against tax evasion is of especially high relevance. I will talk to the respective Presidencies of the Council to ensure that this topic stays on the agenda. In this context it is important to finalise the anti-fraud agreement with Liechtenstein1 as soon as possible.

Finally, I would like to come to the Anti-Fraud policy in general:

The co-operation between OLAF and some DGs needs to be further extended throughout the Commission. Some DGs have developed a specific anti-fraud strategy, but not yet all. OLAF has started to prepare risk assessments for geographical regions, but this is only the beginning.

Therefore, a coherent framework for anti-fraud strategies within the Commission will be developed during my mandate which leaves enough room for tailor-made instruments adapted to the individual needs of each DG and service. In the context of the preparation of the next Multi-annual Financial Framework, the overall strategic approach for the fight against fraud has to be reviewed and presented in a new Commission's communication.


I will keep you regularly informed about the progress of these actions.

I count on your support to implement this agenda in the very spirit of Partnership between our two institutions.

Thank you for you attention.

1 :

Council decision on the signing and on the conclusion of a co-operation agreement between the European Community and its Member States, of the one part, and the Principality of Liechtenstein of the other part, to combat fraud and any other illegal activity to the detriment of their financial interests

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