Explanatory Memorandum to COM(2006)244 - Amendment of Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti Fraud Office (OLAF) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2006)244 - Amendment of Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti Fraud Office (OLAF). |
|---|---|
| source | COM(2006)244  |
| date | 24-05-2006 |
The European Anti-fraud Office (OLAF) was established in 1999. European Parliament and Council Regulation (EC) No 1073/1999 i and Council Regulation (Euratom) No 1074/1999 of 25 May 1999 i, which lay down the modalities of both internal and external investigations conducted by OLAF, and Commission Decision 1999/352/EC, ECSC, Euratom of 28 April 1999 establishing the Office i are the key instruments in the legal framework within which it operates.
In April 2003, the Commission approved a first evaluation of the Office’s activities i, which contained a set of recommendations aimed at further enhancing OLAF’s operations. The Commission concluded that the synergies and the institutional situation of the Office (Commission department enjoying operational independence) were capable of functioning but that there was a need to improve its efficiency and cooperation with the Member States. The European Parliament welcomed the Commission's undertaking to prepare the requisite legislative proposals.[5]
In February 2004 the Commission adopted proposals amending Regulations (EC) No 1073/1999 and (Euratom) No 1074/1999 i. The aim was to boost the procedural rights of individuals, to ensure better control over the duration of investigations and to improve the exchange of information between the Office and the institutions concerned and the efficiency of operational activities. Before opening the first reading of these proposals, Parliament and the Council asked for a further evaluation of the performance of the Office. This was the backdrop to a special report i by the Court of Auditors on the management of OLAF, which contains a number of recommendations and an opinion on the amendments proposed in February 2004 i. The Court of Auditors agrees that the current structure of the Office as a Commission department enjoying operational independence is satisfactory. But it recommends that greater efforts be made to improve efficiency at the Office, particularly as regards the duration of investigations, cooperation with national authorities and concentration on essential tasks and on the powers of the Supervisory Committee.
In July 2005, a public hearing on the reinforcement of OLAF was organised at the European Parliament by the Committee on Budgetary Control, in the presence in particular of Vice-Presidents Kallas and Frattini, representatives of the Court of Auditors and the Court of Justice, and leading experts. At this hearing Vice-President Kallas stressed the value of establishing political governance of OLAF’s anti-fraud investigative activities and the need for independent review of proceedings and the duration of investigations while ensuring the confidentiality of investigations. It was possible to conclude from the public hearing that the Office’s current institutional structure did not hamper its independence, that defence rights needed to be enhanced and that the review function needed to be looked into.
This proposal follows up these conclusions. It takes over the progress made in February 2004 and extends it. In view of the findings of the evaluation, the audit by the Court of Auditors and the public hearing, this proposal leaves the Office’s institutional structure unchanged and aims solely to improve its operation in the existing framework. Given the scale of the amendments, this proposal replaces the proposal presented on 10 February 2004, which is withdrawn.
Enhanced governance, combined with the establishment of the Review Adviser and the provisions on the flow of information between OLAF and the institutions, bodies, offices and agencies concerned, will help to strike the right balance between independence and control.
With this proposal there is also a draft internal Commission decision prepared by its staff, which the Commission has noted and which will be sent to the legislative institutions by way of information. That document will contain more detailed measures as well as rules for the application of the new provisions of Regulation (EC) No 1073/1999. It will have to be adopted subsequently in the light of the final text of the principal Regulation as adopted by Parliament and the Council. The same will apply, if the need arises, to the Interinstitutional Agreement between the European Parliament, the Council and the Commission adopted on 25 May 1999. Other aspects of cooperation between OLAF and other institutions and departments will be addressed at a later date.
In substance, the proposal has the following main objectives:
Contents
- Governance, cooperation between the institutions and the Supervisory Committee
- Guarantee of the rights of persons implicated
- Strengthening the review of investigations
- Improving the information flow
- b) Between OLAF and the Member States
- c) Between OLAF and informers
- Term of office of the Director-General
- Related legal provisions
- Legal basis
- Subsidiarity and proportionality
- Fundamental rights
- Budgetary impact
The July 2005 hearing raised questions about the new role of the Supervisory Committee as proposed by the Commission in February 2004. The Commission also sees a need for political governance regarding priorities related to investigative activities. Relations between the Supervisory Committee, the Office and the institutions and other bodies, offices and agencies should be reviewed and closer cooperation should be established.
For this the Commission proposes that the Supervisory Committee meet, periodically or upon request, with representatives of the European Parliament, the Council and the Commission as part of a structured dialogue, without interfering in the course of investigations. This dialogue could also be the opportunity to discuss the definition of the Office’s strategic priorities and programme of activities and the annual activity reports of the Committee and the Director-General of the Office. The aim of this structured dialogue is to exercise a political control function on the investigative activities and efficiency of the Office and the Committee, and to ensure that sound relations are maintained between the Office and the EC institutions and other bodies, offices and agencies, in particular as regards information flows. The Committee’s task in the structured dialogue is to issue opinions and make recommendations, in particular regarding the appointment of the Director-General of the Office and disciplinary penalties against him.
The proposals presented in February 2004 provide for procedural guarantees that are preserved in this proposal. Wherever possible, the proposal seeks to harmonise the procedures for internal and external investigations so as to simplify processing and boost certainty in the law.
The Commission proposes including in the Regulation a detailed provision on the procedural guarantees to be respected in the conduct of internal and external investigations. These guarantees build on, and complement, provisions existing in the Interinstitutional Agreement on internal investigations (and the various individual decisions implementing it), in the Staff Regulations and in the OLAF Manual. Incorporating them in the Regulation itself makes it possible to constitute a uniform body of basic guarantees applicable to all OLAF investigations, be they internal or external. The following additional guarantees were proposed in February 2004:
- provisions on information to be given by OLAF prior to an interview and on the establishment of minutes of the interview;
- right to be assisted by a person of one’s choice at an interview;
- right not to incriminate oneself.
These guarantees must be respected not only before the final report is drawn up but also before information is transmitted to the national authorities.
Not only are the detailed provisions inserted concerning the procedural guarantees (Article 7a) applicable to internal and external investigations, it is also necessary to have them enforced by enhanced review and to provide for the possibility of requests for opinions. This review would be undertaken by a Review Adviser exercising his function in the Office on an exclusive basis and in full independence. Independence is guaranteed by Article 14 of the proposal and, in particular, the role of the Supervisory Committee in the appointment process. This review takes account of the confidentiality of investigations and the principle of sound administration, professional secrecy and data protection and the exercise of their respective prerogatives by both the disciplinary authorities and the judicial authorities.
The enhanced review is applicable at all stages of an internal or external investigation, thereby guaranteeing a single set of review arrangements for all of the Office’s investigation work. The procedural rules concerning the Review Adviser’s opinions should be laid down by an internal Commission Decision. The Review Adviser’s function is an additional measure which, far from being a substitute for judicial review by the Community courts, is designed to reinforce upstream control measures.
The proposed provisions establish a new arrangement for long-term investigations. The institutions “concerned” by an investigation and the Supervisory Committee must be informed of the opinion of the Review Adviser where OLAF decides, after receiving the opinion, to continue the investigation beyond twelve months. The Commission and the Supervisory Committee are to receive the statistical and analytical reports produced by the Review Adviser from time to time on the duration of internal and external investigations.
The review of investigations while they are ongoing is above all a rapid control conducted within the Office. The review adviser is required to formulate opinions:
- on the procedural guarantees provided for by Articles 6 i (reasonable period of investigation) and 7a of this Regulation, of his own initiative or at the request of any EC official or servant or any economic operator personally implicated by an investigation in progress. This opinion may be sought at any stage of the investigation;
- on the duration of the investigation exceeding twelve months automatically or in the event of successive extension beyond eighteen months at the request of the Director-General of the Office; the opinion is notified to the institution, body or agency concerned by the investigation and to the Supervisory Committee;
- where it is necessary to defer implementation of the obligation to call on the person implicated to make his views known on all the facts concerning him;
- at any time during the investigation, whenever the Director-General of the Office so requests in relation to the control of investigations.
At the final stage of an investigation, the proposed mechanism gives an EC official or servant, a natural person or an economic operator, personally implicated in the facts under investigation, the right to be notified by the Office of the conclusions and recommendations of the final investigation report; it allows an interested party who considers that procedural guarantees were not respected in relation to him while the investigation was being conducted to file a request for an opinion with the Review Adviser. This right to notification at the final stage of the investigation is subject to an exception where there is a need to preserve strict secrecy so as to protect the criminal follow-up to the investigation and the effectiveness of cooperation between OLAF and the police and judicial authorities.
a) Between OLAF and the European institutions and bodies
The provisions on passing on information to the institution or body concerned are essential for enabling the European institutions to exercise their political responsibility in cases involving suspected wrongdoing of their officials and/or necessitating administrative action on their part so as to protect the interests of the Union. In such cases, OLAF must be required to inform the institution or body concerned. In addition, the institution or body concerned must also be informed when OLAF transmits information to the judicial authorities. The February 2004 provisions are taken over in their entirety here.
It would also be legitimate for not only the Member States but also the Commission, which is responsible for protecting the Communities’ financial interests, to be able to ask for an external investigation to be opened, to be informed where there is a need for measures to be taken to protect the Communities’ financial interests and to be informed of the outcome.
It is also necessary to enhance the exchange of information between OLAF and Europol and Eurojust for the sake of efficiency in the fight against fraud, corruption and all other illegal activities to the detriment of the financial interests of the European Communities.
The proposal aims at further strengthening cooperation between OLAF and the Member States in the field of external investigations and in information flows. It provides that for the purposes of all its investigations the Office should be informed of action taken by national judicial authorities in response to information transmitted during an OLAF investigation or after its closure.
Anybody in an institution, body, office or agency who transmits information relating to fraud or irregularity cases to the Office will be informed whether an investigation has been opened on the basis of the information.
Moreover, any person who has provided information to the Office relating to a suspected fraud or irregularity may, upon request, be informed by the Office that an investigation has been closed and, where appropriate, that a final report on the investigation has been sent to the competent authorities, provided that such information does not prejudice the rights of the person concerned, the effectiveness of the investigation and its follow-up or any confidentiality requirements.
Strengthening OLAF’s operational efficiency
Provisions are proposed that will allow OLAF to concentrate on its priority actions. It should be made clear that OLAF has discretion over whether or not to open investigations, and to ask the appropriate authorities to follow up cases that are of minor significance or lie outside its investigative priorities, inviting them to inform it of the action taken on its requests.
More generally, the procedures for opening and closing investigations and the relationship between internal action by the European institutions and bodies, on the one hand, and OLAF investigations, on the other, must be clarified. As long as an OLAF internal investigation is in progress, institutions, bodies, offices and agencies must not initiate parallel investigations.
As in the past, the decision whether or not to open an investigation will remain with OLAF, having regard to its priorities and its programme of investigative action and the proportionality principle; the Office’s functional independence will continue to be scrupulously respected and guaranteed by the Supervisory Committee.
Improving the effectiveness of OLAF’s investigations
In line with the recommendations contained in the evaluation report on direct expenditure, it is proposed to clarify OLAF's powers of investigation in the context of external investigations into economic operators receiving Community funds on the basis of contracts, or grant agreements or decisions (direct expenditure). These clarifications will also help to enhance the efficacy of OLAF’s investigations regarding indirect expenditure.
In connection with external investigations OLAF should be given improved access to information held by the European institutions and bodies. Access to information held by economic operators in the context of internal investigations should likewise be facilitated.
To reinforce his independence, it has been found appropriate to provide that the Director-General of the Office will hold office for a non-renewable term.
To facilitate the interinstitutional consultation procedure, it is provided that the decision be taken by the Commission after consulting the representatives of the other institutions meeting with the Supervisory Committee in the context of the structured dialogue.
Provision is made for the Director-General to refrain from transmitting information concerning criminal proceedings to national authorities regarding facts that may be liable to give rise to criminal proceedings if transmission is unwarranted on grounds of proportionality and the effectiveness of the prosecution. The Supervisory Committee and the Review Adviser must be informed of any such decision.
It should be noted that the Commission is proposing, in parallel, amendment of Regulation (Euratom) No 1074/1999, i.e. the legal framework for OLAF investigations carried out under the Community law covered by the Euratom Treaty.
The Commission proposal is aimed at amending existing Regulation (EC) No 1073/1999 and is therefore based on Article 280 of the Treaty establishing the European Community.
The amending Regulation is fully compatible with the principle of subsidiarity. Like the original Regulation (EC) No 1073/1999, this amending Regulation in no way reduces the powers and responsibilities of the Member States for taking measures to combat fraud affecting the Communities' financial interests. OLAF’s means of action in external investigations are clarified and strengthened only in isolated respects where practice has revealed legal loopholes in the existing system and where only more effective intervention by the Office can ensure that it can conduct reliable external investigations which can be used by the authorities of the Member States. In addition basic procedural guarantees need to be extended to external investigations in order to provide a uniform legal framework for all investigations conducted by OLAF. As clear rules, enshrined in Community legislation itself, are required on these matters for the sake of effective OLAF action within a framework of legal certainty, these rules also comply with the principle of proportionality.
As confirmed by the Court of Justice (judgment of 10 July 2003, Case C-11/00 Commission v ECB , paragraph 139), Regulation (EC) No 1073/1999 in its original form already reflects the firm determination of the legislative authority to make any powers granted to OLAF subject to full respect for human rights and fundamental freedoms. It would seem appropriate to make the procedural guarantees even stronger than in the present arrangements and to have them apply to all investigations conducted by OLAF, both internal and external. These guarantees respect the fundamental rights recognised in particular by the Charter of Fundamental Rights of the Union, or even exceed the minimum level of protection required by the Charter.
The financial statement attached to the proposal indicates that there will be no impact on the budget.