Tag Archives: European anti-fraud office

Overall strategic approach

Outline of the Community (European Union) legislation about Overall strategic approach

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Overall strategic approach

Document or Iniciative

Commission communication of 28 June 2000 – Protection of the Communities’ financial interests – The fight against fraud – For an overall strategic approach [COM (2000) 358 final – Not published in the Official Journal].

Summary

Given that the protection of the Community budget is the responsibility of the European institutions and the Member States, the Commission’s aim in this communication is to develop an overall strategic approach based on coordination, the key concept of Article 280 of the EC Treaty, with a view to affording effective and equivalent protection of financial interests Community-wide.

Since 1994, the Community approach to the fight against fraud has been pro-active and designed to develop a legislative framework covering all areas of protection of financial interests. This framework includes:

the convention on the protection of the European Communities’ financial interests (1995) and its Protocols of 1996 and 1997;
the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union (1997);
the Regulation relating to the protection of the European Communities’ financial interests (1995) and the Regulation concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities’ financial interests against fraud and other irregularities (1996);
the establishment of the European Anti-Fraud Office (OLAF) in 1999.

In addition, the Commission, in response to its White Paper on reform, has decentralised the financial control function, set up an internal audit service and established working groups involving OLAF and all Commission departments.

Enlargement, the area of freedom, security and justice referred to in the Treaty of Amsterdam and the gradual abolition of national borders call for an overall and integrated approach based on a strengthened culture of cooperation.

Strategic guidelines

As part of this overall approach, the Commission is proposing a multiannual strategy around four main strategic guidelines to meet the principal challenges.

The first of these relates to an overall legislative anti-fraud policy in four parts:

prevention by means of clear and easily applicable legislation and including sufficiently dissuasive provisions. The Commission also hopes to increase the accountability of officials and is proposing that OLAF, the national authorities and professional circles be involved in prevention;
0detection by strengthening the means and legal instruments for detection, controls and sanctions. The Commission therefore recommends continuing the effort to define precisely irregular conduct and illegal activities with a view to facilitating cooperation and the effective application of penalties. At the same time, it advocates extending information exchanges and control measures, in particular in connected or especially vulnerable sectors such as money laundering, public procurement and the granting of subsidies. This is to be backed up by an extended system of administrative penalties;
follow-up by ensuring more effective management of administrative and financial follow-up in order inter alia to improve the recovery of unduly received or evaded amounts. The financial correction instruments at the Community’s disposal should also be applied with the aim of motivating Member States to put in place effective national control systems;
cooperation in order to establish a single legal basis for combating fraud with a view to simplifying and clarifying the rules on participation in national investigations. Provision also needs to be made for a cooperation and mutual assistance system to fight fraud that is similar to that which already exists in certain areas such as the agricultural and customs policies, while cooperation with applicant countries and non-member countries needs to be strengthened.

The second challenge is to create a new culture of operational cooperation. The Commission is attempting to become more pro-active in its activities on the ground. This involves having an overall view of the economic and criminal environment and enhancing the exploitation and analysis of intelligence. For that purpose, technology and the information sources available must be improved and, in particular, OLAF must serve as a crossroads for gathering and analysing information and as a Community platform of services. Strengthened cooperation with the applicant countries is mentioned again. Lastly, the Commission undertakes to pursue a policy of permanent evaluation of anti-fraud action in order to measure the progress made.

The third challenge is to adopt an inter-institutional approach to prevent and combat corruption. The credibility of Community policies must be strengthened by safeguarding the integrity of the European public service and of the members of the institutions. OLAF must:

cooperate closely on the basis of loyal cooperation and consistency of the duties of each of the participants in the fight against fraud;
contribute more to training measures focusing on training and awareness-raising activities involving all staff, in particular those responsible for procurement or grants and providing a system of values;
encourage transparency and the duty to communicate;
complement its task of conducting administrative investigations with fair and effective penalties. Office action will have to be geared to the objective of “zero tolerance” and compliance with information obligations will be crucial for its effectiveness.

The fourth and last challenge is to enhance the criminal judicial dimension. National criminal policies should be adapted to the new Treaty provisions and assistance sought from the European institutions to improve the cooperation function. The Community already possesses the legal instruments to improve the detection of offences and provide the national judicial authorities with the means to process cases of fraud under criminal law. However, they are often not used because of obstacles such as the non-compatibility of national legal systems or technical specifications.

Lastly, in order to resolve problems arising from the various national systems regarding criminal offences linked to fraud, the conditions under which judicial assistance operates must be improved. OLAF must therefore develop its liaison and expertise function in this area.

Related Acts

Commission report to the European Parliament and the Council of 6 July 2007 – Protection of the European Communities’ financial interests – Fight against fraud – Annual report 2006 [COM(2007) 390 final – Not published in the Official Journal].
This report, which has been produced by the Commission in cooperation with the Member States, presents the measures taken in 2006 to meet the obligations provided for in Article 280 of the EC Treaty. It contains statistics concerning irregularities reported by Member States and gives an account of the measures taken and results obtained in preventing and fighting fraud and in recovering amounts not collected or wrongly paid. In particular, the report covers four specific areas: risk analysis and management; debarment and early-warning databases; warning systems involving internal informers; and mechanisms for recovery by offsetting.

Commission report to the European Parliament and the Council of 12 July 2006 – Protection of the Communities’ financial interests – Fight against fraud – Annual report 2005 [COM(2006) 378 final – Not published in the Official Journal].
In this report the European Commission evaluates its overall strategic approach for the protection of the Communities’ financial interests in the five years 2001-2005. Overall, implementation of the programmed objectives and actions was satisfactory. The report summarises the statistics on fraud and other irregularities notified by the Member States and records the measures taken by the Member States in 2005 and the Commission’s efforts to improve the effectiveness of OLAF. It also contains a section on improving the recovery of amounts not levied or wrongly paid out. The report also covers the issue of certifying the accounts.

Commission report to the European Parliament and the Council of 19 July 2005 – Protection of the European Communities’ financial interests – Fight against fraud – Annual report 2004 [COM(2005) 323 final/2 – Not published in the Official Journal].
This report presents the activities of the European Community and its Member States in combating fraud. To make the report easier to read, Community and national measures are now set out in parallel by topic (rather than in two separate parts). The report covers the salient features of the year’s activities, such as enlargement of the EU and the reform of OLAF. It sums up the statistical situation regarding irregularities reported and the position as regards public information on the fight against fraud. Part of the report is devoted to mutual assistance in customs and agricultural matters. And the Commission presents measures to improve the recovery of sums not collected or paid unduly.

Action Plan 2004-2005

Outline of the Community (European Union) legislation about Action Plan 2004-2005

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Action Plan 2004-2005

Document or Iniciative

Communication from the Commission of 9 August 2004 on Protecting the Communities’ financial interests – Fight against fraud – Action Plan for 2004-2005 [COM(2004) 544 final – Not published in the Official Journal].

Summary

The 2004-2005 action plan corresponds to the second stage of implementation of the overall strategic approach adopted in June 2000. It testifies to the Commission’s ongoing commitment to the fight against fraud and constitutes one of its responses to the new challenges linked to the development of the Union in 2004 and 2005.

The action plan draws its legitimacy from Article 280 EC introduced by the Amsterdam Treaty. On that basis, on 15 May 2001 the Commission adopted a first action plan that saw a highly satisfactory rate of implementation.

Over the period 2001-2003, the legal framework for protecting the Community’s financial interests and fighting fraud and all other illegal activities adversely affecting those interests was supplemented in order to enable effective action to be taken in the fields of fraud prevention and fraud-proofing of legislation, protecting the euro, making public procurement procedures more secure and setting up coordination structures in the ten new Member States and the candidate countries. Cooperation between the relevant administrations was enhanced, thanks in particular to the capacity for analysis of fraud and irregularities and the magistrates unit set up within the European Anti-Fraud Office (OLAF); such cooperation is assessed each year in the report provided for by Article 280 of the EC Treaty. In addition to various measures to prevent and counter corruption, the Commission performed an evaluation of OLAF’s activities and put forward seventeen recommendations for reinforcing its structure and operations, while the Court of Justice confirmed on several occasions the legality and consistency of the inter-institutional framework for internal investigations. The criminal-law protection of the Community’s financial interests was strengthened with the entry into force in October 2002 of the first Convention instruments for the fight against fraud. Major steps were also taken towards setting up a European Public Prosecutor’s Office, and the objective was written into the constitutional treaty.

The new action plan follows the four main lines of action laid down in 2000 for the ensuing five years:

an overall anti-fraud legislative policy: making regulations more effective and consistent;
a new culture of cooperation: full participation of and collaboration between national and Community authorities;
an inter-institutional approach to preventing and fighting corruption: making the European institutions more credible;
strengthening the criminal-law dimension: adapting the legal and judicial framework for the protection of the financial interests of the European Union.

It also takes into account the new guidelines set out in the progress report on the activities of OLAF and the measures announced in the State of the Union Address delivered by the Commission President before the European Parliament on 18 November 2003.

In the context of an overall anti-fraud legislative policy, the action plan provides for the development of a culture of prevention and the tightening-up of legal texts through the following measures:

defining OLAF’s objectives and reinforcing its legal framework in order to consolidate its structure;
stepping up cooperation with the Member States, with special reference to money laundering and VAT fraud;
assessing the black list mechanism in the EAGGF Guarantee Section;
definitively setting up the European Technical and Scientific Centre (ETSC) for protecting the euro against counterfeiting;
continuing and adapting the Pericles programme.

Still within the same context, the aim is also to strengthen means of detection, controls and sanctions. To that end, the Commission plans to:

clarify fraud investigation powers at Community level, particularly in the area of direct expenditure;
extend the administrative penalty system, in particular to the areas of customs, the Structural Funds, direct expenditure and OLAF investigations;
issue technical guidelines to national authorities wishing to supervise the authentification of euro coins in their territory.

Lastly, the plan is aimed at ensuring more effective management of administrative and financial follow-up, and thus provides for the following action:

proposing amendments to the Regulation on the financing of the CAP in order to improve the recovery of sums wrongly paid under the EAGGF Guarantee Section;
clearing the backlog of cases concerning irregularities reported before 1999.

As part of the second line of approach, which focuses on a new culture of cooperation, the intention is to enhance the use and analysis of information (“intelligence”). The Commission aims to establish better operational cooperation between customs administrations and to simplify the procedure for notifying irregularities in the areas of the Structural Funds, the Cohesion Funds and the EAGGF Guarantee Section.

In addition, to develop a closer partnership with Member States and non-member countries, the Commission plans to:

strengthen relations with Member States by updating the Decision establishing the Advisory Committee for the Coordination of Fraud Prevention (COCOLAF);
improve information from Member States on the follow-up given to OLAF’s investigations;
enhance synergy by drawing up an inventory of the services that the Commission and OLAF can provide to the institutions and Member States and implementing the multidisciplinary service platform;
help the new Member States to reinforce their capacity for fighting fraud;
reinforce anti-fraud coordination services in candidate countries;
conclude negotiations with Switzerland on the fight against fraud;
negotiate international agreements on mutual assistance in customs matters with non-member countries;
include anti-counterfeiting clauses in cooperation and association agreements.

Rounding off this second line of approach, the Commission will evaluate anti-fraud measures on an ongoing basis through an inventory of new measures at Community and Member State level.

The third line of action, an inter-institutional approach to prevent and combat corruption, includes the following measures aimed at developing a culture of cooperation at all levels:

examining the usefulness of adopting a memorandum of understanding between OLAF and the Commission and between the Commission and the other institutions;
re-examining the memorandum of understanding between OLAF and the Investigation and Disciplinary Office (IDOC);
setting up a high-level interdepartmental group to improve transparency and the flow of information between OLAF and other directorates-general.

To improve the legal framework for administrative investigations, the Commission intends to amend certain provisions in the interests of clarity and harmonisation.

The fourth and last line of approach focuses on enhancing the criminal-law judicial dimension. Here, the Commission plans to:

draft a White Paper on strengthening the effectiveness of criminal prosecutions by establishing a European Public Prosecutor ;
bring out a report on implementation of the Convention on the protection of the European Community’s financial interests by the Member States;
conclude a protocol with Europol;
draw up with the Member States a practical guide for cooperation with criminal prosecution authorities.

To sum up, the new action plan highlights three top-priority objectives:

reinforcing the regulatory framework of May 1999 for OLAF’s activities and competencies;
improving the flow of information between the Member States and the Commission;
developing the criminal-law protection of the Community’s financial interests with the Member States, following the proposal to create a European Public Prosecutor with competence for protecting the financial interests of the Union.

The measures planned for the period 2004-2005 take into account the findings of the progress report on the activities of OLAF and comprise actions that were not completed in the previous period as well as measures designed to respond to specific needs and reinforce OLAF’s legal framework, in particular in the light of the weaknesses revealed by the Eurostat case.

In the document, the Commission also assesses the overall results of the 2001-2003 action plan, which can be regarded as positive.

Fraud proofing of legislation and of the management of contracts

Outline of the Community (European Union) legislation about Fraud proofing of legislation and of the management of contracts

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Fraud proofing of legislation and of the management of contracts

Document or Iniciative

Commission Communication on fraud proofing of legislation and of the management of contracts [SEC(2001) 2029 of 07.11.2001 – Not published in the Official Journal]

Summary

The Commission Communication is the result of the work of an informal interdepartmental working party chaired by OLAF and made up inter alia of representatives of the Secretariat-General, the Legal Service, and the Directorates-General for Budget, Justice and Home Affairs, External Relations, Agriculture, Regional Policy, and Taxation and Customs Union. Its aim is to develop an overall strategic approach to fraud prevention which also takes account of the Commission’s White Paper on administrative reform and a fraud prevention culture. The new cooperation system will be targeted at new draft legislation with significant financial implications in areas of Community activity deemed most sensitive to fraud.

Provisions are also made in the 2001-03 action plan for mechanisms for cooperation from the stage of drafting legislation between the Commission departments and OLAF. As a result of its experience in conducting investigations and in drawing up legislation, OLAF will be able to help in analysing texts before they reach the stage of interdepartmental consultation by identifying loopholes which might hamper fraud prevention.

Legislative aspect

A horizontal unit has been created within OLAF (Unit OLAF/A/3) one of whose “fraud proofing” tasks will be to work with an ad hoc interdepartmental working party in defining criteria for identifying areas of competence which might be deemed highly sensitive from the point of view of their exposure to fraud risks. The outcome of this analysis will be communicated to the departments responsible and to the Directorates-General for Budget and for Administration.

This unit’s activities will be limited to the most sensitive draft legislation in areas themselves deemed high-risk. The procedure in question will apply to initiatives proposed by the Commission in its 2003 legislative work programme, adopted on 30 October 2002. Further to the decisions adopted within the interdepartmental working party, OLAF will launch a dialogue with the lead Directorates-General, who will have designated a correspondent for that purpose. OLAF and the Directorates-General will at any time be able to review the criteria validated by the interdepartmental working party.

The first meeting of this working party took place on 10 December 2002. This meeting was the first stage in the procedure leading to:

the determination of the criteria required to identify risk sectors;
the determination of risk areas of Community legislation;
the identification of sensitive draft legislation falling within risk areas, which will be specifically analysed by OLAF;
consultation of OLAF prior to interdepartmental consultation.

For the purposes of this analysis and prevention activity, departments will communicate draft legislation to OLAF as early as possible.

Contractual aspect

With regard to fraud prevention in the area of contracts, the Communication proposes two measures (which appear in the Commission’s White Paper on administrative reform), i.e.:

the adoption of standard contracts harmonised for the whole Commission (most frequently used clauses, types of contract, etc.);
the introduction of a central database of contracts and contractors.

OLAF, acting via its specific unit, will be involved at a very early stage in the process of defining and drafting clear clauses with a view to protecting not only the Community’s financial interests but also those of beneficiaries. Standard clauses concerning checks and penalties will have to be included in contracts.

Centralisation of information will enable all Commission departments to be quickly informed via the Intranet.