Select Committee on European Scrutiny Twenty-Sixth Report


EUROPEAN ANTI-FRAUD OFFICE


(21388)

9094/00


Annual Report on operational activities by the European Anti-Fraud Office (1 June 1999 — 31 May 2000) to the Institutions.
Legal base:
Document originated: 23 May 2000
Forwarded to the Council: 25 May 2000
Deposited in Parliament: 5 July 2000
Department: HM Treasury
Basis of consideration: EM of 13 July 2000
Previous Committee Report: None
To be discussed in Council: No date known
Committee's assessment: Politically important
Committee's decision: Cleared

Background

  17.1  We reported[37] last year on the setting up of the new anti-fraud office (OLAF) within the Commission, which replaced its predecessor (UCLAF). In our Report of 21 July 1999, we noted that, whilst OLAF would, like UCLAF, be within the Commission, it would have operational independence and stronger powers of investigation and follow up. UCLAF was regarded as relatively ineffectual, in particular in getting action taken on fraud or irregularities it identified.

  17.2  Although OLAF was formally established last year, it was not until 1 March of this year that its new Director (Franz-Hermann Bruener) took up post. The establishment of OLAF was described by the Helsinki European Council in December 1999 as "an important new step in the fight against fraud".

The document

  17.3  This report summarises OLAF's activities and progress in the first year of its existence. Inevitably this has been a transitional year with its operations much influenced by inherited priorities of UCLAF and completing existing work. In the period of the report, 68 new investigations were opened, 67 reports were sent to the competent authorities and 30 files closed; 181 co-ordination files were opened (on which OLAF works with national agencies in Member States and in third countries).

  17.4  The report says that OLAF has reviewed its information gathering and investigation procedures and carried out risk analysis and assessment. A new Intelligence Unit has been set up to improve information analysis and prepare the investigators' programme. It will be assisted by an Economic and Criminal Monitoring Unit. The function of following up investigations will be organised separately from investigations and have more resources — to remedy a weakness in UCLAF, OLAF wants to develop its partnerships with Member States, through specific agreements, and information exchange with third countries. Its staff will be strengthened to reach a target of 300 by the end of 2001 with an emphasis on a more flexible task-orientated approach, within a specific operational strategy, covering fields of action and priority methods.

  17.5  In his foreword to the report, the Director notes that he has been in office only since March 2000. He says his priorities are the development of co-operation with Member States and strengthening the transparency of European institutions. In respect of internal investigations (within the Commission) he says that he intends to make careful use of the new means of investigation provided for by the legislation establishing OLAF "to neutralise the deleterious effects of criminal networks and thus to guarantee the credibility of the Community institutions and bodies".

The Government's view

  17.6  In her Explanatory Memorandum of 13 July 2000, the Economic Secretary to the Treasury (Miss Melanie Johnson) says that:

"The Government has always given strong support to measures to improve the detection of fraud in the European Union, and played a prominent rôle in the discussions prior to the setting up of the European Anti-Fraud Office. We therefore welcome this first report by the new Director. It is a comprehensive account which indicates the seriousness with which fraud detection and prevention is taken.

"The Government recognises the need for OLAF to have appropriate staffing and resources in order to operate effectively, but it is important to concentrate on the recruitment of staff who have the right background and qualifications, especially those who are currently working in Member States' national investigation services.

"While the Government recognises that there may be some need for improvements in legislation to facilitate the detection and prevention of fraud, we will look very carefully at any proposals to change existing legislation or introduce new legislation".

Conclusion

  17.7  The jury is necessarily still out as regards the relative effectiveness of OLAF. The Community has considerably strengthened its legal powers and independence as compared with UCLAF and has shown that it is prepared also to put substantial additional resources into it. We hope that this act of faith will be duly rewarded but it is clearly too soon to be looking for much evidence of that. However, we welcome the approach the new Director proposes, in particular in ensuring transparency of its operations and in working in partnership with others. The biggest threat to the Community's resources now comes from trans-national organised crime, and effective partnership with and between Member States needs to be developed rapidly to counter this. We look forward to seeing the OLAF work programme for the coming year and to its next annual report.


37  (19671) 14031/98: see HC 34-vi (1998-99), paragraph 1 (20 January 1999); (20049) 7226/99: see HC 34-xxvii (1998-99), paragraph 11 (21 July 1999); (20049) 7226/99: see HC 34-xx (1998-99), paragraph 1 (19 May 1999) and HC 34-xix (1998-99), paragraph 2 (12 May 1999); and also (20168) OJ No. L 136; (20328) 8345/1/REV1. Back


 
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