3 European Anti-Fraud Office (OLAF)
| (26136)
14549/04
SEC(04) 1370
| Commission staff working document: Complementary evaluation of the activities of the European Anti-Fraud Office (OLAF) — Article 15 of Regulation (EC) No.1073/99 and Regulation (Euratom) No. 1074/1999
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| Legal base | — |
| Document originated | 26 October 2004
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| Deposited in Parliament | 18 November 2004
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| Department | HM Treasury |
| Basis of consideration | EM of 2 December 2004
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| Previous Committee Report | None; but see (24811) 11954/03 and ADD1 (24814) 11993/03: HC 63-xxxiii (2002-03), para 3 (15 October 2003)
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Standing Committee B, together with other documents relating to the Community's financial management
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Background
3.1 In December 2003 the Council asked the Commission to prepare
an evaluation report to complement the triennial review of the
work of the European Anti-Fraud Office (OLAF), which it had published
in August 2003, by providing detailed analysis of, and statistical
data on, OLAF's achievements since its establishment in June 1999.[6]
The document
3.2 This staff working paper is the Commission's response to the
Council's request. The document is in five sections, with two
supporting annexes. The first section is a comprehensive examination
of OLAF's activities, looking at:
- OLAF's operational activity (open cases) on work inherited
from its predecessor, the Unit for the Coordination of Fraud Prevention
(UCLAF), or started before the coming into use of the Case Management
System (CMS) on 1 May 2001 and on work started from then until
30 June 2004. Work includes the establishment of "non-cases",
that is, resulting from an assessment that there is no reason
to believe EU interests are at risk from irregular activity. But
the assessment may lead to transmission of information to Member
States about possible offences not related to the protection of
EU interests;
- distribution of cases by type of investigation,
that is, internal cases (within the institutions), external cases
(outside the institutions but where OLAF does most of the work),
coordination cases (external investigations where OLAF facilitates
exchange of information amongst national and Community services)
and assistance cases (where OLAF assists Member States or candidate
countries in criminal investigations); and
- results in terms of operational activity, cooperation
with the judicial authorities and financial impact. CMS data shows
that in the period June 1999-June 2004 approximately €100
million was recovered and €17 million was declared irrecoverable
(following bankruptcies, liquidations etc.).
3.3 The second section looks at the allocation of
resources, noting that there were 101 investigators and 267 other
staff in 2004. About 59% of staff are concerned with the operational
function of OLAF whilst the remainder are almost equally divided
between the intelligence and technical support function, the policy-making
function and the administrative support function.
3.4 The third section of the paper assesses effectiveness,
in terms of OLAF's objectives, discussing:
- better targeting of operational
activity , noting a substantial increase in cooperation between
OLAF and Member States involving regular meetings with Member
States and participation of Member States' investigators in OLAF
investigations and of OLAF investigators in national investigations;
- increasing the effectiveness of operational activity,
in the light of OLAF's objective of combining short deadlines
for processing cases opened with the precise and effective search
for evidence, in order to make it possible for the relevant authorities
to follow up with any required financial, judicial or disciplinary
measures. The proportion of cases closed with follow-up action
has increased; and
- shorter deadlines for assessment and operational
activity, which lead to more effective operational activity; the
Commission has presented draft Regulations on this issue, amongst
others.[7] OLAF has cut
the average time taken to assess incoming information from 18
months, for 488 cases in 2000-01, to five months, for 661 cases
in 2003-04. The average duration of the investigation phase has
shown a continued improvement since the peak of 33 months in 2001-02
(when 747 investigations were closed). As with assessment, the
peak was caused by the major operation to deal with the UCLAF
legacy, which resulted in the average length of investigations
rising. OLAF has managed to get the investigation length under
control, reducing it from the peak of 33 months to only 22 months
within two years.
3.5 In the fourth section of the paper the Commission
attempts an appraisal of the efficiency of OLAF in investigating
frauds and other illegal activities to protect the financial interests
of the EU, noting the difficulty of assessment in terms of quantitative
measures and value added. But it argues that the very existence
of OLAF, with its powers of investigation, the capacity to organise
the fight against fraud in the Member States and the applicant
countries and the technical and operational assistance it gives
to the relevant national services, must have a preventative and
dissuasive effect, even if this is difficult to quantify. The
document gives a rough estimate of the importance of OLAF's activity
in the fight against fraud in financial terms, taking into account
the data used in its report as a basis for this calculation. The
Commission comments that it "is aware of the limits of these
indicators and can only express its reservations as to their use
for appraising its [OLAF's] operational activity".
3.6 The final section of the document summarises
the Commission's views of what needs to be done to improve the
work of OLAF. First the Commission draws attention again to its
proposed new Regulations,[8]
saying they arose from the recommendations in its evaluation report
and the accompanying Opinion of OLAF's Supervisory Committee and
also take account of difficulties during the Eurostat crisis.
It says the proposal addresses:
- circulation of information
between OLAF and the institutions, agencies and bodies and, in
particular, the latter's information rights when OLAF transmits
information to judicial authorities; and
- procedural guarantees to be respected in internal
and external investigations.
3.7 The Commission adds that the proposal also addresses
issues covered in the present document:
- strengthening of the operational
efficiency of OLAF by concentration of action on investigation
activity in line with priorities set out in its annual work programme,
by provisions on the length of investigations and by classification
of procedures for the opening and closing of investigations, with,
in particular, a better definition of OLAF's discretion not to
act itself on a case; and
- improving the effectiveness of investigations,
particularly strengthening complementarity and cooperation between
OLAF and national agencies.
3.8 In this section the Commission also refers back
to references in its "Fight against fraud — Action
Plan for 2004-2005" to work aimed at achieving the objectives
contained in the Constitutional Treaty, in particular concerning
the establishment of a European Public Prosecutor.[9]
The Government's view
3.9 The Financial Secretary to the Treasury (Mr Stephen
Timms) says:
"When the Commission adopted its initial
evaluation report on OLAF's progress since it was set up in 1999,
the Government shared the Council's view that the report was inconclusive
in terms of analysing the difference OLAF has made since it took
over from UCLAF. The Government will consider this complementary
report carefully, and particularly supports the emphasis in this
report on shared knowledge and co-operation between OLAF and Member
States to combat fraud. The statistical data given does seem to
show that OLAF has improved its efficiency and initiatives such
as the Case Management System have helped to improve the transparency
and effectiveness case assessment.
"However, the Government considers that
it is important to consider this report in the light of other
relevant documents such as the proposal to amend the OLAF regulations,[10]
the Mutual Administration Assistance proposal[11]
and the forthcoming report of the audit of OLAF by the European
Court of Auditors. It is necessary to consider the whole picture.
"The Government notes that the report
refers to other anti-fraud initiatives including the proposal
to create a European Public Prosecutor (EPP) but remains unconvinced
that creating an EPP would be necessary or desirable."
Conclusion
3.10 It is our practice to recommend the annual
reports of the Commission, on protecting the Communities' interests
and fighting fraud, and of the European Court of Auditors, together
with any other relevant documents, for debate in European Standing
Committee B. We have already made such a recommendation for the
Commission's report for 2003 and for its "Fight against fraud
— Action Plan for 2004-2005", proposing that the debate
take place once we have considered the 2003 report of the European
Court of Auditors — probably early in 2005.[12]
3.11 This present document adds an important
perspective to the annual consideration of the financial management
of Community resources. We recommend that it too should be included
among the documents for debate on this subject in European Standing
Committee B.
6 See headnote. Back
7
See (25396) 6387/04 (25397) 6389/04: HC 42-xiii (2003-04), para
4 (17 March 2004). Back
8
Ibid. Back
9
See (25891) 11890/04 (25925) 11981/04 + ADDs 1 and 2: HC 42-xxxii
(2003-04), para 4 (13 October 2004). Back
10
See (25396) 6387/04 (25397) 6389/04: HC 42-xiii (2003-04), para
4 (17 March 2004). Back
11
See (25996) 12993/04: HC 42-xxxvii (2003-04), para 8 (17 November
2004). Back
12
See (25891) 11890/04 (25925) 11981/04 and ADDs 1-2: HC 42-xxxii
(2003-04), para 4 (13 October 2004). Back
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