8 European Anti-Fraud Office
| (a)
(25397)
6389/04
COM(04) 104
(b)
(27692)
11281/06 +ADD1
COM(06) 244
|
Draft Regulation amending Regulation (Euratom) No. 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)
Draft Regulation amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)
|
| Legal base | Article 280 EC; co-decision; QMV
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 23 November 2006
|
| Previous Committee Report | HC 34-xxxviii (2005-06), para 7 (18 October 2006)
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| To be discussed in Council | Not known
|
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared, further information awaited
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Background
8.1 The European Anti-Fraud Office (OLAF — Office Européen
de Lutte Anti-Fraude) was set up in 1999 within the Commission
to replace the previous anti-fraud unit, UCLAF (Unité de
Co-ordination de la Lutte Anti-Fraude). Two identical Regulations
were required for this because OLAF functions under the two separate
legal frameworks of the EC Treaty and the Euratom Treaty. OLAF
was given increased powers of investigation and operational independence.
But OLAF's annual activity reports, a Commission evaluation report
of the activities of OLAF from 1999 to 2002[16]
and the Eurostat affair have suggested weaknesses in the organisational
set-up and in inter-institutional flows of information.
8.2 In February 2004 the Commission presented two
draft Regulations, one of which is document (a), to amend the
legislation governing the operation of OLAF. When the previous
Committee considered these documents it welcomed the intention
to improve the regulatory framework under which OLAF works, noted
there were a number of important issues in the draft Regulations,
including a subsidiarity problem, which would need to be addressed
and asked to be kept informed of progress on these matters. It
did not clear the documents.[17]
8.3 In June 2005 the European Court of Auditors published
a Special Report on the management of OLAF and we recorded the
Government's view of its relevance to the continuing consideration
of the two draft Regulations.[18]
8.4 Document (b) is a draft Regulation to amend the
current OLAF Regulation made under the EC Treaty. It replaces
the 2004 proposal, which the Commission has formally withdrawn.
(We understand that document (a) which proposes parallel amendments
to the current OLAF Regulation made under the Euratom Treaty will
be treated similarly.) The new proposal takes account of the European
Court of Auditors' Special Report.
8.5 When we considered the new proposal in October
2006 we noted that there were a number of issues in the draft
Regulation which the Government would be addressing in negotiations
and that we wished to be kept informed of progress on these matters.
Additionally, we asked to be reassured that the potential subsidiarity
issue identified in the original proposal does not reoccur in
the revised draft Regulation — the Government commented
in its Explanatory Memorandum on the new proposal that "The
amending Regulation is fully compatible with the principle of
subsidiarity." (We noted that this question remained open
also in respect of document (a)). We kept both documents under
scrutiny.[19]
The Minister's letter
8.6 The Economic Secretary to the Treasury (Ed Balls)
writes now in relation to the subsidiarity issue. He says that
the current Regulations clearly distinguish between OLAF's role
in internal and external investigations.[20]
The withdrawn amending draft Regulation would have expanded the
provision on external investigations, cross-referring to provisions
giving OLAF the right to immediate and unannounced access to the
premises of institutions, bodies, offices and agencies of the
EU and ensuring that OLAF informed the bodies in question. The
Minister continues that there was some concern initially that
the proposed amendments would have extended OLAF's rights of access
in Member States. But the Government no longer believes that this
is the case. He says that:
- evidence given by OLAF to an
inquiry carried out by the House of Lords European Union Committee,
Sub-Committee E, noted at paragraphs 52 and 56 of its report,[21]
goes some way to addressing the potential subsidiarity concerns;
- moreover, additional wording
in the revised proposal makes it clearer that the cross-reference
will not apply directly to external investigations, but to relevant
information held by the institutions etc. For example, if OLAF,
while investigating a case in a Member State, wished to see relevant
information to that case held by the Commission, they would have
"immediate and unannounced access" to the latter.
8.7 The Minister adds also that OLAF's investigations
are only "administrative" investigations and it would
normally pass findings to the appropriate authority to take further
action, which may include an investigation of its own.
Conclusion
8.8 We are grateful for and accept the clarification
from the Minister as to why the Government has concluded that
the new proposal is fully compatible with the principle of subsidiarity.
8.9 We remind the Minister that we wish to be
kept informed of progress on the other issues the Government is
addressing in the negotiations on these documents. Meanwhile we
will continue to keep them under scrutiny.
16 (24929) -; see HC 63-xxxv (2002-03), para 1 (29
October 2003) and HC 42-x (2003-04), para 1 (11 February 2004);
and (24811) 11954/03 and ADD 1; see HC 63-xxxiii (2002-03), para
3 (15 October 2003). Back
17
(25396) 6387/04 (25397) 6389/04; see HC 42-xiii (2003-04), para
4 (17 March 2004). Back
18
(26727) 11216/05 (26740) 11452/05 + ADDs 1 and 2; see HC 34-vi
(2005-06), para 2 (19 October 2005). Back
19
See headnote. Back
20
Internal investigations are of activity within the institutions
of the EU. External investigations relate, as provided for by
various Regulations and cooperation agreements, to activities
of Member States and third countries on behalf of the EU; almost
all such investigations are in cooperation with national investigative
authorities. Back
21
Twenty-fourth Report from the European Union Committee, 2003-04,
Strengthening OLAF, the European Anti-Fraud Office, HL 139. Back
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