9 Financial management: investigations
of fraud
| Committee's assessment
| Politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
|
| Document details | (a) Draft Regulation to create a "Controller of procedural guarantees" for those under investigation by the European Anti-Fraud Office and for authorising its investigative measures in relation to members of EU institutions (b) European Court of Auditors Opinion on the draft Regulation
|
| Legal base | (a) Article 325; co-decision; QMV; (b) —
|
| Department
Document numbers
| HM Treasury
(a) (36131), 10943/14 + ADD 1, COM(14) 340
(b) (36561), 16042/14, —
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Summary and Committee's conclusions
9.1 The European Anti-Fraud Office (OLAF) was established to enhance
the effectiveness of action to combat fraud and other illegal
activities detrimental to the EU's interests. With this draft
Regulation, document (a), the Commission proposes amendments to
Regulation (EU, EURATOM) No. 883/2013, which governs OLAF's management
of its investigations, to further strengthen the procedural guarantees
set out in that Regulation. To achieve this, the Commission proposes
introduction of a Controller of Procedural Guarantees, charged
with:
· reviewing
complaints lodged by those under investigation about violation
of their procedural guarantees; and
· authorising
OLAF to conduct certain investigative measures in relation to
members of EU institutions.
9.2 In July 2014 we heard that the Government regards
a Controller of Procedural Guarantees, a concept which has been
rejected previously by the Council, as unnecessary. We hoped that
negotiation of this premature proposal would be postponed until
the need for some change, if any, to the OLAF Regulation became
clearer. We asked to hear from the Government, before we would
consider the issues again, about developments in the Council consideration.
Meanwhile the document remained under scrutiny.
9.3 The European Court of Auditors has now issued
this Opinion, document (b), on the draft Regulation, which supports
the proposal for a Controller of Procedural Guarantees and makes
several suggestions for enhancing the text.
9.4 The Government reiterates to us its opposition
to creation of a Controller of Procedural Guarantees, notes that
the Opinion will be taken into consideration by Member States
and the Commission, reports that the proposal was discussed in
July 2014 at official level, where the UK joined the overwhelming
majority of Member States in declaring the proposal to be premature
and potentially unnecessary and tells us further discussion of
the draft Regulation has yet to be scheduled under the Latvian
Presidency.
9.5 We share the Government's continued opposition
to this proposal and note that its concern is shared by the majority
of other Member States. As for the European Court of Auditors
Opinion we ask the Government to tell us how it is playing into
Council consideration of the draft, if and when resumed. Meanwhile
both the documents remain under scrutiny.
Full details of
the documents: (a) Draft Regulation amending
Regulation (EU, Euratom) No. 883/2013 as regards the establishment
of a controller of procedural guarantees: (36131), 10943/14 +
ADD 1, COM(14) 340; (b) European Court of Auditors Opinion No.
6/2014 concerning a draft Regulation amending Regulation (EU,
Euratom) No. 883/2013 as regards the establishment of a controller
of procedural guarantees: (36561), 16042/14, —.
Background
9.6 The European Anti-Fraud Office (OLAF) was established
in April 1999 to enhance the effectiveness of action to combat
fraud and other illegal activities detrimental to the EU's interests.
OLAF's management of its investigations is governed by Regulation
(EU, Euratom) No. 883/2013 (replacing a 1999 Regulation), which
came into force on 1 October 2013.
9.7 During negotiation of the Regulation a Commission
proposal for a "Review Adviser" within OLAF, in relation
to procedural guarantees, was rejected by the Council, because
of cost implications. In July 2013 a Commission Communication,[29]
accompanying a draft Regulation to establish a European Public
Prosecutor's Office (EPPO),[30]
suggested creation of "Controller of procedural safeguards"
for OLAF investigations.
9.8 In June 2014, with this draft Regulation, document
(a), the Commission proposed amendments to Regulation (EU, Euratom)
No. 883/2013 to further strengthen the procedural guarantees set
out in Article 9 of that Regulation. To achieve this, the Commission
proposed introduction of a Controller of Procedural Guarantees
(CPG), charged with:
· reviewing
complaints lodged by those under investigation about violation
of their procedural guarantees; and
· authorising
OLAF to conduct certain investigative measures in relation to
members of EU institutions.
9.9 The draft Regulation was accompanied by the Commission's
analysis of impacts which considered existing measures to ensure
respect for procedural guarantees and available options to improve
them, concluding that appointment of a CPG would be the most effective
way to strengthen procedural safeguards.
9.10 When we considered this proposal, in July 2014,
we heard that the Government regards a CPG as unnecessary, as
those with grievances already have recourse to the European Court
of Justice, the European Ombudsman and the European Data Protection
Officer for redress, and the proposal is very premature because
of possible consequences for OLAF of adoption of the draft Regulation
for an EPPO, which is still under negotiation.
9.11 We hoped that negotiation of this premature
proposal would be postponed until the need for some change, if
any, to the OLAF Regulation became clearer. We asked to hear from
the Government, before we would consider the issues again, about
developments in the Council's anti-fraud working group. Meanwhile
the document remained under scrutiny.
The new document
9.12 The European Court of Auditors (ECA) has issued
this Opinion, document (b), on the Commission's draft Regulation.
The ECA supports introduction of a CPG, which it considers to
be a means of introducing necessary external and independent control
of the legality of OLAF's investigations.
9.13 The ECA identifies several means of enhancing
the Commission's proposal and recommends steps to take to achieve
this, which include:
· increasing
the CPG's independence by ensuring that neither the CPG nor its
secretariat is administratively attached to the Commission or
any other institution involved in its appointment;
· empowering
the CPG to manage alleged violations of fundamental rights and
procedural guarantees under EU law in relation to ongoing OLAF
investigations;
· mandating
that the prior written authorisation of the CPG is required for
OLAF to conduct on-the-spot inspections and for specified categories
of cases, including when OLAF intends to prolong an investigation
beyond two years; and
· stipulating
in the OLAF Regulation that such specified cases amount to an
act that may adversely affect the person being investigated, thus
allowing for an application to the EU courts for interim protection
measures.
9.14 The ECA concludes that any reform should ensure
that OLAF remains strong and effective, notes the importance of
potential for justifiable investigative acts to be undermined
by the perception of insufficient safeguards and considers that
the Commission's proposal seeks to enhance the effectiveness of
OLAF's investigations.
The Government's view
9.15 In his Explanatory Memorandum of 15 December
2014 the Financial Secretary to the Treasury (Mr David Gauke)
says that the Government notes the ECA's support for the Commission's
proposal and the recommendations to enhance the proposal. He comments
that while it supports strict adherence to procedures in OLAF's
investigations, it remains of the view that establishing a CPG
is unnecessary, especially as those with grievances have recourse
to seek redress from the European Court of Justice, the European
Ombudsman and the European Data Protection Officer.
9.16 The Minister tells us that:
· the
draft Regulation was discussed in July 2014 at an official level
working group on combating fraud, where the UK joined the overwhelming
majority of Member States in declaring the proposal to be premature
and potentially unnecessary (the concept of a review adviser having
been rejected by the Council);
· the
ECA Opinion will be taken into consideration by Member States
and the Commission; and
· further
discussion of the Commission's proposal has yet to be scheduled
under the Latvian Presidency.
Previous Committee Reports
Eighth Report HC 219-viii (2014-15), chapter 8 (16
July 2014).
29 (35215) 12554/13: see Fifteenth Report, HC 83-xv
(2013-14), chapter 3 (11 September 2013) and Eighteenth Report,
HC 83-xvii (2013-14), chapter 6 (16 October 2013). Back
30
(35217), 12558/13 + ADDs 1-2: see Fifteenth Report HC 83-xv (2013-14),
chapter 1 (11 September 2013), Nineteenth Report HC 83-xviii (2013-14),
chapter 6 (23 October 2013) and HC Deb, 22 October 2013, cols.
262-74; (35613) 17176/13: Thirty-first Report HC 83-xxviii (2013-14),
chapter 8 (22 January 2014) and Forty-fifth Report HC 83-xl (2013-14),
chapter 10 (2 April 2014) and (36044) 9834/1/14: Fourth Report,
HC 219-iv (2014-15), chapter 6 (25 June 2014). Back
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