EUROPEAN ANTI-FRAUD OFFICE (OLAF) (11281/06)
Letter from the Chairman to Ed Balls MP,
Economic Secretary, HM Treasury
The proposed Regulation was considered by Sub-Committee
E at its meeting on 11 October. As you recall, the Committee examined
the Commission's previous proposal in detail: Strengthening
OLAF, the European Anti-Fraud Office (24th Report, 2003-04).
We were therefore particularly interested to see what changes
the Commission has made in the light of recent developments, including
the report prepared by the Court of Auditors.
In your Explanatory Memorandum, you draw attention
to a number of objectives of the Commission's new proposal. In
relation to governance and cooperation between the institutions
and the Supervisory Committee, we note that the Commission now
sees the need for political governance of OLAF's priorities and
that the new Article llA would provide for a "structured
dialogue". It seems that in future OLAF would not be free
to set its own policy priorities. Could this have consequences
for whether or not to open investigations in particular cases?
Do the Government agree with this change and what effect will
it have on OLAF's current "zero tolerance" policy?
Article 7A sets out a number of procedural guarantees.
You will recall that in your examination of the earlier proposals
we expressed concern that Article 7A should include a statement
of the right to legal assistance and to interpretation/translation
services. The latter appears to have been dealt with by reference
to the use of an official Community language of which the party
has "a thorough knowledge". Do you agree that Article
7A should make an express reference to the right to legal representation?
In relation to the objective of strengthening
the review of investigations, we are pleased to see that the Commission
has dropped its idea of extending the role of the Supervisory
Committee and proposes the appointment of an independent Review
Adviser. As our Report indicated, this would seem a much better
approach.
The proposal contains a number of provisions
aimed at improving the flow of information between OLAF and EU
institutions, between OLAF and Member States, and between OLAF
and so-called "informers". As you recall, when we considered
the earlier proposal, we were particularly concerned that as regards
internal cases the Director General of OLAF should be given greater
freedom so as not to prejudice the conduct of the investigation.
We are pleased to see that you share this view and we hope that
the Government will press this point strongly during the negotiations.
We note that the changes proposed to improve
the effectiveness of OLAF's investigations follow those in the
earlier text. In our 2004 Report we agreed with the Government
that it would be necessary to ensure that any new powers do not
impair the ability and right of national agencies to conduct their
own investigations. Are you content that the new text is satisfactory
in this respect?.
The Committee decided to retain the proposal
under scrutiny.
12 October 2006
Letter from Ed Balls MP to the Chairman
Thank you for your letter of 12 October about
my Explanatory Memorandum on this proposal. I am sorry for the
delay in responding to the queries you raised.
You were concerned that the new Article 11a
might not leave OLAF free to set its own policy priorities in
future. I agree that this is a risk. In Council discussions, a
number of Member States have stated that they do not see why it
is necessary to have this "structured dialogue" with
the institutions. The Presidency has now suggested that this article
be deleted from the proposal, so there would be no effect on OLAF's
"zero tolerance" policy.
Article 7a concerns "procedural guarantees".
I agree that this article should refer expressly to the right
to legal representation, and we will continue to press for this
to be included.
I am pleased that you consider the appointment
of a Review Adviser to be a better solution than the original
proposal to extend the role of the Supervisory Committee. In recent
Council discussions on the revised proposal, the Presidency has
now suggested that OLAF should appoint a "Hearing Officer"
for each case, akin to the function present in EU competition
regulations, either as well as the Review Adviser (which they
suggest should be re-titled "Investigations Ombudsman").
The function of the "Hearing Officer" would be to ensure
that the impartiality and objectivity of the investigations and
other procedural guarantees are effectively respected in the investigations
of the Office. Your Sub-Committee E can take the credit for this
proposal, from their report "Strengthening OLAF, the European
Anti-Fraud Office" (HL 139). The function of the Investigations
Ombudsman would be to rule on appeals or complaints.
As you know, I share your view that the Director
of OLAF should be allowed to exercise some discretion on when
to notify bodies that an internal investigation is being carried
out. We have proposed alternative text for Article 5A (c).[89]
I agree that there is a need to avoid impairing
the ability and right of national agencies to conduct their own
investigations, but this has to be balanced against OLAF's own
need to conduct effective investigations. I am not aware that
this has caused any problems to date, and the proposed revisions
to the Regulation would not seem to make this any more likely
in future. The regulations currently in force clearly distinguish
between OLAF's role in internal and external investigations. As
you are aware, the original proposal to revise the regulation
expanded Article 3, on external investigations. Paragraph 3 of
the proposal cross-referred to Article 4 (2), which gives OLAF
the right to immediate and unannounced access to the premises
of institutions, bodies, offices and agencies of the EU; and to
Article 4 (4), which ensures that OLAF informs the bodies in question.
While there was some concern initially that the proposed amendments
would extend OLAF's rights of access in Member States, I do not
now believe that this is the case. The evidence given by OLAF
to Sub-Committee E's inquiry, and noted at paragraphs 52 and 56
of HL 139 goes some way to addressing these potential subsidiarity
concerns. In addition, the addition of the words "for that
purpose" to Article 3 (3) in the revised proposal, makes
it clearer that the.cross-reference to Article 4 (2) 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, wishes to see relevant information to
that case held by the Commission, they will have "immediate
and unannounced access" to the latter. It is also worth remembering
that OLAF's investigations are of course only "administrative"
investigations and they will normally pass their findings to the
appropriate authority to take further action, which may include
an investigation of its own.
23 November 2006
Letter from the Chairman to Ed Balls MP
Thank you for your letter of 23 November which
was considered by Sub-Committee E at its meeting on 13 December.
We are pleased to see that the Government and the Committee are
at one on a large number of issues raised by the Commission's
proposal and have decided to clear the document from scrutiny.
We would be grateful if you would keep us informed of developments
and, if any material change is made to the proposal, you would
deposit the new text and submit a further Explanatory Memorandum.
14 December 2006
89 "The Director-General of OLAF may decide when
to inform the institution, body, office or agency, which shall
take any precautionary or administrative measures that are required,
with due account being taken of the importance of guaranteeing
the effectiveness of the conduct of the investigation and of the
specific confidentiality measures recommended by the Office". Back
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