Strengthening OLAF

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Strengthening OLAF towards greater
effectiveness in the protection of the
Communities financial interests the revision of
the OLAF Regulation 1073/99 FINAL REPORT

• Dr Constantin Stefanou
• Dr Helen Xanthaki
• Research Assistants Gergana maneva Abdullatif
  elhag

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Issue 1

• A consideration of the relations between
  prosecution of fraud and audit/budgetary control
  authorities

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Classification

• Two main criteria
• judicial function
• relationship with national Parliament
• Three types of Supreme Audit Institutions (SAI)
• SAI, which are in fact Courts
• SAI, which resemble Courts because of their
  collegiate structure
• SAI, which are audit offices

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Main findings

• No dominant model of a Supreme Auditing
  Institution
• SAIs are the first point of identification of
  EU-fraud
• Prosecution takes place only in circumstances
  that constitute a crime or a serious offence
  under national law
• SAIs have a much closer link with the national
  Parliaments and the European Court of Auditors

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Issue 2

• OLAFs administrative and operational
  independence

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Rationale

• OLAFs independence and accountability
  constitutes a core issue for the study
• It relates to the level of effectiveness in the
  way in which OLAF performs its functions
• It is crucial for the assessment of the relevance
  and efficiency of the proposed amendments of
  Regulation No. 1073/1999

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Findings

• OLAF suffers due to its hybrid status
• On the one hand, OLAF enjoys operational
  independence and this should be safeguarded
• However, its relation and collaboration with
  Eurojust and Europol needs to be clarified
• On the other hand OLAFs hybrid status creates
  difficulties for the exchange of information and
  reporting
• So there is a need to explore complete
  administrative independence from the Commission
  in the model of Eurojust

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Issue 3

Judicial supervision of investigations in
European Institutions and in Some Member States,
OLAFs accountability

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OLAFs judicial accountability

• OLAFs Supervisory Committee
• no requirement for its composition to include
  members of the judiciary
• its mandate does not include judicial review of
  OLAFs actions
• in fact, the SC would benefit from formal
  inter-institutional participation as a mechanism
  of accountability
• participation of the EP as the only directly
  elected institution to the SC would be crucial
  for a democratic accountable OLAF
• Reporting to the European Parliament
• OLAFs reporting obligations do not signify that
  its actions are subject to judicial review by the
  EP or COCOBU

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OLAFs judicial accountability

• There is no direct judicial supervision over OLAF
• Judicial review is possible but very limited in
  scope by private applicants as they have to
  demonstrate legitimate interest
• Judicial review is possible by the institutions
  and Member States, but this will be against the
  Commission as a whole and not OLAF directly
• However, it is doubtful whether judicial review
  is possible against OLAFs orders or actions as
  most do not have binding legal effect
• Commission Proposals COM (2004) 103
• Mandate extended but does not amount to judicial
  supervision Art. 11(1)
• No change in the composition of the Supervisory
  Committee Art. 11(2)

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Issue 4

• Protecting Witnesses and Accused in OLAFs
  Investigations

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OLAFs legal framework provides

• Introduces general principles not enforceable
  rights, e.g.
• full respect of human rights
• principle of fairness in proceedings )Recital 10
  of Reg. 1073/1999)
• Protects a limited number of rights
• right to be informed (Art. 4 Model Decision)
• right to express views and comment (Recital 10)
• right to confidentiality of data (Art. 8)
• Offers variable protection
• In internal investigations
• confidentiality of data is protected by the rules
  applicable to the Communities institutions
  (Recital 19 Arts. 4(1) 8(2))
• OLAF protects whistleblowers against adverse
  treatment by their institution (Art. 4(6)(b) Reg.
  1073/99 Art. 2 Model Decision)
• In External investigations
• Confidentiality of data is protected by the
  relevant provisions of national law in the Member
  States (Recital 16, Arts. 8(1)
• OLAF does not guarantee the degree of protection
  to informants

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Protecting accused and witnesses

• Need exists for
• Enhancing procedural rights of defense and their
  application in practice
• Comprehensive and coherent framework (applicable
  to internal and to external investigations
  equally)
• Proposals do not meet these points
• There are still discrepancies in the protection
  of suspects in internal and in external
  investigations
• There is no legal assistance and advice prior to
  interview
• There is no legal aid
• There is no express right to interpretation/transl
  ation.

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Issue 5

• OLAFs cooperation with national investigative
  bodies

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Main Findings

• No universal model for investigating EU-fraud
• Success of the investigations is pre-determined
  by the focus on serious or complex fraud
• The involvement of OLAF at the national level is
  through coordination of activities and provision
  of know-how, logistical and methodological support

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Issue 6

Possible evolution of OLAFs relations with
Eurojust and Europol, and the future European
Public Prosecutor
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There are 4 scenaria

1. (Assumes creation of EPP) OLAF will become one of
   the investigative units of the European Public
   Prosecutor the latter will be responsible to
   Eurojust
2. (Assumes creation of EPP) Merger of OLAF and
   Europol who will in the future liaise, where
   appropriate, with the EPP according to Article
   III-274(2)
3. The minimum cooperation scenario, Europol and
   OLAF will assist Eurojust.
4. Eurojust cooperates with a merged Europol/OLAF

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Most probable scenario

• Irrespective of the future of the European
  Constitutional Treaty and in view of its
  ratification by thirteen Member States up to now,
  it looks like the EPP will still go ahead with a
  minimum of nine Member States, in which case
  OLAFs position will become difficult to sustain
  as the EPP does cover OLAFs current mandate.
• OLAF will have to either merge with Europol or
  become one of the units attached to the EPP
  with the EPP under Eurojust.

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Issue 7

Possible evolution of OLAFs relations with the
EP and COCOBU
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OLAFs relations with the EP COCOBU

• In order to perform its scrutiny function, the EP
  has the obligation to scrutinise the organisation
  of checks, the prevention, prosecution and
  punishment of fraud and irregularities performed
  by OLAF as part of the Commission
• Under Article 287 EC and Article 17 of the Staff
  Regulations OLAF staff may not disclose
  information coming to their knowledge in the
  performance of their duties to any unauthorised
  person
• However, under Article 267(2) of the EC Treaty
  members of COCOBU are authorised to receive such
  information for the performance of their duty of
  discharge and scrutiny
• Article 8(1) of Regs 1073/99 and 2185/96 provide
  discretionary access to data to persons whose
  function does not require them to know
• Contrary to current interpretation, the
  provisions do not allow discretion to COCOBU
  members who are authorised to receive data.

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OLAF and COCOBU

• In addition to data transferred to the EP as a
  body COCOBU is authorised to receive all data on
  current and closed OLAF files, as all data are
  necessary for the close monitoring of OLAFs
  activities on a functional and operational basis.
• Does this compromise OLAFs independence? No, as
  this method of full reporting already applies to
  the Supervisory Committee.
• What about the protection of the rights of the
  accused and witnesses?
• COCOBU staff are bound to confidentiality by
  Art.17 of the Staff Regulations and Section C of
  the Code of Conduct for the EP. Disclosure would
  require express authorization by the appropriate
  authority. Which should this be? Preferably an
  equivalent to the Interinstitutional Committee of
  Article 15(2) of Reg. 1049/2001.
• COCOBU members are bound to confidentiality by
  Article 287 EC Treaty and Annex VII of the new
  Rules of Procedure concerning data arising in the
  course of their work for the Committee.
• National provisions concerning judicial
  proceedings?
• Disclosure to authorised persons could not
  possibly have this adverse effect. Such a view
  would dictate non transfer to any body or agency
  or person, including OLAFs Supervisory Committee
  and national authorities that acquire data
  through mutual assistance conventions.

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So what changes can be considered?

• National audit and prosecution authorities may be
  legally bound to to involve OLAF in cases of
  fraud with possible EU implications
• OLAFs mandate, relationship and cooperation
  framework with Eurojust and Europol must be
  clarified
• Complete administrative independence of OLAF from
  the Commission needs to be explored Eurojust may
  be an excellent model
• The rules on OLAFs activities must be detailed
  in legislation
• Inter-institutional membership of OLAFs SC may
  be explored
• A form of judicial review of OLAFs decisions may
  be introduced
• Membership to COCOBU may be reduced in number
• The currently fragmented regulation of the rights
  of the accused and witnesses must be unified to
  the benefit of the accused and witnesses
• The rights and obligations of members and staff
  of COCOBU with specific reference to
  confidentiality issues must be clarified in
  detail
• A body for the resolution of confidentiality
  waiver disputes may be set
• A joint committee waiving OLAFs obligation to
  report in developing cases of extreme importance
  may also be introduced.
• The future of OLAF must be considered further
  OLAF may form part of the EPP chamber which in
  turn will form part of Eurojust