EUROPEAN COURT OF AUDITORS Michael BAIN Head of Unit - NR4 Tél.: Findings and conclusions related to the Commission’s anti-fraud services. Presentation to the EPP Hearing 3/10/13

2 Published reports and opinions (selected) Special report no 8/98 on: Commission’s services specifically involved in the fight against fraud ▪ An examination of the operation of UCLAF Follow-up of SR 8/98 - published in the Court’s Annual Report 2000 ▪ A follow up of the main findings of the previous special report following the creation of OLAF Special Report 1/2005 Concerning the management of OLAF ▪ An examination of the operation and management of OLAF. Special Report 2/2011 – following up the 2005 report ▪ An in-depth follow-up of the findings of the 2005 report Opinion 6/2011 – on the proposal concerning OLAF investigations ▪ The latest in a series of opinions the Court has been asked to give in relation to proposed legislation relating to the operation of OLAF and the Commission’s fight against fraud.

Main findings Common threads running through the reports resulting from work done between 1996 and the present day: The anti-fraud services (UCLAF and OLAF) have not prioritised the core function of investigation. Poor management of case files and lack of consistent procedures, leading to the risk that cases opened are not successfully brought to a conclusion and rights are not respected – (a complex multi-national framework but solutions adopted to date have not been successful) There remains a lack of a true independent guarantee of the legality of investigative procedures There is a need for a reinforcement of procedural guarantees, even the latest regulatory proposals do not fully clarify the rights of persons to be interviewed. The relationship between the office and supervisory Committee is unsatisfactory. The role and responsibilities of the Committee need to be clarified. The treatment of “internal cases” has been shown to be inadequate. A need for clear rules to be established. 3

4 “The legal framework has not changed since the Court’s last report. There is still no independent control of investigative acts, nor is there a code guaranteeing that investigations follow a predictable course. Special Report 2/2011 Findings from previous reports … “In a comparison with the systematic way many national investigation services are forced to compile an investigation file for the prosecutor, it is difficult to see how the UCLAF files can form the basis for a case respecting national laws.” Special Report 8/1998 “A procedure has been introduced to consult the SC before forwarding information to national judicial authorities but this does not yet adequately protect the rights of the individuals concerned.” Special Report 2/2011 “The Court regrets however that the objective of independent control of investigative acts in progress will not be achieved under the Commission proposal.” Opinion 6/2011 “The Court recommends taking into account the Court of First Instance’s judgment of July 2008 which held that it is an important function of the Supervisory Committee to protect the rights of persons who are the subject of OLAF investigations” Opinion 6/2011 “There is no independent check on the legality of actions investigative procedures that are underway or that the fundamental rights of persons under investigation are safeguarded.” Special Report 1/2005 “All too frequently the preparation and follow-up of investigations is rudimentary” Special Report 1/2005 S “OLAF should increase the number and speed of its investigations by increasing the proportion of time spent on its core investigative function” Special Report 2/2011

Practical outcomes from the weaknesses found: a double edged sword The result of a failure to follow the proper procedures not only impacts on the rights of persons concerned by OLAF procedures but also directly on the protection of the financial interests of the EU budget. Where cases are time-barred, rejected prior to hearing, or lost before national judiciaries the recovery of the monies involved is almost impossible. This has a direct impact on the EU budget and is a waste of scarce EU and national resources. Where cases are founded and are then lost due to poor procedure the perpetrators of such frauds also escape punishment. 5