The Commission Proposal Amending the OLAF Regulation

• Date: 01 June 2018
• Year: 2018
• Author: Koen Bovend’Eerdt LL.M.
• Pages: 75
• DOI: https://doi.org/10.30709/eucrim-2018-007

I. Outcome of the Evaluation of Regulation 883/2013

The proposal is based on the evaluation carried out by the Commission from 2015 until 2017.¹ The evaluation was necessary due to recent changes in the institutional and legal landscape for the rules on the protection of the Union’s financial interests:²

• The adoption of the PIF Directive in 2017;³

• The adoption of the EPPO Regulation in the same year;⁴ and

• The move towards a new Multiannual Financial Framework.⁵

With the above in mind, the Commission evaluation identified the following shortcomings in the OLAF legal framework.

1. Shortcomings related to the establishment of the EPPO

The establishment of the EPPO requires OLAF to adapt its investigative activities. While the EPPO Regulation does not alter OLAF’s mandate or competence to conduct administrative investigations, OLAF will need to work in close cooperation with the EPPO in order to allow both authorities to perform their tasks efficiently and effectively. The EPPO Regulation already lays down the main principles for the future cooperation between the EPPO and OLAF.⁶ These principles should be mirrored in the OLAF legal framework. The following issues require particular attention: (a) the handling by OLAF of incoming information and the swift transmission of information to the EPPO, (b) the handling by OLAF of cases referred to it by the EPPO for administrative follow-up, and (c) EPPO requests for operational support from OLAF.⁷

2. Shortcomings related to the effectiveness of OLAF’s investigative function

Although the changes brought about by Regulation 883/2013 have proven to be a clear improvement in the effective conduct of OLAF investigations, the evaluation revealed a number of shortcomings that hamper the effectiveness of OLAF’s investigatory work. First, OLAF’s powers, and their enforceability by national authorities, are subject to conditions of national law (notably on-the-spot inspections and digital forensic operations). This results in a fragmentation of OLAF’s powers and their enforceability in the Member States.⁸ Second, OLAF does not have full access to bank account information, particularly in external investigations. This is problematic because such information is often crucial in unveiling fraud and irregularities with EU monies.⁹ Third, OLAF’s investigatory powers in the field of valued-added tax (VAT) are unclear.¹⁰ According to some, the PIF Regulation applies only to traditional own resources (excluding VAT).¹¹ All the while, the Court of Justice ruled that VAT is definitively part of the Union’s financial interests, which OLAF is to protect.¹² Fourth, the OLAF Regulation leaves it up to national law to decide on the competences and powers of national anti-fraud coordination services (AFCOS). This results in a considerable diversity in the role, profile, and effectiveness of cooperation between OLAF and the Member States’ AFCOS.¹³ Fifth, OLAF’s rules on the admissibility of evidence hamper the effectiveness of its activities. The current OLAF Regulation provides that OLAF reports constitute admissible evidence in national judicial proceedings in the same way and under the same conditions as administrative reports drawn up by national administrative inspectors. This equivalence rule constitutes an obstacle to the effective follow-up of OLAF investigations in some Member States.¹⁴ Last, OLAF’s modalities for its coordination activities are unclear. Coordination cases allow OLAF and Member States to coordinate their action in protection of the Union’s financial interests. The OLAF Regulation does not specify the role and tasks of OLAF in such coordination cases. This results in a lack of legal certainty for OLAF and for the Member States that depend on OLAF’s assistance.¹⁵

3. Other evaluation findings

The evaluation also pointed out a number of other shortcomings requiring improvement. The rules on internal investigations (in particular, the inspection of premises), digital forensic operations, and the transmission of information to third countries and international organisations require clarification. Furthermore, the mandate of OLAF’s supervisory committee is ambiguous. In addition, measures to ensure closer cooperation between OLAF and the Union’s institutions, bodies, offices, and agencies must be put in place with regard to the early transmission of information by OLAF and the follow-up to financial recommendations. Lastly, the Guidelines on Investigation Procedures should be revised, and internal measures should be taken to ensure the quality of final reports and recommendations. ¹⁶

II. Objectives and Scope of the Commission Proposal

Based on the shortcomings identified in the evaluation, the proposal aims to achieve three specific objectives:¹⁷ (1) adapt the operation of OLAF to the establishment of the EPPO, (2) enhance the effectiveness of OLAF’s investigative functions, and (3) clarify and simply selected provisions of Regulation 883/2013 (not discussed in this article). The Commission clarifies that the current proposal does not aim to remedy all shortcomings identified by the evaluation: it is a targeted proposal. The Commission addresses only the most unambiguous findings of the evaluation, aimed at improving the effectiveness of investigations and cooperation with OLAF and at simplifying or clarifying certain provisions. A more far-reaching process to modernise the framework for OLAF investigations, including aspects that call for further and more fundamental reflection and discussion, will be launched later.¹⁸

III. Proposed Changes 1. Proposed amendments on the relationship with the EPPO

The proposal requires OLAF to establish and maintain a close relationship with the EPPO, based on mutual cooperation and on information exchange in order to ensure that all available means are used to protect the Union’s financial interests.¹⁹ To this end, the Commission proposes a working relationship based on reporting obligations to the EPPO, non-duplication of investigations, and support provided to the EPPO by OLAF.

Under the proposed regulation, OLAF is obliged to report to the EPPO any criminal conduct over which the EPPO could exercise its competence.²⁰ Such a report is to contain, as a minimum, a description of the facts, including an assessment of the damage caused or likely to be caused, the possible legal qualification, and any available information about potential victims, suspects, and any other involved persons.²¹ OLAF does not have to report to the EPPO in case of manifestly unsubstantiated allegations.²²

The Commission’s proposal sets out a non-duplication rule. Under this rule, OLAF may not open a parallel investigation if the EPPO is conducting an investigation into the same facts,²³ unless the EPPO requests OLAF’s support in the course of an investigation (see below) or if an OLAF investigation complements an EPPO investigation.²⁴ The latter is the case when an OLAF investigation facilitates the adoption of precautionary measures or of financial, disciplinary, or administrative action.²⁵

During an investigation, the EPPO can request OLAF to support or complement its activity, in particular by (i) providing information, analyses (including forensic analyses), expertise, and operational support, (ii) facilitating...