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29th Mar 2024

EU in disagreement over anti-fraud reform

  • Traffic in Chinese garlic was one of Olaf's recent investigations (Photo: christing O)

The independence of the EU's anti-fraud investigative body needs to be strengthened, along with its accountability and oversight measures, but member states and the EU parliament disagree on how to move the reforms forward, the commissioner responsible told MEPs on Monday (12 July).

"We have an obligation to ensure that EU taxpayers' money is properly protected and that we take all possible measures to tackle fraud, particularly during times of economic difficulty," Europe's anti-fraud commissioner, Algirdas Semeta, said during a hearing in the European Parliament's budgetary control committee.

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He presented a 'reflection paper' on possible ways to reform the European anti-fraud office (Olaf), outlining where the European Parliament and member states are in disagreement and what solutions could be found to move forward. A legislative proposal to this end could be tabled by the end of this year, in view of having it approved by parliament in 2011, Mr Semeta said.

Set up in 1999 in the aftermath of a corruption scandal that brought down the European Commission led by Jacques Santer, Olaf is mandated to tackle fraud and corruption affecting EU funds in member states, as well as within the bloc's institutions.

Its investigations are administrative, but leads passed on to national authorities can be followed up in criminal proceedings.

At the end of June for instance, in a case flagged up by Olaf in 2006, a Bulgarian court sentenced a local businessman to 12 years in jail for embezzling €7.5 million of EU farm subsidies. His wife was also sent behind bars for five years, while four other accomplices got 10 years each.

Another case co-ordinated by Olaf earlier this month saw Norwegian and Swedish border guards arrest a truck driver after he tried to illegally import 28 tonnes of Chinese garlic into the EU.

But most Olaf leads do not get picked up by national authorities. German centre-right MEP Ingeborg Grassle, the rapporteur for Olaf reform, pointed out that only seven percent of Olaf's cases end up in court.

"It is unacceptable that so many cases end up in the paper basket. The council [of ministers] needs to deliver, we need to keep the pressure for better co-operation with national authorities," she said.

Echoeing previous requests from MEPs, Mr Semeta said member states should be obliged to report on the follow-up of Olaf leads transmitted to them. Also, prosecutors and police in member states should co-operate with the EU anti-fraud unit already during the stage prior to the opening of investigations.

"In the past Olaf could not always easily identify the competent authorities of the member state concerned when conducting on-the-spot checks. Olaf should have an easy access to these authorities. This is especially of importance in cases when Olaf encounters resistance from the economic operator directly or indirectly concerned," the commission's reflection paper says.

Another sticky issue is the role of the Supervisory Committee, a board of former MEPs, prosecutors and auditors overseeing the work of Olaf and having a say on the priorities and length of the investigations.

"We will have to seek together the best solutions regarding the dialogue between the institutions on the political governance of Olaf's investigative priorities, as well as the content of this dialogue. We will have also to see if other stakeholders - such as Europol and Eurojust - should be involved," Mr Semeta said.

The parliament's and member states' views diverge even more strongly on the nomination procedure, functions and title of the Olaf chief.

So far called a "director general," the top Olaf official could see his title changed to "executive director" if parliament agrees to the member states' proposal. The EU commission however suggested that despite the independent status of Olaf within the executive, the title has to reflect the fact that it has a "hierarchical level comparable to a director general."

EU decision-makers are also at odds over the length of the mandate of the Olaf chief: the commission proposes a non-renewable seven year term; the European Parliament would like a five-year term, renewable once and a greater say on the list of candidates put forward by the commission; member states, however, would favour a non-renewable term of five years.

Olaf currently has an interim director general, Nicholas Ilett, after its former chief Franz-Hermann Bruner passed away in January. Mr Bruner, a former German public prosecutor, had been at the head of Olaf since its inception.

The EU commission will come up with a shortlist in September, with the parliament expected to exchange views with the candidates and issue a recommendation for who should fill the post. Mr Bruner's second term appointment was made in spite of the legislature favouring another candidate from Sweden.

Marta Andreasen, a former EU commission chief accountant who was sacked in 2002 after she refused to sign off the accounts for being open to fraud, has made public her intention to run for the Olaf top post.

Currently an MEP affiliated with Britain's Independece Party (UKIP), Ms Andreasen told Accountancy Age on 15 April: "If you don't understand an audit report, and people who are not accountants and auditors have a problem with that, then you will never find anything we have to investigate."

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