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Case closed? – The EU Anti-Fraud Office’s new Annual Report

Author
Yannik Bendel
Date
3 June, 2015
Type
Article
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Love is not necessarily in the air in Brussels these days! Particularly not after the 2014 Annual Report publication of the EU’s Anti-Fraud Office (OLAF) yesterday – highlighting last year’s developments and achievements in preventing and tackling fraud and corruption across the EU. A good opportunity to take stock and to address some of OLAF’s critics

The most exciting news for us at the TI-EU Office: OLAF is now way more transparent in its reporting on investigations! For the first time ever, we see a breakdown of fraud investigations by country and by EU institution, as we had recommended (see, for example, in our EU Integrity Study). Not to the amusement of all EU member states apparently… But check it out yourself, the breakdowns provide for a much more meaningful picture of what is actually happening:

 

Fraud investigations by EU member states/candidate
Romania 36
Hungary 13
Bulgaria 11
Czech Republic 8
Italy 7
Spain 5
Greece, Slovakia 4
France, Germany, Lithuania 3
Poland, Serbia, Turkey 2
Albania, Belgium, Bosnia and Herzegovina, Croatia, Estonia,  Ireland, Kosovo, Latvia, Malta, Netherlands, Portugal, Slovenia, the former Yugoslav Republic of Macedonia, United Kingdom 1

 

Fraud investigations by EU Institution
Agencies 10
European External Action Service 9
European Parliament 7
European Commission 7
European Economic and Social Committee 3
Council of the EU 1
European Court of Auditors 1
European Investment Bank 1
EU missions 1

Now, does this mean that EU agencies are more prone to corruption and fraud than others? Or that new EU member states are more corrupt with one third of all 2014 investigations over EU funds being conducted in Bulgaria and Romania, for example? – Not necessarily, but if compared to the perceived levels of public sector corruption in both of the aforementioned countries, this news doesn’t come as a surprise. On Transparency International’s Corruption Perception Index (CPI) 2014, Bulgaria and Romania rank less than midway on the global scale, sharing the spot with crisis-shaken Greece and Italy. And to address EU member states’ concerns, it may be useful to consider clear performance indicators apart from the enhanced monitoring of EU member states’ actions upon OLAF’s recommendations. The new working arrangements between OLAF and its Supervisory Committee of 14 January 2014 are a first step in the right direction toward a more fully-fledged reform establishing the Supervisory Committee as an independent entity with full access to case files and an independent budget.

In addition, does it surprise us that only 22.7 million EUR were actually recovered of the 476.5 million EUR, as recommended by the EU’s Anti-Fraud Office? – Not so much either! Public procurement is Europe’s corruption risk hotspot number one, according to Transparency International’s research (see our assessment of 26 European National Integrity Systems. 450m EUR of unrecovered EU structural funds’ money equals the amount that Greece has transferred to the IMF in loan repayment in April this year. To keep public contracts free from corruption, EU member states’ managing authorities should use Transparency International’s “Integrity Pacts” tool as a preventive measure to improve trust and transparency in public procurement.

Further, with 700 million EUR of EU taxpayers’ money being lost to EU fraud, today’s report of the EU’s Anti-Fraud Office (OLAF) demonstrates the clear need for a more effective response from the EU level. Since OLAF’s mandate is limited to administrative investigations, the responsibility of bringing recommended cases to justice lies so far with EU member state authorities – which still too often fail to recover EU taxpayers’ money. It is thus prime-time for the EU and all EU member states (in the Council) to seize the opportunity in the currently ongoing negotiations to establish the European Public Prosecutor (see EC proposal on the establishment EPPO) to help tighten the net around fraudsters and cross-border corruption in the EU. OLAF as the main institutional anti-fraud and anti-corruption bodies in the EU can be a decisive driver and partner of the future EPPO in fostering a better EU policy response to the million EUR expensive game.

All in all, the EU’s Anti-Fraud Office may not be the most loved European body in Brussels. But does it have to be? Indeed, the aftermath of the “Dalligate-Affair” has been a bit of a rough time lately for Giovanni Kessler, the Italian Director-General, having to defend the organisation against the European Parliament and its own Supervisory Committee (SC) (see some of the criticism here). Running OLAF should not be about winning a beauty contest. It is about the effectiveness of office’s performance, it is about the effectiveness of tackling fraud and corruption and, most importantly, it is about the effectiveness of recovering huge amounts of lost EU taxpayers’ money that still disappears too often in the wrong pockets.

Leaving politics aside, OLAF’s basic performance figures may speak for themselves:

– The time needed to pre-select incoming allegations (still hovering around 2 months) and the number of opened investigations (234 in 2014) pretty much stayed the same compared to the previous year. Notably though, the average duration of investigations continues to decrease, clearly indicating that OLAF is on its way to address fraud and corruption more efficiently (from 21,8 in 2013 to 21,0 months for the last reporting period).

– The expected cuts of OLAF’s financial and human resources are worrying and we can only reiterate our recommendation for better resourcing, if the EU wants to fight fraud and corruption in the EU more lastingly.

– Whether the establishment of internal whistleblowing procedures or measures to improve the conduct of legality checks prior to the opening of investigations will be picked up in the future still remains to be seen.

In sum, we would like to give credit to the EU’s fraud fighter for acting on some of Transparency International’s recommendation. OLAF’s reporting is getting better, yet much remains to be done to recover the millions of EUR lost every year to fraud and corruption. We are already looking forward – the jury is still out on this point!

 

For thematically related blog posts, see here:

European Public Prosecutor: Do EU member states miss the point? 

Europe’s heroes under fire: blowing the whistle on corruption or better not?

EU institutions drag their feet and still fail to protect whistleblowers

The reality of being a whistleblower

Want to know more? Get in touch

Nicholas Aiossa

Policy Officer – Misuse of EU Funds; Whistleblowing
naiossa@transparency.org