Presentation of the OLAF Supervisory Committee Annual Report 2015

OLAF SUPERVISORY COMMITTEE

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Activity Report 2015

First and foremost:A big thank you for all OLAF staff who helped the SupervisoryCommittee (SC) and its Secretariat (SCS) in the exercise of theirlegal duties under Regulation No 883/2013. Together we can rebuildthe image of OLAF as a beacon of the fight against fraud in theEuropean Union.

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Herbert Bösch, Tuomas Pöysti (chairman), Johan Denolf, Catherine Pignon, Dimitris Ziminiatis

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OLAF SUPERVISORY COMMITTEE

A twofold role:

Facilitating and protecting the independence of OLAF's investigative function

Constructive criticism: we aim to be constructive and to make OLAF stronger on its core mission.

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Activity Report 2015 – in a nutshell

Opinions

• Opinion No 1/2015: OLAF's Preliminary draft budget

• Opinion No 2/2015: Legality check and review in OLAF

• Opinion No 3/2015: Opinion on the OLAF draft Investigation Policy Priorities (IPPs) for the year 2016

Activity Report 2015 – in a nutshell

Analysis and assessment:

• 476 reports on duration of investigations (12 month reports);

• Four complaints and requests from individuals;

• One request for public access to the SC's documents.

Monitoring:

• Procedure for Preparation & Adoption of SC Opinions & Reports

• Implementation by OLAF of the SC recommendations 2012-2014

• Prioritisation of SC recommendations

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Procedural guarantees and legality check -Opinion No 2/2015

Article 15(1) of Regulation No 883/2013: a two-layered control mechanism

• a control mechanism (ISRU)

• a monitoring mechanism (the SC)

• ensuring that OLAF conducts its investigations in full respect of the rights and procedural guarantees of the persons concerned

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The analysis

• focused on the legality check and review function by the Investigation Selection and Review Unit (ISRU)

• based on of 42 case files, 244 case-related documents (sample of 60 cases), interviews with OLAF staff and significant background documentation.

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General findings:

• high level of qualifications of ISRU staff -> still insufficient to cover the legal systems of all MS

• Significantly improved the work-forms following respective recommendations by the SC -> comprehensive and case-founded replies from the ISRU

• In-house relations -> SC encourages constructive relations between investigators and reviewers

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Further improvements:

• introducing a system for recording of crucial reviewers’ suggestions and their implementation

• enhance role of fundamental rights and procedural guarantees

Way forward:

• SC welcomes and encourages ISRU plans to hold workshops -> develop best practices

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Investigation Policy Priorities for the year 2016

Article 5 of Regulation 883/2013: call for a real "investigation policy"

OLAF refrained from defining a true “investigation policy”:

• no documented criteria

• no impact assessment or evaluation of the implementation of previous IPPs or performance indicators

• no systematic linkage with EU spending priorities and EU policy priorities in fighting against financial crimes

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• 2015 internal guidelines for case selection not communicated to the SC prior to their adoption

• guidance given to OLAF’s selection officers (via the instruction note) and selection guidelines do not reflect the importance of the IPPs in the selection process

• SC therefore considers that these instructions and guidelines are not in line with the requirements of Article 5 of Regulation 883/2013

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Very limited input from stakeholders for the 2016 IPPs: 3 Commission spending Directorates-General and 1 agency

No formal Commission inter-service consultation: OLAF did not indicate and assess the precise elements resulting from this consultation which support the selection of the IPPs for 2016.

The SC cannot consider the IPPs for the year 2016 as being properly substantiated.

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Duration of investigations

Article 7(8) of Regulation No 883/2013 - monitoring the duration of investigations: the core of the SC's mandate

Why important?

Connected to the fundamental rights of persons affected by the investigations:

principle of proportionality: to have their affairs handled in reasonable time, without unnecessary delays or unjustified periods of inactivity

performance indicator: OLAF's efficiency

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Regulation No 883/2013: reporting after 12 months and every 6 months thereafter

SC Opinion No 4/2014: information provided by OLAF was both insufficient and inadequate -> hampering the ability of the SC to monitor effectively the duration of OLAF's investigations and report appropriately to the EU Institutions

OLAF justified refusal of information with strict rules of confidentiality and data protection requirements -> SC requests did not violate such requirements

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2015: total number of 476 reports concerning investigations lasting more than 12 months.

Among the 476 reports:

• 262 reports do not contain any justification as to why the investigation had not been concluded in 12 months;

• 440 reports contain no mitigating measures adopted by the OLAF DG to avoid incurring any unreasonable delays.

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OLAF DG: 24 months a "normal duration" for OLAF investigations

SC understands: undue delays may occur -> but remedial measures should be taken by OLAF and indicated in the reports.

18 months reports: no additional useful information over and above the previous 12 months reports

In general: OLAF reports on the duration of its investigations do not contain sufficient factual information relating to elements -> SC cannot check the potential existence of unjustified delays.

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Performance indicator

OLAF DG has established this indicator at 20 months in the OLAF Annual Management Plan.

OLAF handles

• the registration of information

• dates of opening decisions

• dates of closure decisions

• the duration of OLAF cases

OLAF does not usually communicate this information.

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Lack of sufficient information -> SC was unable to draw any conclusions, in particular:

• whether investigations were conducted continuously and without undue delays

• whether their duration was proportionate to the circumstances and complexity of the cases.

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What data does the SC need?

To calculate the total duration of investigations closed in 2015, SC requested the communication of additional statistical information:

• dates of creation of cases

• dates and references of opening decisions

• dates of closure decisions

• dates of Final Case Reports.

-> These are particularly relevant for the evaluation of the performance of investigation proceedings.

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WHY IMPORTANT?

Excessive duration of the investigation process has a two-waynegative impact:

quality of proof (degradation of material proof)

usefulness for the judicial authorities (principle of judgment within a reasonable time).

At the date of this report, these requests have not yet been granted by OLAF.

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Follow-up to OLAF's recommendations

Article 17(5) of Regulation No 883/2013

SC: no information regarding cases where OLAF recommendations have not been followed.

Follow-up to financial, administrative or judicial recommendations:an essential indicator for the quality of these investigations.

2014 OLAF guidelines on the monitoring of recommendations to the national judicial authorities: SC intends to analyse this monitoring process and the follow-up given by national judicial authorities to these recommendations.

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Follow-up to OLAF's recommendations

Analysis of 2014 OLAF guidelines on monitoring to cover:

• co-operation with national authorities in criminal affairs

• exchange of information with Member States on on-going investigations

• co-operation with Eurojust and Europol (Articles 12 and 13 of Regulation No 883/2013).

However: statistical information received from OLAF to date is

rather incomplete and insufficient for the SC to draw any conclusions at this stage.

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Follow-up to SC's recommendations by OLAF

Since 2014, the SC has been regularly monitoring the implementation by OLAF of the SC recommendations.

2015: monitoring exercise concerning 50 recommendations (2012-2014), results: most of the recommendations were not sufficiently implemented by OLAF

Only 9 recommendations out of 50 were fully implemented.

Particular concern:

Non-implementation of high-priority recommendations related to:

• fundamental rights of EU citizens

• OLAF's regulatory obligations and to

• safeguards of OLAF's independence.

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Follow-up to SC's recommendations by OLAF

Further concern: lack of sufficient and timely feedback from OLAF on the reasons for non-implementation

To improve the accountability of this exercise, the SC requested that the follow-up to the SC's recommendations be integrated into the OLAF Annual Activity Report (Section 2.3 “Assessment of audit results and follow-up of audit recommendations”)

Further 15 recommendations issued in 2014-2015: monitoring ongoing, conclusions to be provided in the next activity report

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SC governance and co-operation with stakeholders

• exchange of views with the Institutions (Article 16 of Regulation No 883/2013)

• regular meetings with and provided expert assistance to the •Vice-President of the Commission in charge of OLAF, the European Parliament (the CONT Committee) and the Council (GAF)

• cooperation with the European Fundamental Rights Agency.

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Working methods and transparency

10 plenary meetings

The Chairman, the rapporteurs and SC Secretariat meet regularly to work on particular issues

Rapporteurs:

Members appointed by the SC, working with the SC Secretariat:

• draft reports, opinions or papers to be discussed in the plenary meetings

• meetings with OLAF management and staff in the framework of the preparation of the SC's opinions and reports

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Working methods and transparency

Transparency

SC Opinions are always discussed extensively with OLAF prior to their finalization. OLAF is always provided with an opportunity to comment.

2015: new procedure on the adoption of opinions and reports

To ensure maximum transparency: dedicated SC website(http://europa.eu/supervisory-committee-olaf) -> all non-confidential documents of public interest.

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http://europa.eu/supervisory-committee-olaf

Budgetary independence

In 2015: difference of understanding between SC and OLAF DG on some substantive aspects of the management of the SC budget

SC welcomes the decision of the Commission to move outside of OLAF the management of the SC budget and that its Secretariat

SC notes that the budget related to the activities of the Members of the SC has not been revised in 10 years.

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Supervisory Committee Secretariat

The SCS plays a crucial role by assisting the SC in implementing its monitoring functions in a loyal and efficient manner without being exposed to the risk of potential conflicts of interest.

Composition:

• 8 posts (5 AD, 2 AST, 1 contractual agent)

• lawyers, former investigators and assistants

Tasks:

• daily monitoring of OLAF investigative activities and assistingthe SC Members in the execution of their tasks

• initial review of information destined for the SC

• legal advice for the SC Members.

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Supervisory Committee Secretariat

2015: SCS remained administratively fully subordinate to the OLAF DG -> potential conflict of interest. SC welcomes the Commission's initiative to relocate the SC Secretariat to another appointing authority.

Guarantees to the independent functioning of the SCS:

• recruitment, appraisal and promotion of the Head of the Secretariat on the basis of the SC's decisions

• reclassification of the Head of the Secretariat as a senior manager

• recruitment, appraisal and promotion of the staff of the Secretariat by its Head

• sub-delegation of the SC and SC Secretariat's budget execution to its Head

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Closing remarks: Improving OLAF supervision – a priority on EU level

Improving OLAF supervision serves to equip the European Union with an adequate tool to ensure, and where necessary, defend the independence of OLAF, devoted to the respect of procedural guarantees and ensuring the reasonable duration of investigations.

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Questions to the rapporteurs?

Issues you would like to see better explained next year?

Any other feedback?

Thank you for your attention

Tuomas Pöysti

Chairman-----------------------------------------------

European CommissionSupervisory Committee of the

European Anti-Fraud Office (OLAF)

Présentation Powerpoint4/21/2016

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Documents

Presentation of the OLAF Supervisory Committee Annual Report 2015