OLAF
Encyclopedia
The European Anti-fraud Office (commonly known as OLAF, from ) is charged by the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 with protecting the financial interests of the European Union: Its tasks are to fight fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 affecting the EU budget, as well as corruption and any other irregular activity, including misconduct, within the European Institutions, in an accountable
Accountability in the European Union
As with all public budgets, the EU's budget is also at risk of maladministration. Every year, the Court of Auditors reports on the management of the budget...

, transparent and cost-effective manner.

The Anti-fraud Office achieves its mission by conducting, in full independence, internal and external investigations. It also organises close and regular co-operation between the competent authorities of the Member States in order to co-ordinate their activities. OLAF supplies Member States with the necessary support and technical know-how to help them in their anti-fraud activities. It contributes to the design of the anti-fraud strategy of the European Union and takes the necessary initiatives to strengthen the relevant legislation.

It is an administrative investigative body. It has no judicial or disciplinary powers and it cannot oblige national prosecutors to act.

Structure

OLAF is a General Service Directorate General
Directorate-General
A Directorate-General is a branch of an administration dedicated to a specific field of expertise.* The European Commission: Commission Directorates-General are each headed by a European Commissioner;* The European Patent Office: EPO Directorates-General;...

 of the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

. For its investigative and operational tasks OLAF works in full independence. In a Special Report of July 2005 the European Court of Auditors
European Court of Auditors
The Court of Auditors is the fifth institution of the European Union . It was established in 1975 in Luxembourg to audit the accounts of EU institutions...

 concluded that "the hybrid status of the Office, which has investigative autonomy but reports to the Commission for its other duties, has not adversely affected the independence of its investigative function. Being part of the Commission, the Office has been able not only to benefit from substantial administrative and logistical support, but also to take advantage of the anti-fraud legislation that is available to Commission departments".

OLAF has about 500 staff, out of which 160 are investigators. Many of them are lawyers rather than accountants.

The former German public prosecutor Franz-Hermann Brüner
Franz-Hermann Brüner
Franz-Hermann Brüner was a German public official who was until recently director-general of OLAF, the European Union Anti-Fraud Office...

 was appointed as Director-General
Director-general
The term director-general is a title given the highest executive officer within a governmental, statutory, NGO, third sector or not-for-profit institution.-European Union:...

 for a second five-year term on 14 February 2006 after agreement between the European Commission, Parliament and Council, but died in January 2010. Director Nicholas Ilett is the acting Director General. UKIP MEP and former whistleblower Marta Andreasen
Marta Andreasen
Marta Andreasen is an Argentine-born Spanish accountant, employed in January 2002 by the European Commission as Chief Accountant, and notable for raising concerns about flaws in the commission's accounting system which she felt left the commission vulnerable to potential fraud...

 publicly expressed interest in the position in April, and reiterated her view that OLAF should be separated from the Commission. The post was assigned to Giovanni Kessler
Giovanni Kessler
Giovanni Kessler is an Italian politician of the Democratic Party. President of the Council of the Autonomous Province of Trento from December 2, 2008; since 2010 he seats at the head of the EU Anti-Fraud Office .Previously he was a member of the Democratic Left, and before a Christian Democrat...

, former Italian anti-fraud chief, in December 2010

History

OLAF was created in 1999, after strong pressure from the European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...

. Its predecessor UCLAF (Unité de coordination de lutte anti-fraude), an anti-fraud unit dependent of the European Commission, had failed to convince in the fight against irregularities within the European Institutions. The creation of OLAF is one result of the debates about allegations of fraud and the conduct of former European Commissioner Édith Cresson
Édith Cresson
Édith Cresson is a French politician. She was the first and so far only woman to have held the office of Prime Minister of France.- French Prime Minister :Cresson was appointed to the prime ministerial post by President François Mitterrand on 15 May 1991...

 which in the end led to the collective resignation of the Santer Commission.

An evaluation of the work of OLAF can be found in the Special Report of the European Court of Auditors
European Court of Auditors
The Court of Auditors is the fifth institution of the European Union . It was established in 1975 in Luxembourg to audit the accounts of EU institutions...

 of July 2005.

The European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...

 took stock of the first six years of OLAF during a public hearing in July 2005.

The UK House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....

, in a report published in November 2006, stated: "On the basis of the evidence we have received we emphatically refute claims that OLAF is too close to the Commission or that the Commission seeks to divert and influence OLAF’s investigative activities". The House of Lords concluded: "We are content with the extent of the investigations which OLAF has undertaken."

Cigarette companies' smuggling

Based on OLAF investigations and under OLAF's assistance the European Commission and 10 Member States entered into a law suit against three major international cigarette companies before US courts. According to the allegations, the cigarette companies had used smuggling as a channel of distribution. One of the companies later agreed on a settlement which earned the European Union a compensation of around 1 billion Euros.

Eurostat

The most politically delicate OLAF investigations were those into alleged wrongdoings in the EU statistical office EUROSTAT
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...

. The case caused serious political problems for the Prodi Commission in 2003. OLAF itself faced the accusation of having started the investigations only after the press reported about the case in 2002 and, especially, in May 2003. On top of that, on 8 July 2008 the European Commission and OLAF were condemned to pay the legal costs plus 56,000 euros to Eurostat's director-general Mr. Franchet and its director Mr. Byk in the judgement of case T-48/05 of the European Court of First Instance.

The Tillack case

OLAF came under pressure in 2004 in the course of an investigation that aimed to identify a leak within its own ranks. In February 2002, the journalist who had first written about the EUROSTAT case, the then Brussels correspondent of the German magazine Stern Hans-Martin Tillack
Hans-Martin Tillack
Hans-Martin Tillack is a German reporter. Born 1961 in Königs Wusterhausen near Berlin, he grew up in Stuttgart.He studied politology and sociology in Marburg and Berlin, worked for five years as reporter for taz before coming to Stern in 1993 – first in Bonn, from 1999 to 2004 in Brussels, today...

, and subsequently also other journalists had published details from a confidential OLAF document. Quoting that document, Tillack revealed that OLAF was in the possession of serious fraud allegations against EUROSTAT. Two years later and based on statements by a former Commission spokesman, OLAF claimed that Tillack might have received the internal documents from an official in exchange for money and passed this information to the Belgian public prosecutor. In 2004, following a request from OLAF, a Belgian judge ordered a search of the journalist's home and office in Brussels where the authorities seized his archives and his mobile phone. On the basis of the same information, the German authorities opened also an investigation but decided not to search his German offices. It is unclear why the suggestion was made that a pressing reason for the search would be the journalist's expected move to Washington while in fact he left Belgium for Hamburg. The search was widely condemned as an attempt to violate the principle of protection of journalists' sources.

Following the events Tillack initiated legal proceedings in Germany, Belgium, Strasbourg, and before the European Court of Justice. His complaint before the German courts against the Commission spokesman on whose statements OLAF had based the case was unsuccessful after the spokesman insisted on his immunity as a former Commission official. Tillack's appeals to the Belgian courts were not successful either as the judges did not consider the provisions of article 10 European Convention of Human Rights as pertinent and the Belgian law at the time did not explicitly grant journalists the right to protect their sources. Tillack subsequently took Belgium to the European Court on Human Rights in Strasbourg which may decide to open a case in September this 2006. Supported by the International Federation of Journalists (IFJ), the journalist also took OLAF to the European Court of Justice
European Court of Justice
The Court can sit in plenary session, as a Grand Chamber of 13 judges, or in chambers of three or five judges. Plenary sitting are now very rare, and the court mostly sits in chambers of three or five judges...

 where all his pleas were dismissed.

On the political level, Tillack complained to the European Ombudsman, who wrote a special report in May 2005 in which he recommended that OLAF should acknowledge that it made incorrect and misleading statements in its submissions to him and that the European Parliament could consider adopting his recommendation as a resolution. The European Parliament, however, decided to await the final decision of all court cases before further treating the Ombudsman's report. However, after the European Court of Human Rights
European Court of Human Rights
The European Court of Human Rights in Strasbourg is a supra-national court established by the European Convention on Human Rights and hears complaints that a contracting state has violated the human rights enshrined in the Convention and its protocols. Complaints can be brought by individuals or...

 decided on 27 November 2007 in Tillack v. Belgium that Article 10 of the European Convention on Human Rights
European Convention on Human Rights
The Convention for the Protection of Human Rights and Fundamental Freedoms is an international treaty to protect human rights and fundamental freedoms in Europe. Drafted in 1950 by the then newly formed Council of Europe, the convention entered into force on 3 September 1953...

 had been violated, the European Parliament rapporteur responsible for drafting a report was not given the green light to suggest that the Ombudsman's suggestion be taken on board.

An – incomplete – overview of the events is given in the judgement of the European Court of First Instance.

Quotes

  • “There are problems with the European anti-fraud office. The reforms of Olaf that were recommended by a committee of experts in 1999 after the fall of the Commission have not been implemented."
Paul van Buitenen, July 2007

See also

  • European Court of Auditors
    European Court of Auditors
    The Court of Auditors is the fifth institution of the European Union . It was established in 1975 in Luxembourg to audit the accounts of EU institutions...

  • Institutions of the European Union
    Institutions of the European Union
    The European Union is governed by seven institutions. Article 13 of Treaty on European Union lists them in the following order: the European Parliament, the European Council, the Council of the European Union, the European Commission, the Court of Justice of the European Union, the European...

  • Internal Audit Service
    Internal Audit Service (European Commission)
    The Internal Audit Service or IAS is a Directorate-General of the European Commission.The mission of the IAS is to:* issue independent audit opinions on the quality of management and internal control systems...

    (IAS)
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