52006PC0244

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 24.5.2006

COM(2006) 244 final

2006/0084 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)

(presented by the Commission) Bruxelles, le 24.5.2006

COM(2006) 244 final

2006/0084 (COD)

Proposition de

RÈGLEMENT DU PARLEMENT EUROPÉEN ET DU CONSEIL

modifiant le règlement (CE) n° 1073/1999 relatif aux enquêtes effectuées par l’Office européen de lutte antifraude (OLAF)

(présentée par la Commission) {SEC(2006) 638 }

EXPLANATORY MEMORANDUM

Motivation and objectives

The European Anti-fraud Office (OLAF) was established in 1999. European Parliament and Council Regulation (EC) No 1073/1999[1] and Council Regulation (Euratom) No 1074/1999 of 25 May 1999[2], which lay down the modalities of both internal and external investigations conducted by OLAF, and Commission Decision 1999/352/EC, ECSC, Euratom of 28 April 1999 establishing the Office[3] are the key instruments in the legal framework within which it operates.

In April 2003, the Commission approved a first evaluation of the Office’s activities[4], which contained a set of recommendations aimed at further enhancing OLAF’s operations. The Commission concluded that the synergies and the institutional situation of the Office (Commission department enjoying operational independence) were capable of functioning but that there was a need to improve its efficiency and cooperation with the Member States. The European Parliament welcomed the Commission's undertaking to prepare the requisite legislative proposals.[5]

In February 2004 the Commission adopted proposals amending Regulations (EC) No 1073/1999 and (Euratom) No 1074/1999[6]. The aim was to boost the procedural rights of individuals, to ensure better control over the duration of investigations and to improve the exchange of information between the Office and the institutions concerned and the efficiency of operational activities. Before opening the first reading of these proposals, Parliament and the Council asked for a further evaluation of the performance of the Office. This was the backdrop to a special report[7] by the Court of Auditors on the management of OLAF, which contains a number of recommendations and an opinion on the amendments proposed in February 2004[8]. The Court of Auditors agrees that the current structure of the Office as a Commission department enjoying operational independence is satisfactory. But it recommends that greater efforts be made to improve efficiency at the Office, particularly as regards the duration of investigations, cooperation with national authorities and concentration on essential tasks and on the powers of the Supervisory Committee.

In July 2005, a public hearing on the reinforcement of OLAF was organised at the European Parliament by the Committee on Budgetary Control, in the presence in particular of Vice-Presidents Kallas and Frattini, representatives of the Court of Auditors and the Court of Justice, and leading experts. At this hearing Vice-President Kallas stressed the value of establishing political governance of OLAF’s anti-fraud investigative activities and the need for independent review of proceedings and the duration of investigations while ensuring the confidentiality of investigations. It was possible to conclude from the public hearing that the Office’s current institutional structure did not hamper its independence, that defence rights needed to be enhanced and that the review function needed to be looked into.

This proposal follows up these conclusions. It takes over the progress made in February 2004 and extends it. In view of the findings of the evaluation, the audit by the Court of Auditors and the public hearing, this proposal leaves the Office’s institutional structure unchanged and aims solely to improve its operation in the existing framework. Given the scale of the amendments, this proposal replaces the proposal presented on 10 February 2004, which is withdrawn.

Enhanced governance, combined with the establishment of the Review Adviser and the provisions on the flow of information between OLAF and the institutions, bodies, offices and agencies concerned, will help to strike the right balance between independence and control.

With this proposal there is also a draft internal Commission decision prepared by its staff, which the Commission has noted and which will be sent to the legislative institutions by way of information. That document will contain more detailed measures as well as rules for the application of the new provisions of Regulation (EC) No 1073/1999. It will have to be adopted subsequently in the light of the final text of the principal Regulation as adopted by Parliament and the Council. The same will apply, if the need arises, to the Interinstitutional Agreement between the European Parliament, the Council and the Commission adopted on 25 May 1999. Other aspects of cooperation between OLAF and other institutions and departments will be addressed at a later date.

In substance, the proposal has the following main objectives:

Governance, cooperation between the institutions and the Supervisory Committee

The July 2005 hearing raised questions about the new role of the Supervisory Committee as proposed by the Commission in February 2004. The Commission also sees a need for political governance regarding priorities related to investigative activities. Relations between the Supervisory Committee, the Office and the institutions and other bodies, offices and agencies should be reviewed and closer cooperation should be established.

For this the Commission proposes that the Supervisory Committee meet, periodically or upon request, with representatives of the European Parliament, the Council and the Commission as part of a structured dialogue, without interfering in the course of investigations. This dialogue could also be the opportunity to discuss the definition of the Office’s strategic priorities and programme of activities and the annual activity reports of the Committee and the Director-General of the Office. The aim of this structured dialogue is to exercise a political control function on the investigative activities and efficiency of the Office and the Committee, and to ensure that sound relations are maintained between the Office and the EC institutions and other bodies, offices and agencies, in particular as regards information flows. The Committee’s task in the structured dialogue is to issue opinions and make recommendations, in particular regarding the appointment of the Director-General of the Office and disciplinary penalties against him.

Guarantee of the rights of persons implicated

The proposals presented in February 2004 provide for procedural guarantees that are preserved in this proposal. Wherever possible, the proposal seeks to harmonise the procedures for internal and external investigations so as to simplify processing and boost certainty in the law.

The Commission proposes including in the Regulation a detailed provision on the procedural guarantees to be respected in the conduct of internal and external investigations. These guarantees build on, and complement, provisions existing in the Interinstitutional Agreement on internal investigations (and the various individual decisions implementing it), in the Staff Regulations and in the OLAF Manual. Incorporating them in the Regulation itself makes it possible to constitute a uniform body of basic guarantees applicable to all OLAF investigations, be they internal or external. The following additional guarantees were proposed in February 2004:

- provisions on information to be given by OLAF prior to an interview and on the establishment of minutes of the interview;

- right to be assisted by a person of one’s choice at an interview;

- right not to incriminate oneself.

These guarantees must be respected not only before the final report is drawn up but also before information is transmitted to the national authorities.

Strengthening the review of investigations

Not only are the detailed provisions inserted concerning the procedural guarantees (Article 7a) applicable to internal and external investigations, it is also necessary to have them enforced by enhanced review and to provide for the possibility of requests for opinions. This review would be undertaken by a Review Adviser exercising his function in the Office on an exclusive basis and in full independence. Independence is guaranteed by Article 14 of the proposal and, in particular, the role of the Supervisory Committee in the appointment process. This review takes account of the confidentiality of investigations and the principle of sound administration, professional secrecy and data protection and the exercise of their respective prerogatives by both the disciplinary authorities and the judicial authorities.

The enhanced review is applicable at all stages of an internal or external investigation, thereby guaranteeing a single set of review arrangements for all of the Office’s investigation work. The procedural rules concerning the Review Adviser’s opinions should be laid down by an internal Commission Decision. The Review Adviser’s function is an additional measure which, far from being a substitute for judicial review by the Community courts, is designed to reinforce upstream control measures.

The proposed provisions establish a new arrangement for long-term investigations. The institutions “concerned” by an investigation and the Supervisory Committee must be informed of the opinion of the Review Adviser where OLAF decides, after receiving the opinion, to continue the investigation beyond twelve months. The Commission and the Supervisory Committee are to receive the statistical and analytical reports produced by the Review Adviser from time to time on the duration of internal and external investigations.

The review of investigations while they are ongoing is above all a rapid control conducted within the Office. The review adviser is required to formulate opinions:

- on the procedural guarantees provided for by Articles 6(5) (reasonable period of investigation) and 7a of this Regulation, of his own initiative or at the request of any EC official or servant or any economic operator personally implicated by an investigation in progress. This opinion may be sought at any stage of the investigation;

- on the duration of the investigation exceeding twelve months automatically or in the event of successive extension beyond eighteen months at the request of the Director-General of the Office; the opinion is notified to the institution, body or agency concerned by the investigation and to the Supervisory Committee;

- where it is necessary to defer implementation of the obligation to call on the person implicated to make his views known on all the facts concerning him;

- at any time during the investigation, whenever the Director-General of the Office so requests in relation to the control of investigations.

At the final stage of an investigation, the proposed mechanism gives an EC official or servant, a natural person or an economic operator, personally implicated in the facts under investigation, the right to be notified by the Office of the conclusions and recommendations of the final investigation report; it allows an interested party who considers that procedural guarantees were not respected in relation to him while the investigation was being conducted to file a request for an opinion with the Review Adviser. This right to notification at the final stage of the investigation is subject to an exception where there is a need to preserve strict secrecy so as to protect the criminal follow-up to the investigation and the effectiveness of cooperation between OLAF and the police and judicial authorities.

Improving the information flow

a) Between OLAF and the European institutions and bodies

The provisions on passing on information to the institution or body concerned are essential for enabling the European institutions to exercise their political responsibility in cases involving suspected wrongdoing of their officials and/or necessitating administrative action on their part so as to protect the interests of the Union. In such cases, OLAF must be required to inform the institution or body concerned. In addition, the institution or body concerned must also be informed when OLAF transmits information to the judicial authorities. The February 2004 provisions are taken over in their entirety here.

It would also be legitimate for not only the Member States but also the Commission, which is responsible for protecting the Communities’ financial interests, to be able to ask for an external investigation to be opened, to be informed where there is a need for measures to be taken to protect the Communities’ financial interests and to be informed of the outcome.

It is also necessary to enhance the exchange of information between OLAF and Europol and Eurojust for the sake of efficiency in the fight against fraud, corruption and all other illegal activities to the detriment of the financial interests of the European Communities.

b) Between OLAF and the Member States

The proposal aims at further strengthening cooperation between OLAF and the Member States in the field of external investigations and in information flows. It provides that for the purposes of all its investigations the Office should be informed of action taken by national judicial authorities in response to information transmitted during an OLAF investigation or after its closure.

c) Between OLAF and informers

Anybody in an institution, body, office or agency who transmits information relating to fraud or irregularity cases to the Office will be informed whether an investigation has been opened on the basis of the information.

Moreover, any person who has provided information to the Office relating to a suspected fraud or irregularity may, upon request, be informed by the Office that an investigation has been closed and, where appropriate, that a final report on the investigation has been sent to the competent authorities, provided that such information does not prejudice the rights of the person concerned, the effectiveness of the investigation and its follow-up or any confidentiality requirements.

Strengthening OLAF’s operational efficiency

Provisions are proposed that will allow OLAF to concentrate on its priority actions. It should be made clear that OLAF has discretion over whether or not to open investigations, and to ask the appropriate authorities to follow up cases that are of minor significance or lie outside its investigative priorities, inviting them to inform it of the action taken on its requests.

More generally, the procedures for opening and closing investigations and the relationship between internal action by the European institutions and bodies, on the one hand, and OLAF investigations, on the other, must be clarified. As long as an OLAF internal investigation is in progress, institutions, bodies, offices and agencies must not initiate parallel investigations.

As in the past, the decision whether or not to open an investigation will remain with OLAF, having regard to its priorities and its programme of investigative action and the proportionality principle; the Office’s functional independence will continue to be scrupulously respected and guaranteed by the Supervisory Committee.

Improving the effectiveness of OLAF’s investigations

In line with the recommendations contained in the evaluation report on direct expenditure, it is proposed to clarify OLAF's powers of investigation in the context of external investigations into economic operators receiving Community funds on the basis of contracts, or grant agreements or decisions (direct expenditure). These clarifications will also help to enhance the efficacy of OLAF’s investigations regarding indirect expenditure.

In connection with external investigations OLAF should be given improved access to information held by the European institutions and bodies. Access to information held by economic operators in the context of internal investigations should likewise be facilitated.

Term of office of the Director-General

To reinforce his independence, it has been found appropriate to provide that the Director-General of the Office will hold office for a non-renewable term.

To facilitate the interinstitutional consultation procedure, it is provided that the decision be taken by the Commission after consulting the representatives of the other institutions meeting with the Supervisory Committee in the context of the structured dialogue.

Provision is made for the Director-General to refrain from transmitting information concerning criminal proceedings to national authorities regarding facts that may be liable to give rise to criminal proceedings if transmission is unwarranted on grounds of proportionality and the effectiveness of the prosecution. The Supervisory Committee and the Review Adviser must be informed of any such decision.

Related legal provisions

It should be noted that the Commission is proposing, in parallel, amendment of Regulation (Euratom) No 1074/1999, i.e. the legal framework for OLAF investigations carried out under the Community law covered by the Euratom Treaty.

Legal basis

The Commission proposal is aimed at amending existing Regulation (EC) No 1073/1999 and is therefore based on Article 280 of the Treaty establishing the European Community.

Subsidiarity and proportionality

The amending Regulation is fully compatible with the principle of subsidiarity. Like the original Regulation (EC) No 1073/1999, this amending Regulation in no way reduces the powers and responsibilities of the Member States for taking measures to combat fraud affecting the Communities' financial interests. OLAF’s means of action in external investigations are clarified and strengthened only in isolated respects where practice has revealed legal loopholes in the existing system and where only more effective intervention by the Office can ensure that it can conduct reliable external investigations which can be used by the authorities of the Member States. In addition basic procedural guarantees need to be extended to external investigations in order to provide a uniform legal framework for all investigations conducted by OLAF. As clear rules, enshrined in Community legislation itself, are required on these matters for the sake of effective OLAF action within a framework of legal certainty, these rules also comply with the principle of proportionality.

Fundamental rights

As confirmed by the Court of Justice (judgment of 10 July 2003, Case C-11/00 Commission v ECB , paragraph 139), Regulation (EC) No 1073/1999 in its original form already reflects the firm determination of the legislative authority to make any powers granted to OLAF subject to full respect for human rights and fundamental freedoms. It would seem appropriate to make the procedural guarantees even stronger than in the present arrangements and to have them apply to all investigations conducted by OLAF, both internal and external. These guarantees respect the fundamental rights recognised in particular by the Charter of Fundamental Rights of the Union, or even exceed the minimum level of protection required by the Charter.

Budgetary impact

The financial statement attached to the proposal indicates that there will be no impact on the budget.

2006/0084 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 280 thereof,

Having regard to the proposal from the Commission [9],

Having regard to the opinion of the Court of Auditors,

After consulting the European Data Protection Supervisor,

Acting in accordance with the procedure laid down in Article 251 of the Treaty[10],

Whereas:

(1) Clear rules should be laid down which, while confirming the priority enjoyed by the European Anti-Fraud Office (‘the Office’) for conducting internal investigations, establish mechanisms enabling the institutions, bodies, offices and agencies quickly to take over the investigation of cases in which the Office decides not to intervene.

(2) It needs to be made clear that the decision as to whether to open an investigation is left to the discretion of the Office, which may decide not to open an investigation in cases of minor importance or not falling within the investigative priorities set annually by the Office. Such cases should then be handled, where internal investigations are concerned, by the institutions and, where external investigations are concerned, by the competent national authorities in accordance with the rules applicable in each Member State.

(3) The Office must be placed under precise obligations to inform the institutions, bodies, offices and agencies in good time of investigations in progress where a member, manager, official or other servant or staff member is personally implicated in the matter under investigation or where administrative measures may be required in order to protect the Union’s interests.

(4) In order to make the Office’s investigative activity more effective and in the light of the evaluations of its activities made by the institutions, in particular the Commission’s evaluation report of April 2003 and the Court of Auditors’ special report No 1/2005 on the management of the Office, certain aspects need clarifying and certain measures the Office can take in conducting its investigations need improving. The Office must therefore be given the power to carry out the inspections and checks provided for by Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities’ financial interests against fraud and other irregularities[11] in connection with internal investigations and in cases of fraud linked to contracts concerning Community funding, and have access to information held by the institutions, bodies, offices and agencies of the Union in connection with external investigations.

(5) It is necessary, for the sake of legal certainty, to clarify the procedural guarantees applicable in internal or external investigations conducted by the Office. That does not affect any more extensive protection which may derive from the rules of the Treaties, the Staff Regulations and any relevant national provisions.

(6) In order to strengthen the protection of the individual rights of persons under investigation, and without prejudice to Article 90a of the Staff Regulations of Officials of the European Communities and the powers of the Court of Justice of the European Communities under the Treaty, a person implicated personally must be entitled, at the final stage of an investigation, to be provided with the conclusions and recommendations of the final investigation report and, if that person considers that procedural guarantees have not been complied with, must be able to file a request for an opinion with the Review Adviser established by this Regulation.

(7) For the sake of greater transparency, it is necessary to ensure an adequate degree of information for informers, who must be informed of the initial decision as to whether or not to open an investigation and, on their express request, of the outcome of the action taken on the information supplied.

(8) Where it is found that facts which may constitute criminal offences, brought to light by the final report on an internal investigation, cannot, on account of their nature, because they are not serious enough or because the financial loss was only minor, be effectively dealt with before the courts, the Director-General of the Office should transmit the final report direct to the institution, body, office or agency concerned in order that more appropriate action then be taken. It is necessary that he inform the Supervisory Committee and the Review Adviser of all duly reasoned decisions not to transmit the final report to the judicial authorities.

(9) Experience based on operational practice has shown that it would be useful to allow the Director-General of the Office to delegate the exercise of certain of his functions to one or more members of the staff of the Office by a written document specifying the conditions and limits governing the delegation.

(10) It is appropriate to strengthen the Supervisory Committee’s powers of review in relation, in particular, to compliance with the provisions governing information exchanges between the Office and the institutions, bodies, offices and agencies, and to developments in the application of procedural guarantees and duration of investigations. It is also necessary to establish cooperation between the Supervisory Committee and the European Parliament, the Council and the Commission, by enabling the Supervisory Committee, without affecting the independence of its members, to meet representatives of those institutions in the context of a structured dialogue.

(11) In order to reinforce complete independence in the running of the Office, the Director-General should be appointed for a term of seven years which will not be renewable.

(12) In order to strengthen respect for procedural guarantees, a Review Adviser should be required to deliver an opinion, in complete independence, of his own motion or on requests for opinions relating to such guarantees, and to give opinions in certain other cases, in particular on requests made by the person implicated personally.

(13) The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission[12].

(14) Regulation (EC) No 1073/99 should be amended accordingly.

(15) By this Regulation, the courses of action which may be taken by the Office in external investigations are clarified and strengthened only in isolated respects where legal loopholes have been found in the existing system and where only more effective action by the Office can ensure that reliable external investigations are conducted, which can be used by the authorities of the Member States. In addition, procedural guarantees need to be extended to external investigations in order to provide a uniform legal framework for all investigations conducted by the Office. This Regulation fully respects the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

(16) This Regulation respects fundamental rights and complies with the principles recognised in particular in the Charter of Fundamental Rights of the European Union, and in particular Articles 47 and 48 thereof,

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1073/1999 is amended as follows:

(1) Article 3 is replaced by the following:

“Article 3

External investigations

1. The Office shall exercise the power conferred on the Commission by Regulation (Euratom, EC) No 2185/96 to carry out on-the-spot inspections and checks in the Member States and, in accordance with the agreements in force, in third countries and international organisations.

As part of its investigative function, the Office shall carry out the inspections and checks provided for in Article 9(1) of Regulation (EC, Euratom) No 2988/95 and in the sectoral rules referred to in Article 9(2) of that Regulation in the Member States and, in accordance with the cooperation agreements in force, in third countries.

2. With a view to establishing that there has been fraud, corruption or any other illegal activity referred to in Article 1 in connection with a grant agreement or decision or a contract concerning Community funding, the Office may, in accordance with the procedures laid down by Regulation (Euratom, EC) No 2185/96, conduct on-the-spot checks and inspections on economic operators concerned by such funding.

3. During an external investigation and where strictly necessary in order to establish that fraud, corruption or any other illegal activity referred to in Article 1 has occurred, the Office may have access to any relevant information held by the institutions, bodies, offices and agencies connected with the matter under investigation. Article 4(2) and (4) shall apply for that purpose.

4. Where the Office has to hand, prior to an investigation, information which suggests that there has been fraud, corruption or any other illegal activity referred to in Article 1, the Director-General of the Office may inform the competent authorities of the Member States concerned and, without prejudice to the sectoral rules, those authorities shall ensure that appropriate action is taken and, where necessary, undertake investigations in accordance with national law, in which staff of the Office may take part. The competent authorities of the Member States concerned shall inform the Director-General of the Office of their findings on the basis of such information.”

(2) Article 4 is amended as follows:

(a) paragraph 3 is replaced by the following:

“3. In accordance with the procedures laid down by Regulation (Euratom, EC) No 2185/96, the Office may carry out on-the-spot inspections at the premises of economic operators in order to obtain access to information relevant to the matter under internal investigation.”

(b) paragraph 5 is deleted.

(3) Article 5 is replaced by the following:

“Article 5

Opening of investigations

1. The Office may open an investigation when sufficiently strong suspicions exist that acts of fraud or corruption or other illegal acts referred to in Article 1 have been committed. The decision whether or not to open an investigation shall take account of the investigation policy priorities and the Office’s programme of investigative activities determined in accordance with Articles 11a and 12(5). That decision shall also take account of the need for efficient utilisation of the Office’s resources and for proportionality in the means deployed.

2. The decision to open an external investigation shall be taken by the Director-General of the Office, acting on his own initiative or following a request from a Member State concerned or the Commission.

The decision to open an internal investigation shall be taken by the Director-General of the Office, acting on his own initiative or following a request from an institution or from the body, office or agency within which the investigation is to be conducted.

While the Office is conducting an internal investigation within the meaning of this Regulation, the institutions, bodies, offices or agencies shall not open a parallel investigation into the same facts.

3. When an institution, body, office or agency plans to open an investigation acting under its own administrative authority, it shall ask the Office whether the facts in question are already the subject of an internal investigation. The Office shall state within fifteen working days of that request if an investigation is already open or if it is planning to open an investigation under paragraph 4. Failure to reply shall be deemed to be a decision on the part of the Office not to open an internal investigation.

4. The decision on whether or not to open an investigation shall be taken within two months of receipt by the Office of a request as referred to in paragraphs 2 or 3. It shall be communicated without delay to the institution, body, office or agency or the Member State which made the request. Reasons shall be given for a decision not to open an investigation.

Where an official or other staff member of an institution, body, office or agency, acting in accordance with Article 22a of the Staff Regulations or the corresponding provisions of the Conditions of Employment of Other Servants, provides information to the Office relating to a suspected fraud or irregularity, the Office shall inform him of the decision whether or not to open an investigation into the facts in question.

5. If the Office decides, on the basis of what it deems appropriate or on the basis of its priorities for investigative action, not to open an internal investigation, it shall without delay send the information available to the institution, body, office or agency concerned for appropriate action to be taken in accordance with the rules that are applicable to it. In appropriate cases the Office shall agree with that institution, body, office or agency on suitable measures to protect the confidentiality of the source of that information and shall ask, if necessary, to be informed of the action taken.

If the Office decides, on the basis of what it deems appropriate or on the basis of its priorities for investigative action, not to open an external investigation, Article 3(4) shall apply.”

(4) Article 6 is amended as follows:

(a) in paragraphs 1 and 3, “the Director” is replaced by “the Director-General”;

(b) the following paragraph 5a is inserted:

“5a. As soon as investigations reveal that a member, manager, official, servant or any other person serving an institution, body, office or agency may be implicated or show that it might be appropriate to take precautionary or administrative measures to protect the interests of the Union, the institution, body, office or agency concerned shall be informed of the investigation in progress. The information supplied shall include the following:

(a) the identity of the person or persons under investigation and a summary of the facts in question;

(b) any information that may assist the institution, body, office or agency in deciding whether it is appropriate to take precautionary or administrative measures in order to protect the interests of the Union;

(c) any special measures of confidentiality recommended.

The institution, body, office or agency shall decide whether any precautionary or administrative measures are appropriate, with due account being taken of the importance of guaranteeing the effectiveness of the conduct of the investigation and of the specific confidentiality measures recommended by the Office.”

(c) the following paragraph 7 is added:

“7. Where it is found that an investigation cannot be closed within 12 months after it has been opened, the Director-General of the Office may decide to extend the period by up to six months. Before taking this decision, he shall seek an opinion from the Review Adviser referred to in Article 14. Within fifteen working days the Review Adviser shall send the Director-General his opinion on whether the investigation in progress complies with Article 6(5) and on the reasons given by the Director-General for extending the investigation, together with any recommendations he considers useful for the further conduct of the investigation. The Review Adviser shall send a copy of his opinion to the Secretary-General of the institution, body, office or agency concerned and to the Supervisory Committee.

If necessary, further such extension decisions may be taken, subject to the same conditions.”

(5) The following Articles 7a and 7b are inserted:

“Article 7a

Procedural guarantees

1. In its investigation the Office shall seek evidence for and against the person concerned.

2. As soon as an investigation reveals that a member, manager, official or other servant or a person serving an institution, body, office or agency or an economic operator may be implicated in a matter, the person concerned shall be informed, provided that this does not prejudice the conduct of the investigation.

In any event, no conclusions referring by name to a natural or legal person may be drawn on completion of an investigation unless the person thus personally implicated has been given the opportunity to make his views known on all matters concerning him. That person must be given a summary of such matters in the invitation to comment. He is entitled to be assisted by a person of his choice. Any person implicated personally is entitled to use the official Community language of his choice; however, officials or other servants of the Communities may be asked to use an official Community language of which they have a thorough knowledge. A person implicated personally shall be entitled to avoid self-incrimination.

In cases requiring absolute secrecy to be maintained for the sake of the investigation and entailing use of investigative proceedings falling under the jurisdiction of a national judicial authority or, in the case of an external investigation, that of a competent national authority, the Director-General of the Office may decide to defer fulfilment of the obligation to ask the person implicated to make his views known. He shall first notify the Review Adviser, who shall give an opinion in accordance with Article 14(3). In the case of an internal investigation, the Director-General of the Office shall take his decision in agreement with the institution, body, office or agency to which the person concerned belongs.

3. The invitation to any interview, whether with a witness or with a person implicated personally within the meaning of paragraph 2, must be sent with at least eight working days’ notice; the period of notice may be shortened with the agreement of the person to be interviewed. The invitation shall include a list of the rights of the person interviewed. The Office shall draw up a record of the interview and shall give the person interviewed access to it so that he may either approve the record or add observations.

When, in the course of the interview, it transpires that the person interviewed may be involved in the facts under investigation, the procedural rules provided for in paragraph 2 shall apply at once.

4. The procedural guarantees provided for in this Article shall apply without prejudice:

(a) to more extensive protection which may derive from the rules of the Treaties or any relevant national provisions;

(b) to rights and obligations conferred by the Staff Regulations.

Article 7b

Information about decisions to close an investigation and take no further action

If, on completion of an investigation, no evidence has been found against a member, manager, official or other servant or person serving an institution, body, office or agency or against an economic operator, the investigation into that person shall be closed and no further action taken, by decision of the Director-General of the Office, who shall inform the person concerned and, where appropriate, the institution, body, office or agency in writing.”

(6) In Article 8, paragraphs 3 and 4 are replaced by the following:

“3. The Office shall observe the Community and national provisions on the protection of personal data, in particular those provided for in Regulation (EC) No 45/2001 of the European Parliament and of the Council(*).

4. The Director-General of the Office shall ensure that the provisions of this Article and of Article 287 of the Treaty are applied.

_________________

(*) OJ L 8, 12.1.2001, p. 1.”

(7) The following Article 8a is inserted:

“Article 8a

Notification of the final report on completion of the investigation

Before sending the final investigation report to the institutions, bodies, offices or agencies concerned or to the competent authorities of the Member States concerned, the Office shall communicate the conclusions and recommendations of the final report to the person implicated personally in the matter under internal or external investigation.

The Director-General of the Office may decide not to make the communication referred to in the first subparagraph in cases requiring the maintenance of absolute secrecy and use of investigative measures that fall under the jurisdiction of a national judicial authority. In the case of an internal investigation he shall decide in agreement with the institution, body, office or agency to which the person concerned belongs.

If the person implicated personally considers that the procedural guarantees provided for in Articles 6(5) and 7a have been disregarded in a manner liable to affect the conclusions of the investigation, that person may lodge a request for an opinion with the Review Adviser within ten working days of receiving the conclusions of the final report.”

(8) Article 9 is amended as follows:

(a) paragraph 1 is replaced by the following:

“1. On completion of an investigation by the Office, the latter shall draw up a report, under the authority of the Director-General, which shall include an account of the stages in the procedure, the legal basis, the facts established and their classification in law, the financial loss, if any, and the findings of the investigation, including recommendations on action that should be taken.”

(b) paragraph 3 is replaced by the following:

“3. Reports drawn up following an external investigation and any useful related documents shall be sent to the competent authorities of the Member States concerned in accordance with the rules relating to external investigations and to the Commission. The competent authorities of the Member States concerned shall, in so far as is not incompatible with national law, inform the Director-General of the Office of the action taken as a result of the investigation reports sent to them.”

(c) the following paragraph 3a is inserted:

“3a. Where the report drawn up after an internal investigation reveals the existence of facts which could give rise to criminal proceedings, the final report shall be transmitted to the judicial authorities of the Member State concerned. The Director-General of the Office may decide, however, not to transmit the final report to the judicial authorities where he considers that internal measures permitting more appropriate follow-up action are available, in the light of the nature of the facts, their lack of seriousness or the small scale of the financial loss. In all cases, he shall transmit the final report to the institution, body, office or agency concerned in accordance with paragraph 4. He shall inform the Review Adviser and the Supervisory Committee of all duly reasoned decisions not to transmit the final report to the judicial authorities.”

(d) the following paragraph 5 is added:

“5. An informer who has provided the Office with information relating to suspected fraud or irregularity may, if he so requests, be informed by the Office that an investigation has been closed and, where appropriate, that a final report has been sent to the competent authorities. The Office may, however, refuse the request when it considers that it is such as to prejudice the legitimate interests of the persons concerned, the effectiveness of the investigation and the action to be taken subsequent thereto or any confidentiality requirements.”

(9) Article 10 is replaced by the following:

“ Article 10

Exchange of information between the Office and the national authorities of the Member States

1. Without prejudice to Articles 8 and 9 of this Regulation and to the provisions of Regulation (Euratom, EC) No 2185/96, the Office may at any time forward to the competent authorities of the Member States concerned information obtained in the course of external investigations.

2. Without prejudice to Articles 8 and 9, the Director-General of the Office shall, in the course of internal investigations, forward to the judicial authorities of the Member State concerned information obtained by the Office concerning facts entailing use of investigative proceedings within the jurisdiction of a national judicial authority or which are so serious as to require urgent criminal prosecution. In such a case he shall first inform the institution, body, office or agency concerned. The information forwarded shall include the identity of the person implicated by the investigation, a summary of the facts established, a preliminary legal evaluation and any financial loss.

Before forwarding the information referred to in the first subparagraph, the Office shall give the person implicated by the investigation the opportunity to comment on the matters concerning him subject to the conditions, and in accordance with the arrangements, set out in the second and third subparagraphs of Article 7a(2).

3. The competent authorities, and in particular the judicial authorities, of the Member State concerned shall, in so far as is not incompatible with national law, inform the Director-General of the Office as quickly as possible of the action taken on the basis of the information forwarded to them under this Article.”

(10) Article 11 is amended as follows:

(a) paragraph 1 is replaced by the following:

“1. The Supervisory Committee shall reinforce the Office’s independence by regular monitoring of the implementation of the investigative function.

The Supervisory Committee shall ensure that the rules governing information exchanges between the Office and the institutions, bodies, offices and agencies are complied with.

The Supervisory Committee shall monitor developments regarding the application of procedural guarantees and the duration of investigations in the light of the periodic statistics supplied by the Director-General of the Office and the opinions and analysis reports regularly drawn up in this connection by the Review Adviser on the basis of close cooperation with the Director-General of the Office.

The Supervisory Committee shall deliver opinions to the Director-General of the Office, on its own initiative or at his request or the request of an institution, body, office or agency, without however interfering with the conduct of investigations in progress. The applicant shall be provided with a copy of such opinions.”

(b) paragraphs 7 and 8 are replaced by the following:

“7. The Director-General of the Office shall forward to the Supervisory Committee each year the Office’s programme of investigative activities. He shall keep the Supervisory Committee regularly informed of the Office’s activities, the implementation of its investigative function and the action taken by way of follow-up to investigations.

The Director-General of the Office shall inform the Supervisory Committee:

(a) of cases where the institution, body, agency or office concerned has failed to act on the recommendations made by it;

(b) of cases in which information is forwarded to the judicial authorities of a Member State.

8. The Supervisory Committee shall adopt at least one report on its activities per year, covering in particular the application of procedural guarantees and the duration of investigations; such reports shall be sent to the institutions. The Committee may submit reports to the European Parliament, the Council, the Commission and the Court of Auditors on the results of the Office’s investigations and the action taken thereon.”

(11) The following Article 11a is inserted:

“Article 11a Structured dialogue with the institutions

The Supervisory Committee shall meet, at least twice a year and at the request of one of the institutions, with one representative designated by each of the European Parliament, the Council and the Commission, as part of a structured dialogue at political level in order to devise common guidelines.

The structured dialogue shall relate to the Office’s investigative function, and in particular to:

(a) the annual report on the activities of the Supervisory Committee and that of the Director-General of the Office;

(b) the Office’s programme of investigative activities;

(c) aspects relating to the Office’s investigation policy priorities;

(d) good relations between the Office and the institutions, bodies, offices and agencies;

(e) the effectiveness of the work of the Office with regard to investigations and that of the Supervisory Committee.

The structured dialogue shall not interfere with the conduct of investigations.

The Office shall take such action as is appropriate on the opinions expressed in the structured dialogue.”

(12) Article 12 is amended as follows:

(a) the title and paragraph 1 are replaced by the following:

“Article 12

Director General

1. After consulting the representatives of the other institutions, meeting with the Supervisory Committee in the context of the structured dialogue, the Commission shall appoint the Director-General of the Office for a term of seven years, which may not be renewed. The consultation shall be organised on the basis of a list of candidates drawn up by the Commission after a call for applications.”

(b) paragraph 2 is deleted;

(c) in paragraph 3, “the Director” is replaced by “the Director-General”;

(d) paragraph 4 is replaced by the following:

“4. Before adopting any disciplinary sanction against the Director-General, the Commission shall consult the Supervisory Committee, meeting with the representatives of the other institutions in the context of the structured dialogue.

Measures relating to disciplinary sanctions against the Director-General shall be the subject of reasoned decisions, which shall be forwarded for information to the European Parliament, to the Council and to the Supervisory Committee.”

(e) the following paragraphs 5 and 6 are inserted:

“5. The Director-General shall each year, after securing the opinion of the Supervisory Committee, determine the programme of activities and the investigation policy priorities of the Office.

6. The Director-General may delegate the exercise of certain of his functions under Articles 5, 6(3), 7b and 10(2) to one or more members of the staff of the Office by a written document specifying the conditions and limits governing the delegation.”

(13) Article 13 is replaced by the following:

“Article 13

Financing

The appropriations for the Office, the total amount of which shall be entered under a specific budget line within the section of the General Budget of the European Communities relating to the Commission, shall be set out in detail in an Annex to that section.

The establishment plan of the Office shall be annexed to the Commission’s establishment plan.”

(14) Article 14 is replaced by the following:

“Article 14

Review adviser

1. The Director-General of the Office, acting on a proposal from the Supervisory Committee, shall appoint a Review Adviser for a non-renewable term of five years. The Supervisory Committee shall base its proposal on a list of several candidates drawn up following a call for applications.

2. The Review Adviser shall act in complete independence. He shall neither seek nor take instructions from anyone in the performance of his duties. He shall perform no functions within the Office other than those related to monitoring compliance with procedures.

Before adopting any disciplinary measure concerning the Review Adviser, the Director-General of the Office shall consult the Supervisory Committee.

3. Anyone personally implicated by an investigation may ask the Review Adviser to give an opinion regarding the procedural guarantees provided for in Article 6(5) and Article 7a. The Review Adviser may also issue opinions of his own motion on those matters.

4. Cases shall be referred for the opinion of the Review Adviser by the Director-General of the Office in the circumstances referred to in Article 6(7) and the third subparagraph of Article 7a(2). The Director-General of the Office may also submit any request to the Review Adviser in connection with the review of investigations.

5. The Review Adviser shall report regularly to the Supervisory Committee on his activities; he shall present it, and the Commission, with regular statistical and analytical reports on questions related to the duration of investigations and procedural guarantees. The Review Adviser’s reports may not refer to individual cases under investigation.”

(15) Article 15 is deleted.

(16) The following Articles 15a and 15b are inserted:

“Article 15a

Implementing measures

Implementing measures relating to the application of procedural guarantees in administrative investigations by the Office as provided for by this Regulation shall be adopted in accordance with the regulatory procedure referred to in Article 15b(2).

Article 1 5b

Committee

1. The Commission shall be assisted by the Committee instituted by Article 43 of Council Regulation (EC) No 515/97(*)

2. Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply, having regard to the provisions of Article 8 thereof.

The period referred to in Article 5(6) of Decision 1999/468/EC shall be three months.

3. The Committee shall adopt its Rules of Procedure.

______________

(*) OJ L 82, 22.3.1997, p. 1.”

Article 2

The provisions of Article 12(1) of Regulation (EC) No 1073/1999 as amended by this regulation shall not apply to the Director-General of the Office in office at the date of entry into force of this regulation, whose term of office has been renewed for a period of five years.

Article 3

This Regulation shall enter into force on the [...] day following that of its publication in the Official Journal of the European Union .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President […] […]

LEGISLATIVE FINANCIAL STATEMENT

1. NAME OF THE PROPOSAL :

Amendment of Regulations (EC) No 1073/1999 and (Euratom) No 1074/1999

2. ABM / ABB FRAMEWORK

Policy Area(s) concerned and associated Activity/Activities:

24.01 Administrative expenditure of policy area Fight against fraud

24.02 Anti-fraud

3. BUDGET LINES

3.1. Budget lines (operational lines and related technical and administrative assistance lines (ex-BA lines)) including headings :

24.010600.03.01.00 Expenditure incurred for members of the Supervisory Committee

3.2. Duration of the action and of the financial impact:

Indefinite duration No impact

3.3. Budgetary characteristics ( add rows if necessary ):

Budget heading | Type of expenditure | New | EFTA contribution | Contributions from applicant countries | Heading in financial perspective |

24.0106 | Non-compulsory expenditure | NDA[13] | NO | NO | NO | No 5 |

4. SUMMARY OF RESOURCES

4.1. Financial resources

4.1.1. Summary of commitment appropriations (CA) and payment appropriations (PA)

EUR million (to 3 decimal places)

Type of expenditure | Section No | Year n | n +1 | n + 2 | n +3 | n +4 | n+5 and subs. Yrs. | Total |

Operating expenditure[14] |

Commitment appropriations (CA) | 8.1 | a |

Payment appropriations (PA) | b |

Administrative expenditure within reference amount[15] |

Technical and administrative assistance – ATA (NDA) | 8.2.4 | c |

TOTAL REFERENCE AMOUNT |

Commitments | a+c |

Payments | b+c |

Administrative expenditure not included in the reference amount[16] |

Human resources and associated expenditure (NDA) | 8.2.5 | d | 0,972 |

Administrative costs, other than human resources and associated costs, not included in reference amount (NDA) | 8.2.6 | e | 0,200 |

Total indicative financial cost of intervention

TOTAL CA including cost of Human Resources | a+c+d+e | 1,172 |

TOTAL PA including cost of Human Resources | b+c+d+e | 1,172 |

Co-financing details

Not applicable.

EUR million (to 3 decimal places) Co-financing body | Year n | n + 1 | n + 2 | n + 3 | n + 4 | n + 5 and subs. yrs | Total |

…………………… | f |

TOTAL CA including co-financing | a+c+d+e+f |

4.1.2. Compatibility with Financial Programming

x Proposal is compatible with existing financial programming.

( Proposal will entail reprogramming of the relevant heading in the financial perspective.

( Proposal may require application of the provisions of the Interinstitutional Agreement[17] (i.e. flexibility instrument or revision of the financial perspective).

4.1.3. Financial impact on Revenue

x Proposal has no financial impact on revenue

( Financial impact - The effect on revenue is as follows:

Not applicable.

EUR million (to one decimal place)

Prior to action [Year n-1] | Situation following action |

Total number of human resources | 9 | 9 | 9 | 9 | 9 |

5. CHARACTERISTICS AND OBJECTIVES

Details of the context of the proposal are required in the Explanatory Memorandum. This section of the Legislative Financial Statement should include the following specific complementary information:

5.1. Need to be met in the short or long term

The proposals for amendment of Regulations (EC) No 1073/1999 and (Euratom) No 1074/1999 were adopted by the Commission on 10 February 2004, following the April 2003 report on the evaluation of the activities of the Office and statements by President Prodi in the European Parliament in September and November 2003.

In Conclusions dated 22 December 2003, the Council also stressed the importance of compliance with the rules on protection of fundamental rights.

The Court of Auditors subsequently adopted special report No 1/2005 on the management of the Office with a series of recommendations, and Opinion No 6/2005 on the February 2004 proposals.

On 12 and 13 July 2005 the European Parliament organised a hearing on the reinforcement of the Office, at which Vice-president Kallas announced an initiative. The legislature is hoping to receive this initiative in the near future.

5.2. Value-added of Community involvement and coherence of the proposal with other financial instruments and possible synergy

Different aspects of the proposals for amendment seek to establish value added at Community level in relation to the current situation, in particular:

- establishment of cooperation between the institutions and the Supervisory Committee (Article 11a),

- appointment of a Review Adviser (Article 14).

Compatibility with the Financial Regulation (in particular Article 13).

5.3. Objectives, expected results and related indicators of the proposal in the context of the ABM framework

5.4. Method of Implementation (indicative)

Show below the method(s) chosen for the implementation of the action[19].

X Centralised Management

X Directly by the Commission

( Indirectly by delegation to:

( Executive Agencies

( Bodies set up by the Communities as referred to in art. 185 of the Financial Regulation

( National public-sector bodies/bodies with public-service mission

( Shared or decentralised management

( With Member States

( With third countries

( Joint management with international organisations (please specify)

Remarks:

6. MONITORING AND EVALUATION

6.1. Monitoring system

The European Parliament and the Council will assess the situation of OLAF in the light of, inter alia , the future reports.

6.2. Evaluation

6.2.1. Ex-ante evaluation

6.2.2. Measures taken following an intermediate/ ex-post evaluation (lessons learned from similar experiences in the past)

See paragraph 5.1 above.

6.2.3. Terms and frequency of future evaluation

In addition to obligations that are unaffected by these proposals, the Review Adviser will regularly report on his activities to the Supervisory Committee, which will also be regularly briefed by the Director-General on the Office’s investigative activities.

7. ANTI-FRAUD MEASURES

Implementation in accordance with the new Financial Regulation.

Application of Regulation (EC) No 1073/1999.

8. DETAILS OF RESOURCES

8.1. Objectives of the proposal in terms of their financial cost

Commitment appropriations in EUR million (to 3 decimal places)

Year n | Year n+1 | Year n+2 | Year n+3 | Year n+4 | Year n+5 |

Officials or temporary staff9 (XX 01 01) | A*/AD | 6 | 6 | 6 | 6 | 6 |

B*, C*/AST | 2 | 2 | 2 | 2 | 2 |

Staff financed10 by Article XX 01 02 |

Other staff financed11 by art. XX 01 04/05 | 1 | 1 | 1 | 1 | 1 |

TOTAL | 9 | 9 | 9 | 9 | 9 |

8 posts are currently assigned to the Supervisory Committee (3 A, 2 C, 3A.T) + 1 auxiliary.

8.2.2. Description of tasks deriving from the action

There is currently no plan to earmark extra resources for the Review Adviser.

8.2.3. Sources of human resources (staff covered by the Staff Regulations)

(When more than one source is stated, please indicate the number of posts originating from each of the sources)

X Posts currently allocated to the management of the programme to be replaced or extended

( Posts pre-allocated within the APS/PDB exercise for year n

( Posts to be requested in the next APS/PDB procedure

( Posts to be redeployed using existing resources within the managing service (internal redeployment)

( Posts required for year n although not foreseen in the APS/PDB exercise of the year in question

8.2.4. Other administrative expenditure included in reference amount (XX 01 04/05 – Administrative management expenditure)

EUR million (to 3 decimal places)

Budget heading (No and title) | Year n | Year n+1 | Year n+2 | Year n+3 | Year n+4 | Year n+5 and later | TOTAL |

1. Technical and administrative assistance (including related staff costs) |

Executive Agencies12 |

Other technical and administrative assistance. |

- intra muros |

- extra muros |

Total technical and administrative assistance. |

8.2.5. Financial cost of human resources and associated costs not included in the reference amount

EUR million (to 3 decimal places)

Type of human resources | Year n | Year n+1 | Year n+2 | Year n+3 | Year n+4 | Year n+5 and later |

Officials and temporary staff (XX 01 01) | 0,864 |

Staff financed by Art XX 01 02 (auxiliary, END, contract staff, etc.) (specify budget line) | 0,108 |

Total cost of Human Resources and associated costs (NOT in reference amount) | 0,972 |

Calculation - Officials and temporary staff

Reference should be made to Point 8.2.1, if applicable

9 x 108 000 = 972 000

Calculation - Staff financed by Article XX 01 02

Reference should be made to Point 8.2.1, if applicable

8.2.6. Other administrative expenditure not included in reference amount

EUR million (to 3 decimal places)

Year n | Year n+1 | Year n+2 | Year n+3 | Year n+4 | Year n+5 and later | TOTAL |

XX 01 02 11 01 - Missions |

X 01 02 11 02 – Meetings & Conferences | | 0,200 | 0,200 | 0,200 | 0,200 | 0,200 | 0,200 |

XX 01 02 11 03 - Committees13 |

XX 01 02 11 04 - Studies & consultations |

XX 01 02 11 05 - Information systems |

2. Total Other Management Expenditure (XX 01 02 11) |

3. Other expenditure of an administrative nature (specify including reference to budget line) | |

Total Administrative expenditure, other than human resources and associated costs (NOT included in reference amount) |

Calculation - Other administrative expenditure not included in reference amount

Meetings of the Supervisory Committee 10 x 20 000 = 200 000

[1] OJ L 136, 31.5.1999, p.1.

[2] OJ L 136, 31.5.1999, p. 8.

[3] OJ L 136, 31.05.1999, p. 20.

[4] COM(2003) 154 final.

[5] Resolution on the evaluation of the activities of the Anti-fraud Office, 4 November 2003; COM(2003) 154 - 2002/2237 (INI). Resolution of 29 January 2004 on the action taken by the Commission on the observations contained in the resolution accompanying the decision giving discharge for the 2001 financial year: COM(2003) 651 - C5-0536/2003 – 2003/2200 (DEC).

[6] COM(2004) 103 and 104.

[7] Special report No 1/2005 (OJ C 202, 18.8.2005, p. 1), approved by Council Conclusions dated 8 November 2005.

[8] Opinion 6/2005, OJ C 202, 18.8.2005, p. 33.

[9] OJ C […], […], p. […].

[10] OJ C […], […], p. […].

[11] OJ L 292, 15.11.1996, p. 2.

[12] OJ L 184, 17.7.1999, p. 23.

[13] Non-differentiated appropriations.

[14] Expenditure that does not fall under Chapter xx 01 of the Title xx concerned.

[15] Expenditure within article xx 01 04 of Title xx.

[16] Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05.

[17] See points 19 and 24 of the Interinstitutional agreement.

[18] Additional columns should be added if necessary i.e. if the duration of the action exceeds 6 years.

[19] If more than one method is indicated please provide additional details in the “Remarks” section of this point.

8 As described under Section 5.3.

9 Cost of which is NOT covered by the reference amount.

10 Cost of which is NOT covered by the reference amount.

11 Cost of which is included within the reference amount.

12 Reference should be made to the specific legislative financial statement for the Executive Agency(ies) concerned.

13 Specify the type of committee and the group to which it belongs.