1.

Finally in June 2017 the Council announced the adoption of the Regulation implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) by October 2017 conditional on the prior consent of the European Parliament. In that event, the Commission would certainly envisage revising the OLAF Regulation, a process which could overlap with the current evaluation exercise. As a consequence, a thorough analysis of how OLAF’s powers and composition would interact with the future EPPO goes beyond the scope of this opinion. However, given OLAF’s history, its investigations were strongly influenced by the future role that the EPPO would play in the European area of justice; therefore references to it in this evaluation seem unavoidable.

2.

This extremely serious and unprecedented situation requires close scrutiny of the application of the Regulation to the investigative measures that OLAF is entitled to undertake and to the protection of fundamental rights. The way in which the paramount principles of independence, supervision, legality check, impartiality, integrity, good governance and accountability were implemented demand careful consideration.

As far as the waiver of immunity was concerned, the Director-General brought an action before the General Court of the Court of Justice of the European Union seeking the annulment of the Commission decision on the grounds that the measure was liable to call into question his independence (3). The Supervisory Committee (SC) is not acquainted with the detailed submissions of either party to the General Court, before which the main action brought by the Director-General is still pending. The matter also raises questions about the adequacy of the SC’s powers to safeguard the independence of OLAF.

3.

Three years later, in October 2016, Regulation (EC) No 883/2013 underwent early amendment without waiting for the assessment period set in the reform to make changes to the independence of the Secretariat of the SC and the SC budget. The amendment, enacted by Regulation (EU) 2016/2030, resulted in unforeseen adverse challenges for the SC’s work and institutional position and, as a consequence, on the suitability of the mechanisms for supervision and reinforcement of OLAF’s independence.

The SC will give further consideration to the second reform in the near future.

4.

The SC is aware that in the new Regulation the legislator removed from the SC responsibility for ex ante legality control, which was subject of the EU General Court ruling in case T-48/05 Franchet and Byk v. Commission. The Court ruled that the SC must be consulted prior to transmission of case reports to national judicial authorities for the sake of protecting fundamental rights (5). The SC believes there is still a need for clear rules on the mechanisms by which it evaluates OLAF’s investigative function after the closure of investigations.

5.

In addition the SC examined:

Selection of information on OLAF casework that the SC analysed was made by OLAF.

6.

Article 1(4) of Regulation (EC) No 883/2013 gives OLAF the duty to conduct internal administrative investigations for the purpose of fighting fraud, corruption and any other illegal activity affecting the financial interest of the EU. To that end it investigates serious matters relating to the discharge of professional duties constituting a dereliction of the obligations of officials and other servants of the Union liable to result in disciplinary or criminal proceedings, or an equivalent failure to discharge obligations on the part of members of institutions and bodies, heads of offices and agencies or staff members of institutions, bodies, offices or agencies not subject to the Staff Regulations.

Article 1(4) also gives OLAF competences to investigate conduct affecting the financial interests of the Union, thereby leaving investigations of any other misconduct outside of the scope of the Office’s investigation. However, the OLAF Regulation confirmed that the responsibility of the Office extends beyond the protection of the financial interests to include all activities relating to the protection of Union interests against irregular conduct liable to result in administrative or criminal proceedings. OLAF may also launch administrative investigations to verify whether failure by an official or former official to comply with his obligations under the Staff Regulations has occurred, without explicitly limiting the scope of investigations to conduct affecting the financial interests of the Union (6).

In practice, OLAF investigations focus on fraud (which is a category of criminal law). At the same time, the legislator left the way open for the evidence gathered during administrative investigations to be sent to judicial authorities of the Member States. Furthermore, OLAF gives recommendations to take a specific action in the national disciplinary, administrative, financial and/or criminal proceedings. OLAF therefore conducts investigations which have continuation in national criminal proceedings; moreover, the evidence gathered has the same value as evidence of administrative bodies of the Member States (7).

In this context, the adoption of the Directive for the Protection of the Financial Interests in July 2017 broadened the criminal-law competence for the protection of the EU’s financial interests and expanded the scope of OLAF investigations to cover VAT. This will have an impact on OLAF’s remit.

7.

Future investigations led by OLAF will have a direct link to criminal proceedings in the close relationship and information exchange with the EPPO (9). Especially if OLAF will provide operational support to the EPPO (10) or will conduct administrative investigations, OLAF will do so exclusively for the purpose of criminal investigations and proceedings run in a Member State. Such cases will be subject to amendment of Regulation (EC) No 883/2013 so that the procedural rights and guarantees and rules on evidence would reflect requirements given by the relevant Member State’s national law.

8.

In the cases under c), it has not been clarified yet whether OLAF would open its own investigation or would somehow work within the procedural framework of the EPPO. The opinion of the SC is that these crucial questions of competence must be fully resolved by the OLAF Regulation.

The opinion of the SC is that an amendment to Regulation No 883/2013 should unify grounds for all OLAF investigations in order to avoid fragmentation and interpretation difficulties, and to strengthen clarity of law and procedural guarantees. The unified legal framework should also contain an exhaustive code of OLAF’s powers. The Regulation will need to pay special attention to clarification of powers with regard to the EU institutions and the division of competences between OLAF and the future EPPO.

9.

In particular, the new Regulation (EC) No 883/2013 introduced the ‘guidelines on investigation procedures’, a document giving practical guidance to the staff of the Office on: (i) the conduct of investigations; (ii) the procedural guarantees and rights of persons concerned and witnesses; and (iii) details on the internal advisory and control procedures to be followed, including a legality check. These guidelines were given a primary role in Regulation (EC) No 883/2013 and conceived as a way of enabling the Director-General to act independently. Investigators are bound by these guidelines, which need to be submitted to the SC before being adopted (see recitals 18 and 19 and Article 17(8) of Regulation (EC) No 883/2013) and sent to the institutions. Article 41 of the Charter of Fundamental Rights, which deals with good administration made these rules binding on OLAF itself.

10.

A major impact of the guidelines was the establishment of a new structure in OLAF dealing with the internal organisation and repartition of tasks for the different investigation units including the creation of what is known as the Investigation Selection and Review Unit. The Unit serves as the initial filter for the analysis of incoming information, as the body for decision making on cases to be opened. It also performs the legality check during the investigation and serves as the final reviewer of case reports and decision-making on OLAF recommendations.

The SC expresses its doubts about the effectiveness and transparency of this structure and calls for the legislator to reflect on consequences that such a structure and its flexible legal basis may have for the rights of individuals. The legislator needs to establish a framework of permanent structures to secure stability of the investigation service.

The SC acknowledged that the body of 28 articles that formally constitute the guidelines on Investigation Procedures was supplemented from its adoption in 2013 by numerous guidelines to OLAF staff issued between 2014 and 2016, including:

Given the above, the SC considers that the patchwork of rules does not provide the conduct of investigations with the transparency intended by the legislator and that the number of instructions may mislead OLAF staff, and specifically investigators. This situation could be prevented by having comprehensive investigation procedures laid down in the Regulation.

11.

The SC examined the implementation of OLAF’s new powers and the principles governing the investigatory function, taking into account the entire lifecycle of a case and in the light of the Charter of Fundamental Rights’.

12.

13.

The SC finds this variety of criteria for opening investigations to be too flexible and may put at risk legal certainty and fair treatment of incoming information by OLAF, unless mechanisms are put in place to counterbalance any potential abuse of discretion or undue external pressure on the Director -General of OLAF.

The wide discretion granted to the Director-General by the new Regulation at this key moment should be reconsidered by the legislator and certainly balanced by the obligation of regularly inform the SC of his reasoned decision when he decides not to open an investigation. This would serve as a mechanism of accountability and strengthening of OLAF’s independence.

14.

15.

In the monitoring experience of the SC, it was found that the assessment of the broad criteria referred to above for allegations and incoming information was carried out by a very limited number of staff in OLAF in the Investigation, Selection and Review Unit, without making consistent use of the staff members who are experts in the relevant areas of OLAF’s work in the investigation units and investigative support units. Given these units’ expertise in each operation sector, their involvement should be always required when incoming information is being assessed. The collection, evaluation, treatment, analysis and dissemination of information must be ensured by a strong and well-structured case information and management system that is to be used as a working tool by investigators and not as a purely information storage system.

With the experience gained by OLAF since its establishment, the Regulation should better indicate the main areas of OLAF’s investigations (which include structural funds, agriculture, own resources, customs, external aid, corruption…). This would clarify OLAF’s investigatory rules and powers in those sectors. If the Regulation gives OLAF a transparent structure, this will support independence in the proper exercise of the Office’s powers and provide a sound foundation for OLAF to work together with the EPPO.

16.

17.

18.

19.

20.

The legislative technique used by the legislator when drafting the provisions on the Commission’s powers of investigation in competition law has proved suitable for achieving effective investigations in that domain. The technique could therefore serve as a guide for amending the OLAF Regulation (25).

21.

22.

Removing the obstacles to effective cooperation between tax administrations and customs, and with law enforcement bodies and financial institutions at national and EU level is a part of the Commission’s strategy to combat VAT fraud (30). The SC welcomes such an approach.

23.

24.

The SC believes that the legislator should give consideration to appointing a fundamental rights and procedural guarantees officer for OLAF. This would also involve determining how such an officer would interact with court supervision and with the SC, and ensuring that it would work in close connection with fundamental rights and procedural guarantees experts in each OLAF sector.

Another option would be to expand the SC from five to seven members, as was proposed in the past, and for the Committee to be given specific competences in this area and in the field of confidential exchange of information, given the future interaction with the EPPO.

25.

26.

27.

The national administrative authorities should be obliged to provide immediate assistance to OLAF if coercive measures are needed to enforce OLAF competences. Harmonisation or, preferably, unification is appropriate mainly in the case of on-spot-checks, in which national rules and practices (35) – and hence also OLAF competences – significantly differ. The investigative powers of OLAF inspectors should have the same EU law basis, and the inspectors should have the possibility to exercise and enforce these powers equally in all Member State territories. In this respect the national law provisions should oblige the specific national administrative authorities to initiate national proceedings, exchange information with OLAF and support its investigative actions in their territory. OLAF, as the SC repeatedly mentions, should be obliged to provide the national authorities with information from the investigation in question in order to enhance the effectiveness of both OLAF and national investigations, avoid duplication of actions and reduce the duration of investigations. The SC sees this mechanism as also contributing to the protection of fundamental rights.

28.

The duties to appear and testify should be, however, limited to the territory of which the respective person is resident. In cases where a person voluntarily agrees to testify at the headquarters of OLAF or in another place outside of the country of residence, he/she should be eligible for the reimbursement of their expenses.

The SC is aware that since OLAF lacks legal personality, this could be an obstacle to potential sanctions being imposed. However, failure to comply with duties set up by the Regulation should have consequences. A possible solution would be to impose sanctions via national proceedings initiated on the Office’s request. However, the SC will explore these questions at a later stage together with questions concerning the establishment of the EPPO.

29.

The fact that the time has elapsed in an investigation can make it more difficult for exculpatory evidence, in particular statements from witnesses for the defence, to be collected, or even unlikely that they will be collected. Similarly, the administrative, disciplinary or judicial follow-up may be compromised, in particular due to limitation periods for the acts in question. The SC’s monitoring experience has showed that this was indeed the case in particular in final reports and recommendations forwarded to the national judicial authorities. OLAF made available to the SC short notes in excel tables, including quotations of the reasons given by Member State judicial authorities for dismissing OLAF reports (37).

The SC considers that Regulation should be amended to include a requirement for the Director General of OLAF to take into account statutory limitations in the Member States concerned by an investigation. At least 18 months before expiration of the statutory limitation period, OLAF should send an interim report to the authorities of respective Member States. The form and content of the interim report would be equivalent to the final report and it would not contain recommendations.

30.

Article 7.8 of the new Regulation extended the reporting obligation from OLAF to the SC on the duration of investigations from 9 months to 12 months after their opening and every 6 months thereafter. However, it did not substantially change the content of that reporting exercise; the Director-General of OLAF should indicate the reasons and the remedial measures envisaged to speed up the investigation (38).

31.

32.

The SC considers of fundamental importance for the effectiveness of OLAF’s investigatory work the new provision on an ‘internal advisory and control procedure including a legality check, relating, inter alia, to the respect of the national law of the Member State’ to be put in place by the Director-General of OLAF. However, this internal check on the respect of the national law of the Member State was not provided for in the ‘Guidelines on investigation procedures’ as part of the competences of the Investigation Selection and Review Unit, which remained in charge of the legality check and review mechanisms during the entire investigation lifecycle (41). The control of this matter was conducted by a limited number of staff in the Investigation Selection and Review Unit and was not reinforced by the ex ante control mechanism that the SC carried out before this competence was removed in the new Regulation (42).

The legislator should give careful consideration to the impact of removing this monitoring and quality control mechanism from the SC. In any case, in order for the SC to be in a position to assist the Director General in discharging his/her duties in this area, the Committee would need at least to receive from OLAF the investigation report sent to the Member State judicial authority and the reply from that authority to OLAF.

33.

This makes it all the more necessary to set out in the Regulation clear rules on time-barring thorough the investigation lifecycle and to put in place follow-up teams with experts in judicial follow-up and in checks of evidence gathering. This is of particular importance in view of the establishment of the EPPO and the quality of assistance that OLAF will need to provide in compliance with the national rules on admissibility of evidence.

34.

The SC dealt with this question in number of documents in the past (43). As early as its first progress report (2010) the Committee emphasised the need to respect the right to be heard, the right to be informed, the right of persons concerned to receive instructions on their rights, the right to be informed and to have the opportunity to state their case, and the right to an impartial investigation. Also in SC Opinion 5/2010, the Committee voiced the need for the protection of individuals over the processing of personal data (privacy rights) and for guarantees of the transparency and objectivity of investigations.

35.

The SC is of the opinion that the standard of protection of fundamental rights and procedural guarantees of the persons concerned has a direct influence on admissibility of evidence in subsequent proceedings before national authorities. Special attention should be paid to avoiding differences in standards, especially if the standards of relevant national proceedings or the standards applied by the EPPO are higher. This would avoid situations where OLAF investigations and the evidence collected within become devalued.

36.

Although a general reference to the Charter is made in Recital 51 of Regulation (EC) No 883/2013, more detailed provisions relating to the most relevant rights and guarantees are to be included in the OLAF Regulation.

Since the Charter is the common source of fundamental rights and guarantees there is no reason to limit or fundamentally distinguish between rights of persons concerned or witnesses in internal or external investigations or in actions performed at the request of the EPPO. The SC is aware that OLAF needs to respect the rules of each Member State when conducting external investigations and that due to the different legal conditions in internal and external investigations OLAF’s powers may differ. However, the standard of fundamental rights and procedural guarantees should be as close as possible in both internal and external investigations.

37.

The opinion of the SC is that adopting the high standard of procedural safeguards as given in Article 41 of the EPPO Proposal (47) and relevant legislation (48) would not impede OLAF in any way in the independent exercise of the mission conferred upon it but it would add value to its final reports and accompanying evidence.

The higher standards under which evidence would be obtained would definitely reflect in their admissibility (as well as in admissibility of OLAF final reports) in trials at national courts. Adopting the EPPO standard of procedural safeguards would also help disperse doubts about admissibility or value of evidence originating from (administrative) investigations performed ‘on request’ of the EPPO, as envisaged in Article 101 of the EPPO proposal.

The SC believes that unification of these standards would facilitate transfer of evidence from administrative to criminal proceedings and the transfer of evidence between jurisdictions (49). It would not prevent situations in which evidence has been obtained under the law of one Member State but contrary to the law of another in which the final (or, in the case of OLAF, subsequent) proceedings take place and the case is resolved.

38.

The persons concerned should be able to avail themselves of this right before, during and after their first interview in the proceedings. They should be also allowed to access the evidence gathered by OLAF not later than before the final report is sent to national authorities with recommendations. This possibility is particularly important when the final report contains recommendations to take action in criminal proceedings. To guarantee objectivity and impartiality of investigation, the persons concerned should have the possibility to make comments on the final report, while their comments should accompany the final report and recommendations sent to national authorities.

39.

40.

41.

42.

The extent to which respect for fundamental rights is examined in the judicial review of an administrative investigation body can serve as a yardstick to measure its effectiveness.

At the same time, the extent of involvement of fundamental rights can be a measure of extent of the necessary judicial review of the action of an administrative investigation body (52).

The Regulation does not provide for effective scrutiny of the legality of OLAF investigations, except in the case of internal investigations and solely where officials or agents are concerned. Officials and agents may file a complaint with the Director of OLAF in accordance with the procedure laid down in Article 90 of the Staff Regulations, under which appeals may be filed retrospectively before the Court of First Instance.

43.

The Court of Justice has consistently rejected applications for annulment of OLAF final reports forwarded to national authorities or to the competent EU organisation. The main reasoning behind the rejections was that the contested acts did not bring about a distinct change in the applicants’ legal positions (53) and that effective legal protection is to be considered not as a separate legal remedy but as the legal product of many complementary remedies in successive legal orders (54).

44.

The current possibilities for remedies against OLAF actions (56) are limited to such an extent that they cannot stand alone in the future changed institutional and procedural system in which: (i) the link between administrative and criminal investigations will be made stronger; and (ii) the admissibility of evidence collected by OLAF in administrative proceedings launched at the request of the EPPO is envisaged.

45.

46.

In spite of these features, the SC is of the opinion that the TFEU has given the Court of Justice different tasks which are distant from the continuous supervision of particular actions in administrative investigation. Under the current mandate of the Court of Justice, the SC can see obstacles to having the Court provide continuous supervision of OLAF. ‘The position of the Court of Justice, namely that OLAF final reports sent to national judicial authorities ‘do not constitute an act adversely affecting an official as it does not bring a distinct change in the legal position of the person concerned’, will continue to apply unless, for example:(i) OLAF were able to impose a sanction at the end of an investigation that would bring about such a change (ii) there is a duty to initiate national proceedings on the basis of the final report or at the request of OLAF

47.

At the same time, the SC finds advantages in potentially involving the Court of Justice in judicial supervision of OLAF. Of particular benefit would be the core set of procedural rules applicable before the Court, which is therefore the same for all parties coming from various Member States. If the question of the Court’s competence is resolved, the SC calls on the European Parliament the Council, the Commission and the Court of Justice to explore the possibilities of Article 257 TFEU in this regard.

48.

49.

50.

If OLAF investigations were to become part of national proceedings, this would make them subject to the control of national courts. As a result, national courts could refer a question to the CJEU for a preliminary ruling on the interpretation of the provisions of EU law before delivering their judgments in such cases (61).

51.

To strengthen the procedural guarantees of persons under investigation by OLAF, the Commission has proposed establishing a Controller of procedural guarantees (62) of the persons concerned. The Controller would: (i) review complaints concerning violations of the procedural guarantees and issue non-binding recommendations to the Director-General of OLAF on these complaints; (ii) monitor compliance with the procedural guarantees applicable to OLAF investigations; (iii) ensure prompt handling of investigations to avoid undue delay; (iv) authorise inspections and certain procedural acts to be taken at the premises of EU institutions.

However, even if the Controller could be composed of judges, it would lack the necessary status of an independent court as it would lack the necessary separation of powers. Moreover, the intention was that the Controller would be administratively attached to the Commission, one of the institutions involved in appointing the body. Given that the Controller could also advise on investigative measures against other institutions, positioning it among the executive institutions and making it administratively dependent on the Commission could affect the inter-institutional balance.

52.

53.

54.

Serious concerns over OLAF’s independence could be raised depending on the reviewer’s powers, what sort of action it would take in individual cases and whether the office of the reviewer would be made part of the Commission or attached to it in some way or another. Depending on where in the administrative hierarchy the reviewer is placed, his competence to advise on investigative measures against Members of the Commission but also with regard to other institutions could affect the interinstitutional balance.

In addition, as the Controller would be similarly placed and separate from the SC, there could be concerns about his independence and the cost effectiveness of him having a separate secretariat with the same agenda as that of the SC’s Secretariat.

55.

The SC’s preferred solution is to establish direct access to an independent court which could review individual actions of OLAF and recognise the legitimate expectations of persons affected by OLAF investigations. Only a judicial body could adequately verify whether an investigation was conducted within the due process of law and thereby guarantee the high standard of evidence required (mainly) in subsequent criminal proceedings in a Member State.

56.

57.

The SC is a unique independent body with a very strong mandate. The selection of the Committee’s members requires agreement of the Council, the Commission and Parliament, as well as of an ad hoc body composed of all three institutions.

The scope of the SC’s competences was extended by Regulation (EC) No 883/2013. This was mainly because of questions concerning how to inform the Committee about documents sent to national authorities and about the SC’s competence to deal with cases in which investigation is still in progress (67), and also because of the need to strengthen procedural rights and guarantees.

58.

Regulation (EC) No 883/2013 also clarified that the opinions of the SC to the Director-General of OLAF may include recommendations. The Regulation also prolonged the period before reporting to the SC on cases lasting over 12 months and introduced an annual inter- institutional exchange of views with the institutions, with the participation of the SC (73).

59.

60.

61.

62.

If lifting the immunity of the DG is to be considered by the Commission, the SC finds it necessary to monitor the decision-making process and to have access to relevant information.

If the challenges to the independence of OLAF or its Director-General come from actions of the Director-General himself/herself, consideration should be given for the SC to have the power to trigger the disciplinary proceedings before the Commission and take part in the proceedings.

63.

64.

65.

66.

The Regulation should also provide for a mechanism to resolve situations in which the duties to provide information are not respected, in order to restore the flow of information.

67.

68.

69.

70.

If the SC requests additional information on investigations, including reports and recommendations on closed investigations, the Regulation should set a time limit in which access to such information and documents in a case file should be provided by OLAF, as well as a resolution mechanism if the access is not provided or denied. The same procedure should apply to information and data concerning investigations in progress, but without the SC interfering with the conduct of such investigations.

71.

72.

73.

74.

75.

76.

The SC is convinced that crucial issues concerning the nature of investigations, type of proceedings, opening and closing cases or even duties of exchange of information should not be left to interpretation and should not depend on future working arrangements concluded between the EPPO, OLAF and other institutions. All these basic elements of procedure should be clearly specified by the regulations concerning OLAF and the EPPO, which should also contain provisions on their relationship.

77.

78.

79.

80.

81.

82.

The revision of Regulation (EC) No 883/2013 should set clear rules for OLAF, either by imposing on it a duty to act at the request of the EPPO with no exceptions, or by setting out the exceptions in a closed list of grounds for refusal. The SC considers leaving this question to working arrangements between OLAF and EPPO inappropriate because of the possibility of various interpretations of Article 101 of the EPPO Proposal, which would be contrary to the EU’s concern about effective and timely protection of its financial interests.

Since the SC has a strong mandate from all three institutions, it would also like to play a significant role in creating structural, operational and competence links between OLAF and its partners, namely the EPPO, European Court of Auditors, Europol, Eurojust and other partners in the new system of protection of the EU’s financial interests. As the new institutional system for the protection of the EU’s financial interests will require certain monitoring and supervision, the SC also offers its long-lasting experience to discussions about their establishment and application.

—

Directive 2010/64/EU of the European Parliament and of the Council of 20 October 2010 on the right to translation and interpretation in criminal proceedings (OJ L 280, 26.10.2010, p. 1);

—

Directive 2012/13/EC of the European Parliament and of the Council of 22 May 2012 on the right to information in criminal proceedings (OJ L 142, 1.6.2012, p. 1);

—

Directive 2013/48/EU of the European Parliament and of the Council of 22 October 2013 on the right of access to a lawyer in criminal proceedings and in European arrest warrant proceedings, and on the right to have a third party informed upon deprivation of liberty and to communicate with third persons and with consular authorities while deprived of liberty (OJ L 294, 6.11.2013, p. 1);

—

Directive (EU) 2016/343 of the European Parliament and of the Council of 9 March 2016 to strengthen the presumption of innocence and the right to be present at trial in criminal proceedings (OJ L 65, p. 1);

—

Directive (EU) 2016/1919 of the European Parliament and of the Council on the right to provisional legal aid for citizens suspected or accused of a crime and for those subject to a European Arrest Warrant (OJ L 132, 21.5.2016, p. 1).