Keywords
Summary

Keywords

1. European Investment Bank — Power to determine its own internal organisation — Decision laying down the procedures for cooperation with the European Anti-Fraud Office (OLAF) — Competence of the Governing Council — (Statute of the European Investment Bank, Arts 9(3)(h) and 13(3))

2. Actions for annulment — Actionable measures — Measures of the European Investment Bank — Measures within the competence of the Governing Council — Whether included — Adoption by another organ of the Bank — Not relevant — (Art. 237(b) EC)

3. European Anti-Fraud Office (OLAF) — Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by OLAF — Scope — European Investment Bank — Whether included — (European Parliament and Council Regulation No 1073/1999, Art. 1(3), and Council Regulation No 1074/1999, Art. 1(3))

4. European Investment Bank — Independence — Scope — (Art. 267 EC)

5. European Investment Bank — Controls which may be exercised over the Bank — Distinction by reference to the purpose of the controls — Audit of accounts and examination of financial management without prejudice to application of Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) — (Arts 248(1) and (3) EC and 280 EC; Statute of the European Investment Bank, Art. 14; Art. 203 EA; European Parliament and Council Regulation No 1073/1999 and Council Regulation No 1074/1999)

6. European Investment Bank — Independence — Application of Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) — Whether compatible — (European Parliament and Council Regulation No 1073/1999 and Council Regulation No 1074/1999)

7. Financial provisions — Community's financial interests — Definition — Resources and expenditure of the European Investment Bank — Whether included — (Art. 280 EC)

8. Financial provisions — Protection of the Community's financial interests — Article 280 EC — Purpose — Scope — Adoption of legislative measures applicable within Community institutions, bodies, offices and agencies — Whether included — (Art. 280 EC)

9. Acts of the institutions — Choice of legal basis — Regulation No 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) — Article 203 EA — (Arts 183a EA and 203 EA; Council Regulation No 1074/1999)

10. European Anti-Fraud Office (OLAF) — Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by OLAF — Breach of the principle of proportionality in relation to the inclusion of the European Investment Bank within their scope — None — (European Parliament and Council Regulation No 1073/1999 and Council Regulation No 1074/1999)

11. European Anti-Fraud Office (OLAF) — Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by OLAF — Infringement by the Decision of the Management Committee of the European Investment Bank of 10 November 1999 concerning cooperation with OLAF — (European Parliament and Council Regulation No 1073/1999 and Council Regulation No 1074/1999; Decision of the Management Committee of the European Investment Bank of 10 November 1999)

Summary

1. A decision, whose purpose is to lay down the procedures for cooperation between the European Investment Bank and the European Anti-Fraud Office (OLAF) as regards the transmission of information relating to potentially fraudulent activities and the conduct of investigations into such activities within the Bank falls within the sphere of competence of the Board of Governors and not that of the Management Committee.

Such a decision cannot form part of the "current business of the European Investment Bank" for the purposes of Article 13.3 of its Statute, or, more generally, fall within the ambit of the Management Committee's own competence. Furthermore, it follows from Article 9.3(h) of the Statute that, within the Bank, it is in principle the Board of Governors on which power is conferred to organise internal matters and which is, therefore, authorised to take the appropriate measures in order to ensure the internal operation of the Bank in conformity with the interests of its good administration. Such is the case with the development by a Community institution or body of procedures for monitoring whether its internal operations are in order, designed inter alia to ensure that it functions smoothly and forming part of the institution's or body's internal organisation, subject to the limits imposed by Community law in that regard.

see paras 66-68, 70

2. By providing that the measures of the Board of Governors of the European Investment Bank may be subject to review by the Court, Article 237(b) EC seeks, in particular, to ensure that all the acts adopted by the Bank falling within the Board's sphere of competence may be referred to the Court.

If Article 237(b) EC were to be interpreted as excluding such a measure from those amenable to challenge on the basis of that provision purely on the ground that the measure was adopted by a different organ of the Bank, such as the Management Committee, the result would be contrary to the spirit of Article 237(b) EC; and that would be so whether or not the adoption of the measure at issue was the consequence of a deliberate arrangement by the Bank of its decision-making procedures.

Such an interpretation would also ignore the fact that the European Community is based on the rule of law, inasmuch as neither its Member States nor its institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty, which established a complete system of legal remedies and procedures designed to permit the Court of Justice to review the legality of measures adopted by the institutions. Although it is not a European Community institution, the European Investment Bank none the less is a Community body established and endowed with legal personality by the Treaty and it is on that account that it is subject to judicial review by the Court, in particular as provided for in Article 237(b) EC.

see paras 73-75

3. Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) apply to the European Investment Bank. The expression "institutions, bodies, offices and agencies established by, or on the basis of, the Treaties" in Article 1(3) of those regulations must be interpreted as including the European Investment Bank, which is a Community body established and endowed with legal personality by the Treaty. It is not apparent from either the preamble to, or the provisions of, those regulations that the Community legislature intended to draw any distinction between the various institutions, bodies, offices and agencies established by, or on the basis of, the Treaties. The seventh recital to the regulations specifically draws attention to the need to extend the scope of OLAF's internal investigations to "all" the institutions, bodies, offices and agencies.

see paras 97-99

4. The fact that the European Investment Bank has operational and institutional autonomy does not mean that it is totally separated from the Communities and exempt from every rule of Community law. It is clear in particular from Article 267 EC that the Bank is intended to contribute towards the attainment of the European Community's objectives and thus by virtue of the Treaty forms part of the framework of the Community. It follows that the position of the European Investment Bank is ambivalent inasmuch as it is characterised, on the one hand, by independence in the management of its affairs, in particular in the sphere of financial operations, and, on the other, by a close link with the European Community as regards its objectives.

see para. 102

5. The provisions of Article 248(1) and (3) EC and Article 14 of the Statute of the European Investment Bank, which in essence concern the audit of accounts and the examination of financial management, are without prejudice to the applicability to the European Investment Bank of a system of investigation which, like that established under Articles 280 EC and 203 EA by Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF), is specifically designed to permit the investigation of suspicions relating to acts of fraud or corruption or other illegal activities detrimental to the financial interests of the Communities. Such a system of investigation bears no similarity to the audit of the accounts or the examination of the financial management of the entity concerned.

see para. 105

6. Neither the fact that the European Anti-Fraud Office (OLAF) was established by the Commission and is incorporated within the Commission's administrative and budgetary structures on the conditions laid down in Decision 1999/352 nor the fact that the Community legislature has conferred on such a body external to the European Investment Bank powers of investigation on the conditions laid down in Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF), is per se capable of undermining the European Investment Bank's operational autonomy and its reputation on the financial markets.

The rules put in place by the regulations reflect the settled intention of the Community legislature to subject the powers conferred on OLAF, first, to guarantees intended to ensure OLAF's complete independence, in particular from the Commission, and, second, to strict observance of the rules of Community law, including, in particular, the Protocol on the Privileges and Immunities of the European Communities, human rights and fundamental freedoms and the Staff Regulations of officials of the European Communities and the Conditions of Employment of other servants of the European Communities. The exercise of those powers is subject to various specific rules and guarantees, whilst the purpose for which they may be used is clearly delineated. The internal investigations which OLAF may carry out must also be carried out under the conditions and in accordance with the procedures provided for in decisions adopted by each institution, body, office and agency. Thus it is conceivable that any matters specific to its banking business will, where appropriate, be taken into account by the European Investment Bank when it adopts such a decision and it is incumbent on the Bank to establish that any restrictions in that regard are necessary.

see paras 106-109

7. The expression "financial interests of the Community" in Article 280 EC must be interpreted as encompassing not only revenue and expenditure covered by the Community budget but also, in principle, revenue and expenditure covered by the budget of other bodies, offices and agencies established by the Treaty. The expression is peculiar to Article 280 EC and is different from the terms used in other provisions of Title II of Part Five of the Treaty, which refer invariably to the "budget" of the European Community. Furthermore, that expression seems wider than the expression "items of revenue and expenditure of the Community" found inter alia in Article 268 EC. Lastly, the fact that a body, office or agency owes its existence to the Treaty suggests that it was intended to contribute towards the attainment of the European Community's objectives and places it within the Community legal order, so that the resources that it has at its disposal by virtue of the Treaty have by their nature a particular and direct financial interest for the Community.

The European Investment Bank, pursuant to the Treaty, falls within the Community framework and its resources and their use are thus of evident financial interest to the European Community and its objectives. Therefore, the expression "financial interests of the Community" in Article 280 EC is not restricted exclusively to the budget of the European Community in the strict sense but also covers the resources and expenditure of the Bank.

see paras 120-125

8. By introducing into Article 280 EC the statements in paragraphs 1 and 4, the draftsmen of the Treaty of Amsterdam clearly intended to step up the fight against fraud and irregularities affecting the financial interests of the European Community, in particular by expressly conferring on the Community the specific task of "combating" , like the Member States, such fraud and irregularities by adopting "measures" which act as a "deterrent" and afford "effective protection in the Member States" . The fact that Article 280(1) EC specifies that the measures are to be taken in accordance with that article does not mean that the scope of the Community's competence in this sphere is to be determined exclusively by reference to the remaining paragraphs of Article 280 EC, in particular paragraph 4. Article 280(4) EC must be construed as providing a fuller explanation of the Community's competence and specifying certain of the conditions on which it is exercised.

In that context, the fact that Article 280(4) EC refers in particular to the need to afford effective and equivalent protection in the Member States cannot be taken to mean that the draftsmen of the Treaty of Amsterdam implicitly intended to make any action taken by the Community subject to a supplementary restriction as basic as a prohibition on combating fraud and other irregularities affecting its financial interests by adopting legislative measures covering the institutions, bodies, offices and agencies established by, or on the basis of, the Treaties. Quite apart from the fact that such a restriction of the Community's competence is not apparent from the wording of Article 280 EC, it would scarcely be compatible with the objectives pursued by that article. If the protection of the European Community's financial interests is to be rendered effective, it is essential that the deterrence of, and the fight against, fraud and other irregularities operate at all levels at which those interests are liable to be affected by such phenomena and it is often the case that phenomena fought in that way simultaneously involve actors at various levels.

see paras 131-135

9. Since Article 183a EA encapsulates an independent objective of protecting the financial interests of the European Atomic Energy Community, it cannot be accepted that Regulation No 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF), which has the aim of combating fraud affecting those financial interests, was not adopted for the purpose of attaining one of the objectives of that Community and, consequently, could not be adopted on the basis of Article 203 EA.

see paras 140, 143-144

10. Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) cannot be declared inapplicable with regard to the European Investment Bank on the ground of a breach of the principle of proportionality.

The Community legislature does not make a manifest error of assessment in considering it necessary, for the purposes of strengthening the prevention of, and the fight against, fraud, corruption and other irregularities detrimental to the financial interests of the European Community, to set up a control mechanism which is simultaneously centralised within one particular organ, specialised and operated independently and uniformly with respect to the various institutions, bodies, offices and agencies established by, or on the basis of, the Treaties: that is so notwithstanding the existence of control mechanisms specific to those institutions, bodies, offices and agencies. In that regard, the investigative function conferred on OLAF is different, as regards its specific nature and its specific subject-matter, from general auditing tasks such as those entrusted to the Court of Auditors, and the Audit Committee of the European Investment Bank.

In addition, the Community legislature can take the view that disparate control mechanisms adopted within the institutions, bodies, offices or agencies established by, or on the basis of, the Treaties, with the existence of such control mechanisms and the procedures followed by them being left to the discretion of those entities, do not constitute a solution presenting a degree of effectiveness equivalent to that which might be expected of a system designed to centralise the investigative function within one and the same specialised and independent body.

see paras 150, 166-168, 171

11. The Decision of the Management Committee of the European Investment Bank of 10 November 1999 concerning cooperation with the European Anti-Fraud Office (OLAF) infringes Regulations Nos 1073/1999 and 1074/1999 concerning investigations conducted by OLAF, in particular Article 4 thereof, and exceeds the margin of autonomy of organisation which the Bank retains for the purpose of combating fraud, since, in view of its preamble and its provisions, that decision is based on the incorrect premiss that Regulations Nos 1073/1999 and 1074/1999 do not apply to the Bank and consequently gives expression to the Bank's intention to assume sole responsibility for combating fraud within it whilst developing certain forms of reduced operational cooperation with OLAF, by failing to apply the system set up by the regulations and substituting for adoption of the decision referred to in Article 4(1), second subparagraph, and (6) of the regulations the establishment of a separate system peculiar to the Bank.

see paras 184-186