Keywords
Summary

Keywords

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

2. Plea of illegality — Measures in respect of which a plea of illegality may be raised — Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) — Community legislative act whose addressee is not the Community body alleging its illegality — Admissibility — (Arts 230 EC and 241 EC)

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

4. 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)

5. European Central Bank — Obligation to consult the Bank before adoption of an act in its field of competence — Scope — Measures intended to combat fraud adversely affecting the Community's financial interests — Excluded — (Art. 105(4) EC; European Parliament and Council Regulation No 1073/1999)

6. European Central Bank — Independence — Scope — Community legislative measures capable of applying to the Bank — Whether permissible — Conditions — (Art. 108 EC; Statute of the European System of Central Banks)

7. European Central Bank — Independence — Application of Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) — Whether compatible — (European Parliament and Council Regulation No 1073/1999; Commission Decision 1999/352)

8. European Anti-Fraud Office (OLAF) — Regulation No 1073/1999 concerning investigations conducted by OLAF — Breach of the principle of proportionality in relation to the inclusion of the European Central Bank within its scope — None — (European Parliament and Council Regulation No 1073/1999)

9. European Anti-Fraud Office (OLAF) — Regulation (EC) No 1073/1999 concerning investigations conducted by OLAF — Infringement by Decision 1999/726 of the European Central Bank on fraud prevention — (European Parliament and Council Regulation No 1073/1999; European Central Bank Decision 1999/726)

Summary

1. Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) must be interpreted as being intended to apply inter alia to the European Central Bank. The expression "institutions, bodies, offices and agencies established by, or on the basis of, the Treaties" in Article 1(3) of the regulation must be interpreted as including the Bank. Regardless of the distinctive features of its status within the Community legal order, the European Central Bank was indeed established by the Treaty, as is apparent from the actual wording of Article 8 EC. It does not follow from either the preamble to, or the provisions of, Regulation No 1073/1999 that the Community legislature intended to draw any distinction between the institutions, bodies, offices and agencies established by, or on the basis of, the Treaties, in particular by excluding those bodies, offices or agencies which have resources distinct from the Community budget. The seventh recital to the regulation 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 63-67

2. Although it is true, first, that a decision adopted by the Community institutions which has not been challenged by its addressee within the time-limit laid down by the fifth paragraph of Article 230 EC becomes definitive as against that person and, second, that the general principle, to which Article 241 EC gives expression and which has the effect of ensuring that every person has or will have had the opportunity to challenge a Community measure which forms the basis of a decision adversely affecting him, does not in any way preclude a regulation from becoming definitive as against an individual in regard to whom it must be considered to be an individual decision and who could undoubtedly have sought its annulment under Article 230 EC, a fact which prevents that individual from pleading the illegality of that regulation before the national court, those principles nevertheless do not in any way affect the rule laid down by Article 241 EC, which provides that any party may, in proceedings in which a regulation of the kind referred to in Article 241 EC is at issue, plead the grounds specified in the second paragraph of Article 230 EC in order to invoke before the Court of Justice the inapplicability of that regulation.

Therefore, in an action for annulment of a decision adopted by a Community body, based on the latter's failure to comply with Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF), that body cannot be denied the right to invoke the possible illegality of that regulation, given that its legislative nature has not been challenged by any of the parties and that, more particularly, it has not been claimed that the regulation should be treated as a decision or that the body in question would, in such a case, be the addressee thereof.

see paras 74-78

3. 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 framework of the Community, 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 Central 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 also covers the resources and expenditure of the Bank.

see paras 89-93, 95

4. 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 100-104

5. The obligation laid down by Article 105(4) EC to consult the European Central Bank on any proposed act in its field of competence is intended essentially to ensure that the legislature adopts the act only when the body has been heard, which, by virtue of the specific functions that it exercises in the Community framework in the area concerned and by virtue of the high degree of expertise that it enjoys, is particularly well placed to play a useful role in the legislative process envisaged.

That is not the case as regards the prevention of fraud detrimental to the financial interests of the Community, an area in which the Bank has not been assigned any specific tasks. The fact that Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) may affect the Bank's internal organisation does not mean that the Bank should be treated differently from the other institutions, bodies, offices and agencies established by the Treaties.

see paras 110-111

6. It is clear from the wording of Article 108 EC that the outside influences from which that provision seeks to shield the European Central Bank and its decision-making bodies are those likely to interfere with the performance of the "tasks" which the Treaty and the Statute of the European System of Central Banks assign to the Bank. Article 108 EC seeks, in essence, to shield the Bank from all political pressure in order to enable it effectively to pursue the objectives attributed to its tasks, through the independent exercise of the specific powers conferred on it for that purpose by the Treaty and the Statute. By contrast, recognition that the Bank has such independence does not have the consequence of separating it entirely from the European Community and exempting it from every rule of Community law. There are no grounds which prima facie preclude the Community legislature from adopting, by virtue of the powers conferred on it by the Treaty and under the conditions laid down therein, legislative measures capable of applying to the European Central Bank.

see paras 134-136

7. 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 Central Bank powers of investigation on the conditions laid down in Regulation No 1073/1999 concerning investigations conducted by OLAF is per se capable of undermining the Bank's independence.

The rules put in place by the regulation 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 system of investigation set up by Regulation No 1073/1999 is specifically intended to permit the investigation of suspicions relating to acts of fraud or corruption or other illegal activities detrimental to the financial interests of the European Community and a decision by OLAF's Director to open an investigation cannot be taken unless there are sufficiently serious suspicions in that respect. 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 matters specific to the performance of its tasks will, where appropriate, be taken into account by the 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 138-141, 143

8. Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) cannot be declared inapplicable with regard to the European Central 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 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 control tasks such as those entrusted to the Court of Auditors, as regards examination of the operational efficiency of the Bank, and to external auditors, as regards the auditing of its accounts. As regards the functions assigned to the Directorate for Internal Audit and the Bank's Anti-Fraud Committee by Decision 1999/726 on fraud prevention 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 158-160, 164

9. Decision 1999/726 of the European Central Bank on fraud prevention infringes Regulation No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (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 provisions, that decision is based on the incorrect premiss that Regulation No 1073/1999 does not apply to the Bank and consequently gives expression to the Bank's intention to assume sole responsibility for combating fraud within it, by failing to apply the system set up by the regulation and substituting for adoption of the decision referred to in Article 4(1), second subparagraph, and (6) of the regulation the establishment of a separate system peculiar to the Bank.

see paras 173, 176, 181-182