EN Official Journal of the European Union C 100/1

Activity Report of the OLAF Supervisory Committee

January 2011-November 2011

2012/C 100/01

Members of the OLAF Supervisory Committee

Diemut R. THEATO Chairman Former Member of the European Parliament Former Chairman of the Committee of Budgetary Control of the European Parliament, Germany

Peter STRÖMBERG Director of the Supervisory Board of Public Accountants, Sweden

Kálmán GYÖRGYI Former General Prosecutor of the Republic of Hungary, Hungary

Luis LÓPEZ SANZ-ARANGUEZ Public Prosecutor at the Supreme Court, Spain

Rosalind WRIGHT Chairman of the Fraud Advisory Panel, United Kingdom

CONTENTS

FOREWORD BY THE CHAIRMAN TO THE SUPERVISORY COMMITTEE’S ACTIVITY REPORT

1. INTRODUCTION

2. LEGAL GUARANTEES FOR OLAF’S INVESTIGATIVE INDEPENDENCE

2.1. Independence of the OLAF Director-General

2.1.1. Recruitment of the OLAF DG

2.1.2. Means of ensuring the independence of the OLAF DG

2.1.3. The Deputy DG

2.2. Role of the Supervisory Committee

2.2.1. Access by the SC to OLAF case files

2.2.2. The SC Secretariat

3. MONITORING THE IMPLEMENTATION OF OLAF’S INVESTIGATIVE FUNCTION

3.1. OLAF’s competence and powers of investigation

3.2. Duration of investigations

3.3. Respect for procedural guarantees within investigations

3.4. Cooperation and information exchange with Member States

3.5. Cooperation and exchange of information with the institutions, bodies, offices and agencies in relation to OLAF’s investigative function

3.5.1. Access by OLAF to information held by the institutions

3.5.2. Relations with IDOC and other EU institutions’ services

3.5.3. Follow-up by institutions of OLAF’s recommendations

3.5.4. Agreement of the Secretary-General/President of an institution, body, office or agency to defer the obligation to give the person concerned the possibility to make his views known

3.5.5. Transmission of case reports and provision of information by OLAF to institutions, bodies, offices, agencies

3.5.6. Exchange of views with the institutions

4. MONITORING THE IMPACT OF MANAGEMENT ON OLAF’S INVESTIGATIVE FUNCTION

4.1. Management of investigations

4.1.1. Planning and strategic direction of investigations

4.1.2. Internal control of investigations

4.2. Budget, administrative organisation and staff policy in relation to OLAF’s investigative function

4.3. OLAF’s procedural investigation rules (the Manual)

CONCLUSIONS

ANNEX I Calendar of Supervisory Committee Meetings

ANNEX II List of opinions adopted by the SC between 1 December 2005 and 30 November 2011

ANNEX III Opinion No 1/2011 Access by OLAF to personnel data held by the Commission

ANNEX IV Opinion No 2/2011 Powers of the European Anti-Fraud Office (OLAF) for the independent conduct of internal investigations within the EU institutions

ANNEX V Opinion No 3/2011 OLAF’s preliminary draft budget for 2012

ANNEX VI Opinion No 4/2011 on the amended 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) and repealing Regulation (Euratom) No 1074/1999

ANNEX VII Opinion No 5/2011 Transmission by OLAF to the institutions of final case reports drawn up following internal investigations closed without follow-up

FOREWORD BY THE CHAIRMAN TO THE SUPERVISORY COMMITTEE’S ACTIVITY REPORT

I am pleased to submit the last Activity Report of the Supervisory Committee of the European Anti-Fraud Office (OLAF). This is the final activity report of our Committee, whose term of office began in December 2005.

The final year of our mandate was a particularly challenging one for our Committee, with the arrival of the new Director-General, the acceleration of the reform of Regulation (EC) No 1073/1999 leading to a debate in which the Supervisory Committee was actively involved and the European Court of Auditors’ follow-up audit of OLAF.

The time has now come to make an overall assessment of our work. The format of this last annual report for this Supervisory Committee is therefore different, in order better to reflect our activities throughout our six-year mandate. As well as summarising our activities during 2011, this report is intended to provide a synopsis of the main issues on which the Supervisory Committee focused its monitoring activity.

The Supervisory Committee has remained fully committed to assisting OLAF in its fight against fraud, corruption and any other illegal activity affecting the financial interests of the European Union and to reinforcing OLAF’s independence through the regular monitoring of its investigations.

The Supervisory Committee worked closely for several years with the first Director-General of OLAF, the late Mr Franz-Hermann Brüner and, after January 2010, with Mr Nicholas Ilett in his capacity as acting Director-General. In 2010 the Supervisory Committee was actively involved in the selection procedure of the new Director-General and, following his appointment in February 2011, had several meetings with Mr Giovanni Kessler.

The Supervisory Committee has also considered it a priority to maintain regular contact with the EU institutions and OLAF’s partners and stakeholders, in particular since OLAF relies upon these bodies for the effective enforcement of its recommendations following investigations. The Supervisory Committee appreciates the good relations it has enjoyed with the European Commission, the European Parliament, the Council and the European Court of Auditors, with whom it has had regular meetings to discuss matters of common interest concerning OLAF. The Supervisory Committee can only hope that in the future this fruitful relationship will be continued.

As OLAF’s critical friend, the Supervisory Committee has supported OLAF when needed, encouraging it to maintain its good practices, whilst underlining those aspects relating to the implementation of its investigative function needing improvement.

In particular, the Supervisory Committee has consistently stressed the need for OLAF to concentrate on its core investigative activity and to focus its efforts on larger cases, by developing a consistent and robust de minimis policy. The Supervisory Committee also recommended that OLAF endeavour to expedite the investigation process by way of better management, improved planning of all investigative activities and more effective prioritisation of case work. Moreover, the Supervisory Committee has regularly highlighted the need for adequate and clear procedural investigation rules and recommended improvement of both the rules contained in OLAF’s Manual and of their implementation at every stage of investigations.

Our work throughout 2011 can be seen as yet another example of our supporting yet critical role. The Supervisory Committee issued a total of five opinions relating to OLAF’s investigative function. The first upon the request of the acting Director-General; the Supervisory Committee supported OLAF’s need for access to European Commission personnel databases at the evaluation phase of an investigation. The second opinion was drafted at the request of the new Director-General and confirmed OLAF’s competence to investigate alleged corruption on the part of members of the European Parliament. The third opinion covered OLAF’s draft budget for 2012; the Supervisory Committee supported the wish of OLAF management to be free to determine how cuts in expenditure for the coming year, imposed on it by the European Commission, should be allocated within OLAF. In its fourth opinion the Supervisory Committee examined the proposal of the European Commission to reform Regulation (EC) No 1073/1999 concerning investigations conducted by OLAF. The most recent opinion of the Supervisory Committee explores OLAF’s practice of transmitting to the institutions, bodies, offices or agencies concerned, case reports drawn up following internal investigations closed without follow-up; the Supervisory Committee drew attention to the consequences of this practice in the areas of the efficiency and the independence of OLAF’s investigations.

The Supervisory Committee is encouraged that, over the years, OLAF has taken steps to implement many of its recommendations. However, the Supervisory Committee is aware that a number of issues still require improvement. In particular, OLAF needs to take measures in order to refocus its attention on its investigative function and to improve its overall efficiency by better management of investigations, particularly with regard to their length and to control their management and supervision. The Supervisory Committee hopes that the reorganisation of OLAF which will take effect on 1 February 2012, will remedy these problems. The progress made by OLAF, more particularly in the specific areas mentioned above, remains to be monitored by the next Supervisory Committee.

Throughout our mandate, we have developed a constructive relationship with OLAF. Numerous meetings with the OLAF management team and OLAF staff have been the occasion for valuable exchanges of views and sharing of information. The Supervisory Committee would like to thank the staff of OLAF and its Director-General for their readiness to cooperate with the work of the Supervisory Committee throughout our mandate and to make our task an easier and more enjoyable one than would have been possible without their assistance.

I particularly wish to express my own and the Committee members’ debt to the staff of our Secretariat, without whose industry and loyal support none of our work would have been possible. They have been a pleasure to work with.

Diemut THEATO Chairman Supervisory Committee, OLAF

1. INTRODUCTION

1. The Supervisory Committee (SC) of the European Anti-Fraud Office (OLAF) was established for the purpose of reinforcing OLAF’s independence by the regular monitoring of its investigative function, whilst refraining from interfering with the conduct of investigations in progress. The SC also assists the Director-General of OLAF (hereinafter OLAF DG) in the discharge of his responsibilities, with the aim to support OLAF’s work and to ensure that its investigations are carried out to the highest standards.

2. The SC discharges this role by delivering opinions to the OLAF DG, in which it makes recommendations to OLAF for improvement where it deems appropriate and necessary. The SC also submits annual reports to the EU institutions on its activities.

3. This activity report covers the six-year period of the mandate of the SC whose members began their term of office in December 2005.

4. The SC’s main responsibility during its mandate has been to ensure that OLAF’s independence is in no way compromised. The SC considers that the risks of undue influence on the opening, pursuit and conduct of an investigation can come from any source and has paid particular attention to those more subtle pressures which could potentially affect OLAF’s independence, such as efforts by the institutions, bodies, offices, agencies, Member States or other third parties, to obstruct OLAF either at the opening stage or during the course of an investigation: by refraining from or delaying the transmission of evidence or documentation to OLAF, by hindering it in its investigatory activities or by unduly restricting OLAF’s resources, whether operational, financial or human. The monitoring by the SC of OLAF’s investigations has therefore covered a wide range of issues.

5. The SC paid particular attention to the implementation of the legal provisions set out in Regulation (EC) No 1073/1999 of the European Parliament and of the Council (1) guaranteeing OLAF’s independence: the guarantees associated with the post of the OLAF DG, and the existence and powers of the SC. The SC actively participated in the recruitment procedure of the new OLAF DG and expressed its views on the amendments to the reform of Regulation (EC) No 1073/1999 (2) with regard to this procedure, as well as to those amendments pertaining to the OLAF DG’s mandate, status, role and independence.

6. The SC carefully monitored the execution of OLAF’s investigative function in order to be able to identify any undue pressure on OLAF which might lead to its independence being compromised. On the basis of a thorough examination of a representative sample of a diverse range of case files and numerous discussions with OLAF’s investigators, managers and directors, the SC assessed those aspects it considered to be essential for the efficiency, effectiveness and independence of OLAF’s investigative work: OLAF’s competence and powers of investigation, duration of investigations, respect by OLAF of procedural rules during investigations, cooperation and information exchange with Member States and with the institutions, bodies, offices and agencies in relation to OLAF’s investigative function.

7. The SC assessed the impact of OLAF’s management on investigations. In particular, the SC paid special attention to issues such as management of investigations, budget, as well as administrative organisation and staff policy in relation to OLAF’s investigative function and OLAF’s procedural investigation rules.

2. LEGAL GUARANTEES FOR OLAF’S INVESTIGATIVE INDEPENDENCE

8. Although OLAF is formally part of the European Commission from an administrative viewpoint, it is independent from it as regards its investigative activities. The legal framework governing OLAF’s investigations sets out two sets of guarantees aimed at ensuring OLAF’s operational independence and the ‘proper conduct of investigations’ (3): the independence of the OLAF DG and the role of the SC.

2.1. Independence of the OLAF Director-General

9. The opening, conduct and closing of OLAF’s cases is a matter exclusively for the OLAF DG. Therefore, his independence is an indispensable prerequisite for OLAF to carry out its administrative investigations free from outside influence or pressure. In several of its opinions, the SC expressed its views as to his recruitment, the means of ensuring his independence and the issue of deputy representation.

2.1.1. Recruitment of the OLAF DG

10. During 2010, the SC was actively involved in the appointment procedure for the post of the DG and issued its Opinion No 2/2010 on the nomination of the OLAF DG. The SC stated that the successful functioning of OLAF requires from its DG strong leadership, good management skills and the proven ability to manage large teams. More specifically, the SC highlighted that the OLAF DG should have the ability and determination to lead a complex, multi-task organisation within an international environment in order to deliver concrete results in the fight against fraud and corruption in Europe. He should have sufficient background in this field in order to command the loyalty and the respect of a highly specialised team, and in order to ensure credibility both within and outside OLAF.

11. Moreover, in its Opinion No 3/2010, the SC welcomed the new recruitment procedure as foreseen in Article 12(2) of the amended Regulation (EC) No 1073/1999. This procedure fully corresponds to the requirement of independence and the joint agreement of the three institutions — European Parliament (EP), Council and Commission — serves to reinforce the position of the OLAF DG.

2.1.2. Means of ensuring the independence of the OLAF DG

12. The OLAF DG must carry out his duties in full independence. Moreover, he has the overall responsibility for ensuring the independence of OLAF as a whole in its operational activities, a duty in which he has always been supported by the SC. The legal framework governing OLAF’s investigations sets out several means enabling the OLAF DG to act independently. The SC expressed its views with regard to some of them in its opinions and previous Annual Reports.

13. Inter alia, it is within the competence of the OLAF DG to decide upon the opening, conduct and the reporting of investigations without the need to either seek or accept outside instructions (4). In addition, the OLAF DG may bring an action against the European Commission should he consider that a measure taken by the latter calls his independence into question. In the light of recent misunderstandings between the European Parliament and OLAF, the SC stated in its Opinion No 4/2011 that, in the amended proposal for Regulation (EC) No 1073/1999, this possibility should be extended to all institutions, bodies, offices and agencies (5). In such a case he should inform the SC immediately and seek its full support.

14. Furthermore, unlike others Directors-General within the European Commission, the OLAF DG has the power to act as Appointing Authority or as authority authorised to conclude contracts of employment (6). Given that he should manage human resources in a way that best responds to the operational needs of OLAF, the SC believes that this role should be strengthened, thus making him free to recruit investigative staff with the necessary skills and qualifications to carry out all OLAF operational activities. This should be solely the responsibility of the DG, and not related to the recruitment procedures for the rest of the European Commission. This responsibility should not be surrendered to the European Commission. The SC would once again reiterate the need for a better developed human resources policy by introducing a strategy to reflect the operational priorities set by management (7).

15. Finally, the SC emphasised in its Opinion No 4/2011 that the continued independent conduct of OLAF’s investigations is essential and no delegation of the DG’s investigative duties to one or more OLAF staff members should either detract from the appointed person’s responsibility to the institutions or jeopardise his independence (8).

2.1.3. The Deputy DG

16. In January 2010, the institutions were faced with a situation where no person had been appointed to the post of the OLAF DG as required by Article 12 of Regulation (EC) No 1073/1999, at which time the European Commission appointed an acting DG without prior consultation or agreement of the two other institutions (European Parliament and Council). The SC expressed the view that the person carrying out the role of acting OLAF DG during an interim period should do so with the consensus of the three institutions (9).

17. In the light of these events, the SC therefore considered it important to ensure the continuity of the independent conduct of OLAF’s investigations through the creation, in Regulation (EC) No 1073/1999, of the post of a standing Deputy Director-General to replace the DG were the latter to resign, retire, be on sick-leave or otherwise be unable to fulfil his obligations (10); such a Deputy to be chosen from amongst the OLAF Directors in consensus with all three institutions.

2.2. Role of the Supervisory Committee

18. The SC was established in order to reinforce OLAF’s independence by regular monitoring of the implementation of OLAF’s investigative function. The independence of the SC is a key factor for the operational independence of OLAF itself. Therefore, the SC’s resources (that of access to OLAF case files by the SC and support from the SC Secretariat) should be appropriate and adequate to enable it to fulfil its role and perform its functions in full independence. The SC has regularly expressed its views on this matter both in its Annual Reports and its opinions.

2.2.1. Access by the SC to OLAF case files

19. As stressed in its Opinion No 4/2011, the SC’s monitoring activity as an independent body should not be based solely on information it receives from OLAF. The SC must be able to carry out its own analysis using not only the documents and information obtained from OLAF under Regulation (EC) No 1073/1999, but also all the documentation that the SC considers necessary to carry out this task. In this context, access by the SC and its Secretariat to OLAF’s case files is essential to obtain information relevant to the SC’s mission to strengthen OLAF’s independence by the regular monitoring of its investigative function.

2.2.2. The SC Secretariat

20. SC members are assisted in the performance of their duties by a Secretariat, which is provided by OLAF (11). The SC has always stressed the need for the SC Secretariat to work independently under the supervision and direction of the Chairman of the SC and its members. In the SC’s view, the independent functioning of the Secretariat requires that additional safeguards be included in the text of Regulation (EC) No 1073/1999 itself, such as those proposed by the SC in its Opinion No 4/2011 (12) regarding the number of members of the Secretariat, as well as their nomination and evaluation.

21. Throughout its mandate, the SC has continually stated its requirement for an adequately staffed Secretariat as to its number and level: one Head of unit, four administrators and three assistants. The SC is very disappointed therefore to note that not only were its repeated recommendations not fully taken into account by OLAF, but what is more the new OLAF structure provides for a reduction from eight to six posts. The SC also notes with concern that the appointment of the next Head of the SC Secretariat has been made by OLAF DG; both these decisions having been taken without any prior consultation with the SC.

22. It is the SC’s assessment that, in the future and in accordance with Article 11 of its rules of procedure (13), members of its Secretariat be appointed at the suggestion of the SC, by an authority other than that of DG OLAF, to carry out their work accountable to and in full compliance with instructions received solely from the SC and to be periodically evaluated by the SC (14). With the experience of its six year term of office the SC considers that its independence, together with that of its Secretariat, would be illusory were the SC Secretariat staff to continue to be appointed, managed and graded by the office it is responsible for monitoring.

3. MONITORING THE IMPLEMENTATION OF OLAF’S INVESTIGATIVE FUNCTION

23. Throughout its mandate, the SC has made the fullest use of those legal mechanisms provided for it by the legislator with regard to the regular monitoring of OLAF’s investigative function in order to ensure that its independence is not compromised. On the basis of information sent to it by the OLAF DG (15) or acting on its own initiative (16), the SC scrutinised those aspects of OLAF’s investigative function that it considered to be essential for safeguarding its operational independence: OLAF’s competence and powers of investigation, duration of investigations, respect for procedural rights, cooperation and exchange of information with Member States and the institutions, bodies, offices and agencies.

3.1. OLAF’s competence and powers of investigation

24. In its Opinion No 3/2010, the SC expressed its wish to have, in the amended Regulation (EC) No 1073/1999, a clear definition of OLAF’s competence and powers of investigation at each stage, especially regarding OLAF’s powers to carry out on-the-spot checks and inspections as provided by Regulation (Euratom, EC) No 2185/96 (17). Recent challenges have shown that OLAF’s power to have immediate and unannounced access to any information held by institutions, bodies, offices or agencies (18) also needs to be reinforced.

25. OLAF has been prevented from having immediate and automatic access to the European Commission’s databases containing personal data when considering whether to open an investigation. The SC’s Opinion No 1/2011, issued at the request of the OLAF DG, supported OLAF in the dialogue with the European Commission on this matter (for further details, see below point 3.5.1).

26. OLAF’s competence to open and conduct an internal investigation concerning Members of the European Parliament, as well as its power to have immediate and unannounced access to any information held by this institution and to its premises has also been challenged. Again, the SC supported OLAF and, following a request from the OLAF DG, issued its Opinion No 2/2011 in which it stated that preventing OLAF from exercising this key investigative activity following an interpretation made by an institution, body, office and agency of OLAF’s mandate was a limitation of OLAF’s independent conduct of investigations.

27. In its Opinion No 4/2011, the SC expressed its regret that, to date, OLAF’s competence to conduct investigations and its investigative powers had not been clearly defined, in particular with regard to investigations within the institutions, bodies, offices and agencies (19).

3.2. Duration of investigations

28. The SC paid close attention to the duration of OLAF’s investigations, with particular regard to the operation of time limits and to unexplained delays in the course of investigations. In addition, the length of investigations was monitored in order to verify that potential undue delays were not related to any reason that would have compromised their independent conduct or jeopardised their results. The SC examined a total of 425 cases lasting more than nine months, as well as a number of cases remaining open after more than four years of investigation. The findings were presented in two opinions (20) and set out in each annual report of the SC.

29. Having recommended in its Opinion No 1/2007 that the form of the reports submitted to the SC by OLAF relating to investigations lasting more than nine months indicate more clearly the reasons for exceptional delays in investigations (21), the SC has been better able to identify the reasons for such delays and, as a result, OLAF has largely eliminated unexplained reasons, having changed the format of the ‘nine months reports’.

30. This is not to say that the SC is satisfied that investigations are completed within an acceptable time-frame. On the contrary, the SC has observed that investigations, sometimes of comparatively simple matters, often take an inordinately long time to complete. Notably, there are currently 36 cases whose investigations have already lasted more than four years (22). This may be as a result of insufficient numbers of experienced staff allocated to particular investigations, or it could result from investigators being diverted from completing one investigation before they begin another. This is a matter which greatly concerns the SC which has addressed the problem by, inter alia, suggesting better methods of control and planning of investigations so that managers may better deploy their investigators and direct the course of investigations more efficiently (23).

3.3. Respect for procedural guarantees within investigations

31. OLAF’s independence relies to a large extent on its ability and willingness to respect fundamental rights and procedural guarantees when conducting its investigations. By failing to do so, OLAF would open itself to criticism, resistance from concerned parties and political interventions. For this reason, the SC has always taken a keen interest in OLAF’s respect for these rights and guarantees and has made considerable efforts both to assess the way OLAF ensures respect for fundamental rights and procedural guarantees and to actively promote the development of relevant standards in this field applicable to OLAF.

32. When examining cases transmitted to the national judicial authorities, the SC paid particular attention to the substantive and procedural aspects of investigations. On the basis of these cases, the SC assessed the way in which OLAF ensures respect for fundamental rights and procedural guarantees within its investigations. The SC’s findings and recommendations are summarised in Opinion No 5/2010. In this Opinion, the SC found that, overall, OLAF respects fundamental rights and procedural guarantees. The SC identified, however, specific problems such as procedural shortcomings, administrative errors and divergent practices within the investigative units.

33. The SC made recommendations aimed at improving the current practice in carrying out investigations. In particular, the SC suggested specific measures that should be taken by OLAF to reinforce respect for fundamental rights and procedural guarantees at each stage of an investigation. In addition, it recommended that OLAF make specific improvements to the OLAF Manual (24) and ensure that its rules are respected. Furthermore, the SC recommended the reinforcement of the mechanisms of both the control of the impartiality and the confidentiality of investigations and their duration. Finally, it provided OLAF with an analysis grid in respect of fundamental rights and procedural guarantees, to be used as a guide for investigators during investigations and for the management team when controlling their legality.

34. The SC notes with satisfaction that, in response to its Opinion No 5/2010, the OLAF DG decided to implement most of its recommendations within OLAF.

35. The SC also contributed to the debate on the reform of Regulation (EC) No 1073/1999, urging the European Commission and the legislator to take advantage of this reform to reinforce the protection of fundamental rights and procedural guarantees of those persons involved in OLAF’s investigations. The SC issued three opinions on this subject (25).

36. In particular, the SC highlighted that, when setting standards for procedural guarantees, the balance between the interests of concerned parties and the efficiency of the conduct of investigations must always be borne in mind. This balance is particularly delicate when regulating an administrative procedure that contains no coercive measures and has a rather limited impact on the legal status of the person concerned. There is a risk that giving too much weight to the procedural aspects of a case will detract from the efficient conduct of the investigation. One example of that is the complex question of deferral of OLAF’s obligation to give the person concerned the possibility of making his views known and the need for OLAF to obtain the prior agreement of the Secretary-General/President of the institution, body, office or agency concerned (see point 3.5.4 below).

3.4. Cooperation and information exchange with Member States

37. The efficiency of OLAF’s operational activity depends greatly on its cooperation with Member States and on the contribution made by them both during the investigation and in the follow-up stages. In this respect, the monitoring of OLAF’s investigative function by the SC was twofold.

38. The SC was particularly conscious of the importance of improving the flow of information between the Member States’ authorities and OLAF. The SC sought, in particular, to ensure that Member States avoid acting in a way which might actively hinder OLAF in its investigative activity; for example, by refraining from or delaying the transmission of evidence or documentation to OLAF. When examining reports on cases lasting more than nine months, the SC noted a number of cases where OLAF reported the lack of cooperation by the Member States as the reason for not having completed investigations within this period (26). While this reason has been inaccurately used in some of the cases examined, it has been rightly identified in others. The SC also noted that OLAF has encountered problems in identifying the appropriate competent national authorities able to provide it with the assistance needed, when carrying out, for example, on-the-spot checks on the premises of economic operators. For this reason, the SC, in its Opinion No 4/2011, supported the amendment to Regulation (EC) No 1073/1999 which aims to oblige each Member State to identify quickly the relevant national competent authority to assist OLAF in its investigations, mainly in the area of direct expenditure.

39. A thorough analysis of those cases where OLAF has faced lack of cooperation from Member States is still needed.

40. Secondly, bearing in mind that OLAF has no prosecuting power, the SC considers that close co-operation between OLAF and the national judicial authorities, as well as proper follow up of OLAF’s recommendations remain essential for the successful outcome of OLAF’s investigations. In the light of these considerations, the SC examined those cases requiring information to be transmitted to these authorities. In so doing, the SC’s intention was to assess both the quality and usefulness of OLAF’s investigation reports for them and to identify the reasons why some cases were not taken up by them (27). The SC also wanted to ensure that conclusions of investigations were solely based on elements having evidential value in the judicial proceedings of the Member State in which their use proved necessary (28).

41. The SC noted that, in some cases, the national judicial authorities did not follow OLAF’s recommendations for various reasons: prescription (statute of limitations), lack of prioritisation, or obvious lack of evidence. However, the SC noted that the cases where these authorities were prevented from taking action due to prescription diminished progressively as the quality of information provided in the reports improved, in particular the analysis of criminal offences allegedly committed and of the applicable rules in the Member State to which the report was forwarded.

42. The SC believes that the majority of these problems could be avoided by the early involvement of experts in the respective national legal systems, be it the magistrates of the Judicial and Legal Advice Unit, or a similar function built into the investigative organisation of OLAF.

3.5. Cooperation and exchange of information with the institutions, bodies, offices and agencies in relation to OLAF’s investigative function

43. To fulfil its remit, it is essential that OLAF carries out its role with the full support and confidence of the institutions, bodies, offices and agencies. Without their trust and confidence, OLAF cannot carry out complete and effective investigations in absolute independence, given that many cases necessarily involve the cooperation of their staff.

44. The SC has always stressed that close cooperation between OLAF and the institutions and competent bodies, as well as proper follow-up of OLAF’s recommendations is essential for the successful outcome of OLAF’s investigations. However, the SC is anxious to ensure that all parties cooperating with OLAF avoid acting in a way which might actively impede OLAF’s work. Therefore, the SC has paid particular attention to and monitored those aspects of this cooperation relating to OLAF’s operational independence: access by OLAF to information held by the institutions, relations with the Investigation and Disciplinary Office (IDOC) and other EU institutions’ services, follow-up by institutions of OLAF’s recommendations, those situations where OLAF defers the obligation to enable the person concerned to make his views known, transmission of case reports, provision of information by OLAF to institutions, bodies, offices and agencies and exchange of views with the institutions.

3.5.1. Access by OLAF to information held by the institutions

45. One area which has been brought to the attention of the SC where trust and confidence appears to have broken down is the access by OLAF to databases held by the European Commission. Article 4(2) first paragraph of Regulation (EC) No 1073/1999 recognises clearly the right for OLAF to have immediate and unannounced access to any information held by the institutions, bodies, offices and agencies. However, the SC noted that since its creation, OLAF has encountered difficulties in obtaining access to information held by certain institutions. Such institutions are particularly reluctant to give OLAF quick and discreet access to certain categories of personal data, due to a very restrictive interpretation of Regulation (EC) No 45/2001 (29). The SC expressed the view that such a position is a sign of mistrust vis-à-vis OLAF and could also undermine its investigative independence.

46. In May 2011, the SC delivered an opinion (30) giving its view that quick and discreet access be given, especially at the initial stage of an investigation, before the opening of a file by OLAF, so that OLAF can assess whether the material necessarily meets its criteria for investigation. This is particularly relevant in cases where a potential conflict of interest may have arisen.

47. OLAF needs to have access to information contained in the Human Resources databases maintained by the European Commission. In particular, OLAF requires access to data relating to individual employees and their family members (referred to as ‘family tree’ data).

48. The issue is an historic one and no agreement on the way forward has yet been reached. It is to be hoped that, in following the SC’s recommendations and the dialogue which OLAF and the European Commission have now embarked upon, a solution to this long-standing problem may be reached.

49. The SC believes that the reform of Regulation (EC) No 1073/1999 should also be the occasion to address this issue. In its Opinion No 4/2011, the SC stated that the new regulation should include provisions allowing a fair balance between the need for OLAF to have access to information held by the institutions prior to the opening of a case and at any stage of an investigation and relevant data protection rules.

50. The SC also recommended that OLAF systematically send it any information concerning delays in reporting or the failure to report fraud cases, as well as failure by an institution, body, office or agency, to provide access to information held by them.

3.5.2. Relations with IDOC and other EU institutions’ services

51. The manner of OLAF’s deployment of its limited investigative resources is a constant concern to the SC. The SC believes OLAF needs to concentrate its efforts on those cases likely to have a successful outcome and to offer value for money. Only by using its resources in an effective and efficient manner will OLAF be able to carry out investigations into the more serious cases of fraud or irregularity affecting the financial interests of the EU, leaving other cases to be dealt with by more appropriate bodies, such as IDOC, the European Commission’s Security Office or the competent services of the other institutions.

52. In the light of these considerations, the SC recommended that OLAF develop an in-house de minimis policy in accordance with OLAF’s investigation policy and priorities, in order for it to allocate its resources, wherever possible, to the investigation of more serious cases. The SC reviewed this policy and summarised its findings in its Opinion No 5/2008. The SC proposed a set of recommendations taking into account, inter alia, the necessity for cooperation with both the IDOC and other EU institutions’ services. Work sharing with them is based on outlining a delineation of responsibilities for investigation. Consequently, the SC encouraged OLAF to improve the process of exchange of information and cooperation with these services, but underlined that no cooperation arrangement agreed should limit either OLAF’s key competencies or its independence to investigate.

53. The SC followed-up the implementation of its opinion (31) and was pleased to note that OLAF de minimis rules had been added to the OLAF Manual (32). The SC also welcomed the initiative to clarify the implementation of the de minimis policy through operational guidelines, as well as the creation of a de minimis annex listing the different criteria when judging whether or not to open an external investigation.

3.5.3. Follow-up by institutions of OLAF’s recommendations

54. The OLAF DG is under an obligation to inform the SC of cases where the institution, body, office or agency concerned has failed to act on OLAF’s recommendations (33). The SC has addressed this issue in every Annual Report and noted that only two such cases have been reported to it during its six-year mandate. As a consequence, this small number of reported cases did not enable the SC to come to any general conclusion or make any recommendations. The SC expressed its concerns that the absence of reports may indicate a lack of a proper follow-up mechanism and recommended that OLAF set up as soon as possible a systematic reporting system for such cases. In the SC’s view, OLAF’s independence could be seriously threatened if it fails to react when counterparts disregard its recommendations.

3.5.4. Agreement of the Secretary-General/President of an institution, body, office or agency to defer the obligation to give the person concerned the possibility to make his views known

55. When carrying out internal investigations, OLAF must obtain the prior agreement of the Secretary-General or the President of the institution, body, office or agency concerned whenever it decides to defer the obligation to give the person concerned the possibility of making his views known. This requirement aims to ensure that the rights of defence of the persons concerned are respected (34). However, the SC expressed the view that where an institution refuses or delays giving its agreement, OLAF’s investigative independence may be compromised (35). The SC noted that on several occasions the transmission of OLAF’s case files to the national judicial authorities was prevented by a delay in the granting of an agreement by the institution or body concerned. The SC stated in its Opinion No 4/2011 that the new regulation should therefore contain provisions allowing for the avoidance of such situations in the future and regarded the manner in which this problem has been addressed in the present proposal for reform of Regulation (EC) No 1073/1999 as inadequate.

56. As the guardian of OLAF’s independence, the SC should be informed systematically of all cases in which institutions, bodies, offices or agencies have refused to give or unnecessarily delayed their agreement to defer the obligation to ask the person concerned to make his views known.

3.5.5. Transmission of case reports and provision of information by OLAF to institutions, bodies, offices, agencies

Supply of information by OLAF to institutions, bodies, offices, agencies

57. Under the current legislation, OLAF has a legal obligation to inform an institution, body, office or agency in cases where an internal investigation shows that a member or staff member may be concerned, with the exception of cases requiring absolute secrecy for the purposes of the investigation or where the investigation falls within the competence of a national judicial authority. In its Opinion No 4/2011, the SC expressed its concerns with regard to the legislative proposal amending Regulation (EC) No 1073/1999 and modifying these rules (36), because it might deprive OLAF of its option to keep its investigation confidential wherever necessary.

Transmission of case reports by OLAF to institutions, bodies, offices, agencies

58. The SC took note of OLAF’s decision to send to the European Commission, in response to its request, all final case reports drawn up following internal investigations closed without follow-up. In addition, OLAF decided to apply a similar policy to the other institutions and bodies, unless otherwise requested. The SC decided to assess this practice, with the express purpose of determining whether it could jeopardise OLAF’s investigative independence. The SC’s Opinion No 5/2011 gives an overview of the SC’s findings following the examination of 17 cases, as well as of the SC’s opinion with regard to the legal basis for these transmissions and compliance of this practice with EU law.

59. More specifically, the SC expressed its concern that this transmission could affect the rights of the persons implicated in investigations and lead them to bring an action for damages before the European Court of Justice, which would be detrimental to OLAF’s credibility and reputation. Transmission of final case reports which contain sensitive information about witnesses, informants and whistleblowers might also jeopardise the success of investigations by discouraging them from coming forward and assisting OLAF and by disclosing unnecessary information related to other ongoing OLAF investigations. At the very least, this practice may give other institutions inappropriate means to influence OLAF’s investigative activity, which would be detrimental to the public’s trust and confidence in OLAF’s independence.

60. The SC recommended that OLAF reconsider its decision to transmit these case reports to the institutions, bodies, offices or agencies concerned without taking all necessary measures in order to ensure that this practice complies with EU law and does not jeopardise the efficiency and independence of its investigations.

3.5.6. Exchange of views with the institutions

61. One of the objectives of the reform of Regulation (EC) No 1073/1999 is to improve OLAF’s governance and to enhance its cooperation with the institutions, while respecting its operational independence. The regular interinstitutional dialogue initially proposed has been replaced by a less formal exchange of views between the European Parliament, the Council and the European Commission, with the participation of OLAF and the SC. The SC expressed its views concerning both proposals in its Opinions Nos 3/2010 and 4/2011.

62. The SC stated that either a formal dialogue or an exchange of views with the institutions could support OLAF’s activities, but that they should under no circumstances weaken the operational independence of OLAF (37). In particular, the SC noted that the proposal that OLAF should take appropriate action while taking into account the opinions expressed in the exchange of views, may have the effect of undermining the independence of the DG. The DG could well be put under pressure by the institutions, particularly regarding the establishment of the strategic priorities for OLAF’s investigative policies.

4. MONITORING THE IMPACT OF MANAGEMENT ON OLAF’S INVESTIGATIVE FUNCTION

63. From the outset and throughout its mandate, the SC has continually stressed the need for OLAF to implement a robust and effective leadership policy, to lay down clear investigatory rules and ensure that investigations are appropriately managed. Furthermore, the SC places great importance on the introduction of internal control mechanisms in relation to the duration of investigations and the respect for procedural guarantees within investigations and situations of potential conflict of interest. All these matters have a direct impact on the independent conduct of investigations and have therefore been closely monitored by the SC.

4.1. Management of investigations

4.1.1. Planning and strategic direction of investigations

64. The SC’s analysis of the nine months reports (38) indicated a lack of investigative methodology and that many delays in processing case files could be avoided by better management and planning of investigations. The SC was concerned by these findings and considered that where investigations lacked proper planning at each stage of the case, there was an ever-present danger that investigators might divert their activities from the objectives set at the outset of the investigation. This may lead to a lack of accountability and thereby impugn the independence of the investigation itself. Bearing in mind that good investigation planning is the key to successful and focused investigations, the SC therefore examined a number of OLAF cases with a view to ascertaining whether and to what extent investigation planning assists OLAF in the carrying out of its investigations.

65. In the SC’s Opinion No 4/2010, the recurrent lack of proper planning of investigations was noted. This has a negative impact on the effectiveness of OLAF’s work and the length of its investigations. The SC also noted that OLAF’s Manual provided guidelines for drawing up an initial work plan at the assessment stage, but lacked provision for a full investigation plan once the investigation starts.

66. The SC stressed the need for OLAF to curb the excessive length of some investigations by establishing clear investigatory procedures and deadlines. The SC recommended that OLAF implement a policy of proper planning of all stages of investigations, with regular checks, realistic timetables and periodic updates to ensure compliance. In particular, it recommended that a detailed investigation plan be developed at the outset for each investigation, setting out the objectives of the investigation, the likely resources needed for its completion and projected costing. Moreover, the SC suggested that investigation plans should be regularly examined by the management, at unit level, in order to follow and, where necessary, guide the development of cases.

67. As a result of the SC’s work in this field, OLAF has become aware of the need to adopt a common approach to the strategic planning of cases, and has begun to draw up detailed work plans once a case is opened. Moreover, the SC is pleased to note that, from the very beginning of his mandate, the new OLAF DG requested that changes be made to the Manual to implement the SC’s recommendations.

68. The effectiveness of the measures taken by OLAF needs to be further assessed.

4.1.2. Internal control of investigations

69. The SC laid particular emphasis on the importance of adequate internal mechanisms for quality control and the avoidance of delays as well as a fully functioning feedback system and evaluation of investigations for ensuring the independence and efficiency of OLAF’s investigations. The existence of a sound control system and benchmarks would not only facilitate the follow-up by OLAF management of performance as well as identification of problem areas, but also would allow corrective action to be taken on the basis of lessons learnt, following recommendations made.

70. In the light of these considerations, the SC paid particular attention to the adequacy and effectiveness of these mechanisms, especially in the framework of its monitoring of the duration of investigations and the respect by OLAF of fundamental rights and procedural guarantees.

Control of duration of investigations

71. Two of the SC’s opinions (39) highlighted a number of shortcomings in the conduct of investigations, some of which relate to operational factors and others which are the result of weaknesses in planning or internal organisation. In particular, the SC noted that the increase in the length of investigations was often due to shortcomings in the management of some investigations or insufficient management supervision of the real reasons for their length, the estimates of time limits for their completion and the scheduling of investigative measures to be performed. For the SC, these various findings indicated inadequate supervision and control of the day to day management of cases.

72. The SC regrets that, despite its repeated recommendations, the measures implemented to achieve regular verification of the length of investigations have not been applied in a sufficiently systematic way. The SC therefore reiterates the need for effective and efficient control of the duration of investigations.

Control of impartiality in investigations

73. In the SC’s view, impartiality in the conduct of investigations goes hand in hand with OLAF’s operational independence. Therefore, the SC has repeatedly recommended that OLAF establish the strict internal control mechanisms necessary to prevent any conflicts of interest likely to harm OLAF’s independence and reputation (40). In its Opinion No 5/2010, the SC made specific recommendations in order for OLAF to bolster the current control mechanisms concerning impartiality in investigations. When assessing the respect by OLAF of fundamental rights and procedural guarantees within its investigations, the SC paid particular attention to this issue and regrets that the measures taken by OLAF to date remain insufficient.

Control of legality of investigations

74. The SC noted with concern that the legal control of OLAF’s investigative work was not carried out in a systematic way at each and every stage. This lack of a continuous legal examination during investigations has led to failures to observe procedural requirements. The SC regularly expressed the view that in order to ensure effective respect for fundamental rights and procedural guarantees it was necessary to establish checks on the legality of the investigations, based on greater and continuous involvement of the members of the Judicial and Legal Advice Unit (41).

75. The SC addressed the issue of the additional role played by these magistrates in each of its previous Activity Reports. Not only are they the main point of contact with the national judicial authorities, but they also play an important role in ensuring that the evidence contained in the files which are transmitted to national judicial authorities conform to the legal requirements of the respective Member State. Given this important role, the SC repeatedly encouraged closer involvement of the magistrates in the investigations. The SC notes that OLAF staff with legal and judicial experience will join the newly created investigation selection and review unit. The SC considers that, regardless their place in OLAF’s new organisation, they should keep their previous role. In order to comply with its legal obligation (42) to transmit reports and information obtained during its investigations to Member States, OLAF needs to have experts in legal and investigative procedures from the greater part of the Member States.

76. The effectiveness of the transmissions of case reports and information by OLAF to the national judicial authorities following its internal reorganisation needs to be addressed in the future.

Review adviser

77. The SC’s role is essentially to carry out systemic analysis of OLAF’s investigations and not to deal with individual cases. In its Opinion No 4/2011 the SC considered that there was a clear need to assign the tasks of reviewing procedures or handling of complaints to an independent person. This person should have a clear mandate which does not overlap with that of the SC and be provided with guarantees of his own independence. In particular, the SC stated that this person should be able not only to analyse complaints against OLAF, but also to act on his own initiative by regularly ensuring respect for procedural rights throughout the investigative process.

4.2. Budget, administrative organisation and staff policy in relation to OLAF’s investigative function

78. The SC is legally obliged to give an opinion on OLAF’s draft annual budget proposal (43). The SC’s Opinions Nos 1/2006, 2/2007, 3/2008, 3/2009, 1/2010 and 3/2011 have addressed issues on technical budgetary matters as well as on matters of principle.

79. More specifically, the SC underlined that the most essential measure to be taken to guarantee OLAF’s independence in investigations is the allocation of sufficient resources to OLAF. Solid funding must be guaranteed over time. In times of economic recession budgetary cuts are necessary throughout the whole EU. OLAF can by no means be granted any immunity from such restraints, but, as an independent investigative body, it needs to enjoy the fullest budgetary independence possible. In line with the SC’s recommendation in its Opinion No 3/2011, the OLAF DG alone should have the freedom to decide where budget cuts that affect OLAF should be allocated.

80. The SC has emphasised the importance for OLAF to ensure the proper staffing and budgetary allocations for its core investigative functions. OLAF is dependent for its investigations on people with skills in highly specialised areas, who are not easily available through the normal recruitment procedures provided by the European Commission. The SC has repeatedly underlined the necessity for OLAF to have and maintain its own staffing policy. This would allow it to attract temporary agents from Member States’ investigative and judicial bodies and to offer them an attractive career path by way of salary and promotion or the possibility of becoming permanent employees.

81. In its various opinions on OLAF’s budget, the SC also called for OLAF temporary agents to be promoted as foreseen in the OLAF DG’s decision of 30 June 2005. The SC is greatly disappointed that until now, despite promises to this effect, no such action has been taken.

4.3. OLAF’s procedural investigation rules (the Manual)

82. Throughout its mandate the SC voiced its concern that OLAF investigations are carried out on the basis of a variety of instructions and practices with a lack of clear rules. The SC regularly emphasised that the adoption of a clear, practical and useful guide for investigations, including deadlines within which separate stages of an investigation must be completed, would provide a consistent framework for OLAF’s investigations and would reinforce its operational independence. The need for adequate and clear procedural investigation rules, which would increase the legality, the efficiency and the transparency of investigations, as well as OLAF’s accountability, was a constant issue for discussions between the SC, the OLAF DG and OLAF investigators. In addition, when examining different aspects of the implementation of OLAF’s investigative function, the SC assessed the usefulness of the OLAF Manual.

83. The SC has followed with great interest the progress of the updating of the Manual. The SC examined several versions and, in its previous Annual Reports gave OLAF a significant number of written comments. The SC persistently expressed its disappointment that none of the versions met its expectations. Despite progressive improvements at every drafting stage in its form and content, the new Manual does not yet constitute a set of hard and fast rules capable of guiding investigators at every stage of an investigation. The SC has therefore repeatedly recommended its improvement. In particular, the SC urged OLAF to implement the recommendations made in its previous Activity Reports and various opinions, in particular with regard to the de minimis policy, the planning of investigations and the protection of fundamental rights and procedural guarantees (44). The SC also recommended that the Manual include examples of good practice developed in investigations, as well as for in-depth training on the Manual to take place on a regular basis.

84. The Manual is now being reviewed following the proposed changes to OLAF’s structure and the new way of working. The updated version will require in depth evaluation and the SC will need to be consulted during the drafting process.

CONCLUSIONS

In previous annual reports the SC concluded that no actual threats to OLAF’s independence had either occurred, been reported to the SC, or noted by it.

In this report, the SC has, among other issues, reported on:

(a) OLAF’s ability to access the premises of Members of the European Parliament;

(b) OLAF’s access to certain personal data in files held by the European Commission;

(c) the transmission by OLAF to the institutions, bodies, offices and agencies concerned of final case reports drawn up following internal investigations closed without follow-up;

(d) OLAF’s obligation to obtain prior agreement from the Secretary-General or President of the institution, body, office or agency before deferring the obligation to enable the persons concerned by internal investigations to make his views known.

The SC regrets that the abovementioned issues call into question OLAF’s independence from the institutions in carrying out its investigations.

(a) OLAF’s power to enter the premises of the European Parliament was not only questioned, but also hindered, by the European Parliament, in contravention of what the SC regards as clear legal provisions.

(b) The SC noted unwillingness on the part of the European Commission to allow OLAF direct and immediate access to certain personal data, motivated by a very narrow interpretation of the rules on the protection of personal data.

(c) The SC noted with concern that OLAF has complied with a request from the European Commission to regularly forward to it its final reports on internal cases closed without follow-up, despite the fact that these reports may contain very sensitive information.

(d) The SC notes the potential for the institutions, bodies, offices or agencies to block the progress of any ongoing internal investigation by the refusal or delay in granting agreement to defer the obligation to give the person concerned the possibility to make his views known.

The SC is reluctant to go as far as to say these examples are signs of any deliberate intention on the part of the institutions in question to hamper OLAF’s investigative independence, however, they have the overall effect of partially eroding OLAF’s independence in practical terms.

The SC emphasises that the independent functioning of OLAF can only be assured if the SC’s independence is guaranteed. The undermining of the proper functioning of the SC Secretariat by OLAF can only serve to jeopardise the independence of the SC and therefore that of OLAF itself.

It is the SC’s view that this is clearly a development in the wrong direction. The incoming SC is advised to keep a close eye on any future developments which could affect the independence of OLAF.

(1) OJ L 136, 31.5.1999, p. 1.

(2) See the European Commission’s Reflection paper on the reform of OLAF of 6 July 2010, SEC(2010) 859 and the SC’s Opinion No 3/2010; see also the European Commission’s Amended 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) and repealing Regulation (Euratom) No 1074/1999 of 17 March 2011, COM(2011) 135 final and the SC’s Opinion No 4/2011.

(3) Recital 5 of Commission Decision 1999/352/EC, ECSC, Euratom of 28 April 1999 establishing the European Anti-fraud Office (OLAF) (OJ L 136, 31.5.1999, p. 20).

(4) Article 12(3) of Regulation (EC) No 1073/1999.

(5) Opinion No 4/2011, paragraph 6.

(6) Article 6(1) of Decision 1999/352/EC, ECSC, Euratom.

(7) Opinion No 3/2011.

(8) Opinion No 4/2011, point 4.2.1.

(9) SC Activity Report 2009-2010, point 3.1.1.

(10) Opinions Nos 3/2010 and 4/2011.

(11) Article 11(6) of Regulation (EC) No 1073/1999.

(12) Opinion No 4/2011, paragraph 41.

(13) OJ L 308, 24.11.2011, p. 114.

(14) See point 44 of the European Court of Auditors’ Opinion No 6/2011 (pursuant to Article 325 TFEU) on the amended 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) and repealing Regulation (Euratom) No 1074/1999 (OJ C 254, 30.8.2011, p. 1).

(15) Article 11(7) of Regulation (EC) No 1073/1999.

(16) Article 11(1) of Regulation (EC) No 1073/1999.

(17) 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 (OJ L 292, 15.11.1996, p. 2).

(18) Article 4(2) of Regulation (EC) No 1073/1999.

(19) Opinion No 4/2011, paragraph 5.

(20) Opinions Nos 1/2007 and 2/2009.

(21) The SC recommended including information relating to when the facts under investigation took place; time barring (prescription) periods of acts under investigation; the legal description of the irregularity under investigation; potential sanctions or legal consequences of the acts under investigation and the expected time for completion together with a reasoned explanation.

(22) October 2011.

(23) Opinion No 4/2010.

(24) OLAF Manual — Operational Procedures.

(25) Opinions Nos 2/2006, 3/2010 and 4/2011.

(26) Opinion No 2/2009.

(27) For further developments concerning the findings of the SC on this issue, see its previous Activity Reports.

(28) Recital 10 and Article 9.2 of Regulation (EC) No 1073/1999.

(29) Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (OJ L 8, 12.1.2001, p. 1).

(30) Opinion No 1/2011.

(31) See the SC’s Activity Report 2009-2010, point 3.2.

(32) See Annex 9 to the Manual.

(33) Article 11(7) of Regulation (EC) No 1073/1999.

(34) Court of First Instance, Franchet and Byk v Commission (No 2), 8 July 2008, Case T-48/05, paragraph 151.

(35) See Opinion No 5/2010, paragraphs 36-37.

(36) Article 4(6) of the amended proposal: ‘In exceptional cases where the confidentiality of the investigation cannot be ensured, the Office shall use appropriate alternative channels of information’.

(37) Opinion No 3/2010, point 2.1 and Opinion No 4/2011, point 4.3.

(38) Opinions Nos 1/2007 and 2/2009.

(39) Opinions Nos 2/2009 and 5/2010.

(40) See the SC’s Activity Reports 2005-2007 and 2008-2009.

(41) See the SC’s previous Activity Reports and Opinion No 4/2011.

(42) Articles 9 and 10 of Regulation (EC) No 1073/1999.

(43) Article 6(2) of the Commission Decision of 28 April 1999 cited above.

(44) See the SC’s Opinions Nos 5/2008, 4/2010 and 5/2010.

ANNEX I CALENDAR OF SUPERVISORY COMMITTEE MEETINGS 2011 Month Meeting date JANUARY Monday, 17th – Tuesday, 18th FEBRUARY Tuesday, 15th – Wednesday, 16th MARCH Tuesday, 15th – Wednesday 16th APRIL Wednesday, 6th – Thursday, 7th MAY Tuesday, 10th – Wednesday 11th JUNE Tuesday, 28th – Wednesday, 29th SEPTEMBER Tuesday, 6th – Wednesday 7th OCTOBER Wednesday, 5th (all day) NOVEMBER Tuesday, 8th – Wednesday, 9th NOVEMBER Tuesday, 29th – Wednesday, 30th

ANNEX II List of opinions adopted by the SC between 1 December 2005 and 30 November 2011 2005-2007 Opinion No 2/2006 concerning the reform of the Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) Opinion No 3/2006 Performance indicators for OLAF Opinion No 1/2007 OLAF’s Reports of Investigations that have been in progress for more than nine months Opinion No 1/2006 OLAF’s preliminary draft budget for 2007 Opinion No 2/2007 OLAF’s preliminary draft budget for 2008 2007-2008 Opinion No 1/2008‘Prima facie Non-Cases’ Opinion No 2/2008 OLAF’s Annual Management Plan for 2008 Opinion No 3/2008 OLAF’s preliminary draft budget for 2009 2008-2009 Opinion No 5/2008 OLAF de minimis policy Opinion No 1/2009 OLAF’s Annual Management Plan for 2009 Opinion No 2/2009 OLAF’s Reports of Investigations that have been in progress for more than nine months Opinion No 3/2009 OLAF’s preliminary draft budget for 2010 2009-2010 Opinion No 1/2010 OLAF’s preliminary draft budget for 2011 Opinion No 2/2010 Opinion on the nomination of the Director-General of OLAF Opinion No 3/2010 on the Reflection Paper on the Reform of OLAF Opinion No 4/2010 Investigation Planning Opinion No 5/2010 Respect for fundamental rights and procedural guarantees in investigations by OLAF 2011 Opinion No 1/2011 Access by OLAF to personnel data held by the Commission Opinion No 2/2011 Powers of the European Anti-Fraud Office (OLAF) for the independent conduct of internal investigations within the EU institutions Opinion No 3/2011 OLAF’s preliminary draft budget for 2012 Opinion No 4/2011 on the Amended 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) and repealing Regulation (Euratom) No 1074/1999 Opinion No 5/2011 Transmission by the European Anti-Fraud Office (OLAF) to the institutions of final case reports drawn up following internal investigations closed without follow-up

ANNEX III OPINION No 1/2011 Access by OLAF to personnel data held by the Commission Brussels, 30 May 2011 1. Background 1.1. In the context of assessing initial information received by OLAF, Unit C4, ‘Operational Intelligence’, which supports the two Directorates in charge of Investigations and Operations, needs to be able quickly, accurately and discreetly to identify, particularly where allegations of conflicts of interest may arise, an alleged person. To do this, OLAF needs to have access to information contained in the Human Resources databases maintained by the Commission. In particular, OLAF requires access to data relating to individual employees and to their family status and connections, the home addresses and telephone numbers and dates of birth of the employees and their family members. This latter data is referred to as ‘family tree’ data. 1.2. OLAF is anxious that, in accessing this information, the reputation of innocent individuals working in the Commission or other EU bodies is not harmed and that where allegations made are groundless that fact can be verified without disseminating the allegations made — sometimes, based on very flimsy grounds. Equally, where the allegations turn out to be well founded, OLAF is anxious that, at this preliminary stage, as few people as possible are alerted to the allegations, so that the person who may potentially be the subject of an investigation is not alerted prematurely. 1.3. OLAF proposes, therefore for a limited number of staff in C4 to have direct, read-only, confidential ‘pull’ access to the family tree data, allowing them to see a limited set of data to be able to validate allegations prior to the opening of an investigation. 2. Current position 2.1. Article 4(2) of Regulation (EC) No 1073/1999 provides that: — the Office shall have the right of immediate and unannounced access to any information held by the institutions, bodies, offices and agencies, and to their premises. The Office shall be empowered to inspect the accounts of the institutions, bodies, offices and agencies. The Office may take a copy of and obtain extracts from any document or the contents of any data medium held by the institutions, bodies, offices and agencies and, if necessary, assume custody of such documents or data to ensure that there is no danger of their disappearing. 2.2. This provision enables OLAF to have unrestricted access (providing that it complies with the requirements of paragraph 1 of Article 4 (1)) to data held by the Commission, including data relating to Commission personnel. The provision applies to OLAF internal investigations which are underway. 2.3. The Secretariat-General is prepared to grant OLAF ‘push’ access to the family tree data, but not ‘pull’ access, as requested. The reason provided for refusal of pull access is data protection. As controller of the personal data, the Commission asserts that it must filter requests and provide only the personal data that it deems legitimate, necessary and proportional for OLAF to ask. This ‘filtering process’ appears to be applied only to requests made by OLAF, as other services within the Commission having a direct ‘pull’ access without the intervention of the controller. 2.4. The Supervisory Committee is concerned that this limitation on OLAF’s direct, read-only confidential access to family tree data may prejudice its independence in relation to its investigatory function. 3. Meetings with the Secretariat-General and with the EDPS 3.1. The Supervisory Committee and members of the Secretariat have met with the staff of the Secretariat-General on two occasions, on the 25 November 2010 and 8 December 2010 and with the Secretary-General herself on the 15 December 2010 to discuss this issue. The Secretariat-General recognises that OLAF ‘has indeed the right to access any database it considers relevant for investigative purposes for the opening and throughout the duration of an investigation, even before the formal opening decision, when linked to a specific CMS case number’ but it maintains that OLAF cannot have direct ‘pull’ access. 3.2. Since OLAF’s request for access to data is covered by the provisions of Article 7.2.2 of Regulation (EC) No 45/2001, OLAF and the Supervisory Committee have sought the views of the EDPS and, in consequence have had two meetings with Mr Hustinx, the EDPS, on 15 December 2010 and 25 March 2011. 4. The position regarding data protection 4.1. A requirement for compliance with Article 7.2 paragraph 2 of Regulation (EC) No 45/2001 (2) is the need to establish necessity for the transfer of the data from the Commission to OLAF. 4.2. Necessity must be verified. If the type and amount of data accessed varies on each occasion, then the verification of necessity should take place ex ante for each individual access. If there are categories of similar limited access for the same purpose, which can be verified ex post by both sides, then it may be possible to cluster them together to verify necessity. This is part of the structure that should be developed between the data controller and the data recipient. The solution must address the question of necessity, and be verifiable. It must also include a strict purpose limitation. 4.3. In the situation outlined above, OLAF is able to predefine the necessity of the transfer of the data because the necessity is always the same: identification of the individual(s) allegedly involved in a matter under assessment or investigation. As explained by Unit C.4, OLAF needs access to a limited number of data fields in the Commission data bases for the purpose of ensuring the proper identification of a Commission staff member allegedly involved in a fraud or irregularity. The data fields which OLAF will access for this purpose are: — date of birth, — address, — address in case of accident, and — telephone number. (Other relevant data fields, such as Name, statute, ID No, organisational entity and dates of working for that entity are available to all Commission staff in Sysper 2). 4.4. In cases where allegations of conflict of interest involving a family member are involved, OLAF will also need to access the ‘family tree’ data in order to verify the identification of the relatives who may be concerned, including partner and relatives in the ascending and/or descending line. The data fields in these cases would be: — name, — date of birth. Access will be made by one of a small group (three or four) of trained intelligence staff. Furthermore, OLAF keeps a careful log file of each instance of access to such data bases. It logs the following information: — which data base was accessed, — the date, — the staff member accessing the data, — the number of the request in the CMS intelligence module which triggered the need for the access, and — the OF case number. 4.5. OLAF expects these records to be logged automatically by the CMS, later this year. These access logs are available for review by the controller, the Data Protection Officers, and the EDPS at any time. 4.6. In such circumstances, where the purpose of the transfer is limited to the identity of individuals, and accurate log files are kept, the Supervisory Committee believes that the requirements of Article 7(2) are satisfied without having to ask the controller’s permission before each individual access. 5. Interpretation of Article 7.2 of Regulation (EC) No 45/2001 5.1. Article 7.2 of Regulation (EC) No 45/2001 appears to allow for a number of different scenarios. It could be read as creating a structured dialogue between the data controller and the data recipient, as both need to verify the necessity of the transfer. 5.2. It appears that ‘pull’ access is not accorded on an automatic basis but it is granted on request within the Commission in other contexts. In the following instances, ‘pull’ access gave rise to problems, but in the last example below, it was accorded: — Communication between Sysper 1 and Sysper 2 — Sysper 1 was problematic because it allowed pull access without sufficient safeguards/traceability of who had access. — PNR — this involved pull access by a third country, which is unacceptable. — ABAC and payment transactions — could not function without pull access. Indeed, ‘push’ access can also be unacceptable, if personal data is sent without verifying necessity. 5.3. It does not appear, therefore, that there is any fundamental data protection bar in principle to allowing OLAF access to the data sought. 6. The way forward 6.1. The Supervisory Committee considers that the need for OLAF to have access on a ‘pull’ basis to personnel data held by the Commission to establish, prior to the opening of an investigation whether a person can be identified or eliminated, is essential to its work. To deny OLAF this access could threaten its independence in its investigatory function. 6.2. The Supervisory Committee recommends a modification to the ‘Memorandum of understanding concerning a code of conduct in order to ensure a timely exchange of information between OLAF and the Commission with respect to OLAF internal investigations in the Commission’ (3). This provision could set out a protocol for access to Commission data at the selection phase, along the same lines as that provided for in Article 4.2 of Regulation (EC) No 1073/1999 for investigations which have been commenced. 6.3. The Committee therefore suggests that a practical way forward is for negotiations to commence to find a solution between OLAF and the Commission. One practical suggestion would be for an external mediator to be appointed who has the trust and confidence of both OLAF and the Commission. An appropriate mediator could be someone such as a former high level official or Commissioner. The Supervisory Committee therefore recommends that agreement be sought as soon as possible with the Commission to appoint a suitable mediator to resolve this problem. 6.4. The Supervisory Committee would hope and expect that agreement can be reached on this issue. The Supervisory Committee recommends that the reform of Regulation (EC) No 1073/1999 would provide an ideal and opportune moment to amend Article 4 to include access by OLAF to information held by the institutions prior to the opening of a case and also at any stage of an investigation. (1) Article 4, paragraph 1: ‘The Office shall carry out administrative investigations within the institutions, bodies, offices and agencies (hereinafter internal investigations). These internal investigations shall be carried out subject to the rules of the Treaties, in particular the Protocol on privileges and immunities of the European Communities, and with due regard for the Staff Regulations under the conditions and in accordance with the procedures provided for in this Regulation and in decisions adopted by each institution, body, office and agency. The institutions shall consult each other on the rules to be laid down by such decisions.’ (2) ‘Article 7 Transfer of personal data within or between Community institutions or bodies Without prejudice to Articles 4, 5, 6 and 10: 1. Personal data shall only be transferred within or to other Community institutions or bodies if the data are necessary for the legitimate performance of tasks covered by the competence of the recipient. 2. Where the data are transferred following a request from the recipient, both the controller and the recipient shall bear the responsibility for the legitimacy of this transfer. The controller shall be required to verify the competence of the recipient and to make a provisional evaluation of the necessity for the transfer of the data. If doubts arise as to this necessity, the controller shall seek further information from the recipient. The recipient shall ensure that the necessity for the transfer of the data can be subsequently verified. 3. The recipient shall process the personal data only for the purposes for which they were transmitted.’ (3) SEC 871, 14.8.2003 (consolidated).

ANNEX IV OPINION No 2/2011 Powers of the European Anti-Fraud Office (OLAF) for the independent conduct of internal investigations within the EU institutions Brussels, 13 June 2011 Background 1. On 20 March 2011The Sunday Times newspaper published a press article entitled ‘An MEP claims to earn more than EUR 450 000 a year moonlighting for clients. He is one of three ready to take cash to help change EU laws’. The press article explained how reporters ‘posing as a lobbying firm’ offered cash for amendments to legislation to three Members of the European Parliament (MEPs) (up to EUR 100 000 per year in two cases) and ‘they went on to do so’ and amendments were tabled. Journalists reported meetings in the EP premises and outside, phone conversations, e-mails, correspondence and sending of invoices between them and some of the MEPs. Following the disclosure of this undercover investigation by The Sunday Times two of them resigned as MEPs by the next day and a third one was expelled from his group (1). 2. On 22 March the European Anti-Fraud Office (OLAF) opened an internal investigation on the following legal basis: ‘Article 4 of Regulation (EC) No 1073/1999 in conjunction with European Parliament Decision concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Communities’ interests (Annex XII Rules of Procedure of the European Parliament).’ 3. On 15 April 2011 the Director-General of OLAF requested an opinion from the Supervisory Committee (SC) on OLAF’s powers to open and conduct internal investigations within the institutions and the limitation posed by the privileges and immunities of their Members, in particular in the case of MEPs to the right of immediate and unannounced access to any information held by the institutions and to their premises. OLAF’s powers for the independent conduct of internal investigations 4. Article 12 of Regulation (EC) No 1073/1999 provides that the Director-General of OLAF shall not take instructions from any institution in the performance of his duties with regard to the opening and carrying out internal investigations. Internal investigations in relation to irregular conduct 5. OLAF is responsible for the initiation and conduct of administrative investigations within the institutions for the purpose of fighting fraud, corruption and any other illegal activity affecting the financial interests of the European Union. It has powers to investigate to that end any serious matter relating to the discharge of professional duties such as to constitute a dereliction of the obligations of the officials liable to result in disciplinary or, as the case may be, criminal proceedings, or an equivalent failure to discharge obligations on the part of the members of institutions (2). 6. The SC notes that the responsibility of OLAF concerning internal investigations within the institutions includes all activities relating to the need to safeguard Community interests against irregular conduct liable to give rise to administrative or criminal proceedings. 7. These activities have been listed in detail in the European Parliament (EP) Decision concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Communities’ interests, based on recital 5 and on Article 4(1) of Regulation (EC) No 1073/1999. Situations such as conflict of interest, the duty to behave with integrity as regards the acceptance of benefits, refraining from action or behaviour which might reflect adversely upon the member’s position or serious misconduct, fall within the scope of OLAF’s investigations (3). 8. The SC takes the view that all these matters form part of the facts allegedly committed, and, as such, they fall within the scope of OLAF’s investigation powers as indicated in Rule 10 of the Rules of Procedure of the EP: ‘Internal investigations conducted by the European Anti-Fraud Office (OLAF)’. Internal investigations on activities affecting the financial interests of the EU 9. The SC considers that fraud, corruption and any illegal activities affecting the ‘financial interests of the European Union’ encompass those which even if not directly related to the budget of the Community, are capable of harming the financial interests of the Community in a broad sense by adversely affecting its assets (4). 10. The SC agrees with the Advocate General’s opinion in the case referred to above, that ‘the source of the assets in question is not decisive (…); ensuring the proper use of all funds held by the institutions, bodies, offices or agencies of the Community must be regarded (…) as forming part of the financial interests of the Community and may thus be the subject of measures adopted on the basis of Article 280(4) EC’ (5). 11. The SC recalls the Court of Justice rulings on this matter which considered that the expression ‘financial interests of the Community’ seems wider than the expression ‘items of revenue and expenditure of the Community’: ‘…the fact that a body, office or agency owes its existence to the EC 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’ (6). 12. The SC underlines that the proper use of the funds that the EP has at its disposal in order to cover the exercise of the Parliamentary mandate: salary of its members, reimbursement of expenses (travel, telephone expenses...), payment of allowances, etc. is based on the compliance with the Financial Regulation and on the principle that those funds are reserved exclusively for the funding of activities linked to the exercise of a Member’s mandate (7) and not to work for purposes determined by a private payment. Duty to inform and to cooperate with OLAF 13. Article 7.1 of Regulation (EC) No 1073/1999 provides that the institutions, bodies, offices and agencies shall forward to the Office without delay any information relating to possible cases of fraud or corruption or any other illegal activity. 14. The SC stresses the fundamental duty to fully cooperate with OLAF, to supply information and to provide assistance in the practical conduct of investigations that all institutions and their members have. The unequivocal fulfilment of these duties allows OLAF to carry out investigations under equivalent conditions in all the Community institutions, bodies, offices and agencies (8). The lack of cooperation puts into question the credibility of the tools that the institutions adopted to fight against any kind of fraud, corruption, illegal activities or irregular conduct. 15. The SC considers that the rules laid down in the Rules of Procedure of the EP comprising the measures needed to facilitate the smooth running of investigations conducted by OLAF shall be rigorously respected (9). Initial stage of the investigation 16. The SC considers that it is premature to categorically deny OLAF’s powers to investigate the alleged facts at the initial stage of the investigation; especially in cases of alleged corruption and irregular behaviour, the complexity of which does not allow for verification of all illegal activities at the beginning of the investigation. OLAF’s access to premises of the institutions: privileges and immunities of MEPs 17. The SC points out that those internal investigations can be conducted only if OLAF is guaranteed access to all premises of institutions, bodies, offices and agencies and to all information and documents held by them. This key power must be exercised in full independence by the Director-General of OLAF and the institutions’ security offices shall assist OLAF in its practical conduct (10). 18. OLAF shall carry out administrative investigations within the institutions that shall be carried out subject to the rules of the Treaties, in particular the Protocol on Privileges and Immunities. OLAF shall have the right of immediate and unannounced access to any information held by the institutions, bodies, offices and agencies, and to their premises. It shall be empowered to inspect the accounts of the institutions, bodies, offices and agencies. OLAF may take a copy of and obtain extracts from any document or the contents of any data medium held by the institutions, bodies, offices and agencies and, if necessary, assume custody of such documents or data to ensure that there is no danger of their disappearing (11). 19. The Protocol of Privileges and Immunities of the European Union contains several rules on privileges and immunities of the MEPs (Articles 7 to 9), in particular that MEPs shall not be subject to any form of inquiry, detention or legal proceedings in respect of opinions expressed or votes cast by them in the performance of their duties. However, immunity cannot be claimed when a member is found in the act of committing an offence. 20. The SC points out that, on this matter, the Court of First Instance held that ‘the Protocol refers to the Members of Parliament only in a general fashion and contains no provision explicitly governing internal investigations in the Parliament (…). As the President of the Court of First Instance was able to observe in paragraph 107 of the order in Rothley and Others v Parliament, the risk cannot be excluded a priori that, in conducting an investigation, the Office [OLAF] might perform an act prejudicial to the immunity enjoyed by every Member of the Parliament. However, if that were to occur, any Member of the Parliament faced with such an act could, if he considered it damaging to him, avail himself of the judicial protection and the legal remedies provided for by the Treaty’ (12). 21. The SC considers this to be a sensitive area where the position upheld by the Advocate General in Case C-167/02 is worth reading; ‘As regards the measures taken by OLAF during the course of an internal investigation, whilst it is difficult to pronounce in the abstract on the admissibility of future proceedings, it seems probable to me that, as the Court of First Instance held and as the other parties have suggested, Members of the Parliament who considered their rights to have been infringed would have various opportunities to bring judicial proceedings. The Commission points to a number of legal acts which might be challenged in that way: the decision of the Director of OLAF to open an internal investigation as required by the second paragraph of Article 5 of the Regulation; various measures taken by OLAF in the course of an investigation, including the decision to have access to an office, to seize documents or to request oral information; as well as the agreement, explicit or implicit, of the institution in question. It appears to me, however, that the need for discreet and expeditious action in the detection of fraud renders some such risk unavoidable. It should, moreover, be noted that the contested measure contains provisions designed to minimise the danger. Thus, Article 5 of the model decision requires Members to be informed rapidly of their implication in an investigation, as long as that would not harm the investigation. That article also prevents Members from being named in OLAF’s conclusions without their first having been heard except in so far as national investigative procedures require the maintenance of absolute secrecy’ (13). 22. The SC considers that OLAF should act with scrupulous respect of those rules and following a thorough assessment of the risk involved on each case and the proportionality of the measure to be taken. 23. The SC recalls that the Court of Justice found that, in Case T-17/00, the provisions ‘relating to cooperation with OLAF or to supplying it with information are intended — whatever their exact scope may be — to impose obligations upon Members of the Parliament, so that it is in the first instance for Members, in any given case, either to act upon those obligations or not to comply with them if they are persuaded that it is open to them to do so without infringing Community law. If, in a specific case, one of the Members of the Parliament adopts that approach, any subsequent measures taken by the Parliament with regard to that Member and to his disadvantage will, in principle, be subject to judicial review’ (14). As regards the various measures that OLAF could take when exercising its investigative powers, the Court of Justice bore in mind the risk that OLAF might perform an act prejudicial to the immunity enjoyed by every Member of the EP and recalled that the review of the legality of acts of the institutions has been entrusted to the Community Courts (15). 24. The SC considers that the institutions, bodies, offices and agencies (which are not the ‘person concerned’ by an OLAF investigation) shall fully cooperate with OLAF and refrain from taking measures hindering OLAF’s investigation powers. The SC believes that preventing OLAF from exercising this key investigative activity following an interpretation made by an institution, body, office and agency of OLAF’s mandate is a limitation of OLAF’s independent conduct of investigations. 25. The SC recommends that OLAF follow a rigorous implementation of the rules of procedure and the existing jurisprudence in this area. (1) The Sunday Times press article, 20 March 2011. (2) Article 1 of Regulation (EC) No 1073/1999. (3) See Article 10 of the Rules of Procedure of the EP, recitals 2, 3 and 4 of the Interinstitutional agreement on 25 May 1999 and of the EP Decision concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Communities’ interests of 18 November 1999, as well as Articles 11, 12, 13, 14, 16, 17 and 22 of the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union. (4) Opinion of the Advocate General Jacobs, Case C-11/00 Commission v ECB paragraph 118. (5) Current Article 325 of the EU Treaty. See Case C-11/00, opinion of the Advocate General Jacobs paragraph 118. (6) See Cases C-11/00 Commission v ECB and C-15/00 Commission v EIB. (7) See Statute for Members of the EP Decision of the EP of 28 September 2005 (Articles 9 and 10), Decisions concerning implementing measures for the Statute for the Members of the EP of 19 May and 9 July 2008 and subsequent Decisions amending those Implementing measures (Articles 10, 25, 28, 32, 61, 62, 66, 67, 68…) and Rules of Procedure of the European Parliament March 2011 (Rule 9 and Rule 10) (8) See Article 3 (Assistance from the security office) ‘At the request of the Director of the Office, the European Parliament’s security office shall assist the Office in the practical conduct of investigations’ and recital 6, EP Decision of 18 November 1999. (9) See Rule 10 of the Rules of Procedure of the EP and EP Decision concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Communities’ interests adopted on 18 November 1999. (10) See recital 11 of Regulation (EC) No 1073/1999 and Article 3 of the Interinstitutional agreement and of the relevant Decisions of each institution. (11) Article 4 of Regulation (EC) No 1073/1999. (12) See Case T-17/00, Willi Rothley and Others v European Parliament, judgement of 26 February 2002, paragraphs 72 and 73. (13) See opinion of Advocate General Jacobs in Case C-167/02 P, Willi Rothley and Others v European Parliament paragraphs 56 to 61. (14) See Case C-167/02 P paragraph 49. (15) See Case C-167/02 P, paragraphs 46, 50 and 51.

ANNEX V OPINION No 3/2011 OLAF’s preliminary draft budget for 2012 Brussels, 14 July 2011 On 16 March 2011 and 10 May 2011 the OLAF Supervisory Committee (SC) examined ‘OLAF’s preliminary draft budget for the European Anti-Fraud Office for 2012’ and adopted the following opinion: a) OLAF's administrative independence vis-à-vis the Commission The OLAF budget proposal for 2012 was fully in line with that requested by the Commission in pursuing the zero growth policy for 2012 for all Commission services. However, the SC was informed that the Commission recently introduced a requirement for additional budget reductions to accommodate anticipated difficulties in the 2012 budget negotiations with imposed reductions of 1,47 % (EUR 857 000) on the OLAF draft budget proposal. These reductions, in comparison with the OLAF original proposal, would be in the following areas: — 75 000 (2,8 %) of external staff — 159 000 (4,8 %) other management expenditure (namely mission expenses) — 587 000 (4,9 %) Buildings and related costs — 36 000 (2,25 %) Financing anti-fraud measures Whilst the SC acknowledges the political realities faced by the EU in the current difficult economic climate and the resulting need for further efforts on the part of the EU institutions to achieve savings in all areas of the administrative expenditure, the SC would like to express its concern with regard to the proposed additional budget cuts. In particular, in budget lines relating to staff management (A3 01 02), which would have a direct impact on the conduct of OLAF’s investigation activities. The SC would question the proposed enforced cuts to the budget lines of OLAF’s operational activities. OLAF is an investigative service and it is precisely in times of financial crisis when it should exercise increased control over both expenditure and revenue. According to OLAF the additional expenditure cuts proposed by the Commission would have the following implications for the operational departments: — discontinuation of five or more contractual agent contracts, — termination of two interim staff contracts, — delay in the launching of the recruitment process for the replacement of Directors for Directorates B and C, — additional delays in the temporary agent reclassification exercise which concerns, for the most part, investigators from the operational units mainly in the highest grades. Specifically, the SC would like to point out that, in order to strengthen OLAF’s independence in its function as an investigative body, Regulation (EC) No 1073/1999 explicitly grants OLAF’s Director-General, as authorising officer, sole responsibility for the preparation of the draft budget following consultation with the SC. Furthermore, the principle of OLAF’s budgetary autonomy was further reinforced by the Commission in 1999 (1) when a special budget heading for OLAF was created. Moreover, it goes without saying that whilst OLAF is administratively attached to the Commission, it should be fully independent in the conduct of its operational activities and henceforth be provided with sufficient resources for its investigatory capability. OLAF must accordingly retain the financial resources and manpower it needs to perform its tasks at least to the level which has been agreed during previous budgetary negotiations in terms of its personnel capacity. In the SC’s view the principle of budgetary autonomy should be respected by the Commission, particularly since no budget increase vis-à-vis the adopted budget 2011 has been proposed by OLAF. If, despite what is stated above, reductions take place up to the amount proposed by the Commission, OLAF should be expressly allowed to make such cuts as it sees fit to parts of its budget. To summarise, the SC strongly disagrees with the position of the Commission during the budgetary discussions. Recommendations: — The SC supports OLAF’s proposal for its draft budget 2012 which foresees no increase in administrative expenditure. — The SC strongly disag