EN    EN  
 EUROPEAN COMMISSION 
Brussels, 19.12.2011 
SEC(2011) 1610 final 
  
COMMISSION STAFF WORKING PAPER 
IMPACT ASSESSMENT 
Accompanying document to the  
Proposal for a  
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
On the Hercule III programme to promote activi ties in the field of the protection of the 
European Union’s financial interests 
{COM(2011) 914 final} 
{SEC(2011) 1611 final}  
 
EN 2   EN TABLE OF CONTENTS 
1. POLICY CONTEXT AND CONTRIBU TION TO EU PRIORITIES ........................... 3 
2. CONSULTATION OF INTERESTED PARTIES............................................................ 7 3. PROBLEM DEFINITION AND  INTERVENTION LOGIC .......................................... 8 
4. PROGRAMME OBJECTIVES........................................................................................ 15 5. SUBSIDIARITY AND EU ADDED VALUE................................................................... 20 6. DESCRIPTION OF POLICY OPTIONS........................................................................ 22 7. ANALYSIS OF IMPACTS BY OPTION: CHOICE OF PREFERRED OPTION..... 24 
1. Technical assistance and info rmation technology projects .................................................. 24 
2.  Specialised anti-fraud training ............................................................................................ 26 
3.  The Associations for Criminal Law and the Protection of the EU Fi nancial Interests (ELA)
............................................................................................................................... ..... 28 
8. LINKS BETWEEN THE INTENDED INITIATIVE AND OTHER POST 2013 
MULTIANNUAL FINANCIAL FRAMEWORK RELATED INITIATIVES .. 39 
9. SIMPLIFICATION AND REDUCTION OF THE ADMINISTRATIVE BURDEN.. 41 
10. MONITORING AND EVALUATION........................................................................... 42 ANNEXES........................................................................................................................ ....... 43 
ANNEX 1........................................................................................................................ ......... 43 
BUDGETARY ENVELOPE OF THE HER CULE II PROGRAMME (2007-2011):...... 43 
ANNEX 2........................................................................................................................ ......... 44 
COMMITMENTS MADE UNDER THE HERC ULE II PROGRAMME (2007- 2010):44 
ANNEX 3........................................................................................................................ ......... 46 
TECHNICAL ASSISTANCE AND INFO RMATION TECHNOLOGY: RESULTS .... 46 
3.1 OPERATIONAL RESULTS OF TECHNI CAL EQUIPMENT CO-FINANCED BY 
HERCULE II.............................................................................................................. 46 
3.2 X-RAY SCANNING EQUIPMENT SUPPORTED BY HERCULE II.................... 46 
3.3 COMPUTER FORENSIC TRAINING ..................................................................... 47 
3.4 INFORMATION TECHNOLOGY: AMT AND CONTRAFFIC............................. 47 
3.5 PROCURED ACCESS TO DATABASES ............................................................... 49 
ANNEX 4........................................................................................................................ ......... 52 
TRAINING: SOME HERCULE II SUCCESS STORIES ................................................. 52 
 
EN 3   EN ANNEX 5........................................................................................................................ ......... 54 
REPLIES TO THE 2011 SURVEY ON THE USE OF DATABASES SUPPORTED BY 
HERCULE II............................................................................................................ 54 
ANNEX 6........................................................................................................................ ......... 56 
DATA ON THE EXTENT OF FRAUD ............................................................................... 56 
 1.
 POLICY  CONTEXT  AND  CONTRIBUTION  TO EU PRIORITIES 
Treaty base 
The Treaty reflects public concern about the prot ection of EU financial interests by providing 
for the principle of effective and equivalent pr otection across the Member States and the EU 
Institutions, bodies, offices and agencies (Article 325 TFEU, ex  Article 280 TEC). 
The importance of gaining and maintaining pub lic trust in the EU's capacity to protect 
taxpayers' money from fraudsters cannot be overstated, particularly  in the present context of 
budgetary stringency. 
Origins of the Hercule programme 
The Hercule programme is  the only instrument specifically  dedicated to protecting the 
financial interests of the EU by supporting the fi ght against fraud to th e detriment of the EU 
Budget. 
Hercule is administered by the European Anti- Fraud Office (OLAF) which is a Directorate-
General of the European Commission. 
The Hercule I  programme was based on Decision 804/ 2004/EC which essentially put on a 
proper footing and expanded a number of activ ities which had developed from the 1990s. 
Decision 878/2007/EC extended this programme over the period 2007 to 2013, as Hercule II .  
The 2007 decision introduced a sp ecific emphasis on the fight against cigarette smuggling and 
counterfeiting to reflect the support by th e Commission to the objectives of the Anti-
Contraband and Anti-Counterfeitin g Agreement with Philip Morri s Internationa l, signed in 
2004, and provided an additional € 6 million per year. 
The Hercule II overall budget is € 98.5 milli on over 2007 – 2013, with annual provision rising 
from € 13 million in 2007 to €15 million in 2 011. (Details of the breakdown of spending 
between the main sectors of activity are in Annex 2.)  
The protection of the financial interests of the EU 
The concept of the protection of the financial in terests of the EU (PFI) covers the prevention, 
detection and investigation of fr aud against the EU Budget and can  extend also to measures to 
address other serious irregularitie s.  Action to protect the financial interests covers the whole 
 
EN 4   EN of the expenditure side of the Budget.  On the revenue side of th e Budget, action mainly 
relates to traditional Own Resources (mainly Customs duties). 
Protection of EU funds goes alongs ide the protection of national funds. This is particularly 
obvious where projects are co-financed.  But it is also the case that general improvements in 
ethical standards, reduced corruption and better  administration benefit public finance at all 
levels. On the revenue side of the budget, acti on to fight smuggling benefits Member States 
directly because it protects (national) ex cise revenue as well as (EU) Customs duty.  
Details of the Hercule programme (except cigarette smuggling) 
The main sectors of expenditure under the present Hercule II are as follows; 
1.   Technical assistance  in order to assist the Memb er States to acquire highly 
sophisticated and transnationally compatible  technical equipment used to protect, 
mainly, the revenue side of the budget; and also to promot e common technical 
standards, training and coopera tion between the services wh ich use this equipment.  
This heading is also used to support joint operations and to acquire commercially available databases needed by Member St ate and OLAF investigation services. 
Examples are the financing of vehicle and container number plate  reading 
equipment at the external frontier and of scanners of various types at sea ports, 
airports and postal depots to detect in pa rticular  smuggling of products shipped by 
container  
Present annual spending under this heading is € 9.1 million; about 60% of the 
Hercule Budget. 
2.   Specialised training
 in the protection of EU financial interests for Member 
State services and sometimes third country part ners.  This training is intended to help 
Member States ensure that their official s who have responsibilities for decisions on 
and control of the spending of EU funds  have an adequate knowledge of the 
protection of EU financial interests' aspect of  their jobs.   It also  promotes the spread 
of best practice and networking between Member State services with similar 
responsibilities or shared res ponsibilities where cro ss-border issues aris e.  This is in 
line with the objectives of the Commissi on's Anti-Fraud Strate gy (CAFS) which the 
Commission adopted earlier this year (COM (2011)376, 24.06.2011). 
Some training covers protec tion of the financial interests in a wider sense, for 
example the prevention of irregularities in  the cohesion funds.  Other training may 
focus more on the specific issue of (crimina l) fraud against the Budget; for example, 
a conference bringing together public pros ecutors from Member States, candidate 
countries and sometimes third countries who are responsible for dealing with 
particular aspects of this category of economic crime or who act as national contact 
points with OLAF. 
Present annual spending under this heading is € 5.2 million; about 35% of the 
Hercule Budget. 
 3. Support of the Associations for Europ ean Criminal Law and for the Protection 
of the EU Financial Interests (hereinafter : European Lawyers’ Associations (ELA)) .  
 
EN 5   EN These academic and professional groups undertake research and discussion on the 
legal issues involved, in the main, in bri nging the different national criminal justice 
to bear on the protection of EU finances.  This also serves as a forum for the 
dissemination of information about this ar ea of EU law and potential developments 
therein. The long-term strategic objectiv e is to develop sufficient professional 
consensus about the necessity of harmonised or coordinated criminal law approaches 
to the issue.  It is reasonable to speculate that without  the work financed in this area 
over the past two decades  important ground work reflecting on how best to achieve 
criminal law protection of the EU finan ces would not have been possible: for 
example the “Corpus iuris”  (2000) developed by a study group composed of the 
members of the ELA influenced the prepar ation of the Green Pa per on the European 
Public Prosecutor  in 2001 and as a conse quence also the consultation process at an 
institutional level for the preparatory wo rk of the Convention on the Constitution. 
Present annual spending under this heading is € 0.7 million; about 5% of the Hercule 
Budget. 
 
Details of the Hercule programme; cigarette smuggling 
In July 2004, the Commission and 10 Member  States signed a legally binding Anti-
Contraband and Anti-Counterfeit Agreement with Philip Morris Internat ional (PMI). The aim 
of the 12 year Agreement was to give higher pr iority to the fight against cigarette smuggling 
which is estimated to result in financial losses to the EU and Member States of €10 billion a 
year. As well as building on meas ures to prevent the products  of PMI entering the illegal 
supply chain, the Agreement enhanced the Co mmission’s role in anti -contraband and anti-
counterfeiting of cigarettes insofar as it provid es for  sharing of data on seizures of illegal 
product by the manufacturers… The Agreement pr ovides for payments by PMI of up to $1.25 
billion over the lifetime of the Agreement.    
Similar Cooperation Agreements were concluded with Japan Tobacco International (JTI) in 
December 2007, with British American Tobacco (BAT) in July 2010 and with Imperial 
Tobacco Limited (ITL) in September 2010. All 27 Member States have signed the PMI and JTI Agreements, 26 Member States have signed the Agreements with BAT and ITL
1.  
The four tobacco manufacturers will pay a co llective total of $2.15 b illion over 20 years, of 
which 10% is paid to the Commission and the rest is paid to Member States.  
These Agreements were in some cases conc luded against the background of actual or 
potential litigation. The full text of all the Ag reements concluded with tobacco manufacturers 
can be found at: http://ec.europa.e u/anti_fraud/budget/index_en.html 
The PMI Agreement (Article 3, Section 3.01) re fers specifically to the Commission’s anti-
contraband and anti-counterfeit initiatives and intention to intensify efforts to prevent the introduction, sale and distribution of  contraband and count erfeit cigarettes: 
                                                
 
1 Sweden has not signed the Agreements with BAT and ITL 
 
EN 6   EN “It is the policy of the EC and the Me mber States to vigorously combat the 
introduction, sale and distribution of  Contraband Cigarettes and Counterfeit 
Cigarettes within or through the Territo ry of the Member States. Subject to 
budgetary constraints, the EC intends to intensify efforts to curb the introduction, 
sale and distribution of Contraband Cigar ettes and Counterfeit Cigarettes; apply 
appropriate equipment for monitoring and tracking the in troduction, sale, 
distribution, storage, and shipment of Contraband Cigarettes and Counterfeit 
Cigarettes; and continue to train law-enfor cement personnel in how best to detect 
and seize Contraband Cigarettes and  Counterfeit Cigarettes”.  
Since 2007 the Hercule programme has served as the means by which the Commission has 
carried out its side of these Agreements by spen ding at least € 6 million per year on actions to 
fight cigarette smuggling.  These actions are ta ken under the headings of  technical assistance 
and of specialised training, described above .  The largest area of spending, reflecting 
consultation with Member States in 2007 has been  on the co-financing of scanners to detect 
concealed cigarettes in trans it (whether at EU ports, border crossings, postal hubs or by 
mobile detection teams).  Other spending has be en on specialist conferences and seminars and 
laboratory services. 
OLAF coordinates operational matters relating to these Agreements with the specialist 
services of Member States thr ough the Task Force Cigarettes wh ich brings together the OLAF 
and national officials concerned.   
 
 
EN 7   EN  
2. CONSULTATION  OF INTERESTED  PARTIES 
The current Hercule programme includes a heterogeneous group of actions involving 
stakeholders who are all important to the fi ght against fraud but whose contribution takes 
different forms. The format of consultati on has taken account of these differences. 
OLAF carried out in 2011 an informal consultation of the following stakeholders , in part 
on the basis of questionnaires; 
-  OLAF's Task Group Cigarettes partners (specialist services in Member States 
 concerned in particular with the agr eements with the t obacco manufacturers); 
-  Member state services which access the specialist databases  which OLAF procures 
 under the technical assist ance sector of Hercule; 
-  The Associations for Criminal Law and the Protection of the EU Financial Interests 
(European Lawyers’ Associations  – ELA). These stakeholders were asked to  evaluate 
the implementation of the Hercule II programme a nd to provide ideas for  future objectives. 
In respect of other ac tivities financed under Hercule, ther e has been a continuous dialogue 
between OLAF and stakeholders ov er the life of the programme, in particular in the sensitive 
sector of technical assistance , some of which is confidentia l for operational reasons.   
Discussions have also been held during the development of the existing programme with 
other institutions/bodies, including Eurojust a nd Europol, as well as with EU agencies. These 
have led, in particular, to suggestions for the wider availability of databases funded by Hercule, and to the cooperation with the Joint Research Centre (JRC) described in chapter 7. 
This Impact Assessment also draws on the Inte rmediate Review carried out within OLAF in 
late 2010. 
All this feedback has been taken into account in this impact assessment.  
 
EN 8   EN  
3. PROBLEM DEFINITION AND INTERVENTION LOGIC   
Size of the problem  
The Commission's Annual Reports under Arti cle 325 TFEU for 2009 (COM (2010) 382) and 
2010 (COM (2011) 595) on the protection of the EU's  financial interests confirm that further 
action is required to ensure that EU taxpayers' money is correctly spent and that measures are 
in place to improve the prevention, detec tion, investigation and prosecution of fraud 
Whereas the actual level of (criminal) fra ud against the EU Budge t by nature of the 
phenomenon is not known. The Commission’s Annua l Reports provide two sets of figures 
which give an indication of the ex tent of the problem.  These are 
• total irregularities reported by Member  States or EU authorities; and 
• the subset of that total which has b een identified as suspected fraud.   
The Report for 2010 shows that reported irregula rities varied from 0.23 % of the agriculture 
budget to 5.26% of pre-accessi on funds, via 0.27% of direct  expenditure and 3.15% of 
cohesion policy expenditure (the latter heavily influenced upwards by cyclical 
considerations).  The correspond ing figures for irregularities su spected to constitute fraud 
were 0.12% of agriculture spending, 0.74% of cohesion policy spending, 2.6% of pre-
accession spending, and 0.02% of direct expenditure (the latter probably influenced downwards because of the relative newness of th e data source).  The overall financial impact 
of reported irregularities was € 1.8 billion of which suspected instances of fraud accounted for 
nearly € 0.5 billion. 
The table at Annex 6 gives more details. Another statistical demonstration of the scale of the problem can be found in the data on 
OLAF’s casework in OLAF’s a nnual independent operational re port.  The report for 2010  
shows that at end-2010 OLAF was conducting 339 investigations  on its own account and was 
assisting national authorities with a further 154 cases.  Between the creation of OLAF in 1999 
and July 2011, OLAF completed more than 1,500 of its own investigations.  Further data is in 
Annex 6. The Annual Accounts of the EU (Note 6 on financial corrections and recoveries 
following the detection of irregularities)
2 give also an indication of  the size of the problem. 
Consequences of the problem  
Fraud against the expenditure side of the EU budget makes spending less effective and has 
similar social and economic consequences to those of other economic crime; distortion of 
competition, growth of organised crime, pervasive effects of corruption on society and economic growth etc.  However, there is in surplus also a sign ificant reputational risk to the 
credibility of the EU Institutions and of the European project itself. This risk is 
proportionately greater than reputational risk at  national level since "EU fraud" has at times 
been instrumentalised as an argument ag ainst EU policies and spending programmes and 
indeed the European project generally.   
                                                
 
2  OJ C 308, 12.11.2010, p.1 (128) 
 
EN 9   EN On the revenue side of the B udget, where Hercule interventions  concentrate on traditional 
own resources, the reputational ri sk is lesser but the sums at stake are larger, with individual 
cases in the tens of millions or more, so metimes involving organised criminal groups. 
The enlargement process has significantly increase d the level of the problem, as is shown by 
the proportion of OLAF’s caseload in  certain new Member States rela tive to their size.  Future 
enlargements may have similar consequences. 
In addition, there is a third country dimension. The EU spends money in jurisdictions with a 
weak administrative and judicial environment wh ere corruption is a subs tantial and structural 
problem. 
Fraud prevention and awareness-raising are th erefore a key issue under the Commission's 
Anti-Fraud Strategy (CAFS) (C OM (2011) 376, 24.06.2011).  In this  Anti-Fraud Strategy the 
Commission has identified the current contex t of the preparation of the new multi-annual 
financial framework (MFF) as an opportunity to reinforce anti-fraud approaches across 
different EU policies. Fraudsters, in partic ular organised crime, adapt quickly to new 
circumstances. The Commission must be in a position to face such new challenges. The 
changing context requires continuous adjustment to EU anti-fraud policies. 
Drivers  
A number of drivers have been identified which have a negative effect on the joint efforts of 
the EU Institutions and the Member States to work together to protect the EU Budget against 
fraud in close and regular coop eration, as required by the Treat y.  These are summarised in 
Figure 1. 
  
 
EN 10   EN Figure 1: Hercule III Drivers and problems 
 Driver 1 :
 
Fraudsters adapt quickly to 
new circumstances at EU 
level, operate across  
borders and exploit the 
weakest points  Driver 3 :
 
Pressures on public finance 
require increasingly cost-
efficient protection of EU 
financial interests through 
improved detection and 
preventionDriver 4 :
 
Vast majority of anti-fraud 
resources are at national level, 
in many and varied competent 
authorities  
 
Problem 1 :
How to develop specialist 
knowledge and to deploy state 
of the art technical equipment 
to modernise prevention, 
detection and investigation in 
defence of the EU Bud get 
Problem 2 :
1 
How to respond to the rapid 
development in organised 
criminal activities in key 
sectors such as cigarette 
smuggling and counterfeiting 
 
Problem 3 :
 
How to maintain public 
confidence in the European 
project given the increased 
challenges to good 
governance and public finance 
ethics from past and 
prospective enlargements and 
from continued expansion of 
EU expenditure in high-risk 
third countriesProblem 4 :
 
Lack of sufficient awareness 
and expertise to prevent and 
detect fraud on an EU scale 
 
Problem 5 :
 
Insufficient and/or ineffective 
use of risk analysis of and 
information sharing about fraud 
patterns at EU level Problem 6 :
 
Shortcomings in the ability 
and/or willingness of 
competent authorities to 
cooperate among themselves 
and/or with OLAF 
Problem 7 :
4 
 
Difficulties in installing 
information exchange 
mechanisms and tools which 
are standardised, 
interconnected and adapted to 
efficient transnational anti-
fraud cooperation 
Problem 8 :
 
Lack of a uniform 
administrative and judicial 
environment to investigate and 
prosecute EU budget fraud Driver 2 :
 
The Commission and 
Member States have 
committed themselves to 
intensify the fight against 
cigarette smuggling  Driver 5 : 
 
Differences in incentives and 
capacities between Member 
States impede equivalence in 
the protection of financial 
interests 
Problem 9 : 
 
Gaps in the skills, experience 
and sharing of best practices 
among national competent 
authorities 
 Driver 5 : 
Differences in incentives and 
capacities between Member 
States impede equivalence in 
the protection of financial 
interests  
Problem 9 : 
Gaps in the skills, experience 
and sharing of best practices 
among national competent 
authorities 
 
EN 11   EN Driver 1  
  Fraudsters adapt quickly to new circumstance s at EU level, operate across borders and 
exploit the weakest points. 
Crime, especially organised economic crime, know s no borders.  It is quick to exploit the 
removal of internal frontiers and to search fo r the weakest points in the external border.  
The Commission Anti-Fraud Strategy, COM (2011) 376 emphasises that the changing context 
of fraud requires continuous adjust ment to EU anti-fraud policies. 
 In recent years, OLAF has uncovered sophistic ated networks which defraud the expenditure 
side of the Budget through complex structures  operating in several member states and 
neighbouring countries, using devices such as multiple invoicing, hidden relationships and 
inflated cost claims.  There have also been many instances of collusion between the 
beneficiaries of EU funding in one MS (typ ically a new MS benefiting from pre-accession 
funding) and the suppliers of the equipment funded  (typically situated in an “old” MS).  The 
investigation and prosecution of such offenc es requires close cooperation between the 
authorities of the Member States involved, ge nerally involving OLAF and sometimes also 
EUROJUST. 
Similar patterns of criminal behaviour have lo ng existed on the revenue side of the Budget, 
but now enjoy enhanced opportunities as a re sult of globalisation, increased trade and new 
more complex internat ional business models. 
Law enforcement authorities, on the other hand, re main constrained to a significant extent by 
internal borders, and have not yet sufficiently developed structures, networks and skills on the 
scale or with the flexibility rapidly to investig ate cross-border crime and to prosecute it in the 
appropriate jurisdiction(s). 
This situation presents a particular threat to the EU B udget, on the reve nue side, through 
Customs fraud (notably misdescription of goods,  false declaration of origin or value and 
through smuggling). On the expenditu re side of the Budget, there is a particular threat to 
funds under shared management in certain Memb er States with weak administrative and/or 
judicial structures, a nd to funds under direct expenditure in respect of which Member State 
judicial authorities are, in pr actice, less likely to intervene th an in respect of national funds. 
Problem 1: how to develop specialist knowledge  and to deploy state of the art technical 
equipment to modernise prevention, detection and investigation in defence of the EU Budget.  
Problem 2: how to respond to th e rapid development in  organised criminal activities in key 
sectors such as cigarette  smuggling and counterfeiting. 
Problem 3: how to maintain public confidence in the European project given the increased 
challenges to good governance and public finance ethics fr om past and prospective 
enlargements and from continued expansion of EU  expenditure in high-risk third countries. 
 
 
EN 12   EN Driver 2: The Commission and the Member St ates have committed themselves to intensify 
the fight against ci garette smuggling  
The Commission and the Member States have committed themselves to intensify the fight 
against cigarette smuggling in the Cooperation Agreements with  four major international 
cigarette manufacturers which are described in chap ter 1 above.  As that chapter explains, the 
companies have committed themselves to pay over $ 2 billion to national and EU Budgets 
over up to 20 years.  The Agreements are legally binding and Hercule II is the chosen instrument through which an annual sum of € 6 million is targeted at cigarette smuggling. 
The Agreements signed with the four tobacco manufacturers contain a number of provisions 
(for example the tracking a nd tracing of cigarettes, kno w-your- customer, anti-money 
laundering provisions) which have  been successful in reduci ng the availability of their 
products to criminal gangs engaged in smuggling. This supply shortfall has been filled with 
cheap cigarettes from countries bordering the EU, and counterfeit cigarettes from the Far East, 
particularly the People's Republic  of China but also Malaysia, Vietnam and the Philippines. 
Production of cheap cigarettes in the Middle East , most notably the United Arab Emirates, has 
also expanded considerably in the last three ye ars, and a presence of cigarettes produced in 
the Middle East on the illicit mark et in the EU has increased.   
The primary driver of cigarette smuggling is th e intent and ability of criminal elements to 
supply the unofficial market for tobacco at prices  below the official market prices in member 
states.  The relatively high cigarette prices in the EU are a major in centive for smugglers.  
Smugglers can expect very high profits and a rela tively low risk of de tection. If caught and 
prosecuted, the penalties are much  lower than for other forms of serious organised crime. 
.Evasion of customs and other duties is therefore a serious problem.  
Losses to the EU and Member States' budgets as a result of cigarette smuggling are estimated 
to be approximately €10 billion per year. 
The new Member States have all signed the Agreements with the tobacco manufacturers. 
However, before joining the EU many of these Member States had lim ited experience with 
cigarette smuggling investigations and traditionally had seized ve ry few illicit cigarettes. The 
situation has changed quite rapidly and both the Balkan route and the Baltic route are being 
used to smuggle substantial quant ities of cigarettes. Member States which in the past were 
source/transit countries for illi cit cigarettes are now transit/d estination points for illicit 
consignments of cigarettes.  
Problem 3 (see under Driver 1 above) and problem 5 (see under Driver 3 below) Driver 3: pressures on public finance require increasingly cost-efficie nt protection of EU 
financial interests through imp roved detection and prevention  
It is generally not possible for Member States or indeed EU Institutions to increase their 
funding of control or investig ation services to match the increase in the threat; on the 
contrary, especially in some of  the Member States more vulnerable to fraud, previous levels 
of funding cannot be maintained. 
There is a particular issue with the lack of incentive for Member States, in some 
circumstances, to give sufficient priority to protecting EU funds.  Fo r example, failure to 
collect Customs duties effectivel y in one Member State will, in the absence of identification 
 
EN 13   EN and recovery by the Commission, lead to an in crease in national cont ributions to the EU 
Budget financed by general taxation through the GNI mechanism in all Member States.  Or 
the regional law enforcement authorities, even in  a rich Member State, as OLAF has recently 
experienced, may be reluctant to allocate resources  to deal with an alleged fraudster in their 
territory whose criminal activ ities target the EU budget rath er than local residents, 
In these circumstances it is necessary to devi se more cost-effective ways of protecting public 
money and to take further steps to reduce the risk that increasing resource pressures do not 
have disproportionate consequences for the prot ection of EU funds relative to national funds. 
The Commission Anti-Fraud Strategy (CAFS) acknowledges the importance of cost/benefit 
considerations and resources available when  implementing anti-fraud measures. Improved 
fraud risk management and in telligent IT based controls should boost fraud prevention and 
detection.  Fraud awareness-raising is anothe r key action to support pr evention and detection. 
Problem 4: lack of sufficient awareness and  expertise to prevent and detect fraud on an EU 
scale. 
Problem 5: insufficient and/or ineffective us e of risk analysis of and information sharing 
about fraud patterns at EU level. 
…and also Problem 1, which is agg ravated by budgetary pressures 
 Driver 4: the large number and varied nature of competent authorities in Member States 
and candidate or associated countries.   The vast  majority of resources available to fight EU 
budget fraud are at national not EU level.  
Administrative and law enforcement structures  differ between Member  States. Operational 
responsibility for the protection of EU financ ial interests can involve  national, local or 
specialist police forces; Customs services; pu blic prosecutors who may or may not be 
specialists in fraud; national audit Courts or Offices; national or regi onal inspection services; 
the audit or control functions of national and regional admini strations; and sometimes other 
agencies such as those dealing with secu rity or organised or economic crime.   
These bodies have varying competences, capacit y, priorities and expert ise, not to mention 
resources.  Some authorities find it relativel y easy to work together across frontiers; for 
example, neighbouring Customs administrations, or national police forces organised on a 
paramilitary basis, where these exist.  In other cases, for example where Customs in one 
country need to work with the police in anothe r, or where a specialis t economic crime agency 
cannot identify a natural "opposite number" or pa rtner in another Member State, cooperation 
is much more difficult.  OLAF has an essen tial role in facilitati ng and coordinating such 
contacts. 
Only Member States who joined in 2004 or later,  and candidate countries, are obliged to have 
formal structures for national c oordination of measures to fight  EU budget fraud and to liaise 
with OLAF (“AFCOS” – Anti Fraud Coordinati on Structures). However, the proposal to 
reform the Regulation governing OLAF (1073/ 99) which is curren tly under discussion 
between the Council and the Pa rliament (COM (2011)135) woul d extend this to the older 
Member States. 
 
EN 14   EN The application of the criminal law and penal sa nctions in the fight against fraud remains the 
exclusive prerogative of the Member States.  Despite the – slow - progress made with third 
pillar instruments over the past 15 years or so , differences in national legal structures and 
approaches continue to constitu te a significant obstacle to more effective use of the criminal 
law to deal with the threat of fraud to th e EU Budget.  The Comm ission Communication on 
the protection of the financial interests of the EU by criminal law and by administrative 
investigations (COM (2011) 293) drew attention in May 2011 to th e problems that continue to 
be caused by the absence of a level playing field in criminal law and by insufficient 
cooperation between national authorities. 
In all these circumstances there can be consider able practical difficulties in making a reality 
of the Treaty duty towards close and regular  cooperation between the Commission and 
Member States (and indeed on occasion between  services of the same Member State). 
Problem 6: shortcomings in the ability and/or willingness of competent authorities to 
cooperate among themselves and/or with OLAF 
Problem 7: difficulties in installing information exchange m echanisms and tools which are 
standardised, interconnected and adapted to ef ficient transnational anti-fraud cooperation. 
Problem 8: lack of a uniform administrative and judicial en vironment to investigate and 
prosecute EU budget fraud. 
 
Driver 5:  Differences in incentives  and capacities between Member States impede  
equivalence in the protection of financial interests . 
The equivalent protection of EU financial interests across  the EU and between EU and 
national budgets is a fundamental  principle which is an essen tial reassurance to the taxpayer 
and should be a guarantee that the solidarity whic h is explicit in EU financial mechanisms is 
not abused. 
However, the capacity of individual Member Stat es and their services to achieve equivalence 
varies very substantiall y.  This is shown in successive  Commission article 325 (formerly 280) 
Reports, in reports of the Cour t of Auditors and of the Inte rnal Audit Service, in the 
monitoring of the most recent Member States , and elsewhere.  For example, the Annual 
Report of the Commission on the protection of EU financial interests for 2010, COM 
(2011)595,   points out that the performance of Memb er States in identifying and reporting 
instances of irregularity which are likely to constitute suspected fraud continues to vary 
significantly. 
Problem 9: gaps in the skills, experience  and sharing of best practice among national 
competent authorities. 
 
EN 15   EN  
4. PROGRAMME OBJECTIVES 
General objective  
The general objective of the Programme shall be to  protect the financial interest of the Union 
thus enhancing the competitiveness of the Eu ropean economy and ensuring the protection of 
the taxpayers' money. 
The programme will respect the distinct  traditions of each Member State  and will aim to strike 
a geographical balance across all Member States and candidate  countries, without 
undermining operational effectiveness. 
Specific objective  
The specific objective of the Programme shall be  to prevent and combat fraud, corruption and 
any other illegal activities agains t the Union's financial interest. 
This objective will be measure d, inter alia, through the amount of  recoveries following fraud 
cases detected by joint actions and cross bor der operations, the increased percentage of 
successful joint operations, and the increased number of cases accepted by the criminal 
investigative authorities. 
Operational objectives  
Specific objectives are designed to address one or more of the problems identified in the 
intervention logic chart. 
Operational objective 1  
To enhance transnational and multidisciplinary cooperation between Member State 
authorities, the Commission and OLAF in th e prevention and invest igation of fraud. 
Mainly addresses problems 2, 3, 4, 6 and 7 
Operational objective 2  
To facilitate the exchange of information, e xperience and best practices related to the 
protection of the financia l interests of the EU. 
Mainly addresses problems 4, 5, 7 and 9  
Operational objective 3  
To provide technical and opera tional support for the law enfo rcement authorities of the 
Member States in their fight against illegal cross border activities, emphasising support for 
customs authorities. 
Mainly addresses problem 1  
Operational objective 4  
 
EN 16   EN To enhance actions directed specifically at cigarette smuggling and the counterfeiting of 
cigarettes, in line with the Agreements  signed with cigare tte manufacturers. 
Mainly addresses problems 1, 2 and 5 
Operational objective 5  
To support academic analysis of strategic le gal issues with implications for the law 
enforcement area, with a view to the development of a broad consensus on how better to use legal resources in the protecti on of EU financial interests. 
Mainly addresses problem 8, also problem 3. 
 
EN 17   EN  
Operational sub-objectives  
Operational sub-objectives objective s are set separately for each of the sectors of the Hercule 
programme. They relate to one or mo re of the specific objectives above. 
Operational sub-objective 1: To extend the pr otection of the extern al frontier through the 
deployment of technical equipment w ith common technical specifications. 
Relates mainly to operational objective(s) 3, 4 
Operational sub-objective 2: To support join t operations which bring together national 
resources in a focussed manner on targets of shar ed interest to EU and, where appropriate, 
third countries. 
Relates mainly to operational objective(s) 1 ,4 
Operational sub-objective 3: To increase the numb er of fully trained and up-to-date forensic 
IT examiners in Member State services  who are available to investigate fraud. 
Relates mainly to operational objective(s) 2, 3 
Operational sub-objective 4: To identify and procure the most su itable databases to support 
investigations at  prices reflecting OLAF's cap acity  to buy in bulk on behalf of EU and 
national services; to make these available efficiently to Member States.  
Relates mainly to operational objective(s) 3 
Operational sub-objective 5: To develop with the JRC mechanisms enabling the identification 
of significant changes in trade, and to distri bute the resulting alert signals to Member State 
authorities as soon as possible.  
Relates mainly to operational objective(s) 1, 3 
Operational sub-objective 6: To develop with the JRC an instrument for calculating 
acceptable price ranges that will serve as de fact o EU reference prices and signal trade outside 
those ranges. 
Relates mainly to operational objective(s) 3 
Operational sub-objective 7: To develop with the JRC an advanced risk-analysis system 
capable of automatically checking the origin of  the merchandise declared by importers, in 
order to detect potential fra udulent cases of the type "false declar ation of origin". 
Relates mainly to operational objective(s) 3 
Operational sub-objective 8: To implemen t the Commission's commitments under the 
Agreements with international cigarette manufacturers.  
Relates mainly to operational objective(s) 4 
 
EN 18   EN Operational sub-objective 9: To en sure that EU law enforcement agencies engaged in the fight 
against tobacco contraband and counterfeiting are equipped with a ppropriate, up-to-date 
equipment to detect illegal consignments. 
Relates mainly to operational objective(s) 3, 4 
Operational sub-objective 10: To develop cl oser collaboration between the national law 
enforcement agencies responsible for investig ating the illegal tob acco product imports  
Relates mainly to operational objective(s) 1 , 4 
Operational sub-objective 11: To provide training on and exchange  best practice in relation to 
contraband and counterfeit tobacco products. 
Relates mainly to operational objective(s) 2, 4 
Operational sub-objective 12: To  improve monitoring, analysis and dissemination of data on 
trends, modus operandi and criminal gangs  active in the ille gal tobacco trade. 
Relates mainly to operational objective(s) 1, 4 
Operational sub-objective 13: To ensure that conferences and tr aining events are designed to 
strengthen compliance by Member States with EU legislation. 
Relates mainly to operational objective(s) 2 
Operational sub-objective 14: To communicate EU policies to targeted audiences who need to 
implement these policies; to achieve and maintain a sufficient level of awareness. 
Relates mainly to operational objective(s) 1, 2  
Operational sub-objective 15: To facilitate mutual understanding and sharing of best practices 
among national administrations. 
Relates mainly to operational objective(s) 2 
Operational sub-objective 16: To raise public awareness of the ri sk of fraud while providing 
reassurance that the EU is determined to deal with fraud and has the means to do so. 
Relates mainly to operational objective(s) 2  
Operational sub-objective 17: To facilitate stra tegic discussions and aca demic consensus with 
a view to identifying topics for possible future legislation in th e field of the protection of the 
EU financial interests.  
Relates mainly to operational objective(s) 5  
Operational sub-objective 18:  To build networks of academics and practitioners throughout 
the Member States, acceding countries and candi date countries with an interest in the 
protection of EU fi nancial interests 
Relates mainly to operational objective(s) 5  
 
EN 19   EN Operational sub-objective 19: To  facilitate the exchange of information between EU 
Institutions, legal practi tioners, and academics  
Relates mainly to operational objective(s) 5  
Operational sub-objective 20: To de velop together with Member States more reliable statistics 
on irregularitie s and fraud 
Relates mainly to operational objective(s) 1 and 2 
Operational sub-objective 21: To find ways to  develop a coherent analysis of irregularities 
and fraud within the COM (esp. annual report ing under Art. 325 TFEU and Annual Accounts)  
Relates mainly to operational objective(s) 1 and 2 
 
 
EN 20   EN  
5. SUBSIDIARITY AND EU ADDED VALUE 
The Treaty states that the protection of the fi nancial interests of the EU is the shared 
responsibility of the Union a nd of the Member States (articles 310 (6) and 325 TFEU). The 
execution of the Budget, whatever the form of  management might be, remains the ultimate 
responsibility of the Commission.  The Treaty also  lays down the principle of equivalence, 
which requires a comparable level of prot ection across the EU. U nder the assimilation 
principle Member States are obliged to afford th e same level of protection to EU funds as to 
national funds. 
The Hercule programme relates in part to ac tivities of the European Commission and more 
particularly OLAF, and cooperati on with the other European In stitutions and bodies, as well 
as with Member States. Theref ore, by definition, some objectiv es could not be achieved by 
action at the national level alone. 
Where a Member State fails to collect Custom s duties, the impact falls on more efficient 
Member States since the shortfal l in revenue for the EU is made up by an increase in the GNI 
contribution financed by general taxation.    
Expenditure at EU level on the protection of EU financial interests is therefore justified in 
terms of subsidiarity where it facilitates coope ration between the EU and Member States or 
between Member States, without impinging on Me mber States’ responsibilities (for example, 
to pay the salaries of  their control staff). 
Expenditure at EU level is also justified where it clearly assists Member States collectively to 
protect their national finances and the use of EU  structures is more efficient than informal 
national cooperation.   
The most obvious example of this is action agai nst cigarette smuggling; most of the revenue 
protected is national revenue, and 90% of the payments made by the cigarette manufacturers 
under the Agreements which are administered  by the Commission go to national budgets. And 
Failure by Member States on the external frontie r to prevent the smuggling of cigarettes may 
have minor impact on their own finances but  significant impact on the finances of other 
Member States which were the intended destination of the smuggled cigarettes. 
It is therefore justifiable for the EU to provide  some assistance to enable more vulnerable / 
affected Member States to provide the same level of protection as less vulnerable Member 
States. Criminals will exploit any weak point in the system, so EU interventions which are 
targeted at vulnerable points are in the common interest. 
In concrete terms, added value can be demonstrated by 
• savings from collective procurement of  specialised equipment and databases 
• savings from collective spec ialised training (forensic IT training, seminars on 
irregularities/fraud dete ction and reporting) 
• improved operational cooperation following tr aining events, includ ing networking at 
conferences and staff exchanges 
 
EN 21   EN • more effective cross-border operations on the basis of common technical standards 
and joint training 
 
EN 22   EN  
6. DESCRIPTION  OF POLICY  OPTIONS 
This Section lists and briefly describes the optio ns.  Section 7 will then assess the impact of 
each option against the baseline and also agains t the option of discontinuation (option 4) since 
the latter comparison best illustrates the va lue of the different sectors of activity under 
Hercule. 
Option :; Baseline scenario  
The baseline option (1) is to maintain overall spending at the current level with the 
assumption, not set out in legislation, that th e distribution between sp ending sectors would be 
broadly the same.   
Option 2  
Option 2 is to maintain overall spending at th e present level and rene w the programme with 
improved objectives and methodology. 
Option 3  
Option 3 is to maintain overall spending at the present level but significantly to alter the 
distribution of spending towards greater support  for operational activities with less spending 
on activities with less or no imme diate impact on operations.  . 
The main challenge would be to devise inte rventions which support op erational actions and 
OLAF’s operational work without crossing into areas which should prop erly be financed by 
OLAF’s administrative budget or by the ad ministrative budgets of Member States. 
It would be necessary under options 1, 2 and 3 to respect the objectives  under the 
Agreements with the cigarette manufacture rs to spend some €6 million annually on 
cigarette-related activities. 
Option 4  
Option 4 is to discontinue the programme in whole or in part.  The consequences of 
reductions should be assessed in terms of the i ndividual sectors affected  and of any decision 
not to continue funding of work against cigarette smuggling at the agreed level. 
Discarded options:  
Another option, which could in theory be combined with any other option except total 
discontinuation, could be to combine the Hercul e and Pericles programm es (Pericles is the 
programme, also managed by OLAF, which finan ces measures to combat the counterfeiting 
of the euro). There would in principle be ad vantages of management and synergy for the 
Commission and Member States in  combining Hercule with Pericl es.  However, this is not 
possible because of the different legal bases in the Treaty for the euro and for the protection of 
the Budget (Art. 133 TFEU) and because of the pr oblems which would arise from the need for 
separate legislative instruments for euro a nd non-euro Member States.  This option is 
therefore not further considered. 
 
EN 23   EN Finally, another option could be  to increase the level of spendi ng on Hercule III.  This would 
be inconsistent with decisions  already taken on the Medium Te rm Financial Framework in the 
communication ‘A Budget for Europe 2020’ (C OM (2011)500), and is therefore not further 
considered. 
 
 
EN 24   EN 7. ANALYSIS OF IMPACTS BY OPTION : CHOICE OF PREFERRED OPTION 
Option 1  
This is the baseline option; c ontinue with the same level of funding and the same approach to 
projects as at present under He rcule II. The impact of the base line option is best assessed by 
reference to the existing programme. Specific imp act can only sensibly be assessed by sector. 
Overall, feedback from the stakeholders in th e different sectors of the programme has been 
positive.  The Intermediate Review in late 2010 evaluated output in detail; the main data is summarised in the Annex to this Impact Assessment. 
1. Technical assistance and information technology projects  
Technical equipment (except scanners)
 
The purchase of technical equipment for law enforcement agencies combating fraud aims at: 
- achieving a better level of technical e quipment across the EU and increased 
compatibility to facilitate cross-border c ooperation and achieve  procurement savings; 
- efficient use of the equipment acquired; 
- facilitating joint operations and in ternational support for operations; 
- better disclosure of offences and hi gher quality eviden ce for the courts. 
Good operational results were  obtained. Over the period from 2007 to 2011 (part),  Member 
State services attributed the seizure of 374 m illion cigarettes, 9 million litres of alcohol and 
over 1 million litres of fuel to  the use of equipment funded by Hercule  II. The financial 
impact exceeded € 100 million.   See Annex 3.1 for more detail.  
Scanners  
Since discussions with member States in 2007, a nd to date, Hercule II has co-financed 21   X-
Ray scanners intended primarily for the detection of illicit cigarettes in 16 Member States.  Because of long lead times for procurement and installation, complete and informative data 
on the results of this deployment is not yet available.  There will also, increasingly, be a deterrent effect which cannot be measured. 
Spending on scanners constitutes the greater part of  expenditure targeted at the illicit trade in 
cigarettes. 
Examples of practical results: Ireland and Malta 
A mobile scanner, co-funded with a grant fr om Hercule (cost: approximatively €3million has 
been deployed in the in the Port of D ublin since December 2009. Between January 2010 and  
June 2011, almost 4,000 scans have been performed, resulting in the seizure of over 6 million 
cigarettes, 2,111 litres of spirits , 5,877 litres of wine and 48kgs of  cannabis, as well as many  
counterfeit items.  This scanner in Dublin Port was been invol ved in the detection of several 
other large consignments of ille gal cigarettes which were subsequently seized at their final 
destination, for example 8 million cigarette s in January 2010 and 6.5 million cigarettes in 
April 2010. The financial impact of these seizures, in terms of revenue protected, would over 
a few years exceed by a factor of several times the cost of the scanner. Another grant from 
Hercule was used to co-fund a mobile scanner  in Malta Freeport (cost: approximatively 
 
EN 25   EN €3million€). The scanner, which is capable of sc anning a 40ft shipping container in just 1.5 
minutes, was inaugurated  in May 2009 and led to the seizure of over 50 million contraband 
cigarettes and over 16,000 kilos of tobacco in 2009. Over 20 million contraband cigarettes 
were seized in 2010 and nearly 5 million contra band cigarettes in the first half of 2011.Again, 
the benefit in terms of revenue protected exceeds by a factor of several times the cost of the 
scanner.  
Forensic IT training  
Cutting edge computer forensic tools and techniques are essential in the investigation of fraud 
so that evidence can be acquired, searched an d analysed in a manner which will later be 
accepted as evidence in court.  Computer fore nsic training organise d by OLAF and funded by 
Hercule has brought law enforcement forensic e xperts from all Member States together for 
joint  training courses which are not otherwis e available in Europe and are expensive for 
national services (in excess of €2,000 per officer pe r week).   In additi on to technical skills 
acquired, these training courses have devel oped networking and provided the basis for 
operational cooperation notably but not only in the context of co mplex OLAF investigations.  
It is estimated that by 2013 some 460 offi cers will have attended the basic training 
programme and a further 500 will have partic ipated in specific advanced modules. More 
detail in Annex 3.3. 
Monitoring of international container movements  
An agreement between OLAF and the EU Joint Re search Centre (JRC) will provide for tools, 
funded by Hercule, to support investigations  which need data on container movements 
(current and past) and which can also provide mo re realistic and effective scenarios for joint 
customs operations. It will also provide the possibility for more effective risk analysis in the domain of trade flows. Ther e are two specific pr ojects: Automated Monitoring Tool (AMT) 
and Contraffic  
 
The Automated Monitoring Tool (AMT) 
The AMT has  specific operational objectives3 ; to increase OLAF' s operational anti-fraud 
effort by providing automated analysis of tr ade flow data at EU level; to further develop a 
tool to be used to detect si gnals in customs declaration data pr ovided by Member States with 
prioritization of signals detected in custom s declarations; and, to continue develop the 
ground-breaking software so that the deployment of this kind of  automated tool can be 
widened.   
                                                 
3  A further objective (the development of a web based version of  ARIADNE) has been dropped from the arrangement due to its 
cost. 
 
EN 26   EN Contraffic; better risk analys is in maritime transport 
The Contraffic project supports the activity of customs authorities at EU level. About 90% of 
the world's cargo is transporte d by a fleet of around 15 million containers. Less than 2% are 
physically inspected by custom authorities, due to obvious resour ce constraints.  It is thus 
imperative to develop advanced risk analysis in  order to focus customs controls on those 
movements most likely to be fraudulent.  Feedba ck from users in Member  States suggest that 
half find it useful in routine operational work, and a quarter consider it to be crucial. 
 More details in annex 3.4). 
Procurement of databases  
The procured access to  external data bases (see annex 3.5) provides essential information to 
investigators from Member States and OLAF. Th is includes data nece ssary for protecting the 
revenue side of the budget, relating to trad e flows and shipping and container movements. 
Three recent OLAF cases which relied on the extr action of data from one of these databases 
identified evaded Customs duties of € 14 million. Data relating to companies is also essential 
for investigations and analysis relating to the expenditure side of the budget.  More details in 
Annex 3.5.  
2.  Specialised anti-fraud training 
The projects co-financed involved participants from all MS, candidate countries and a large 
number of third countries. From 2007 to 2010, in total, 41 projects were realised under 
Hercule II, involving 8.773 par ticipants from all EU Member States (8.447), Candidate 
Countries (79) and Th ird Countries (247). 
 
Number of Participants - Member States/Candidate 
Countries
67129568
82510
39281522612
24789
523122
19190144230898
151512
302
7138 47 74283714
0500100015002000250030003500
AT BE BG CY CZ DK EE FI FR DE EL HU IE IT LV
LT LU MT NL PL PT RO SK SI ES SE UK HR MK TR 
 
Through the training activities, there was a wider disseminati on of anti-fraud and anti-
corruption measures affecting the EU financial in terests. In particular, good cooperation 
between the EU and national authorities, and between the services of all the institutions 
concerned, is a prerequisite for efficiently co mbating fraud. Attendees were principally from 
national authorities: police, Cu stoms, Ministries of Finance and Justice, law enforcement 
 
EN 27   EN bodies, audit bodies, the judiciar y etc. There was also some attendance from private bodies: 
NGO representatives, students, company representatives. 
The results in this area reflect knowledge obtaine d in the field of fraud prevention and combat 
against fraud detrimental to the EU financial interests, specific  skills in prevention, detection 
and investigation capacity in fighting agains t fraud, input for further development and 
improvement of the activities of  the organisation, including legi slative work, dissemination of 
information about  the latest developments, met hods, techniques in the field of combat against 
fraud and corruption as well as information obt ained through networks  established between 
the organisations and exchange of the latest  information.  These we re listed in the 2010 
Intermediate Review. 
Conference by the European Law Academy (ERA) (2010 grant agreement) 
The “Annual Forum on Combating Corruption in  the EU 2011 - How best to ensure the 
protection of whistleblowers” was designed as a discussi on forum where international, 
European and national experts could present the topic from their own point of view. This 
objective was met. The conference brought together approximately 110  legal practitioners 
and experts (mainly of lawyers,  prosecutors and anti-fraud in vestigators) from 24 Member 
States and EU Institutions. The results of the conference where used inter alia to prepare for 
the specific objectives to be inserted in the Commission's Anti-Fraud Strategy (CAFS) (COM 
(2011) 376) on informants and whistleblowers (2.3.2.). 
Eucrim 2010 (2009 grant agreement) 
Eucrim is a quarterly review of the Asso ciations for European Criminal Law and the 
Protection of the EU Financial Interests (ELA).  It includes an extended news letter section 
and serves as a platform of discussions between academics and practitioners publishing 
scholarly articles on relevant topics of EU  criminal law and the protection of the EU 
financial interests. Four issu es of the journal Eucrim we re published in 2010 by the Max-
Planck-Institute. The following topics we re covered: “Data Protection”, “The Lisbon 
Treaty”, “The External Dimension of Criminal  Justice”, “Procedural Rights in Criminal 
Proceedings”. Eucrim raises the awareness of legal practitioners (those working in judicial, 
police or administrative aut horities, universities, law offices, et c.) of relevant legal provisions 
associated with the protecti on of the EU financial interest s and European criminal law. 
Eucrim conveys information on the protection of the financial interests and supports networks 
of the European Lawyers Associations in this area.   
 
Annual Task Group Cigarettes Conference 
Each year OLAF holds a Task Group Cigarettes C onference, bringing toge ther investigators, 
analysts and policy makers working on tobacco crim e to discuss the latest  trends and issues 
in this ever changing environment. In 2011 the 16th Annual Task Group Cigarettes 
Conference will be held in Vienna from 8-12 October. Not only are the 27 Member States 
represented but key thir d countries (Russia, Ukraine, Egyp t, and Moldova) and international 
organisations (WCO, EUROPOL) attend the conference. It is an important event for 
participants to maintain and enhance their expertis e, as well as for developing and nurturing 
valuable contacts in other Member  States and key third countries. As a resu lt of the contacts 
made during this conference, OLAF and the Memb er States are able to deal swiftly and 
 
EN 28   EN effectively with operational issu es, as demonstrated consistently  over the years (for example 
more recently  Joint Customs Operation SI ROCCO, see OLAF (eleven th)  Annual Report 
2011, point 3.1.4). 
Further examples of Hercule spending on training are listed in Annex 4. 
 
3. The Associations for Criminal Law and th e Protection of the EU Financial Interests 
(ELA) 
Financial support has been grante d to legal academic projects such as legal studies, legal 
academic conferences and publications dealing with  particular issues of the protection of the 
EU financial interests. The group of eligible beneficiaries is not  limited to the 32 Associations 
belonging to the ELA. Other entities (univers ities, research institutes, Member State 
administration and non-profit making bodies…) may also compete in the calls for applications. 
The events have a wide international dimens ion.  The audiences are mainly composed of 
judges, prosecutors, lawyers, policemen, nati onal Law Enforcements Agencies, academics, 
researchers, national civil servants, as well as members and officials of the EU institutions. As 
regards the 6 conferences per year that have b een held on average, the regional spread of 
participants was satisfactory with, however, a very high numb er of Italian participants
4, due to 
the fact that a very big conference was organize d in Italy each year in  Milan where relevant 
topics on the development of EU law and the tran snational protection of the financial interests 
against fraud were included into a continuous  training scheme including Italian lawyers, 
prosecutors and judges and participan ts from other Member States.  
Feedback has been positive; the six conferen ces organised under the 1999 Budget were rated 
as good or excellent in 97% of  completed evaluation forms. 
Through its influence on the se lection of topics, the Commis sion has a certain influence on 
the debate between the specialists, promo ting a more comprehensive approach and 
encouraging the dissemination of legal informat ion on the latest developments in the area of 
fraud prevention and fight against fraud. 
Projects give input and motivation for preparat ory strategic work, research, teaching and the 
exchange of practical experience. Each conf erence is in principle attended by speakers and 
participants from OLAF, other Commission serv ices or other European Institutions. The 
annual meetings of the Presiden ts of the ELA give OLAF a fu rther opportunity to initiate 
discussion among professionals and ideas for future legal projects and this is much 
appreciated. These consultations  were at the origin of several forward looking comparative 
law studies, the “Corpus iuris” on penal provisions for the pur pose of protecting the financial 
interests of the EU, the study on “Criminal justice systems” rele vant to developing a 
European institutional frame for the penal law pr otection of the financial interests of the EU, 
the “Euroneeds” stakeholder review study on  the practical experiences by anti- fraud 
prosecutors and the study. 
Option 2  
                                                 
4  Budget 2007: 352 out of 605, budget 2008: 4 71 out of 988 and budget 2009: 436 out of 770.  
 
EN 29   EN Option 2 is to renew the programme at the pres ent level of spending w ith improved objectives 
and methodology taking into account feedback from  stakeholders as well as the Commission's 
experience in managing Hercule II. 
The most significant change would be to increase the share of Hercule funding in co-
financed activities .  This would be a res ponse to a development whic h has become evident in 
2011, namely that Member States are less able to co-finance Hercule pr ojects.  So far as 
procurement of technical equipment is concerned,  those Member States which most need this 
equipment are the least able to co-finance this .  In some instances, notably on eastern and 
southern borders, the areas affected are also those potential or actual weak points where there 
is the greatest common interest in strengthening the EU’s defences. However, due to the specific co-financing requirements of the Herc ule programme some Memb er States which are 
particularly exposed to the risk s of smuggling have not been able  to benefit from the funding 
for the acquisition  for instance of  container scanning equipment. 
The consequence of an increase in the EU shar e of financing would be that fewer projects 
could be funded.  This would require prioritisati on and tougher choices at the selection stage; 
at present most projects which meet the elig ibility criteria are accepted.  These could include 
departing from the principle of geographical balance.  
The impact on individual sectors of reductions  in spending is discussed under option 4. 
In theory, an increase in the EU share of fina ncing could reduce the over all level of spending 
on anti-fraud because the Member States woul d reduce their contribution.  In practice, 
however, the risk is that unless the cofinancing ratios are changed upwards the volume of antifraud spending would be even lower – and its  quality would fall – since there will be a 
sharp reduction in bids from the Member States.  Unless the cei lings are raised total spending 
under Hercule could actually fall. 
Another change would be greatly to simplify the administration of small grants, under 
€50,000 , to take account of criticisms that the bureaucracy required to demonstrate the 
eligibility of expendi ture in detail is disproportiona te. Lighter procedures, reduced 
requirements in terms of detailed breakdown of co sts and more flexible criteria for eligibility 
are needed. For smaller training projects the level of administrative burden for the 
beneficiaries should be  kept proportionate. 
Other changes could clarify the scope of Hercule in the sense of explicitly promoting 
flexibility to extend present areas of activity where there is a strong EU wide interest as 
for example: The action plan to fight against smuggli ng of cigarettes and alcohol along the 
EU Eastern Border  (SEC (2011) 791 which accompanies the CAFS envisages for example 
that Hercule III “ could be modified in order to facilitate  acquisition of relevant equipment for 
a project which has wider European interest ” (see action plan in the annex , point 1.3).  This 
would imply readiness also to fund essential equipment which is of a specialist technical 
nature  such as automated recogni tion tools. .Another change wh ich could be facilitated by 
more flexible scope could extend the concept of training towards communication to a 
wider public  than the specialists who are currently targeted. 
Option 3
 
Option 3 is to maintain overall spending at the present level but significantly to alter the 
distribution between spending sectors towards gr eater support for operationa l activities; and to 
 
EN 30   EN reduce the level of spending on activities with le ss or no immediate impact on operations.  
This would be facilitated by ch anges to the financial manageme nt procedures to allow very 
rapid decisions, outside the conventional approach  to calls for proposals, for the financing of 
operational support - effectivel y a “war chest” for OLAF. 
Option 3 would imply placing more weight on  specific objective 3 (technical operational 
support) and specific objective 1 (enhanced c ooperation), and less weight on specific 
objectives 2 and 5 (information a nd best practice exchange, and im proved academic analysis).  
The implications of reduced spending in  these areas are discussed under option 4. 
The main challenge would be to devise inte rventions which support op erational actions and 
OLAF’s operational work without crossing into areas which should prop erly be financed by 
OLAF’s administrative budget or by the admini strative budgets of Me mber States. There 
would also be a need to avoid overlap w ith the operational activities of EUROPOL 
(coordinating law enforcement actions) and EU ROJUST (coordinating j udicial procedures), 
as these develop. They each manage a budget to support specific la w enforcement actions. 
Movement in this direction therefore n eeds to be exercised with caution.   
Option 4  
Option 4 is to discontinue all or part of the programme.  The analysis below would also apply, 
proportionately to the scale of th e reduction, to changes in the allocati on of funds to particular 
sectors under Options 2 and 3 
General observations 
If EU spending in this area were simply discon tinued, the principles of the protection of the 
Budget as set out in the Treaty would be less respected; indeed the Commission would be 
sending a stark signal to that effect. While cost s at EU level would be reduced, it is unlikely 
especially in present circumstances that th e efforts of individual Member States could 
collectively make good the difference and on the re venue side of the Budget the cost of less 
effective protection in some Member States w ould be met by greater financial contributions 
from all Member States.  There would also  be negative impacts on national finances. 
Some elements could be maintained under other programmes in the areas of justice, customs 
cooperation and security, either by the transf er of part of the Hercule funding currently 
foreseen in the MFF or at the expense of other activities under t hose programmes, about 
which this Impact Assessment does not attempt to speculate. 
However, this would inevitably lose the adva ntage of the focus of the present Hercule 
programme on the key issue, central to the European  project, of the defence of the EU Budget.  
Apart from the political implicati ons of appearing to weaken comm itment to the principles of 
equivalence and close cooperation between the Un ion and the Member States in the Treaty, 
OLAF’s operational effectiveness would suffer from the loss of it s ability to use Hercule to 
network with operational partners  and so to multiply its own value by bringing the resources 
available in the Member States to bear on the problem of fr aud against the EU Budget in a 
coordinated way. 
To some extent, Member States would replace some of the activities consistent with the 
principle of subsidiarity; for example, to  procure technical equipment and commercial 
databases for their own purposes and to train fore nsic IT staff, both of which could have real 
 
EN 31   EN or tangential benefits for the protection of the EU Budget.  But these ac tivities would lose the 
focus of the present Hercule programme and c ould well cost more because of the loss of 
collective purchasing power.  
The likelihood is that for reason s of budgetary stringency and lack  of incentive (Drivers 2 and 
5) the absence of EU funding would mean that in some critical areas differences in the 
effectiveness of the defences of the EU Budge t between Member States would increase. Not 
only would the overall level of protection be lower, but the equivalence of protection would 
be less .  There could be critical problems on th e Eastern border, and the opportunities for 
criminals to move across borders  to seek out the weakest poin ts in the EU would increase 
rather than diminish. 
Reduction in the overall amount spent on prevention of cigarette smuggling and 
counterfeiting would, beyond an immediate negative impact on  public finances through 
reduced revenue,  would not be consistent wi th the specific anti-fraud, anti- smuggling and 
anti- counterfeiting objectives of the Agreemen ts with the cigarette manufacturers  which 
were at the basis of th eir willingness to make out of the poc ket payments of more than US $ 2 
billion into national and the EU Budgets ove r the next two decades. These should serve 
targeted action to improve the chances of effective law enforcement against fraud and 
smuggling.   
Observations on individual sectors 
Technical assistance:  In addition to the points made above about the consequences for 
Member States, OLAF's own investigations w ould suffer seriously from the loss of data 
sources currently financed for the Member Stat es and OLAF and mainly used on the revenue 
side of the Budget. The cost in terms of reductions of Own Resources recovered (not to 
mention reduced deterrence) would exceed the fi nancial savings many times over.  The loss of 
ground-breaking work currently under developm ent with the Joint Research Centre to 
automate analysis of trade flows so as to iden tify potential fraud against the revenue side of 
the Budget through systematic analysis of massive data sets would deprive the EU of what is 
potentially a powerful new defence for the Budge t.  No single Member State has the incentive 
to undertake this work on its own. 
Specialist anti-fraud training:  The loss of this activity woul d greatly reduce opportunities for 
networking and exchange of best practice between the services of  Member States and/or with 
their Commission counterparts.  Such contacts would be reduced to th ose which necessarily 
occur in an immediate operationa l context; indeed there would probably be fewer even of the 
latter since experience shows that operational exchanges are fostered by prior networking.  
The level of compliance of Member States with EU law on matters such as the timely 
reporting of irregularities, and their duties of cooperation with OLAF and each other on 
investigations would fall.  Realistically, Member  States would not make up the gap and to the 
extent that some might attempt to? do so this would inevitably be more from a national or 
(selective) intergovernmental standpoi nt than from an EU perspective. 
Associations for European Criminal Law and fo r the Protection of the EU Financial Interests 
(ELA) : This activity can, realistically, only be maintained at EU level.  Its loss would reduce 
the volume and the specificity of the academic and professional work which is necessary in 
order to prepare the ground for mo re integrated use of criminal  and administrative law assets 
in defence of EU financial interests.  A reduction in spending would have a proportionate 
 
EN 32   EN effect. The transfer of support to the ELA to another programme  would reduce its focus on the 
protection of the financia l interests of the EU. 
.
 
EN 33   EN Analysis of Options  
Methodology The range of options has been checked agai nst the specific and operational objectives:  
 
 Option 1  
Continue with the same level 
of funding 
Baseline scenario (BS) Option 2  
Improved objectives and 
methodology, increase  the share of 
Hercule funding in co-financed 
activities for the procurement of 
technical equipment  Option 3  
Significantly alter the 
distribution between 
spending sectors towards 
greater support for 
operational activities Option 4  
Discontinue all or part of the 
programme 
 
To enhance transnational 
and multidisciplinary 
cooperation between 
Member State authorities, 
the Commission and 
OLAF in the prevention 
and investigation of fraud. 
Relates mainly to 
operational objectives  
1: protect external 
frontier with technical 
equipment 
4: procure databases to 
support investigations, BS, has currently not the 
full intended positive 
impact  as co-financing 
rates do not always allow 
to achieve a balanced 
geographical distribution 
of funds  facilitating 
targeted projects in high 
risk geographical areas 
 
- Improved impact, as increased 
co-financing will allow to 
achieve a geographically more 
balanced distribution of funds 
facilitating targeted projects in 
high risk geographical areas  
 
++ Improved impact on  
investigations, but limits 
potential of the 
programme for 
implementing a consistent 
policy in support of 
prevention,  
 
+/- Adverse impact on chances to 
implement in a consistent way the 
action plan to fight against alcohol 
and cigarettes smuggling along the 
Eastern boarder  
 
__ 
 
EN 34   EN To facilitate the exchange 
of information, 
experience and best 
practices related to the 
protection of the financial 
interests of the EU.  
Relates mainly to 
operational objectives  
 13: conferences to 
strengthen MSt 
compliance 
,14: communicate EU- 
anti fraud policies, 
 15 : facilitate sharing of 
best practices,  
16 : raise public 
awareness of the risk of 
fraud,  
 BS,  Improved impact, as increased 
co-financing will allow to 
achieve a geographically more 
balanced distribution of funds  
 
++ Adverse impact on a 
consistent policy for 
exchange of best practices 
 
-- Adverse impact on technical 
support offered to Member States  
 
-- 
To provide technical and 
operational support for 
the law enforcement 
authorities of the Member 
States in their fight 
against illegal cross 
border activities, 
emphasising support for 
customs authorities. 
Relates mainly to 
operational objectives  BS Positive impact facilitating 
targeted projects in high risk 
geographical areas 
 
++ Improved impact on  joint 
operations, but limits 
potential of the 
programme for a 
consistent policy in 
support of prevention,  
 Adverse impact on possibilities to 
facilitate the exchange of best 
practices 
-- 
 
EN 35   EN 2: support joint 
operations 
 3: increase number of 
forensic examiners 
5:  develop with JRC 
mechanisms identifying 
significant changes in 
trade 
6: develop with JRC 
advanced risk analysis,  
7: develop with JRC an 
advanced risk analysis 
system +/- 
To enhance actions 
directed specifically at 
cigarette smuggling and 
the counterfeiting of 
cigarettes, in line with the 
Agreements signed with 
cigarette manufacturers.  
Relates mainly to 
operational objectives  
8: implement agreements 
with cigarettes 
manufacturers, 
9:provide  up to date 
equipment to detect 
tobacco contraband 
consignments  BS, has currently not the 
full intended positive 
impact  as co-financing 
rates do not always allow 
to achieve a balanced 
geographic distribution of 
funds and do not 
sufficiently facilitate 
targeted projects in high 
risk geographical areas 
 
- Positive impact facilitating 
targeted projects in high risk 
geographical areas 
+ Positive impact  in as 
much as the  cooperation 
between law 
enforcements authorities 
is concerned, negative 
impact on implementation 
of  non-law enforcement 
related objectives and 
exchange of best practices 
+/- 
 Adverse impact on a coherent 
implementation of the convened 
actions to fight against alcohol and 
cigarettes smuggling, in particular  
along the Eastern boarder  
 
-- 
 
EN 36   EN 10: close collaboration 
between anti- tobacco 
contraband law 
enforcement agencies 
 11: exchange of best 
practices related to contraband  tobacco 
products 
 12: dissemination of data 
on modus operandi in the 
illegal tobacco trade  
To support academic 
analysis of strategic legal 
issues with implications 
for the law enforcement 
area, with a view to the 
development of a broad 
consensus on how better 
to use legal resources in 
the protection of EU 
financial interests.  
Relates mainly to 
operational objectives  
17: facilitate strategic 
discussion and academic 
debate 
 18:Build networks of 
academics,  
19:facilitate exchange 
with practitioners and BS Positive impact as an 
improved methodology and 
objectives will allow  to 
simplify procedures thereby 
facilitating attribution of 
grants 
 
+ Adverse impact 
-  Disruptive impact on possibilities 
to facilitate exchange with 
academics and practitioners 
 
-- 
 
EN 37   EN academics 
 20:  Develop reflection 
on reliable statistics 
about fraud,  
21:Develop coherent 
quantitative analysis of 
fraud  phenomenon 
 
 
 
EN 38   EN  
  
Choice of option On the basis of the analysis and evaluation ma de the preferred option  is option 2, which 
scores best.  
 It is essentially an improved version of the st atus quo (option 1), but taking into account 
feedback and experience.   . It is in general positive to move into the direction of more 
support for operational activities but Art. 325 TFEU does not only oblige the Member States 
and the Union to fight against fraud, but also  to prevent fraud. As recently emphasised 
through the CAFS (COM (2011) 376, 24.6. 2011) a dist inct effort needs to be developed on 
specific prevention and detection of fraud. This includes actions for an improved exchange of 
best practices, more systematic risk analysis and exchange of strategic intelligence, awareness 
raising and training. A more cautious move towards greater emphasis on operational support 
could be determined within the concept of Option 2, through an increased co-financing for 
technical assistance and by incr easing the share of the amounts attributed to operational 
support in the implementation measures under the annual financing decisions.  
 
Option 3 ( to alter significantly the distribution between spending sectors towards greater 
support for operational activities): To concen trate on specific inve stigations and law 
enforcement actions would be problematic  as Member States are with their national 
authorities and budgets responsib le for the fight against fra ud by means of justice and law 
enforcement. It might therefore lead to co nfusion with regard to  the attribution of 
responsibilities between  Member States and the EU. The obligation to prevent fraud under 
Art. 325 TFEU could not be followed-up in such  an effective manner as until now. This could 
lead to less and less well de signed prevention measures in th e Union and the Member States 
and limit the chances to achieve a better awareness raising on th e need to proactively identify 
fraud risks and exchange of best practices.. Ther efore, the potential advantages of option 3 for 
cooperation on investigations are by la rge outweighed by its disadvantages 
 Option 4 (discontinuation) would have the undesirable effect of costing much more than it 
would save:  The actions which ar e supported in a cost effective way at a European level  and 
which serve the development of improved conditions under which close and regular 
cooperation between nation authorities may  be  organised could no l onger be assisted. It 
would also signal lack of commitment to the key principles of budgeta ry anti-fraud protection 
in the Treaty. 
 
 
EN 39   EN  
8. LINKS  BETWEEN  THE  INTENDED  INITIATIVE  AND  OTHER  POST  2013  
MULTIANNUAL  FINANCIAL  FRAMEWORK  RELATED  INITIATIVES 
In a very wide sense, the Hercule proposal  underpins the MFF by strengthening the protection 
of the Budget. 
In a number of specific areas, there is a potentia l interlink with other measures, at least in 
relation to the area s of justice,  security and of customs cooperation. 
Most obviously, the deployment of additional tec hnical, analytical and training resources to 
fight cigarette smuggling will also strengthen the EU's capacity to protect the external border effectively not only against sm uggling of high value goods but also against other forms of 
serious organised crime such as trafficki ng in human beings, and even terrorism. 
Equally, the development of the capacity of in terested legal professionals to address the 
complex issues involved in using criminal law resources more effectively in pursuit of the 
common the European objective of protecting th e budget will (continue to ) have implications 
for wider work on justice and security. Indeed  the conceptual basis for the ongoing work on a 
possible European Public Prosecutor's Office is firmly rooted in past work on the protection 
of EU financial interests through the use of the criminal law. To that end, the programme will 
also be useful in the context of the impleme ntation of recent Commi ssion communications on 
Anti-Fraud Strategy as well as on anti-corr uption and synergies between the Commission 
services involved will be reinforced. 
From the opposite angle, the fight against fra ud to the detriment of the EU Budget can to 
some extent be reinforced, tangentially or more  directly, by measures with wider application 
in the  justice and security areas, and customs cooperation; for example, through the 
development of Europol and Eurojust, through  better procedures for enforcing civil law 
judgments across national borders, and through improving the administration of justice and 
reducing corruption notably in area s of the EU – and third countri es in receipt of EU funds – 
which are at high risk. 
The indirect economic and social impact of  Hercule is not meas urable as such, but 
instruments whose effect is to protect public funds, improve  law enforcement, reduce the 
availability of counterfeit goods notably ciga rettes, and fight corr uption clearly have a 
positive social and economic impact.  In sectors particularly at risk from smuggling, such as some agricultural products (eg garlic) and industr ial products at risk from unfair competition 
(anti-dumping), the positive economic im pact can be more substantial. 
Steps have been taken during the developmen t of the Hercule programme both to guard 
against the risk of overlapping between Herc ule and other programmes and to promote the 
effective use of Hercule fundi ng in combination with funding  from other programmes where 
this is appropriate. In relation to justice and s ecurity issues, this has involved discussions with 
DGs TAXUD, JUST and HOME (see also an nex 3.3 as regards DG HOME funding of 
cybercrime training under ISEC
5). For example, in 2011 OLAF verified with DG HOME that 
                                                 
5  Previously AGIS.  
 
EN 40   EN there was no overlap between the purchase of scanners for Member State border services and 
actions envisaged by DG HOME. Another example is in the protection of the external aid 
budget, where Hercule funds have been used in  conjunction with funds administered by the 
former DG AIDCO to improve cooperation with the relevant services  of third countries 
through networking, training and staff exchanges. 
Support from programmes designed for wider impact  would be less effective in addressing the 
specific issues relating to the pr otection of the Budget (or would be  distracted from their main 
purpose) . All of them target a specific polic y area to which correspond particular groups of 
stakeholders and authorities. However, anti - fraud requires support of a variety of multi-
disciplinary objectives to prevent,  counter and fight against ille gal activities thereby requiring 
cooperation between many different stakeholders and authorities at  a regional, national and at 
a European level. 
All this said, there are strong arguments of a beneficial effect on multidisciplinary capacity 
building, technical assistance a nd training  for an instrument specifically  dedicated to fighting 
fraud against the EU Budget. 
 
EN 41   EN  
9. SIMPLIFICATION  AND  REDUCTION  OF THE  ADMINISTRATIVE  BURDEN 
As part of a general approach  to improve the efficiency of  the support granted under the 
Hercule programme and to reduce disproportionate  administrative burden on beneficiaries the 
proposal will adapt the Hercule programme to re flect simplification of the current rules which 
apply to this form of spendi ng. Consultations confir m that stakeholders would particularly 
welcome simplification. 
Specifically, revised financial management proce dures could envisage lig hter procedures for 
grants under € 50,000, an increase in the propor tion of co-financing provided from the EU 
Budget, and reduced requirement s in terms of detailed brea kdown of costs and estimates, 
more flexible criteria for eligibility, and more  flexibility in the requirements for application 
and for the reporting of outcomes. 
In terms of communication and coordination, th e increased use of working groups and other 
channels of communication between the national authorities concerned and the 
Commission/OLAF could accelerate feedback and improve the targ eting of spending, at some 
administrative cost. 
Procedures for activities to be supported in third countries should also be simplified so as to 
facilitate operationa l support in one of the highest areas of risk to the budget. 
Some other suggestions made by stakeholders ar e worth consideration, such as the possibility 
to finance, in the same call, complementar y actions (for instance, supply of technical 
equipment, training of the users and maintenance)  or the possibility to  promote annual grants 
to support the execution of multiannual activities (which are currently subject to a declining 
scale of payment). 
In addition, there is a need to address the problems caused by the exclusion of VAT from 
eligible costs for the purpose of calculation of the co-financing per centage where national 
administrations are beneficiaries. 
 
EN 42   EN  
10. MONITORING  AND  EVALUATION 
There will be a mid-term and yearly evaluatio n report produced on the implementation of the 
programme. OLAF also intends to continue its presence at the majority if not all events financed so as to obtain immediate feedback an d ensure quality.  Next to this the use of a 
standard clause requesting bene ficiaries to provide the necessa ry feedback on the impact of 
the funds provided will continued to be used and   received data will be structured and 
analysed. 
The performance of Hercule II has already larg ely been measured in terms of output, through 
feedback from clients and stakeholders desc ribed in the Annex and also by a policy of 
managing the quality of spending cl osely. In an effort to check the quality of the events and to 
verify target achievement nearly  all conferences and training events financed are attended by 
OLAF staff with financial management res ponsibilities and many are also attended by OLAF 
staff who actively contributes w ith subject relevant expertis e.  All technical equipment 
funding is discussed between the OLAF expert s and the national services concerned.   
This policy will continue. However, Specific, Measurable, Achievable, Relevant and Timed 
(SMART) objectives which were already used in  the intermediate review on the achievement 
of the objectives of the Hercule II program me submitted on 21, December 2010 under Article 
7 second sub-paragraph (Decision 878/2007/EC) a nd prepared by the OLAF internal audit 
capability, will be furthe r developed on the basis of the inte rvention logic above to the extent 
that this is possible in each sector of the progr amme.  Where the nature of some of the actions 
financed, particularly the support of the ELA and some training activities,  is such that output 
indicators have to be used, particular attention will be paid to stakeholder feedback balanced by assessment from OLAF staff wh o participate in the events 
Data will systematically be collected on the use of financed equipment and services such as 
access to databases including, where this is cost -effective, operational results which can be 
attributed to the equipment or services in  question.  Feedback from participants and 
beneficiaries will be sought on a continuous basis. 
In relation to the acquisition of technical equi pment, where there is a particular need for 
confidentiality and discretion, OLAF will system atically control beneficiaries in order to 
check that the equipment exists and is properly used for the co-financed activity. 
In addition to these monitoring activities an i ndependent mid and final evaluation is foreseen, 
in which the Commission's evaluation standards are used in order to assess the programmes' 
effectiveness, efficiency, utility, accept ability, sustainability and consistency. 
The internal reorganisation of OLAF at the beginning of 2012 will concentrate the 
management of Hercule (and Pericles) in a si ngle unit in order to reinforce programme 
management skills, including capacity to evaluate. 
  
 
EN 43   EN  
 
ANNEXES 
ANNEX 1.  BUDGETARY ENVELOPE OF THE HE RCULE II PROGRAMME (2007-2011):  
2007   13,725,000 
2008   13,800.000 
2009   14,000,000 
2010   14,100,000 2011   15,000,000  
 
EN 44   EN  
ANNEX 2.  
COMMITMENTS MADE UNDER THE HE RCULE II PROGRAMME (2007- 2010): 
The HERCULE II budget was committed in 2007-2010 as shown in the table below. 
Commitment amounts correspond to the amounts stat ed in the grant agreements as a part 
to be financed by OLAF. Final payment can be less than the committed amount, as actual costs are sometimes less than initially envisaged. 
  BUDGET TOTAL 
COMMITED Execution 
(%)* 
    
Technical 
assistance   50% of the budget 
Grants 9.455.208 9.414.489 99,6% 
2007 
Procurements 0 0  
Grants 7.089.000 7.155.941 100,6% 
2008 
Procurements 0 0  
Grants 7.570.000 7.547.636 99,7% 
2009 
Procurements 200.000 240.000 120% 
Grants 6.150.000 6.757.726 109,9% 
2010 
Procurements 100.000 0  
 TOTAL 30.564.208 31.115.792 98,23% 
 
  
 
  
 
 
 
    
 
EN 45   EN  
Training conferences and  
seminars 30% of the budget 
Grants 1.372.997 1.477.713 107,6% 
2007 
Procurements 1.325.911 1.269.237 95,7% 
Grants 1.102.000 1.100.818 99,9% 
2008 
Procurements 2.965.000 2.867.321 96,7% 
Grants 1.400.000 1.396.122 99,7% 
2009 
Procurements 2.610.000 1.917.132 73,5% 
Grants 2.200.000 2.219.599 100,9% 
2010 
Procurements 2.900.000 2.575.298 88,8% 
 TOTAL 15.875.908 14.823.240 93,37% 
    
 IT - Information technology 20% of the budget 
2007 Procurements 1.570.883 1.563.561 99,5% 
2008 Procurements 2.644.000 2.675.920 101,2% 
2009 Procurements 2.220.000 2.203.663 99,3% 
2010 Procurements 2.750.000 2.544.904 92,5% 
 TOTAL 9.184.883 8.988.048 97,86% 
* Hercule annual programme allows 20% budget flexibility between headings 
Hercule II programme: consumption level on a yearly basis: 
2007 2008 2009 2010 
100% 100% 97,22% 99,98% 
 
 
EN 46   EN  
ANNEX 3.  TECHNICAL ASSISTANCE AND INFORMATION TECHNOLOGY: RESULTS 
3.1 OPERATIONAL RESULTS OF TECHNICAL EQUIPMENT CO-FINANCED BY 
HERCULE II 
Results per year (cases where technical equipment co-financed has been used)6  
Year Quantity 
(tons) : 
agricultural products or tobacco Quantity 
(liters) : 
Alcohol  Quantity 
(liters) : Fuel 
 Quantity 
(pieces): 
cigarettes 
 Amount (EUR) 
 
Summary for 2007 
(77 detail records) 
Total year:   
 
6,57   
 
5.500   
 
1.262.900   
 
21.491.440   
 
3.462.821  
Summary for 2008 
(38 detail records) 
Total year:   
 
0  
 
500.000   
 
10.030   
 
266.766.634   
 
81.175.024  
Summary for 2009 
(29 detail records) 
Total year:  
 11,08    
 8.575.885  
 0   
 51.166.469   
 4.252.315  
Summary for 2010 
(65 detail records) 
Total year:   
 
0  
 
26.635  
 
0  
 
24.978.060   
 
12.224.885  
Summary for 2011 
(16 detail records) 
Total year:   
 
0  
 
4.786   
 
0   
 
10.126.254  
 
1.508.544  
Grand Total  17,6 tons of 
agricultural products or 
tobacco 9.113.000 liters 
of alcohol 
 1.273.000 liters 
of fuel 374.529.000 
pieces of cigarettes 102.623.000 
EUR  
3.2 X-RAY SCANNING EQUIPMEN T SUPPORTED BY HERCULE II 
Various types of scanners have been purchased  with financial support,  including large fixed 
scanners at key entry point (sea ports and borde r crossings) to scan suspect containers and 
lorries, mobile scanners which can be deployed wherever ther e is an operational need and 
smaller scanners to scan pallets and small lo ads. One Member State was awarded a grant to 
fund specialist scanning equipment to scan freight entering the EU  by train. Scanning 
technology has proved to be a very effective w eapon in enforcing custom s legislation. It is 
used on a daily basis to examine suspect loads and has been invaluable in detecting illicit 
consignments of cigarettes concea led in containers, vehicles and packages. It is too early to 
give comprehensive figures on the number of scans performed and the number of seizures 
made. This is because of the considerable time-delay between the award of a grant and a 
scanner being fully operational. Public pr ocurement procedures must be followed, the 
equipment must be ordered, delivered and tested  and staff must receiv e appropriate training. 
                                                 
6  This information, obtained from Member States, cannot be considered as complete a nd the results could therefore be superior.  
 
EN 47   EN Member State Number of Scanners 
Austria 2 
Cyprus 1 
Denmark 2 
Estonia 1 
Finland 1 
Germany 1 
Greece 1 
Ireland 1 
Lithuania 1 
Malta 1 
Poland 2 
Portugal 2 
Slovenia 1 
Spain 1 
Sweden 1 
United Kingdom 2 
3.3 COMPUTER FORENSIC TRAINING 
OLAF facilitates training for European Law Enforcement (LE) officers on how to collect, 
retrieve and analyse data on any electronic da ta carrier. It is a vast domain, requiring 
specialised knowledge and a very  high degree of IT literacy. 
OLAF has been co-financing th is kind of training since 2007. So far, th is opportunity has 
been provided to 323 LE officers ("basic" traini ng) and 320 officers (two weeks of high level 
advanced training) to 93 LE bodies /services in the EU and even to 5 acceding countries. This 
training is in line with the US based IACIS st andard (International A ssociation of Computer 
Investigative Specialists), a non-profit organisation composed  by LE people (or retired from 
LE) with a worldwide reputation. It is comp lementary to other forensic training actions 
financed by DG HOME (cybercri me training under ISEC). 
OLAF can count on their pool of high level forens ic trainers and offers the Member States a 
unique opportunity to raise their technical level and readiness to investigate complex financial 
fraud and corruption cases. Additionally, OLAF  has created a real network of forensic 
specialists all over Europe who have received the same kind of traini ng. Each training session 
is also focused to bring people together and to reinforce this netw orking established since 
2007. OLAF can call upon the participating LE se rvices, should its own forensic resources 
fall short in a specific on-the-spot check. As th e staff of these services have been trained 
according to OLAF’ own standards, the retrieval of evidence will be done in a forensically correct manner. 
3.4 INFORMATION TECHNOLO GY: AMT AND CONTRAFFIC 
a) Automated monitoring tool (AMT): number of records 
Access is by OLAF, DG J RC and Member States. 
Results: € 25,506,432 estimated revenue (C ustoms duty) at risk from OLAF exa mples. € 86,461.53 recovered, € 8,404,939 
identified, but not recovered. These figures  include VAT domain of sea-transportation. 
 
EN 48   EN Satisfaction is indicated by discussion and feedback from the last workshop, leading to a decision to draft a 4th administrative 
arrangement. There is an interesting devel opment on prices, supported by Member Stat es at the last workshop. The tool can 
now identify low price outliers (i.e. potential under declarati ons) for all Tariff chapters. Resu lts will shortly be published to 
Member States. 
 
This figure illustrates the count of number of records consulted in Theseus, broken down by number of records for each date 
year. The colour shows details about account category i.e. : Commission, Member States and OLAF. The downward trend 
may give a wrong impression, but the projec t went through a learning curve. AMT now offers more alerts than ever before, 
but filtering tools guide the user to the more relevant alerts.  
b) Contraffic  
Contraffic aims to develop and test an advanced risk-analysis system in the maritime 
transportation domain capable of automatically checking the origin of the merchandise declared by importers, in order to detect po tential fraudulent cases of the type "false 
declaration of origin". The benefits at EU le vel are to complement national risk analyses. 
Established national risk analyses are based on "local data" that mainly derive from 
information about the entities i nvolved in the transaction and on the declarations given by the 
importer. This national risk-analysis can be enha nced if global risk-ind icators - related with 
the itineraries of the containers are used. In orde r to use the itineraries of  containers as a first-
class risk-indicator, there is the need to de velop a repository of container movements on a 
global scale. Clearly, to achieve economies of scale, this type  of development should be done 
centrally and made available fo r national customs organizations. 
 
 
EN 49   EN Contraffic: results obtained so far 
Currently the central repository of Contraffic handles over 660 millions of container events (around 30% of the current 
worldwide activity), referencing over 12 million containers. This repository is regul arly used by EU customs authorities: 
33% of users declared to use it on a weekl y basis, and 22% consult it daily.  The useful ness of the system is also recognized 
by the user community: 50% consider that  the information extracted from Contraffic  is useful in their operational customs 
work, while 22% consider it of crucial importance. In addition, a total volume of more than one million customs import-
declarations have been analyzed, and  2 251 instances of mismatches between the origin declared by the importer and the 
geographically origin inferred by Contraffic  were detected. Out of these, 244 con cerned the transport of "sensitive goods". 
By taken into account the TARIC regime applicable to importation of sensitive goods, the abnormal de clarations were further 
manually analyzed by OLAF in order to a ttribute a "suspicious level" (none, high , medium and low). On the data analyzed 
until May 2010, out of 206 declarations, 14 were considered  highly suspicious and transmitted to a national customs 
authority for further investigation. Contra ffic has demonstrated that route-based risk analysis can be effective in the 
detection of fraud of the type "false declaration of origin". 
3.5 PROCURED ACCESS TO DATABASES 
a) Global Trade Atlas Database (GTA ) 
GTA is used to help identify potential Customs fr aud and support, either di rectly or indirectly, 
the Member States. Access is by OLAF and Memb er States. There is an increasing Member 
States database access (see below).  
Total usage split by OLAF and 11 Member States: 
GTA: OLAF & Member State Usage
02004006008001000120014001600
2007 2008 2009 2010 2011
yearnumber of loginsOLAF
Member States
 
Results: € 14,275,000 from 3 OLAF cases.  
OLAF case example 
A product declared as country A origin, su spected to be country B origin subjec t to anti dumping and countervailing duties €  
9,100,000 ADD and € 1,500,000 Custom s duty. Information was received from Me mber State authorities about a shipment of 
suspect country A product. GTA checks reve aled the exact same quantity being shippe d from country B to country A shortly 
before the country B to EU sh ipment, active investigation. 
 
EN 50   EN b) China Trade Information (CTI) and Tips Software Services 
The information extracted from the Chinese da tabase (CTI) is valuable, not only during the 
investigation itself, but also in the evaluati on stage of a case. It helps OLAF case handlers 
decide whether or not a case should be opened, provides a suppor t for evidence in cases where 
several fraud mechanisms are invol ved and it is also useful to identify the Chinese exporters 
concerned. Some OLAF cases were dependent on the Chinese database to prove the fraud. 
The use of the information contained in th e database has led to the success of many 
operational cases, which in turn led to the recove ry of important amounts, some leading to jail 
penalties for the individuals i nvolved in the fraud scheme.  
OLAF case example 
A specific case fully depended on the Chinese database (and GTA) . The case concerned the evasion of customs duties (12%) 
for textile garments, which had been falsely declared as origi nating in Country A (preferential origin, 0% duty). Thanks to 
the Chinese database, OLAF could demonstr ate that, for example, cashmere pullovers exported from Country B were cleared 
for customs purposes in Country A as yarn in order to deceive the Customs of that Country. The aim was to pretend that the 
companies concerned in Country A produced  textiles from Country B yarn and t hus obtained the Country A preferential 
origin. Instead, however, these companies merely re-exported the Country B ready made garments previously imported. The 
fact that also the bills of lading cont ained wrong information concerning the descri ption of the goods exported from Country 
B to Country A made the Chinese data base valuable. It was the only source of obtaining data to demonstrate the actual 
nature (i.e. ready made garments instead of  raw-material) of the goods supplied from  Country B to Country A and from there 
to the EU. The duties evaded were about € 30 million.  The case faced a number of appeals and the Commission is now 
defending it at the ECJ. 
The same principle and results apply for deta iled shipment records of Indian imports and 
exports (Tips). 
c) Access provided to other main databases  
These databases, supporting the customs activitie s in the Member States as well as OLAF 
activities, cover the following information domains: Maritime - transportation (Lloyds – 
SEAWEB (SEADATA) and AISDATA; Manife st - data (Tradebytes – C-HAWK); 
Companies search tool (DUN & Bradstreet GRS); Companies information (full report) (DUN 
& Bradstreet DBAI). 
       
 
 
 
 
EN 51   EN Lloyds – SEAWEB (SEADATA) and AISDATA : 
This database is maintained to support the requirement of  OLAF and the Member States to information about ship 
characteristics, ownership, casualty, ship movements current  and historic and AIS - automatic identification System - 
information. The AIS module rounds up w ith real-time positions of individual ve ssels and fleets from the AIS network 
receivers. This gives the possibility to OLAF  and the Member states to identify and monitor in real time suspected vessels and 
goods that are carried. This database also gi ves the possibility to check in the hist orical movements of the ships where a 
particular ship was in the past. This is mostly  used when a fraud investigation is carried out. 
Tradebytes – C – HAWK (Manifest data) : 
This Allows special searches based on container number, bill of lading numbe r, vessel name, consignee & address name, 
shipper, lading Port & Country, departure or  arrival date, description, harmonised c ode etc. (unique in combining the most 
possibilities with search criteria). The information represented in the database is important for OLAF and the Member States 
for risk assessment and targeting. The company has focuse d its data source acquisition efforts on geographic regions that 
are of interest for the investigat ion partners in the Member States. 
GRS (Global Reference Solution) - (Search Tool) : 
GRS has a worldwide coverage of more than 196 million compan ies (more than 81 million in Europe); it includes historical 
information on active companies as well as on out-of-business companies. GRS, a customized application, contains more 
detailed features and advanced searches in the identification of related business, for instance in fraud tracking. Owners, 
Shareholders and company trees can be immediately displayed. The subject of the GRS is the acquisition of “Basic Company 
Information”, to be used primarily in s upport Member States investigative work.  
DBAI  (Detailed companies information): 
After company identification via the GRS database, a full fina ncial in depth analysis is available. DBAI allows the 
verification of the existence and backgr ound of any business anywhere in the world, quickly and easily (and therefore the 
verification of the existe nce, history and financial stabilit y of a potential recipient of s ubsidies, funds, grants, etc.). 
 
OLAF cases  
Intelligence support is essential for in vestigations, for example as  regards the most current fraud mechanisms applied in 
poultry cases (misdescription of the species  and of the origin), by establishing the origin of a container consignment through 
container tracking and company in telligence on parties concerned (the shipper/pr oducer in a third Country, the consignee in 
the EU and possible links to other economic operators involved ). In the initial phase of a new OLAF case, such logistical 
information is vital in order to take further appropriat e actions with OLAF partners in the Member States.  
In the context of one OLAF in vestigation into international cigarette smuggli ng, the support provided through data collected 
in the Dun and Bradstreet database, led on e Member State Customs to investigate and identify assets of almost € 14 million 
that had been generated from cigarette smuggling. Without this information from the database it would not have been 
possible to identify the money laundering circuit which extend ed though several countries and fiscal heavens. Information on 
suspect containers is also a vital tool for OLAF and the Member  States to fight international  cigarette smuggling. Several 
hundred million illicit cigarettes are seized ea ch year as a direct result of informa tion on container movements provided by 
OLAF's Information Support Office (ISO). 
 
 
EN 52   EN  
ANNEX 4 TRAINING: SOME HERCULE II SUCCESS STORIES 
 
Guarda di Finanza (IT): specialised anti-fraud training (2010 grant agreement) 
The training activities were organised be tween the Italian and the Bulgarian authorities to pass on to the latter the 
experience acquired by the Guardia di Finanza. The aim wa s to raise awareness and share knowledge in the areas of 
investigation techniques, money laundering,  fight against fraud in the structural funds and common agricultural policy. All 
participants were of the opinion that the training was a ver y challenging experience; they learnt a lot about the Italian 
system. The event was attended by high l evel representatives: th e Bulgarian Deputy Prime Minist er and Minister of Interior 
and the Italian ambassador. The ambassador will explore further possibilities of cooperation between the two countries (in 
particular regarding further cooperation between the Guarda di Finanza and the Bulgarian AFCOS). The project was 
published on various websites.  
SK Customs Directorate (2010 grant agreement) 
This action focused on improving the skills, qualifications and work  of customs officers at the Bratislava Customs Office to 
detect tax fraud, smuggling and counterfeiting of tobacco products , as well as to prevent counterfeiting of tobacco products 
and related crime on the territory of Slovakia and in the EU. Twenty customs officers from the Slovak Customs 
administration were trained in order to fight fraud more effectively, to impro ve the quality of their investigation and to 
ensure that they take effe ctive measures. These two one -week cycles are a good exampl e of efficient training.  
Conference dbb Akademie (DE)  (2010 grant agreement)  
This conference in Germany included workshops on "Corrup tion prevention in the midst of  a crisis" and 4 specialised 
workshops on "Whistle-blowing", "Corruption prevention in th e German municipalities", "Human  resources development in 
corruption prevention efforts" and "Ethics of fices for the public administration" with the aim to provide a wide range of 
participants with up-to-date information on OLAF’s work on prot ecting the EU’s financial inte rests, bring together all 
involved in the fight against fraud and corruption in Eur ope, solidify the joint fight against fraud and corruption and 
facilitate establishment of networks between Member States, acced ing countries, candidate countries and third countries, 
exchange information, strategies and examples of good practice in combating fraud and corrupti on in Europe and thereby 
provide greater transparency, in order to  minimise fraud and corruption and protect th e EU’s financial interests as well as 
hold intensive discussions and make sugge stions. The conference had a transnati onal character with 34 nationalities 
represented, 17 Member States, 3 candidate countries, 3 Ba lkan countries, 1 EFTA/EEA Country, 1 Russian participant, 1 
Neighbourhood policy-country, 2 other countries (CH, USA) and a range of high -level speakers. An evaluation study was 
published.  
Presidency Conference (SE) (2009 grant agreement)  
This seminar was organised in the framework of the Swed ish Presidency to debate and exchange ideas on combating 
financial crime in the EU, including the pr otection of the financial interests of th e EU (from a practical perspective). The 
conference mainly discussed the operational  challenges in investigations for police and judicial authorities.  It also sought t o 
provide up-to-date information on new institutional tools and to inform on the work of the other national law enforcement 
organisations in the EU. The partnership between the private an d the public sector was also discussed. There was a lot of 
discussion of the Lisbon Treaty (Establishment of a Europe an Public Prosecutor's Office (A rticle 86 TFEU). 18 Member 
States and 1 representative of Li echtenstein participated in the event. The participants were fr om policy making bodies, EU 
Institutions (OLAF, Eurojust, Europol), Council of the EU), Law enforcement (operational and training), judges and 
prosecutors.  
Universidade de Lisboa (PT) (2009 Grant agreement) 
This conference was the first co-financed Hercule II proj ect organised by a university on  external aid fraud. 31 of 
nationalities were represented in the fr amework of ANCORAGE-NET, de aling with a new domain of intervention for national 
law-enforcers which requires a solid networ k of cooperation at the international l evel, as well as an understanding of the 
dynamics of laws, institutions and proce dures across different jurisdictions. The main objective was to raise awareness and 
understanding for the agencies involved, in the issues associated  with aid funding, and the problems associated. Information 
regarding the co-financed conference was published on-line and the materials were di stributed amongst Portuguese 
 
EN 53   EN university departments, embassies, EU re presentation in Lisbon, media and state agencies and published at the ICS-UL 
website. Transparency Internati onal (TI), Centre for Public Integrity (CIP) and the Portuguese Platform of NGO's were 
asked to disclose the results of the conference.   
PL Ministry of Finance Internal Control Dept. (2008 Grant agreement)  
The objective of this action was to improve the co-operation between DE and PL surveillance teams, specifically in the area 
of cross-border movements of excise goods (mainly cigarette s). This co-operation comprised determining phraseology, 
communication methods, lines of responsibility, equipment and ultim ately the procedures to be adopted in terms of covert 
surveillance. DE and PL officials from the border areas were invo lved in the action. Post-event feedback has shown that this 
event was very effective:  OLAF was advised of two occasions on which th e procedures were applied in live situations, 
underlining the value of the training. It was a highly operational ma tter fully in line with what Hercule II is targeting. This  
event was beneficial to both sides. With these results in mind, it is very likely that wider use will be made for future joint 
actions.  
 
EN 54   EN ANNEX 5 
REPLIES  TO THE  2011  SURVEY  ON  THE  USE  OF DATABASES  SUPPORTED  BY 
HERCULE  II 
1.  Percentage of users using the database from all survey replies
0%10%20%30%40%50%60%70%80%90%100%
 Lloyds - SEAWEB C-HAWK Full reports D&B GRS GTAyes
no
I don’t't know
2. How often do you use this database?
0%10%20%30%40%50%60%
 Lloyds - SEAWEB C-HAWK Full reports D&B GRS GTADaily
Weekly
Monthly
Occasionally
Never
 
EN 55   EN 3. Rate the quality of provided information in this database.
0%10%20%30%40%50%60%70%
 Lloyds - SEA WEB C-HAWK Full reports D&B GRS GTA1- Insufficient
2- Poor
3- Average
4- Above average
5- Excellent
4. Rate the usefulness of this database
0%10%20%30%40%50%60%70%
 Lloyds - SEAWEB C-HAWK Full reports D&B GRS GTA1- I nsufficient
2- Poor
3- Average
4- Above average
5- Excellent
 
 
 
EN 56   EN  
ANNEX 6   DATA ON THE EXTENT OF FRAUD 
 
Number of irregulari ties values — 2010 – 
 
Number of 
irregularities reported Total estimated financial 
impact of irregularities, including suspected fraud (€ 
million) Estimated financial impact 
of suspected fraud only (€ million) Recovered 
amounts(€ million)  
 
Area 
2009 2010 2009  2010 2009 2010 2010 
Agriculture 1621 1825 125 
(~0.24 % of 
allocations) 131 (~0.23% 
of allocations) 13.3 
(~0.03% of 
allocations 69 (~0.12% 
of allocations) 175 
Cohesion 
Policy 4737 7062 1 183 
(~2.44% of 
allocations) 1550 (~3.15% 
of allocations) 109 
(~0.23 % of 
allocations) 364 (~0.74% 
of allocations) 611 
Pre-
accession funds 706 424 117 (~  3.8% 
of allocations 83(~5.26% of 
allocations) 57 (~0.78% 
of allocations) 41 (~2.6% of 
allocations) 14 
Direct 
expenditure 705 1021 27.5 
(~0.17 % of 
allocations) 43 (~0.27% of 
allocations) 1.5 (~ 0.01 
% of 
allocations) 4 (~0.02% of 
allocations) 25 
Total 
expenditure 7769 10332 1.452,5 
(~1.13% of allocations) 1.807 (~1.27% 
of allocations) 180.8 (0.13 
% of allocations) 478 (~0.34% 
of allocations) 825 
 
Source Commission Annual Report on the Protection of the Financial Inte rests of the EU for 
2010 
   
 
EN 57   EN Headline data on OLAF investigations and operations (Source, OLAF Operational Report 
for 2010)  
 
Investigations and operations by sector and type  and cases under assessment at the end of 
2010 
 
Major sector Co-
ordination 
Case Criminal 
Assistance 
Case External 
Investigation 
Case Internal 
Investigation 
Case Mutual 
Assistance 
Case Total Assessment 
Agriculture 
(expenditure + 
revenue) 37 44 29 0 7 117 101 
Cigarettes 16 9 0 0 0 25 4 
Customs 17 1 13 0 6 37 8 
Direct Expenditure 0 2 43 0 0 45 58 
EU Institutions + EU 
Bodies 0 7 24 108 0 139 94 
External Aid 0 3 74 0 0 77 82 
Structural Funds 2 5 46 0 0 53 201 
Total 72 71 229 108 13 493 548 
 
 
Amounts recovered from closed financial follow ups in € million 
 
  
Major Sector 2010 
Agriculture 11,9 
Customs 7,1 
Direct Expenditure 10,6 
EU Institutions + EU Bodies 0,1 
External Aid 5,3 
Structural Funds 32,9 
Total 67,9 
 
EN 58   EN  
Total amounts recovered by 31/12/2010: € 1.089 bn 
 
Recorded Court decisions on OLAF-related cases 
 
2010 Recorded 
Court 
Decisions Cases Values 
Suspended 
Sentence  
(months) 15 1.201 
Imprisonment  
(months) 22 1.503 
Financial 
Penalty  
(€ millions) 133 1.467,7 
 
 Total cases completed by OLAF by 31/12/2010 
 
• Cases concluded at the end of the assessment phase: 2890  
• Investigation cases: 1447  
• Assistance and coordination cases: 812 
Total amounts recommended by OLAF for recovery by 31/12/2010: € 1.922 bn