REPORT FROM THE COMMISSION - PROTECTION OF THE FINANCIAL INTERESTS OF THE COMMUNITIES AND FIGHT AGAINST FRAUD - ANNUAL REPORT 2001 -

TABLE OF CONTENTS

Summary

Title 1 -The activities of the Community for the Protection of the Communities' financial interests and the fight against fraud

1. MAJOR DEVELOPMENTS IN COMMUNITY POLICY IN 2001

2. EXAMPLES OF INTERNAL AND EXTERNAL COOPERATION AND PARTNERSHIP WITH THE NATIONAL AUTHORITIES

2.1 Sugar export to the OCT and reimportation of sugar and sugar mixtures into the European Community.

2.2 Abuse of the dairy quota systems.

2.3 Investigation for alleged forgery and fraud by a group of NGOs (non-governmental organisations)

2.4 Past experience in the applicant countries: Poland

3. MONITORING THE 2001-2003 ACTION PLAN

Title II: Measures taken by the Member States for the implementation of Article 280 of the EC Treaty

4. TEXTS CONTRIBUTING TO THE IMPLEMENTATION OF ARTICLE EC 280 - PRINCIPAL LEGISLATIVE DEVELOPMENTS

4.1. Own resources: principal legislative developments

4.2. Agricultural expenditure: principal legislative developments

4.3. Structural measures: principal legislative developments

5. COMPLEMENTARY TEXTS FOR THE PROTECTION OF COMMUNITY FINANCIAL INTERESTS

5.1. What is the state of ratification by the Member State of the Convention of 26 July 1995 on the protection of the European Communities' financial interests and its protocols -

5.2. Where appropriate, has the Member State taken steps to transpose this Convention and these protocols- (This relates to measures taken after the adoption of the 2000 Annual Report in May 2001).

6. COORDINATION OF SERVICES CHARGED WITH THE PROTECTION OF FINANCIAL INTERESTS WITHIN EACH MEMBER STATE

6.1. Own resources: coordination and cooperation mechanisms, possible difficulties at legislative or regulatory level

6.2 Agricultural expenditure: coordination and cooperation mechanisms, possible difficulties at legislative or regulatory level

6.3. Structural measures: coordination and cooperation mechanisms, possible difficulties at legislative or regulatory level

7. COMMENTS ON COOPERATION BETWEEN THE COMPETENT AUTHORITIES OF THE MEMBER STATES (Article 280(3), of the EC Treaty)

8. RECOVERY

8.1. Legislative mechanisms and administrative provisions for the judicial authorities to communicate the outcome of criminal proceedings to the administration, for the purposes of recovery

8.2. Measures to improve the recovery of resources and of undue expenditure -links between the control and investigation authorities and those charged with recovery

8.3. Daily liaison between the control authorities and those responsible for recovery

Title III: STATISTICS AND ANALYSES

INTRODUCTION

9. THE SITUATION IN 2001

9.1 Traditional Own Resources

9.2 Agricultural expenditure (EAGGF Guarantee)

9.3 The field of structural measures

9.4 Cases under investigation by OLAF

10. SPECIFIC ANALYSIS

10.1 The field of traditional own resources

10.2 Agricultural expenditure (EAGGF Guarantee)

10.3 The field of structural measures

11 FINANCIAL FOLLOW-UP

11.1 Traditional own resources

11.2 EAGGF Guarantee Expenditure

11.3 Structural Actions

11.4 Direct Expenditure (including external aid)

REPORT FROM THE COMMISSION

PROTECTION OF THE FINANCIAL INTERESTS OF THE COMMUNITIES AND FIGHT AGAINST FRAUD - ANNUAL REPORT 2001

Summary

The Commission submits herewith its third annual report on the protection of financial interests of the Communities and the fight against fraud, in accordance with Article 280(5) of the EC Treaty. To give an account of the shared responsibility of the Member States and the Community, the report presents in turn:

- an evaluation of the Community's legislative and regulatory activity in 2001, accompanied by an illustration of cooperation with the Member States, the applicant countries and the third countries (Title I);

- a presentation of the measures taken by the Member States pursuant to Article 280 of the EC Treaty, in particular legislative measures and measures concerning the organisation of enforcement authorities (Title II);

- a statistical evaluation of the results of activities to protect financial interests and combat fraud undertaken by the Member States and the Commission in 2001 (Title III).

The aim of this document is to present the combined action of all those involved in the protection of the Community's financial interests and to give concrete expression to the aims of general and shared responsibility of the Member States and the Community. The report considers the action undertaken by all the national authorities and the Commission, both in prevention terms and in terms of the fight against economic and financial crime to the detriment of the Community's interests. It follows the broad approach of the Action Plan [1] and in this sense it is not strictly limited to actions based on art. 280 of the Treaty.

[1] Commission Communication - Protection of the Communities' Financial Interests - Fight against Fraud : Action Plan for 2001-2003 (COM(2001) 254 final).

Lastly, it meets the need for permanent and transparent evaluation of Community policies to which the Commission, Parliament and the Council are all attached [2]. Moreover, the Commission regularly meets with representatives of national authorities as well as with members of its own services in order to continue to improve the evaluation of the protection of financial interests [3].

[2] Conclusions of the ECOFIN Council of 7 May 2002 point 13 and Resolution of the European Parliament on the Annual Report 2000, para. 2.

[3] The Advisory Committee for Coordination for Fraud Prevention met three times in 2001, just like the Working Group Article 280. The services of the Commission met twice to this purpose in 2001 as well.

Title 1 -the activities of the Community for the Protection of the Communities' financial interests and the fight against fraud

1. Major developments in Community policy in 2001

The Commission established its general political objectives regarding the protection of financial interests in the Overall Strategic Approach, adopted on 28 June 2000, [4] the scope of which is multiannual (2001-2005). The aim of the Community approach is to develop a legislative and regulatory framework covering all Community policies and allow exchanges and cooperation between those actively involved in the Commission and the Member States, in accordance with the principle of shared responsibility laid down by Article 280 of the EC Treaty. This approach was approved by the Economic and Financial Affairs Council on 17 July 2000 and by Parliament in its Resolution of 13 December 2000 [5].

[4] The four strategic guidelines are to: promote an overall anti-fraud policy; promote a new culture of cooperation with the competent authorities of the Member States; encourage an inter-institutional measure to prevent and combat corruption and strengthen the credibility of the European institutions; strengthen the criminal judicial dimension in accordance with the new obligations resulting from the Treaties (COM(2000) 358 final, 28.6.2000).

[5] Council conclusions of 17.7.2000 on the Commission communication concerning the protection of the financial interests of the Communities - Fraud prevention: for an overall strategic approach (document 10344/00 FIN 273). Parliament Resolution of 13.12.2000 on "Strategic Overall Approach" (Doc. A5-0376/2000).

On 15 May 2001, the Commission adopted a 2001-2003 Action Plan to implement the political objectives defined by the Overall Strategy and allow the presentation of tangible and measurable results. Parliament and the Council welcomed the method followed in the Action Plan for the implementation of the Strategy and approval the proposed formula of regular evaluation and monitoring.

1.1. Prevention provides the key to an overall and coherent anti-fraud policy. This is why the Commission developed the preventive measures to take into account the protection of financial interests right from the legislative drafting stage, an approach welcomed very warmly by Parliament and the Council. [6] The Commission, under the White Paper on Commission reform [7] (Action 94), developed an approach intended to ensure "fraud-proofing" of instruments or measures concerning the management of the Community funds. This action seeks to identify weaknesses in Community legislation and contractual mechanisms which certain external operators are keen to exploit [8]. These weaknesses are then corrected in the course of preliminary review of sensitive legislative drafts, in the light of lessons learned on the ground, and OLAF is routinely consulted. [9]

[6] Conclusions of the Economic and Financial Affairs Council of 15.6.2001 (document 9270 FIN 169). In its Resolution of 29.11.2001 on the annual Report 2000, European Parliament makes fraud-proofing of new legislation one of the four major measures likely to bring a qualitative leap forward in the efforts to combat (Doc A5-2001-393).

[7] Commission Reform - White Paper (COM(2000) 200 final/2 of 5.4.2000).

[8] Commission Communication concerning fraud proofing of the legislation and contract management adopted on 07.11.2001 (SEC (2001)2029 final).

[9] Parliament Resolution on the annual Report 2000 and Council (Conclusions of 15 June 2001) have noted the value added by involving OLAF in the fraud-proofing of legislation.

This approach is concerned as a priority with horizontal initiatives that affect all Community policies and are of interest to all those involved in implementing them. Among those, public procurement is a field where the Commission and Member States are equally interested in an effective dissuasion and warning mechanism. This constitutes one of the issues of the proposal for a Parliament and Council Directive on the coordination of procedures for the award of public contracts and of the specific initiative on an information exchange system between the Member States [10]. Work on these proposals is continuing in the Council. In addition, the Commission has proposed specific antifraud provisions for the recast of the Financial Regulation which has been adopted on 25 June 2002.

[10] In compliance with the action programme on organised crime established by the high level group created by the European Council of Dublin in December 1996, and its political orientation N° 13 (adopted by the Council on 28 April 1997, OJ C251 of 15.08.1997).

To protect the authenticity and credibility of the common currency, the Council, on a Commission proposal, adopted Regulations Nos 1338/2001 and 1339/2001 on 28 June 2001 [11]. These Regulations provide the legislative basis for cooperation between all the institutional actors concerned (ECB, Europol, Commission/OLAF [12]), the central offices and other competent authorities of the Member States, and non-member countries. As regards the protection of the euro by the criminal law, the Commission submitted to the Council a first report on the implementation by the Member States of the provisions of the framework Decision. [13] In general, Member States discharged their obligations. In December 2001, the Council adopted the Pericles programme [14]. This programme co-finances transnational and multi-disciplinary projects on exchanges, assistance and training, for the protection of the euro against counterfeiting.

[11] Council Regulation (EC) No 1338/2001 of 28 June 2001 defining the measures necessary for the protection of the euro against counterfeiting - OJ L 181, 4.7.2001; and Council Regulation (EC) No 1339/2001 of 28 June 2001 extending the effects of the Regulation No 1338/2001 defining the measures necessary for the protection of the euro against the false coining to the Member States which did not adopt the euro as a single currency - OJ L 181, 4.7.2001.

[12] Concerning false euro coins, a European Technical and Scientific Centre (CTSE) has been set up in accordance with the exchange of letters between the President of the Council and the French Minister for finance, managed by two Commission/OLAF officers.

[13] Commission Report based on Article 11 of the Council Framework Decision of 29.5.2000 to strengthen by criminal and other penalties the protection against counterfeiting for the entry into service of the euro (COM (2001) 771 final of 13.12.2001).

[14] Council Decision of 17.12.2001 drawing up an action programme on exchanges, assistance and training for the protection of the euro against counterfeiting ("Pericles "programme) (Decision 2001/923/EC) - OJ L 339, 21.12.2001.

2001 also saw the adoption of the Directive on the prevention of the use of the financial system for the purposes of money laundering [15]. The purpose of this Directive is to update the 1991 Directive and extend its scope by a number of amendments, the main ones of which are as follows: expansion of the prohibition of money laundering to cover not only drug trafficking but also organised crime and a wide variety of serious offences, on the other hand extension of the obligations of the Directive to certain non-financial activities and professions.

[15] Directive 2001/97/EC of the European Parliament and the Council of 4.12.2001, amending Directive 91/308/CEE of the Council on prevention of the use of the financial system for the purpose of money laundering.- OJ 344 of 28.12.2001

The desired overall nature of the approach to effective protection of financial interests requires the applicant states to take part in the Community policy to achieve prevention aims. From this point of view 2001 was a year of consolidation of efforts made by the Commission to prepare for enlargement by encouraging the establishment of financial management and control structures, including internal audit, in the relevant central and regional administrations. The emphasis in 2001 was to set up internal audit units in all Community funds management centres in both central and regional administrations.

The correct use, control, monitoring and the evaluation of Community pre-accession financing (in particular under the PHARE, ISPA and SAPARD programmes) constitute the key indicator of the applicant countries' capacity to implement the 'acquis communautaire' as regards financial control. With regard to fraud prevention, the constitution in Poland of a specific office responsible for the protection of the Community's financial interests began early in 2001. Experience gained this year will be used when corresponding structures are established in all the applicant countries.

In addition, the conclusion of an agreement by the Community and the Member States with Switzerland covering the fight against fraud was given priority status, with a view in particular to remedying the difficulties of judicial assistance in tax and customs matters. On 14 December 2000, the Commission had been given a mandate to negotiate with the Swiss authorities. Negotiations took place during the whole year 2001, but they have not yet led to results.

For the aspect relating to the strengthening of legal instruments governing detection, checks and inspections and penalties, as far as internal measures are concerned, the majority of decisions in principle taken at the end of 2000 were implemented by the Commission in 2001, in particular with a view to improving financial management [16]. As regards direct management by the Commission and the management of Community funds by the Member States, following the Communication on White Paper action 96 (More effective management of the collection of unduly paid funds in the field of direct expenditure), the principle of increased awareness of authorising and accounting officers was laid down. The Commission is preparing implementing provisions to ensure a sound distribution of tasks between authorising officers, accounting officers, the Legal Service and OLAF.

[16] These measures are essentially based on Chapter V - XXIV of the White Paper on Commission Reform, concerning renovation of financial circuits and financial control and the creation of an Internal Audit Service and Internal Audit Capabilities (IAC).

The Structural Funds (Action 97 of the White Paper) obtained an improved legal framework for financial management with the adoption of two Regulations applicable to the new programming period in March 2001 [17]. The Member States' obligations as regards monitoring of projects and payments were specified in these instruments. The strengthening of financial control for the new programming and the finalisation of the interdepartmental protocols provided for in the recommendations of the White Paper on Reform of the Commission are to provide a solution to comments made by the Court of Auditors, [18] in particular on the notification and monitoring of irregularity cases.

[17] Commission Regulations (CE) 438/2001 and 448/2001 of 2.3.2001 (OJ L 63, 3.3.2001, and OJ L 64, 6.3.2001) laying down the detailed rules for the application of Council Regulation (EC) 1260/1999 on the systems of management and of control on the one hand, on the procedure of implementation of the financial corrections on the other hand.

[18] Report 10/2001 relating to the financial control of the Structural Funds (OJ C 314, 8.11.2001). In its Resolution on the Commission 2000 Annual Report, Parliament was alarmed at the very incomplete character of information provided the Commission on the irregularities in certain fields of the Structural Funds.

1.2. The aim of efforts to develop a new co-operation culture with the Member States is to draw the conclusions from the shared responsibility of the Community and the Member States for the protection of financial interests. The purpose of the concept of the OLAF as a platform of services is to set up a genuine long-term partnership with the Member States, [19] to facilitate synergy between the Community and national levels, having regard to the principles of proportionality, subsidiarity and effectiveness.

[19] In its Conclusions on the overall Strategy, the Economic and Financial Affairs Council stressed its importance.

From the Community point of view, OLAF must be able to respond to the demand from the Member States for better fraud prevention. To achieve this objective, without prejudging its Community prerogatives, the European Anti-Fraud Office is organising itself to give practical effect to the concept of the "Community platform of services", reflecting its responsibilities and tasks in organisational terms and making the internal distribution of tasks more visible. Stabilised in these terms, the added value that the Community level can supply will be more explicit and it will be easier to satisfy the national authorities' need for an interface.

An important step in consolidating OLAF was taken in 2001 with the establishment of an Intelligence Directorate which, by developing strategic and operational analysis, will help to improve the Commission's operational strategy and to assist the national administrations to define their priorities in the fight against fraud. With regard to information on the detection of fraud and irregularities from the Member States, this new directorate should make it possible in the long term to improve the quality of the information provided by the Member States. As explained at Title III of this report, the setting up of new computer modules for the notification of frauds and irregularities was accompanied by training activities in the Member States throughout 2001. OLAF also organised, jointly with the national administrations, some twenty training sessions on different aspects of the fight against fraud, to enhance the exchange of best practices and to fulfil specific needs.

In addition, a unit of magistrates and judicial advisers was set up in the Office to monitor OLAF investigations, among other things. By incorporating the administrative and judicial dimensions, this expertise will make it easier to integrate the Office into the broader network of national actors concerned. This mainly means the customs and tax authorities and the police and prosecution authorities, whose assistance is requested by the Office and who also require assistance, if financial interests are to be given the fullest possible measure of protection, including protection by criminal law.

Moreover, OLAF is pursuing reflections with the Member States to give the Advisory Committee for the Coordination of Fraud Prevention (CoCoLaF) its full dimension. The frequency of meetings and the structuring of the Committee's work increased notably in 2001, with a view in particular to deepening the dialogue with national authorities. The ad hoc group of national experts on counterfeiting boosted the Commission's expertise in preparing a common legislative mechanism in this field. And the ad hoc "Article 280" group made it possible to bring the experts of the Member States together to work specifically on the annual report so as to make the procedure for drawing up of the Report provided for by Article 280 of the Treaty more transparent and develop the participation of the Member States in this procedure more fully. In addition national experts on counterfeiting enhanced the Commission expertise to set a legal framework in this field.

The Commission recently joined with ten Member States in commencing an action in the US courts to combat massive threats of cigarette smuggling and organised crime, including money laundering, in the European Union. These illicit activities seriously undermine the common vital interests of the Community and the Member States. In this case the Commission acts as a service platform, by offering the Member States its assistance in proceedings in the courts of a non-member country, and thus facilitates a coordinated initiative by the Member States. The Commission serves as the Member States' legal representative in these proceedings, and is responsible for coordinating the action of the Member States and liaison with the U.S. lawyers representing the Community and the 10 Member States in the U.S. court.

In addition, within the framework of its own Resource controls, the Commission carried out, during 2001, verification missions in all the Member States on the specific topic of the Treatment of the mutual assistance messages. The purpose of these missions was to check that the national systems and the procedures put in place by the Member States ensure adequate protection of the traditional own resources while at the same time contributing to effective collaboration with the Commission. The subject report made on this topic leads to a positive conclusion.

Additionally, in the field of the traditional own resources, the Commission, and more particularly the Directorate-General for the Budget, continues its work under the Joint Audit Arrangement [20], in close co-operation with the internal audit services of the Member States. Member States take an active part in the work of the Audit sub-group some of which are very closely involved in the development of audit modules. With regard to the implementation of methodology by means of joint audits carried out by the Member States, the assessment for 2001 is very positive, in particular in view of the results which confirm the method. In particular, Denmark and Austria carried out a "joint audit" on the external transit procedure and the Netherlands continued their action initiated in 2000, on the topic of "free circulation". These topics had been decided by, mutual agreement, on the basis of the audit modules approved by the Member States and the Commission.

[20] See report on the protection of the financial interests and fight against fraud, fiscal year 2000.

Once the audit was completed, and on the basis of the audit reports which were sent to it by these Member States, the Commission conducted, on the spot, an analysis of all the work undertaken, with close attention paid to the evaluation of the risk analysis system, the validity of the conclusions, and any recommendations proposed, having regard to any anomalies identified or to comments made. The Commission has benefited from the conclusions of the reports in terms of impact on own resources. It will ensure that the results of these audits are taken into account from the financial point of view. Of course, the financial consequences were officially recognised under conditions identical to those which would result had the control been conducted by the Commission itself. Denmark, Austria and the Netherlands will repeat the experience in 2002 .

1.3. In 2001, the criminal judicial dimension of the policy of protection of the Community's financial interests was itself strengthened at the operational level. The judicial advisers' unit provides assistance, advice and judicial expertise to the administrative investigation function and to the monitoring of investigations, in particular for effective cooperation with the national judicial and police authorities.

At the legislative level, since the European Council of Nice had not acted on its first proposal, [21] the Commission revived the debate on the establishment of a European Prosecutor responsible for the criminal protection of the Communities' financial interests by adopting a Green Paper [22]. The function of this European Prosecutor would be to coordinate and direct the investigation and prosecution the offences against the financial interests of the Communities, subject to review by the national courts, in order to remedy the fragmentation of the European law-enforcement area and the relative impunity which criminals enjoy as a result. The aim of the Green Paper is to prompt a broad public debate, the results of which will be sent to the Convention on the Future of Europe for the next Intergovernmental Conference. This initiative has for a long time been supported by Parliament [23]. Within the framework of a Treaty amendment, it called for "a qualitative leap forward" in efforts to combat fraud, with the establishment of a European prosecutor with broad jurisdiction in financial matters. The OLAF Supervisory Committee issued opinions supporting and supplementing the Commission's proposals.

[21] Additional Commission contribution to the Intergovernmental Conference on Institutional Reform - The Criminal Protection of the Community's Financial Interests: a European Prosecutor, 29.9.2000, COM (2000) 608 final. This contribution supplements the opinion of the Commission under Article 48 of the Union Treaty on the meeting of a conference of the representatives of the governments of the Member States with a view to amending the Treaties, adapting the institutions to make a success of enlargement, of 26.1.2000, COM (2000) 34).

[22] Green Paper on the criminal protection of the Community's financial interests and the establishment of a European Prosecutor, 11.12.2001 (COM (2001) 715 final). The site devoted to the green paper is as follows: http://europa.eu.int/olaf/livre_vert.

[23] Resolution of 16.5.2000 on the Commission Annual Report for 2000 (OJ C 59, 23.02.2001), and Resolution of 14 March 2001 on the Commission Annual Report for 1999 (OJ C 343, 5.12.2001), asking the Commission to present such a proposal before 1 June 2001.

In addition, in spite of the repeated calls from the Council [24] the ratification of the Convention of 26 July 1995 concerning the protection of the financial interests of the European Communities [25] and the additional protocols to it is behind schedule, which harms effective cooperation within the Union. To accelerate the entry into force of these provisions, the Commission adopted a proposal for a Directive concerning the criminal protection of the Community's financial interests [26]. It aims to include in an instrument based on new Article 280 of the EC Treaty all the provisions of the Convention and its protocols which relate to the definition of offences, liability, penalties and cooperation with the Commission The European Parliament [27] approved the Commission's proposal, that was also endorsed by the European Court of Auditors [28]. It is now for the Council to examine the proposal of the Commission.

[24] As in its conclusions of 17.7.2000 and its conclusions on the occasion of the Discharge 2000,

[25] Council Act of 26 July 1995 drawing up the Convention on the protection of the financial interests of the European Communities (OJ C 316, 27.11.1995).

[26] Doc.COM(2001)272 final (OJ C240E of 28.08.01) adopted on 23.05.01.

[27] Legislative Resolution of 29.11.2001 on the proposal for a Directive of the European Parliament and the Council on the criminal-law protection of the Community's financial interests (doc. A5-390/2001, not yet published in the OJ).

[28] Opinion No 9/2001 of 8.11.2001 on a proposal for a Directive of the European Parliament and of the Council on the criminal-law protection of the Community's financial interests (OJ C 14, 17.01.2002).

A permanent structure for judicial cooperation was set up (EUROJUST [29]) and the decision was taken to extend EUROPOL's remit to serious forms of international crime. [30] The relationship between the respective powers of EUROPOL and OLAF in the fight against certain forms of economic and financial crime is to be determined by a cooperation agreement between the two bodies. The institutions welcomed the establishment of Eurojust to review investigations and facilitate proceedings in the national courts. Regarding the substance of the matter, the Commission expressed a clear opinion in the Council's subordinate bodies as to the importance of organising the close and regular cooperation provided for by the Treaty (Article 280) with the national prosecution authorities and cooperation with Eurojust. [31] The magistrates' unit in OLAF is specifically responsible for this.

[29] Council Decision 2002/187/JAI of 28.02.2002 establishing Eurojust to strengthen the fight against the serious forms of crime (OJ L63, 6.3.2002), in particular Article 11.

[30] Council Decision of 6.12.2001 (OJ C 362, 18.12.2001).

[31] Commission Declaration 39/02 on Article 4, para.1.b), 2nd indent and Article 26(3) of Decision 2002/187/JAI.

In addition, major progress was made with the strengthening of judicial cooperation, in particular in criminal matters. Political agreement was reached on the implementation of the principles of mutual recognition of judgements (civil and criminal) and of harmonisation of criminal law in the priority fields identified by the Tampere Summit (point 48 of the conclusions). The Commission presented proposals for framework Decisions on the European arrest warrant [32] and the harmonisation of the criminal law as regards trafficking in drugs [33] and terrorism [34] (definitions of offences, common penalties). In addition, in the context of action to combat the financing of terrorism and financial crime, a framework Decision on the freezing of assets and assets deserves highlighting [35].

[32] Proposal for a Council Framework Decision concerning the European arrest warrant and surrender procedures between Member States [COM(2001) 522 final - OJ C 332 E, 27.11.2001]. The Council reached a political agreement on this subject in December 2001.

[33] Proposal for a Council Framework Decision drawing up minimum provisions concerning the constituent components of criminal offences and the applicable penalties in the field of the drug trafficking [COM(2001) 259 final, OJ C 304 E, 30.10.2001].

[34] Proposal for a Council Framework Decision concerning the fight against terrorism [COM(2001) 521 final, OJ C 332E, 27.11.2001].

[35] Initiative by the governments of the French Republic, the Kingdom of Sweden and the Kingdom of Belgium for the adoption of a Council Framework Decision concerning the implementation in the European Union of orders freezing assets or evidence (OJ C 75, 7.3.2001).

1.4. In the interinstitutional fight against corruption, it is important to maintain a sound relationship between OLAF's main tasks under the legislation and of the current disciplinary and financial reforms (Staff Regulations, and Recast of the Financial Regulation). In this context, the investigation and discipline mechanism will be complete only after 2001: while in early 2002, the Commission created an Investigation and Disciplinary Office, the necessary amendments to the disciplinary rules in the Staff Regulations are due to be adopted in 2003 [36]. The recast of the Financial Regulation, adopted on 25 June 2002, provides for the creation of an instance specialised in questions regarding financial irregularities [37] which will further assist enquiries into potential financial irregularities without infringing on OLAF's specific role in relation to fraud and serious professional wrong-doing.

[36] Proposal for a Council Regulation amending the Staff Regulation of officials and the conditions of employment of other servants of the European Communities (COM (2002) 213 final of 24.4.2002, annex IX, Sections 1 and 2.). Constitution of an Office of Investigation and of Discipline within the Commission (Commission decision on the conduct of administration inquiries and disciplinary proceedings adopted on 19 February 2002 (DOC.C(2002)540)).

[37] Article 66, para.4 of the new Financial Regulation and the constitution of an office of investigation and of discipline within the Commission.

Internal administrative investigations will be strengthened by the involvement of the magistrates, which will also secure the protection of individual rights. All the institutions should now, therefore, be in a position to comply fully with Article 7 of Regulation No 1073/99 (exchange of information) [38]. These measures are likely to satisfy the concern expressed by Parliament and the Council [39]. In addition, the scope of the internal investigations has been clarified by the Community courts [40].

[38] OJ L 136, 31.5.1999.

[39] Resolution on the Commission Annual Report for 2000. In its Resolution on the Commission Annual Report for 1999, Parliament pointed out the need for the OLAF "to obtain the unreserved cooperation of the staff and institutions of the European Union, and the police and judicial authorities of the Member States". Conclusions of the Economic and Financial Affairs Council of 7.5.2002, Conclusions of the European Council of 15 June 2001 (Doc. 9270 FIN169) and of the Economic and Financial Affairs Council of 17.7.2000 (Doc. 10344/00 FIN273).

[40] See the Court of First Instance's ruling in Case T-17/00 (" Rothley et al. / Parliament ") of 26.2.2002.

2. examples of internal and external cooperation and partnership with the national authoritiies

Commission.

The added value resulting from the synergy between dispersed sources of information in the Community and the broad scope of OLAF's action are illustrated below by examples of investigations and by the Commission's actions in preparation for enlargement..

2.1. Sugar export to the OCT [41] and reimportation of sugar and sugar mixtures into the European Community.

[41] Non-European overseas countries and territories which maintain specific relations with Denmark, France, the Netherlands and the United Kingdom (Greenland, Aruba, etc...) cf. Annex II to the EC Treaty.

The Commission launched investigations to prevent a threatened malfunctioning of the common organisation of the market in sugar and a diversion of the objectives of the common commercial policy with certain OCT.

OLAF and the Dutch and Belgian authorities carried out an investigation in Aruba in November 1999 concerning exports of sugar originating in the European Community, on which export refunds were paid, reimported into the Community less than two years later in the form of sugar and a mixture of sugar and Aruba cocoa powder.

The investigation revealed that 4 500 tonnes of sugar had been exported with refunds from Belgium and France to Aruba. The processing operations in Aruba (the sugar was cleaned and mixed with cocoa powder) do not constitute substantial processing justifying payment of export subsidies.

The Commission consequently asked the Belgian and French authorities to initiate proceedings for recovery of the unduly paid export refunds in accordance with Community case law (2 million euro in Belgium and 300 000 euro in France).

In addition, OLAF launched investigations into C quota sugar (sugar exported without right to refund) exported to the OCT.

The findings of these investigations prompted the Commission to adopt safeguard clauses on the rules governing Community imports of sugar originating in the OCT. [42]

[42] Commission Regulation (EC) No 2423/1999 of 15.11.1999 (OJ L 294, 16.11.1999) and Commission Regulation (EC) No 465/2000 of 29.2.2000 (OJ L 65, 1.3.2000).

2.2. Abuse of the dairy quota systems.

OLAF was informed of allegations concerning a possible abuse of the system of milk quotas in Spain and of information concerning several Spanish companies allegedly involved in this irregular activity. On the basis of this information, an external investigation was opened and an action plan was agreed for a series of administrative on-the-spot checks and inspections into certain economic operators on the basis of the Council Regulation (EC, Euratom) No 2185/96.

During these checks and inspections, some of the firms refused to comply with OLAF's request for copies of data on hard disk. In accordance with Article 9 of the Regulation No 2185/96, which requires the Member State concerned according to the national provisions to provide OLAF with the assistance it needs to carry out its functions, the Spanish Payment Agency (FEGA) was asked to take the appropriate measures.

After obtaining the authorisation of the Spanish judicial authorities, the complete computer data were copied, giving access in particular to figures on these companies' real production and sales of milk and milk products.

On the basis of the objective evidence obtained and set out in the final report of OLAF's investigation, fraud against the Community budget was estimated at more than 6 million euro. This report was sent to the FEGA for it to launch the administrative procedures for recovery of this amount and to the special anti-corruption Prosecutor's office in Spain, on grounds of suspected false production and sales records. The report also shows that similar practices were followed by other Spanish firms, and the Spanish authorities have been asked to redefine their routine controls in order to remedy these weaknesses in the general control system.

This case is an eloquent example of the value added by OLAF to a Member State's action against fraud, by concentrating its multidisciplinary expertise (investigations, computer analysis of the evidence, judicial advice) on a fraud case with many facets. The advice given by the magistrates' unit was vital for obtaining the requisite court order in the Member State for access to the companies' computer files. A major share of the merit should be attributed to the Spanish authorities whose aid proved valuable in this case, proving beyond doubt what can be achieved when OLAF and Member States work together and take advantage of all the obligations and investigation possibilities under the European regulations.

2.3. Investigation for alleged forgery and fraud by a group of NGOs (non-governmental organisations)

The success of OLAF's investigations, in particular with regard to investigations concerning direct expenditure, depends both on the information collected and, to a large extent, on the high degree of cooperation with the Member States. The following case is a typical example of the difficulties in this field, and in particular that of judicial cooperation between Member States.

In August 1999, OLAF was informed by a Member State of a suspicion of dual national and Community financing of projects in developing countries. The financing requests were submitted to various donors by various non-governmental organisations in two Member States. The Ministry for Foreign Affairs at the source of the information filed a complaint with the relevant prosecution service.In autumn 1999, OLAF started investigations and highlighted a first series of 16 projects were there was a risk of dual financing (Asia, Africa and South America), for which applications were being or had been examined by EuropeAid.

In November 1999, in accordance with Regulation (EC) No 1073/99, the Director-General of OLAF referred a case to the prosecution service in one of the Member States concerned. Searches conducted by the local authorities in February 2000 showed that the NGO acted on instructions given by the parent NGO located in a third Member State.

Searches at the beginning of December 2000 at the head office of the parent NGO in the presence of OLAF confirmed the suspicions. The double financing of the 16 projects identified at the start was estimated at US$ 4 262 633 (not counting financing agreed by the Community but blocked following OLAF's investigation). Moreover, the authorities of the third Member State stated that they could not prosecute on account of legal difficulties.

In addition to the intensity of the efforts made by each of the national authorities involved, the role that the OLAF had to assume since 1999 must be stressed:

- analysing and identifying the multilingual projects suspected of being over-financed, sometimes with other donor bodies located outside the European Union (Worldbank, ADB, [43] Norway, etc.), while mobilising the delegations of the Commission in non-member countries; and identifying documents during searches at the parent NGO;

[43] African Development Bank.

- making the national judicial authorities aware, ensuring coordination between them, providing the necessary legal advice and technical assistance (translations of reports, projects, etc.);

- coordination within the Commission on the situation of the case for the question of joining civil proceedings to the criminal prosecution.

In this case cooperation between the Commission and the national criminal prosecuting authorities made it possible to pursue a fraud at EU level in spite of the legal difficulties which had appeared in the country of the parent associations. However, it was necessary to OLAF to suggest centralising the proceedings at the judicial authorities in one of the Member States concerned and that these agree to take the case over from the other national investigation authorities, with their agreement and support. If this had not been done, the investigation would have stopped. This file demonstrates the need to remedy the dispersal of investigations and prosecutions in the European Community and the obstacles raised by the fragmentation of the European criminal law-enforcement area. In the light of this experience and many others, the Commission considers it is necessary to make serious progress on the ideas in the Green Paper on the criminal protection of the Community's financial interests and the establishment of a European Prosecutor.

2.4. Past experience in the applicant countries: Poland

OLAF, in conjunction with Poland, prepared a PHARE project to help with the establishment of an inter-ministerial anti-fraud structure. The implementation of this project began in January 2001. The prime objective was to create an anti-fraud coordination service that is at the same time specialised, independent and multidisciplinary, to enhance the Polish authorities' operational capacities. In addition, activities launched in the first year of this biannual initiative improved awareness of the fight against fraud among the responsible authorities in Poland. This coincides with the government's overall objectives of improving transparency and the integrity of the Polish public sector and of guaranteeing effective protection of Community funds.

The complexity of the Polish administration, the constant changes in its structure for accession and the successive amendments made to Polish legal and administrative provisions do not make it easy to give effect to such a project quickly. Nevertheless, Union financial support is a major factor in helping the Polish authorities to increase their capacity to combat fraud against the Community budget. Follow-up projects are consequently planned.

These difficulties, most of which are local, do not all apply in all the applicant countries. But the Polish experience once again highlights the need for permanent investment in training and proper working conditions in the applicant countries, including the development of effective computer systems to support anti-fraud activities aimed at protecting the Communities' financial interests. It has also shown that effective and equivalent protection of the Communities' financial interests in the applicant countries can be guaranteed only by tried and tested internal coordination arrangements between all the authorities concerned with the management, implementation or financial control of European Union financing.

3. Monitoring the 2001-2003 action plan

The Commission is presenting here an interim report on the implementation of the Action Plan for the Protection of the financial interests of the Communities and the fight against fraud for 2001-2003. The aim of this report is to show how the projects provided for 2001 were actually executed, in compliance with the need to attain the broad objectives laid down by the Strategic Approach of June 2000.

Progress in the measures provided for in the Action Plan is set out in tabular form [44]. It indicates the relevant elements in terms of compliance with the tentative timetable, the pilot services and, where appropriate, the identification of legal or other instruments.

[44] The table does not show the projects for which no step is planned in 2001. As regards the columns of the table:

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Title II: Measures taken by the Member States for the implementation of Article 280 of the EC Treaty

For the second time, collaboration with the Member States, at non-operational level, is reflected in the Annual Report of the Commission on the Protection of the Communities' Financial Interests.

In accordance with Article 280 of the EC Treaty, this second part of the report gives account of the joint efforts of the Member States' administrations in the year 2001 with a view to the protection of the Communities' financial interests. It has been drawn up on the basis of a questionnaire established in co-operation with the Member States. The Commission recognises that the evaluation of the Member States' activities is still far from a genuine comparative analysis, as called for by the European Parliament. However, the Commission largely depends on the information that it actually receives, while providing interpretative elements necessary for a good comprehension by the Member States of their regulatory obligations.

A reflection could be carried out on the complementarity of this work with that on sound financial management which is carried out under the annual discharge procedure. In this connection, the Commission submits a report to the Budgetary Authority on the basis of the Member States' answers to the observations of the Court of Auditors [45].

[45] Answers of the Member States to the comments of the Court of Auditors in its Annual Report and in its Special Reports. This procedure is in place since the European Council of Dublin in December 1996. In April 2002, at the time of vote on the 2000 discharge, the European Parliament asked the Court of Auditors to evaluate the total cost of the internal and external controls of Community funds, by distinguishing those concerning the Community budget from those concerning national budgets.

This second part of the report opens with an overview of legislative developments in the Member States aimed at implementing Article 280 of the Treaty that have taken place in 2001, followed by two sections devoted to the state of ratification and implementation of the Convention of 26 July 1995 on the Protection of the European Communities' Financial Interests and its protocols. [46]

[46] Convention of 26 July 1995 on the protection of the European Communities' financial interests (OJ C 316 of 27.11.95, p. 48) and its additional protocols (OJ C 313 of 23.10.1996, p. 1; OJ C 221 of 19.7.1997, p. 11; OJ C 151 of 20.5.1997, p. 1).

Information is then provided on the mechanisms in place for internal co-ordination of the control and investigative authorities in each Member State, as well as for cooperation between the competent authorities of the different Member States and between the latter and the Commission.

Information provided by Member States reveals that their organisation is generally consistent with the common objective of the protection of the Communities' financial interests, based on the principle of equivalence laid down in Article 280 of the EC Treaty. However, a fragmented approach, either by policy area, administrative entity or between Member States, may reduce the effectiveness of the prevention of and fight against fraud. In this connection, some Member States have pointed out that coordination could still be improved.

Finally, as in the previous Report, a specific section adresses recovery. In this context, the Commission strives to verify that a good collaboration exists between the judicial and administrative authorities in the Member States in order to ensure an effective recovery of outstanding debts.

The Commission is fully aware that a genuine comparative analysis of the Member States' activities would require, as stressed in previous reports, a closer harmonisation of the concepts of controls and sanctions. In this connection, the Commission is engaged, in the framework of the CoCoLaF, in an exercise aimed at a better definition of these concepts.

4. Texts contributing to the implementation of Article EC 280 - principal legislative developments

The following table lists the main legislative developments aimed at implementing Article 280 of the EC Treaty in 2001. Consequently, it is possible that that the table does not mention those Member States which adopted measures of an administrative nature in 2001, or which have witnessed an abundant legislative activity during the preceding period.

4.1. Own resources: principal legislative developments

Member State // Measure

EL // The new customs code (Act 2960/2001) harmonises national legislation with Community legislation, especially as regards breaches of customs legislation.

F // Article 28-1 of the Code of Criminal Procedure, which authorises certain customs officers to conduct judicial investigations, in particular as regards fraud affecting the Communities' financial interests, has been implemented since December 2001 (offences defined by the Customs Code, and more specifically traditional own resources and agricultural expenditure). The new provision will facilitate the conduct of investigations concerning several Member States.

In total, 73 officers have been authorised by ministerial decree to conduct judicial investigations.

IRL // The Customs and Excise (Mutual Assistance) Act of March 2001 gives force of law to the CIS Convention, the Customs Cooperation Convention and other related instruments.

I // Promulgation of a new Legislative Decree (No 68 of 19.3.2001), "Adaptation of the tasks of Guardia di Finanza as laid down by section 4 of Act No 78 of 31.3.2000). This Decree was promulgated in the general framework of the reform of the tasks of police forces, as laid down by Act No 78 of 31.3.2000. It gives the definition of the institutional mission of the Guardia di Finanza as economic and financial police protecting the budget of the state, of the regions, of the local bodies and of the European Union. It confirms the exclusive investigation powers of Guardia di Finanza officers to prevent, investigate and combat infringements concerning resources and expenditure in the EU budget.

// Promulgation of a new Act (No 92 of 19.3.2001 amending standards as regards repression of cigarette smuggling Under this Act:

- smuggling is an offence punishable by imprisonment for between two and five years when the quantity of tobacco smuggled is more than 10 kilos;

- the following circumstances aggravate the penalty:

- using modified means of transport with a view to hindering police action or to causing danger;

- using legal entities or financial facilities in countries which have not ratified the Strasbourg Convention on money laundering;

- the cooperation of tobacco producers has been envisaged in order to identify the source of the merchandise;

- the management of seized or confiscated goods has become easier and more economical;

a new offence has been introduced - that of group organisation in the purpose of tobacco smuggling, punishable by imprisonment for between three and eight years and falling within the competence of the Departmental Anti-Mafia Offices.

NL // A law has been adopted by the Parliament's second chamber, concerning control on Community funds. This law sets up free ministerial competencies: the right to be informed by managing body, the right to give instructions to the managing body and the recovery of funds from the managing body.

P // New general scheme relating to tax offences and a new tax offence structure: distinction between common tax offences, customs offences, tax offences and offences against Social Security.

Investigations pertaining to one or other of the above-mentioned economic and financial offences are within the jurisdiction of the Criminal Investigation Department wherever they are committed on an organised basis and/or have an international or transnational dimension.

// As regards checks and inspections, the DGAIEC (Portuguese customs) has adopted implementing provisions for local customs, following the reform of the EC Customs Code and implementing provisions.

With regard to the special seal for manufactured tobaccos, a code has been adopted which enables the DGAIEC to trace its origin.

FIN // Act 875/2001, amending the criminal code, has updated the provisions on the confiscation of assets.

S // The Swedish law criminalising smuggling was replaced on 1 January 2001 by Act 2000:1225. Customs offences can be punished by two years in prison. For serious offences, the penalty can extend to six years.

// Sweden has long had a customs criminal court that meets the requirements of Article 280. The new Act of 1 January 2001 (2000:1225) has strengthened the customs prosecutor's powers.

4.2. Agricultural expenditure: principal legislative developments

Member State // Measure

B // Royal Decree of 15 May 2001 relating to administrative fines: where the Royal Prosecutor, three-months after receiving the official report, has not notified the administration whether penalties should be ordered or not, the administration decides whether an administrative fine should be ordered or not.

EL // The newly adopted Act 2945/2001 contains provisions as regards the fight against fraud affecting the EAGGF Guarantee Section:

- power of the rural development payment agency (EPAA) to conduct on-the-spot checks and cross-checks in the case of suspected irregularities;

- possibility of suspending payments and of recovery;

- forwarding evidence to the relevant disciplinary bodies and prosecution authorities in the event of irregularities;

- powers of the payment and inspection agency (OPEKEPE) as regards the prevention and repression of all irregularities

- possibility of imposing penalties on the basis of a decision by the Ministry of Agriculture;

- legal advice provided to OPEKEPE by other bodies.

E // Act No 24/2001, amending the general Budgetary Act:

Designation of the competent body and definition of the functions to be exercised by this specific service as provided by Regulation No 4045/89;

Designation of national and regional services empowered to carry out the checks and inspections provided for by Regulation No 4045/89.

F // Article 28-1 of the Code of Criminal Procedure, which authorises certain customs officers to conduct judicial enquiries, in particular as regards fraud affecting the Communities' financial interests, has been implemented since December 2001 (offences provided for by the Customs Code, and more specifically traditional own resources and agricultural expenditure). See also item 4.1. above).

// A draft decree has been prepared with regard to the control of cow milk production and procedures for recovering the additional levy.

I // - Legislative Decree No 223 of 14.5.2001 lays down new penalties concerning Community aid to the production of olive oil and to table olive processing. The Department for Market Policies of the Ministry for Agriculture and Forestry approved the draft legislative decree concerning the penalty system based on Regulation No 4045/89.

// Legislative Decree No 68 of 19.3.2002:

- gives the Guardia di Finanza the role of "economic and financial police force for the protection of the public budget, and that of the regions, local bodies and the European Union ";

- empowers Guardia di Finanza officers to conduct searches, investigations, inspections and banking enquiries in the field in question, while enjoying the same rights which it had as regards VAT and direct taxation.

// An agriculture, food and forestry protection (NAF) control unit has been set up in the Agriculture Ministry.

IRL // Diseases of Animals Act of March 2001: provides for additional powers for authorised officers, power to regulate dealers and for increased sanctions

NL // Adoption, by the first and second chambers of Parliament, of the Dutch Government Accounts Act (Eighth Amendment) Act and of the EC Grants Monitoring Act (into force on 1.5.2002):

- listing powers of control of the Court of Auditors with regard to the use of Community grants (down to the final recipient);

- establishing parallel powers for the Minister as regards the right to be informed by the management body, the right to give indications to the management body, and the right to recover funds from the management body

P // New general rules for applying the rural development plan, known as RURIS, have been established for the period 2001 to 2006:

- aid is paid out only if the recipient has regularised his debt position with paying agencies;

- paying agencies can offset claims on the recipient;

- cancellation of the contract gives rise to an obligation to refund the aid granted and suspension of eligibility;

- debt certificates issued by the paying agencies have the value of enforceable instruments.

FIN // General measure: Act 688/2001 on State aid covers, inter alia, the recovery and control of public aid, including Community aid.

S // General measure: since March 2001, the protection of Community financial interests and relations with OLAF have been coordinated by an Economic Crimes Bureau and a Community fraud Council.

UK // (England) new regulations on fishing and aquaculture structures: regulate conditions for granting national and Community subsidies (FIFG) as well as control and recovery measures (SI 2001 No. 117).

Equivalent but separate provisions have been adopted in Scotland, Wales and Northern Ireland.

4.3. Structural measures: principal legislative developments

Member State // Measure

DK // Decree No 132 of 1 March 2001 relating to responsibility and the division of powers for the administration of European Social Fund aid deals with the following points:

Composition and tasks of the monitoring committees for Objective 3 and EQUAL; ESF measures under Objective 2; central and regional project approval subcommittees; organisation of the central and regional project administrations, responsibility and missions; use of the web-based IT system; control and auditing, in particular the obligation to notify irregularities; requirement that the project administration make at least one supervisory and control visit to each project during the subsidy period.

Decree No 133 of 1 March 2001 relating to ESF aid: conditions of aid; control and follow-up; use of the web-based IT system; access to justice; recoveries and penalties.

A bank guarantee is imposed on all private and independent aid recipients.

To enable aid for a project to be granted, auditors are required to certify that the project's recording procedures and systems are appropriate.

EL // Act 2860/2000 has set up new management and control bodies, namely the Community Support Framework Monitoring Committee, the Operational Programme Monitoring Committee, the central CSF Management Agency, the management agencies for the operational programmes, the paying agency and the External Financial Control Committee (EDEL).

E // Royal legislative decree No 1098/2001: develops the current legal framework in the field of public procurement.

// Act 24/2001 amending the Public Procurement Act:

- Requires new securities as regards the solvency of tenderers;

- Regulates the procedures for the award of services in the field of the management of information systems.

I // Promulgation of a new Legislative Decree (No 68 of 19.3.2001, "Adaptation of the tasks of Guardia di Finanza as laid down by section 4 of Act No 78 of 31.3.2000").

NL // Adoption of the Dutch Government Accounts Act (Eighth Amendment) Act and of the EC Grants Monitoring Act : see item 4.2. above.

A // A convention has been concluded between the Bund and the Länder (this convention includes all Austrian bodies involved in and responsible for the management of the various structural interventions and projects which directly or indirectly involve protection of the financial interests of the Community).

P // Pursuant to Regulations Nos 1260/99, 438/2001 and 448/2001, a specific national legislative framework for the Community Support Framework (CSF) III has been developed:

- a Decree-law governing the operation of the national control system (SNC), of CSF III.

- under this Decree-law, the Inspectorate General of Finance (IGF) is the competent authority to issue the statement and to coordinate notification of irregularities;

- a regional Decree-law establishing the Instituto de Gestão de Fundos Comunitários (Institute for the Management of Community Funds) in the Autonomous Region of Madeira.

FIN // General measure: see item 4.2.

// The following Acts were passed:

- Act 1268/2000 amending the act on the management of the Structural Funds, which came into force on 1 January 2001: management and supervision provisions relating to Community initiatives and the ESF;

- Act 574/2001 amending the act on regional development: rules on implementation of Community initiatives and recovery of structural and national funding;

- Act 1113/2001 amending the act on employment: guidelines on public investments (ERDF).

// New regulations:

- government decrees (943/2001 and 1466/2001) amending the employment decree (ERDF);

- decree by the Ministry of Education (933/2001): powers of the national Council for Education and the provincial offices with regard to the management, follow-up and audit of projects financed by Interreg and the ESF.

S // Adaptation of relevant Swedish legislation and implementing rules concerning administration of Structural Funds and specific rules within the field of EAGGF - Guidance Section, FIFG and ESF in order to:

- take action pursuant to the new Community legislation for 2000-2006;

- clarify and strengthen the provisions relating to recovery.

Measures making it possible for the Interreg programmes to be managed as agreed with the Commission and other Member States

5. complementary texts for the protection of Community financial interests

5.1. What is the state of ratification by the Member State of the Convention of 26 July 1995 on the protection of the European Communities' financial interests and its protocol-

Progress with ratifications notified to the Secretariat-General of the Council of the European Union at 21.06.2002

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5.2. Where appropriate, has the Member State taken steps to transpose this Convention and these protocols- (This relates to measures taken after the adoption of the 2000 Annual Report in May 2001).

Member State //

DK // The convention and the protocols were implemented in Danish Law in 2000.

D // A law has been drafted to ratify the second protocol of 19 June 1997 to the Convention. Amendments to national law aiming to transposition depend on an implementing law that is being drafted too. It is envisaged to amend article 261 of the criminal code (money laundering, illegal asset concealing) and to extend the scope of art. 30 of the law concerning infringements in order to have the power to impose penalties to corporate bodies and association of persons.

EL // The Convention and its protocols have been taken into account in the new customs code (Law 2960/2001)

IRL // Part 6 of the Criminal Justice (Theft and Fraud Offences) Act of 19 December 2001 transposes the 1995 Convention and its protocols. It will come into operation with effect from 1 August 2002.

I // The contents of the protocol to the PIF convention signed the 19.6.97 and concerning the liability of legal persons, confiscation, money laundering and the co-operation between the Member States and the Commission for the purpose of protecting the European Communities' financial interests and protecting personal data related thereto, have been in large part transposed in Legislative Decree n° 231/01 concerning the liability of legal persons for illegal activities consequent, among others to the crimes of embezzlement, misappropriation of funds or swindle detrimental to the State budget.

Moreover, the Minister of Labour has adopted some administrative measures affecting checks on activities co-financed by ESF.

L // The content of the Convention and the ratified Protocols was transposed into Law 30 on March 2001.

A // The obligation with regard to transposal contained in these four EU legal instruments (including the second protocol) has already been met in part by current provisions and, with one exception (see below), by the amendment to the Criminal Law Act of 1998, in particular as a result of:

- introduction of the offence "misuse of aid";

- extension of the provisions on the corruption of officials to include Community officials and officials of other Member States;

- expansion of the list of offences in the field of money laundering.

- Certain changes to the Act on the repression of financial offences and the Act on export refunds effected by the 1998 Act amending taxation also contribute to the transposal of the legal instruments referred to above.

The only measure which has not yet been transposed is the introduction of the responsibility of legal persons envisaged in the second protocol. With regard to the transposal of this obligation, in Article 18(2) the second protocol anticipates a five-year deadline for Austria with effect from the adoption of the legal instrument.

P // The Convention and respective protocols are directly applicable, without prejudice to adaptations to internal law.

In this context Act 108/2001 was published amending the Portuguese Criminal Code with regard to the offences of trading of favours, passive corruption for illicit acts, passive corruption for lawful acts and, finally, the concept of official.

At the same time, on 26 November 2001, Resolution 163/2001 of the Council of Ministers was published, which adopts a number of measures and national guidelines and basic principles in the fight against fraud and tax avoidance: prevention, control, strengthening of UCLEFA and measures against offences, strengthening external control and reinforced use of information systems (national and Community projects).

FIN // Some legislative amendments required by the second Protocol were implemented in 2001 (measure 369/2001 amending the criminal code): extension of the criminal liability of legal persons to situations where the person or legal entity has taken part in the crime or allowed the crime to be committed.

// (Åland) The provincial government, gave its approval to the 1995 Convention in 2001.

S // Legislation transposing the provisions of the second Protocol (1997) into Swedish law came into force on 1 January 2002. Attempting, preparing or conspiring to perpetrate serious laundering or serious bribery have been made a criminal offence. Provisions relating to foreign criminal judgments have been widened: the judgments of foreign criminal courts relating to the measures covered by the Protocol can hinder pursuit of the same measure in Sweden.

UK // The United Kingdom points out that most of the provisions in the Convention and its protocols already existed in UK law before the Convention and its Protocols were signed. Part 1 of the Criminal Justice Act 1993, which entered into force on 1 June 1999, enabled the UK to ratify the Convention. The jurisdiction required by the first indent of Article 4(1) of the Convention (cases where fraud is committed within the territory of the Member State, including where the benefit was obtained in its territory) was conferred by those provisions.

6. Coordination of services charged with the protection of financial interests within each member state

The Community financial control system in terms of both expenditure and income is largely based on the primary responsibility of the Member States, which manage 80% of funds. The controls provided for by sectoral regulations involve a wide range of actors and staff at the various levels of the national administration (payment agencies, management authorities, central and decentralised national services, local authority services).

These controls constitute the system for the protection of Community financial interests where Member States are required to ensure both effective action and action that is equivalent to that which they undertake to defend their own interests.

This is why a good coordination between the different protagonists involved in all levels of controls is of a strategic importance

The sectoral regulations require national authorities to carry out what are known as regularity controls and controls that are more targeted on the fight against fraud. The former consist of documentary checks, sometimes called "first level" checks, aiming at compliance with procedures and at the criteria determined by regulation for the granting of financing or of advantages (customs duty-free movements, for example).

Regularity controls also include a posteriori checks (after payment of the funds for example), the aim of which is to check that the work has really been done, that the financed projects exist or that the control system is reliable.

In addition, certain controls are conducted on the basis of suspected fraud established by different authorities, depending on the Member States: customs, police, financial administration, judicial authorities at an advanced stage. The organisation of the services depends on the Member States.

Following the request of the Council on the one hand and the report of the European Court of Auditors on the structural Funds [47] on the other, information is here provided on the mechanisms in place for the coordination of the control and investigative authorities carrying out all these controls in Member states.

[47] Special Report n°4/2001 on the audit relating to EAGGF, Guarantee Section - implementation of the Integrated Administration and Control System (IACS) accompanied by the Commission's responses.

The information is presented by field of control: traditional own resources, agricultural expenditure and structural actions.

6.1. Own resources: coordination and cooperation mechanisms, possible difficulties at legislative or regulatory level

Member State //

B // Anti-fraud controls and investigations are carried out within the same government department (Customs and Excise department). It is also competent to prosecute customs infringements.

// With regard to the exchange of information with the police, the situation is as follows:

- agreed protocols are being negotiated with a view to formalising exchanges;

- five tax authority officials have been made available to the Central Office for Combating Crime (Federal Police), pursuant to the Royal decree of 22 December 2000.

// For passing on information about presumed frauds to the legal authorities, the following arrangements exist:

- seven tax officials are made available to the Public Prosecutor or the Judge Advocate for Labour;

- collection of tax by the tax departments is possible at the judicial investigation stage, if the investigation uncovers indications of fraud (Act of 18 April 1999);

- a cooperation agreement has been concluded between the Belgian Department of Justice and Department of Finance.

DK // General comments concerning the coordination between the services and the impact of the law on data protection:

With regard to the notification of cases of suspected fraud by the administrative authorities to the judicial authorities, inspections are carried out in accordance with the Director of Public Prosecutions' communication No 4/1998. This communication also sets out the procedures for informing the administrative authority of the outcome of the matter.

// Administrative or legislative adaptations are under way to implement the Act of 31 May 2000 on the protection of personal data in control measures.

// A committee for matters linked to economic crime and cybercrime ("Violations Committee") has undertaken to revise, under the direction of the Ministry of Justice, the provisions of criminal law applicable to different forms of economic crime.

"The Committee on Economic Crime" constitutes an inter-ministerial forum, under the direction of the customs and tax authorities, with a view to combating economic criminality affecting the common interest. This Committee attaches as much importance to economic crime affecting the Community's financial interests as it does with regard to national resources and expenditure.

D // In the field of traditional own resources, a procedure for the coordination of external/customs controls and fiscal control/ customs surveillance measures with regard to enterprises established in several zones under the competence of a principal customs office, is regulated by paragraphs 59 to 64 of administrative instruction DA-AO. Rules with regard to the content and volume of data exchange include : federal and Länder data protection and budgetary laws, Article 15 of the Customs Code, Article 30 of tax laws (professional secrecy) and criminal code.

EL // The Greek authorities did not see any serious overlapping, since it is Customs that handles the administrative penalties and recovery, even where the complaint is lodged by another enforcement agency (SDOE, the Police, the Harbour Guard).

E // The official tax administration authority (AEAT) has established three coordination mechanisms, based on the various partial Plans which implement the General Tax Control Plan (2001):

- coordination of activities relating to taxpayers who are the subject of inspections;

- improvements in the exchange of information;

- specific coordination between the recovery service and the Customs and Excise Duties Service.

// The AEAT special quality Programme for 2001 provides for the following measures:

- measures to improve interdepartmental coordination in the fight against fraud: transmission of information sheets on recovery transmitted to recovery organisations, coordinated verification activities, research aimed at detailing the number and importance of preventive measures (legal and others) against fraud;

- cooperation between the Customs and Tax Service and other public services in the fight against fraud (local corporations, autonomous communities and cities);

- internal coordination: inter-territorial investigative activities.

F // The DGDDI (General Directorate of Customs and Indirect Taxes) carries out all checks and investigations in the customs field; therefore, no coordination with other services is needed, but only internal coordination.

// The French Customs has a specific action to impose tax penalties; it can either report to the judicial authority and prosecute offences through a complaint to the Public Prosecutor or summon directly before a criminal court.

// As customs officers have been recently empowered to conduct criminal investigations, cooperation with judicial authorities in the financial area will be enhanced.

Moreover, in accordance with the national customs code, judicial authorities must inform the customs of any fact that can possibly be considered as a customs offence.

IRL // Comprehensive systems are in place for carrying out traditional checks, fraud investigations and horizontal and multidisciplinary coordination activities: Automated Entry Processing System (AEP), Customs Audit Teams, the Investigation Bureau, Customs and Excise Enforcement and Anti-Evasion Teams and the Customs National Freight Intelligence Unit.

// A restructuring operation of the Office of Revenue Commissioners, which incorporates the Irish Customs Service, includes the formation of a Prosecutions Division, which is being tasked with coordinating criminal prosecutions across all tax heads, including customs fraud cases.

I // Coordination between the services concerned (the Customs Agency and the Guardia di Finanza) is ensured at national level by legislative provisions and at local level by operational instructions drawn up by the head of Customs and the provincial Commander of the Guardia di Finanza.

Generally, whenever a monitoring agency notes an irregularity, it sends a copy of the official report both to the authorising officer for the recovery of the improperly collected amounts and the application of administrative penalties, and to the prosecutor if a crime is suspected.

In most cases, the administration will have to await the conclusion of criminal proceedings before starting a civil action for recovery. The legal basis for actions for recovery is either a court order (for criminal infringements), or an administrative order imposing sanctions and closing down proceedings.

NL // The Customs Information Centre (DIC) organises an operational coordinating meeting once a month, attended by all the services involved in control and, if necessary, in investigations relating to traditional own resources - the customs service, the tax information and investigation service and economic control services (FIOD-ECD) and the Agricultural Inspectorate (AID).

These meetings are used to discuss irregularities and to determine the powers of the various services concerned.

// Regular consultations also take place between the Ministry of Finance and the Ministry for Agriculture (LNV). A specific prosecutor has been appointed for the national coordination of criminal investigations and the regulatory aspects of criminal proceedings. Discussions take place regularly with the various services involved in criminal proceedings.

// The Director-General for Taxes and the College of Public Prosecutors have agreed on guidelines on the notification, transaction and pursuit of tax and customs offences ("ATV" guidelines). Using specific indicators, the customs authorities hold regular discussions on the treatment of suspected criminal acts with, on the one hand, the tax information and investigation service and the economic control services (FIOD-ECD) and, on the other hand, the public prosecutor's department. This arrangement is evaluated annually.

// No obstacles have been identified with regard to coordination between the services involved in the control of traditional own resources. The guidelines of the tax service (VIV) make adequate provision for the exchange of information, both in the control phase and in the investigatory phase. However, when criminal investigations are involved, it is the prosecutor dealing with the case who decides on the way in which information will be revealed.

A // The Customs administration is using a standardised electronic form for the notification of irregularities.

// Established irregularities also are the subject of risk analyses, both under Regulation No 386/90 and under Regulation No 4045/89.

P // The decree establishing the tax general authority (AGT) provides for an internal supervisory authority as well as a common structure for tax administration, the purpose of which is to carry out administrative inspection and control measures with a view to ensuring control of compliance with set aims and the adoption of appropriate corrective measures.

// Moreover the customs (DGAIEC) establish, recover and entry in the accounts import duties, the management of the Community own resources audit system being the responsibility of this Directorate-General, more precisely the directorate of the department of national income and Community own resources.

// Suspected fraud in the three fields in question (own resources, EAGGF Guarantee Section and Structural and Cohesion Funds) are communicated by the control body to the public prosecutor.

Consequently, they are brought to the attention, together with the despatch of the control report, of the financial interlocutor/payment authority/paying agency, for the purposes of supporting the process not only in criminal but also in administrative terms to recover aid, a process which continues regardless of whether the criminal procedure is concluded or not.

The judicial authorities and the administrative authorities are required to keep each other informed of existing procedures, thus guaranteeing good collaboration between them.

In relation to these offences the judicial authorities and foreign police bodies can travel (after obtaining the authorisation of the Minister for Justice) throughout the national territory, with a view to taking part in criminal investigations and setting up teams responsible for joint criminal investigations.

FIN // General measure:

The anti-fraud programme on white-collar crime was continued in 2001. The Government made a decision in principle of starting a new programme for 2002-2005.

The Ministry of Finance started a project for the development of the control administrations' work (VIRKE) in 2001.

Customs:

The Customs administration has many different kinds of information exchanges systems in use. It ran a research project on administrative and judicial cooperation on customs crime.

S // There is an agreement between the Customs Board and the Public Prosecutor containing rules on the handling of customs surcharge issues in a public prosecution context (Acts 2000:1225 and 2000:1281).

In addition, the Customs Board takes part in regional (SABEM) and national coordination groups (Economic Council) together with representatives from, amongst others, the police, tax authorities, the Enforcement Authority, the Economic Crimes Bureau, the Patent and Registration Office and the Social Insurance Office.

The Customs Board also cooperates with the National Bank and has privileged access to the register of suspected offences of the Police.

// General measure: Since March 2001, the protection of the Communities' financial interests and relations with OLAF are coordinated by the Economic Crimes Bureau and by a Council on EU Fraud (see point 4.1).

UK // A single point of contact within the customs service manages communications between customs assurance staff and investigators. This point of contact also coordinates communications with external agencies.

// Regular meetings are held between customs investigators and the rural payment agency (RPA). Discussions on revised administrative agreement should be finalised in 2002.

6.2 Agricultural expenditure: coordination and cooperation mechanisms, possible difficulties at legislative or regulatory level

Member State //

B // In the field of operational programmes for vegetables and fruit, the Belgian Intervention and Refunds Bureau (BIRB) has signed cooperation protocols with Customs and the Walloon region.

// To guarantee the continuity of management and supervision, given the gradual regionalisation of the implementation of the common agricultural policy, the disbursing agency meets regularly with the supervising authorities.

// In the field of agricultural expenditure in general, several coordinating bodies have been set up: a multidisciplinary unit to combat fraud in the meat sector (MVC), an interdepartmental prevention unit (RPI), an interdepartmental subcommittee overseeing coordination of fraud prevention in the economic sectors and enforcement of Regulation (EC) 595/91.

// A list of the debtors is forwarded monthly to Customs by the Belgian Intervention and Refunds Bureau (BIRB), pursuant to Regulations (EC) Nos 3665/87 and 800/1999.

// Adaptation is under way to the Data Protection Act (8 December 1992).

// Coordination mechanisms between the Customs department and front-line supervising services:

- the coordinating unit of the central Customs and Excise department is informed quarterly by the front-line supervising services and the disbursing agencies of any infringements or irregularity noted and communicated to these bodies, including infringements and/or irregularity involving an amount less than EUR4 000. These communications make it possible for the Customs department to conduct a risk analysis annually under Regulation (EC) 4045/89;

- conversely, the coordinating unit informs the front-line supervising services and the disbursing agencies of cases of infringement and/or irregularity noted a posteriori which can have an impact on front-line supervision.

// Cases of presumed fraud or irregularity are also discussed within the following inter-ministerial and interdepartmental coordinating bodies: the interdepartmental prevention unit (CIP), the inter-ministerial economic committee (CEI) and the interdepartmental coordinating committee for combating fraud in the economic sectors, pursuant to Regulation (EC) No 595/91 (CICF).

DK // General comments concerning coordination between services and the impact of the Data Protection Act etc. see item 6.1 above.

// The Directorate for Food, Fisheries and Agri-Business (the "paying agency") has concluded agreements with the authorities to which it delegated control missions. These agreements lay down the general guidelines on the tasks of the authorities, in conformity, in particular, with the requirements of Regulation (EC) 1663/95. These agreements are reassessed each year.

Regular meetings between the departments concerned ensure the quality of cooperation as regards control and any adjustments that may be necessary.

D // In the field of EAGGF Guarantee, the supervising authorities are governed by paragraph 12 of working instruction DA-AWiMO and by item 5.2 of the control guide.

For the implementation of controls laid down by Regulation (EEC) No 4045/89, special instructions were given, that:

- govern in detail the exchange of information between the supervising authority of the customs administration and other services/administrations

- form part of the software of "Profit "control, which has been very broadly used since the beginning of 2000 for post-clearance verifications of export refunds within the control branch of the customs administration;

- govern the dissemination of post clearance verification reports as well as of other information. Thus, in addition to the competent administrative authorities, the payment authority (also in the other Member States) the ZKA (bureau of investigation on customs infringements) or the risk analysis central service also obtain a copy of the reports.

// In the EU payment authority (head customs office, Hamburg-Jonas ), the coordination of the fight against fraud gives rise to the processing of requests and files following established rules and its activities are subject to the permanent control of the internal audit service and of the certification organisation. (control on legality of the payments and on compliance with rules concerning recovery and penalties).

// The payment authority and the risk analysis central service of the customs administration (ZORA) also communicate information in the form of risk profiles to the services responsible for checks and investigations. The latter are required to communicate the results of their work, in permanent contact and coordination with the payment authority (recovery) and with ZORA (preventive anti-fraud actions ).

Control and investigation authorities and ZORA have access to the data of the AIDA central computer system of the payment authority.

// There is no direct exchange of data between the payment authority/ZORA and the judiciary and police authorities. Information and files are nevertheless communicated according to the rules in force for criminal procedures.

// Within the framework of its coordination function, the federal Ministry for Consumer Protection, Food and Agriculture organises regular meetings with the authorities of the Länder in order to ensure that the transposal of European law by the Länder and, where they are concerned, federal institutions, is as uniform as possible.

// There has been intensive coordination to make the electronic database of the HIT system fully operational and ensure the implementation of the system. Administrative agreements have been concluded between payment/certification authorities and internal audit services.

// Adaptations needed at legislative or regulatory level for implementing the laws on data protection and budgetary laws both at federal and Länder level, Article 15 of the Customs Code, Article 30 of tax laws (professional secrecy) and criminal code.

EL // Cooperation in the field of exports between, on the one hand, the Ministry of Agriculture's Audit Directorate of EAGGF-Guarantee expenditure and, on the other hand, the Ministry of Finance's customs departments is considered satisfactory. Cooperation with the new customs inspection service is expected to be even closer.

// Two new administrative units have been set up, in order to coordinate the new administrative departments of the Ministry for Agriculture referred at in point 4.2:

- A department whose task is to ensure lawful management of the program, through effective coordination between the departments that manage the program and the paying agency (Ministerial common decision 399570/2001);

- A department whose task is to coordinate the EAGGF Guarantee Section paying agencies (Ministerial decision 422182/2001).

These new administrative units and the new administrative departments work closely together with the Direction for planning and agricultural structures and with General Directorate for fishing, to implement programs and structural actions.

E // General measure: The General Intervention Board of the State Administration (IGAE) continues to develop its national database (TESEO) to check and monitor public grants and aid, by introducing changes as regards the exchange of information with the management bodies (Resolution of 7 February 2001).

// Act 24/2001, amending the General Budget Act:

- assigns the General Intervention Board of the State Administration (IGAE), via the National Audit Office, as the responsible service for exercising the missions of the specific service as mentioned in Article 11 of Regulation 4045/89, and defines its functions;

- designates the bodies responsible for the controls foreseen in that Regulation.

F // Fruit and vegetable sector: on 5 October 2001, an agreement was signed, defining the powers and scope of action of the respective Departmental Directorates for Agriculture and Forestry (DDAF) and the Inter-professional Office for Fruit, Vegetables and Horticulture (ONIFLHOR).

// France has developed remote sensing inspections, which increased from 23% in 1998 to 72.5% in 2001. Also, the partial use of Computer-Assisted Photo-Interpretation (PIAO) has progressively increased (30% of all diagnostics effected in 2001).

In addition, 100 inspection staff were recruited by the payment agency between 1999 and 2001. The improvement of training and monitoring of temporary agents and the provision of improved tools to these agents (control manual, increasing numbers of differential global positioning systems (GPS), planimeters etc.) has continued.

As regards the control of beef premiums, the French authorities have put in place joint checks and inspections by the services responsible for checks and identifications, and those responsible for premium controls in 2001, as recommended by the Court of Auditors.

Individualised cells for the coordination of checks and inspections have been established in an important number of Departmental Directorates for Agriculture and Forestry (DDAF).

// Rural development: since 1 January 2001, there has been a single payment agency. A team of inspection staff has been appointed to work for this service, which operates in full liaison with the State's decentralised departments. Furthermore, a new computer application has been devised to fulfil the following objectives:

- implement cross inspections in the framework of administrative controls before the payment of aid;

- establish on-the-spot control plans;

- present the results of on-the-spot control plans, as well as follow-up measures taken further to these controls.

All these new elements aim to improve the detection of irregularities.

// Internal audit: improvement of the quality and continuity of internal audit:

- restructuring of all internal audit activities performed by the Permanent Committee for the Coordination of Inspections (COPERCI) in the framework of Community aid procedures into a single audit service, driven by an Audit Committee.

- audit manuals for the 38 auditors, compulsory audit training and centralised professional documentation;

- conclusion of agreements with the payment agencies' internal audit services and the General directorate for Public Accounts.

// Coordination in the field of export refunds:

- according to Regulation 800/1999, specialised firms (SCS) may deliver proofs of arrival of goods exported from the European Union to third countries, in order to allow payment agencies to disburse the refunds requested. In order to examine requests for approval of candidate firms in France, an inter-ministerial approval committee has been created by Ministerial decree of 20 December 1996. This committee examines SCS' compliance with their conditions for approval, and verifies proofs of arrival;

- EAGGF-related irregularities can constitute a breach of the Customs Code, and are subject to prosecution by the customs authorities, which have power to apply specific penalties. The French customs service can refer a case to the judicial authorities and prosecute established offences, either by filing a complaint with the Prosecutor of the Republic or by direct prosecution in a criminal court. The recent authorisation given to customs officials as regards the conduct of judicial enquiries (see point 4.1. above) should help to reinforce cooperation with the judicial authorities. In addition, the national customs code obliges the judicial authorities to inform customs of all acts which may constitute a breach of the Customs Code;

Since 1 January 2001, the customs services have been exchanging information concerning irregularities of a magnitude less than EUR4 000 on a quarterly basis with the agencies responsible for export refunds. This procedure helps to improve mutual information between inspection services and services responsible for the payment of refunds.

// Coordination and information exchange measures as regards ex posteriori controls established by the Inter-ministerial Committee for the Coordination of Controls (CICC):

- integration, into the risk analysis conducted in application of Regulation No 4045/89, of a specific coefficient for each aid measure, based on the opinion of the Committee for the Certification of Accounts of the Payment Agencies as regards the value of conducting a posteriori controls;

- sharing of control methodologies elaborated by the ACOFA Inspection service with other services effecting checks and inspections under Regulation No 4045/89;

- implementation of exchanges between the ACOFA Inspection service and customs as part of the training given to "4045 control agents";

- specific procedure aimed at preventing the implementation of Regulation 4045/89 controls in cases where controls concerning the same beneficiary, the same period and using the same investigation methods have already been effected;

- systematic information of the CICC about the results of anti-fraud investigations conducted by customs in the case of irregularities exceeding EUR4 000;

- systematic information of paying agencies by inspection services whenever prosecutable offences are reported to the authorities;

- systematic information of inspection services about all irregularities brought to the attention of the CICC.

All administrative services in charge of the management and/or control of EAGGF Guarantee Section support may apply for access to the database of checks and inspections conducted under Regulations Nos 4045/89 and 595/91, which is managed by the CICC Secretariat.

IRL // In the Ministry of Agriculture, Food and Rural Development (DAFRD), a complex system of consultation and information exchange has been put in place between inspectors and authorising divisions, between divisions with common interests (for example in relation to the integrated administration and control system), between policy and implementing divisions and with support divisions.

As regards export refunds, well-established procedures exist for cooperating with the customs authorities. Reports concerning beneficiaries of aid under Regulation No 4045/89 are transmitted by customs to the Ministry of Agriculture's Finance Division. Information is freely exchanged between responsible Departments, including police or the judiciary as required, even though each service maintains its own database.

In the field of area aid and livestock premiums, the management and control authorities report to the same Director.

As regards milk quota, regular meetings take place between the different services involved. The Milk Quota Division uses the facility of shared database, allowing cross-checks with area data, bovine identification systems and herd number systems.

With regard to production refunds for sugar used in the chemical industry, control tasks are shared between the Administrative Division and Inspectorate.

// The access to the information held by different Government Agencies takes due consideration of the Data Protection Act limits.

// Appeals in courts against the penalties imposed under Export Regulations are frequent and make recovery difficult.

I // Coordination between the services concerned (the Customs Agency, the Guardia di Finanza and the Ministry for Agricultural and Forest Policies) is safeguarded at national level by legislative provisions and at local level by operational instructions drawn up by the head of Customs, the provincial Commander of the Guardia di Finanza and the Ministry for Agricultural and Forest Policies.

The service set up by interdepartmental decree 1.4.1996 under Article 11 of Regulation No 4045/89 to coordinate checks and inspections operates in the Ministry for Agriculture.

Generally, whenever a monitoring agency notes an irregularity, it sends a copy of the official report both to the authorising of