Commission Report - Protection of the financial interests of the Communities and fight against fraud - Annual Report 2002
Date: 2003-07-23
Institutions: European Commission
Subjects: Community budget, financial control, fraud, fraud against the EU, interinstitutional cooperation (EU), judicial cooperation in criminal matters in the EU, report

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 4.12.2003
COM (2003) 445 final/2

CORRIGENDUM
nuvelles notes de bas de page 92 et 93 et
modification de la foot note 108.de fin du document
Concerne les 11 versions linguistiques.
Traduction des foot notes 26 et 48 de fin du document
Modification de la 4, insertion de la 35 et suppresion de
la 114 de fin du document.
Concerne uniquement le EN.

COMMISSION REPORT

PROTECTION OF THE FINANCIAL INTERESTS OF THE COMMUNITIES
AND FIGHT AGAINST FRAUD

- ANNUAL REPORT 2002 -

CONTENTS

Introduction.................................................................................................................................4

Title I  – The activities of the Community for the protection of the financial interests
of the communities and the fight against fraud: major developments in 2002...........................6

1.

1.1.

An overall and coherent anti-fraud policy ....................................................................6

Associating the applicant countries with a prevention policy and the fight
against fraud..................................................................................................................6

1.2.

Strengthening the legal instruments for detection, control and sanctions ..................12

2.

2.1.

Cooperate  with the Member States and non-member countries ................................17

Cooperation with the competent authorities in the fight against certain forms
of criminality...............................................................................................................17

2.2.

Cooperation with non-member countries ...................................................................19

3.

3.1.

3.2.

4.

4.1.

4.2.

5.

An inter-institutional step to prevent and fight against corruption.............................21

The interinstitutional framework ................................................................................21

Disciplinary and specialised authorities .....................................................................22

The strengthening of the criminal law dimension ......................................................23

Penal sanctions in the field of the protection of financial interests ............................23

Judicial cooperation in penal matters..........................................................................25

Follow up of the action plan 2001-2003.....................................................................26

Title II – Implementation of Article 280 by the Member States in 2002 - Measures
taken to protect the Community’s financial interests- ..............................................................28

6.

7.

8.

9.

Texts contributing to the implementation of Article 280 of the EC Treaty -
principal legislative, regulatory and administrative developments ............................29

Texts contributing to the implementation of the Convention on the protection
of the Communities’ financial interests ......................................................................32

Organisation of departments responsible for protecting the Communities’
financial interests ........................................................................................................33

Coordination between departments within the Member States ..................................39

Title III – Statistics and Analyses .............................................................................................40

10.

The situation in 2002 ..................................................................................................40

10.1.

Introduction.................................................................................................................40

10.2.

Cases notified by the Member States..........................................................................41

2

10.3.

Cases under investigation by OLAF...........................................................................49

11.

12.

Specific analysis: trends..............................................................................................52

Financial monitoring...................................................................................................59

STATISTICAL ANNEXES......................................................................................................65

ANNEXES ................................................................................................................................75

ANNEXE TITLE I : FOLLOW UP OF THE 2001-2003 ACTION PLAN .............................76

ANNEXE TITLE II : IMPLEMENTATION OF ARTICLE 280 BY THE MEMBER
STATES IN 2002......................................................................................................................96

3

Introduction

The EC treaty calls on the Commission, in cooperation with the Member States, to transmit each
year to the European Parliament and to the Council a report on the measures taken to implement
its Article 280. To illustrate the principle of shared responsibility of the Member States and the
Commission  for  the  protection  of  the  Community’s  financial  interests,  the  report,  as  last  year,
presents  this  action  from  three  aspects:  Community  initiatives,  measures  taken  by  the  Member
States, the results of the operational action taken by the Member States and by the Commission to
detect  the  attacks  on  financial  interests  and  to  fight  against  fraud.  The  Commission  is  more
particularly responsible for designing the policy of protection of financial interests and presenting
to this end political and legislative initiatives.

The first part of the report follows the logic of the Overall Anti-Fraud Strategy 2000-20051 but
focuses  on  the  outstanding  facts  in  this  activity  during  2002.  In  this  part,  one  year  before
accession, the Commission wished to emphasise the efforts undertaken to integrate the candidate
countries in this approach.  Moreover, the more specific elements provided by the Member States
this year help highlight the importance of a  good organisation  of  different levels of  checks  and
controls,  including  investigations  for  the  specific  purposes  of  the  fight  against  fraud.    The
presentation is punctuated with some exemplary cases.

Moreover, the report provides a full and detailed summary of the measures planned for 2002 in
the  2001-2003  Action  Plan2  which  is  annexed:  the  summary  table  thus  gives  the  essential
elements in terms of responsibility, timetable and follow-up to appreciate the state of progress of
this programme. As for 2004-2005, the Commission will prepare a new Action Plan on the basis
of  the  Overall  Strategic  Approach  2000-2005  which  will  of  course  take  into  account  the
recommendations  made in  the  Report  on  the  Evaluation  of  the  activities  of  the  European  Anti-
Fraud Office3, the opinion of the Supervisory Committee and the guidelines defined by the other
institutions.

Part II of the Commission report covers specifically the measures taken by the Member States
to  implement  Article  280.  This  presentation  includes  certain  information  communicated  by  the
Member States on  their  control  activity  and  its  results4.  It  reports  on  their  efforts  to  coordinate
their  inspection  and  investigation  services  from  the  threefold  angle  of  the  monitoring  of
operations, audit of systems and anti-fraud investigations.

Part  III  of  the  Commission  report  presents  the  statistical  data  concerning  the  level  of  frauds
and other irregularities as well as the results in terms of recovery and of action by the Member
States and the Commission departments.

1

2

3 

4 

For  an  overall  strategic  approach  of  protection  of  financial  interests  and  the  fight  against  fraud  (COM
(2002) 358 final of 28.06.2000).
See  the  Action  Plan  2001-2003  on  the  protection  of  financial  interests  (COM  (2001)  254  final  of
15.05.2001) on the implementation of the overall strategy for 2001-2005.
Evaluation Report of the activities of the European Anti-Fraud Office,  under Article 15 of Regulations (EC)
N°1073/99  of  the  European  Parliament  and  the  Council  and  (EURATOM)  N°1074/99  of  the  Council
(COM(2003) 153 of 02.04.2003).
Specifically,  the  Member  States’annual  reports  provided  by  Article  17(3)  of  Council  Regulation
N°1150/2000 of the Council of 22 May 2000 implementing Decisin 94/728/EC, Euratom on the system of
own resources (OJ L130 of 31.05.2000).

4

                                                
These  results  are  analysed  from  the  point  of  view  of  the  detection  of  frauds  and  other
irregularities,  as  they  are  communicated  by  the  national  administrations  in  accordance  with  the
obligations  provided  for  by  the  sectoral  regulations.  Given  the  incomplete  and  not  very
homogeneous nature of the data transmitted last year, the Commission first gives an account of
the  progress  achieved  in  the  electronic  communication  of  data.  Subsequently,  the  Commission
endeavours  to  carry  out  a  first  analysis  of  the  irregularities  communicated,  according  to  a
budgetary  (income/expenditure)  and  sectoral  approach  which  reflects  the  major  Community
policies.

*

As  a  general  rule,  the  2002  report  shows  the  interlinking  of  the  responsibility  between  the
different  actors  and  the  convergence  in  the  different  levels  (Community  and  national).  The
information  provided  by  the  Member  States5  allows  for  better  reporting  on  the  activity  of  the
different services involved in the protection of financial interests. The analysis carried out by the
Commission shows that risks are better covered, especially from the point of view of checks and
controls, whether they be controls of the regularity of operations, audit of systems, investigations
and  prosecutions.  The  coherence  that  it  notes  between  the  various  functions,  including  specific
action  against  fraud,  in  line  with  the  four  axes  of  the  Strategic  Approach,  appears  at  both  the
Community level (Title I) and the national (Title II).  Title III throws further light, on the basis of
frauds  and  other  irregularities  notified  by  the  Member  States,  on  the  control  and  investigation
systems,  their  adaptation  to  the  risks  and  their  results  from  the  point  of  view  of  recovery.  The
presentation  therefore  consolidates  the  complementarity  logic  recommended  by  the  Overall
Strategic  Approach  of  the  fight  against  fraud,  which  makes  it  possible  for  the  Commission,  in
addition to the action proper of the Member States, to implement the means at the disposal of the
Community.

5 

On the basis of this information, alignments are possible with some findings highlighted in the report on the
implementation of former Article 209 A of the EC Treaty (see comparative analysis of the reports supplied
by  the  Member  States  on  national  measures  taken  to  combat  wastefulness  and  the  misuse  of  Community
resources  (COM(95)  556  of  13  November  1995)  and  its  supplement  on  inspections  and  administrative
penalties (SEC (2000) 843 final of 24.05.2000).

5

                                                
TITLE I  – THE ACTIVITIES OF THE COMMUNITY FOR THE PROTECTION OF THE
FINANCIAL INTERESTS OF THE COMMUNITIES AND THE FIGHT AGAINST FRAUD:
MAJOR DEVELOPMENTS IN 2002

The Commission established its general political objectives as regards protection of the
financial  interests  of  the  Community  in  an  Overall  Strategic  Approach  adopted  on  28
June 20006  for  the period  2001-2005.  It  reports  on  them  regularly,  in  particular  in  this
report.  The  approach  includes  Community  initiatives  in  this  area,  including  actions
involving Title VI of the Treaty on European Union, in particular when they are related
to  the  protection  of  the  Community’s  financial  interests.  The  objective  is  to  develop  a
legislative and regulatory framework for the protection of financial interests adapted to
all  European  policies,  which  allows  for  cooperation  and  the  partnership  with  those
working on the ground inside and outside the Union.  Some audit or investigation cases
illustrate the reality of the fight against financial crime on the ground to prevent, detect
but  also  to  penalise  those  responsible  and  repair  the  financial  damages  where  it  is
possible.

The 2002 execution of the measures planned in the Action Plan 2001-2003 is presented
in  detail  in  the  annex  to  Title  I.  The  development  that  follows  highlights  some  major
developments in  the  2002  action  of  the  Commission,  following  the  four  themes  of  the
Overall  Strategic  Approach  as  well  as  certain  horizontal  themes  such  as  the  overall
organisation of protection of financial interests from the aspects of detection, checks and
sanctions  (financial,  administrative  and  judicial  follow  up)7.  Particular  attention  is
focused on the final preparations for accession by the candidate countries.

1.  AN OVERALL AND COHERENT ANTI-FRAUD POLICY

1.1. Associating the applicant countries with a prevention policy and the fight against fraud

By  regrouping  financial  control,  sound  financial  management,  the  protection  of  the
Communities’ financial interests and the fight against fraud in one specific chapter of the
acquis (Chapter 28 – “Financial Control”), the Commission emphasises the importance
which  it  accords  to  these  countries  managing  their  budget  in  accordance  with  sound
financial management.

In its strategy document of 9 October 2002 entitled "Towards the enlarged Union" and
presented  at  the  same  time  as  its  regular  reports  on  the  progress  achieved  by  each
applicant country on the route to accession, the Commission once again stressed that any
Community financing was dependent on compliance with all the conditions ensuring a
sound  management  of  Community  funds8.  That  involves  not  only  complete  alignment

6   
7

8  

COM (2000) 358 final of 28.06.2000.
Thanks to the useful elements provided this year by the Member States on the organisation of their checks
and the coordination of their services.  See Title II, point 8 of the report and its Annex, points 3 and 4, in
particular.
Also see item 43 of the Resolution of the European  Parliament  on  the  2001  annual  report  concerning  the
Protection of financial interests adopted on 13 March 2003.

6

                                                
with  the  Community  legislative  'acquis',  but  also  -  perhaps  more  importantly  -  the
existence of sufficient institutional guarantees.

Indeed, the strategy document stipulates that applicant countries have to strengthen their
administrative structures and capacities to be in a position to ensure the protection of the
financial interests of the Community from the second half of 2003.

The Commission’s support activities within this framework were situated mainly at two
levels.  Part  of  the  Commission’s  support  was  focused  on  the  encouragement  of  the
applicant  countries  to  develop  upstream  sound  financial  management  for  protection  of
the Communities’ financial interests, by following a control and audit model, applicable
not  only  to  Community  funds  but  also  to  income  and  national  expenditure.  Other
activities were specifically aimed at strengthening the protection these interests and the
fight against fraud in the applicant countries. The progress achieved in these two, closely
linked fields, was the subject of a sustained follow-up by the Commission under Chapter
28 of the 'acquis', and of regular reporting to the Parliament and the Council.  It should
be  noted  that  the  protection  of  the  Community’s  financial  interests  is  fully  taken  into
account  in  the  other  chapters  of  the  “acquis”9  where  this  proves  necessary.    In  this
report, the Commission will however restrict itself to highlighting the actions undertaken
in the specific chapter on Financial control (Chapter 28).

1.1.1.  Control of the pre-accession instruments (PHARE, SAPARD and ISPA10)

Over  the  last  ten  years,  as  relations  with  the  accession  states  strengthened,  the
Community’s assistance changed in nature and increased in extent.  By the late 1990s,
PHARE11 was exclusively targeted at the accession process, particularly in the fields of
Institution  Building  and  alignment  with  the  acquis.  This  was  accompanied  by
increasingly rigorous financial management systems. In a dynamic decade of transition,
the  accession  states  transformed  themselves  into  emerging  market  economies.    The
Community’s  annual  assistance  in  2000  doubled  but  it  also  brought  about  both  the
additional  instruments  of  SAPARD&  ISPA,  and  more  demanding  management  and
control requirements, accompanying the candidate countries’ increasing responsibilities
in this respect.

As regards PHARE, management (DIS) has already been decentralised for several years,
and  the  transition  towards  an  extended  implementation  system  (EDIS)  is  underway.

9

10

11 

The Commission also followed the progress achieved on protection of financial interests or in linked areas
in  other  chapters  of  the  acquis,  in  particular  chapters  24  (cooperation  in  justice  and  home  affairs),  25
(Customs  Union)  and  29  (financial  and  budgetary  provisions).    Regarding  traditional  own  resources  for
example,  the  Commission  carried  out  actions  on  chapter  29,  aimed  at  ensuring  that  administrative  and
accounting systems in the ten accession countries meet the Community requirements in the area.
The  PHARE  programme,  set  up  in  1989  to  help  Poland  and  Hungary,  now  covers  the  ten  candidate
countries of central and eastern Europe and contributes some 11 billion dollars in cofinancing for technical
assistance, investment support, strengthening of public institutions and administrations and the promotion of
economic  and  social  cohesion.    SAPARD  (Special  pre-accession  programme  for  agriculture  and  rural
development) aims to help candidate countries deal with the problems of the structural adjustment in their
agricultural  sectors  and  rural  areas,  as  well  as  in  the  implementation  of  the  acquis  communautaire
concerning the CAP (Common Agricultural Policy) and related legislation.
The PHARE programme encompasses the 10 candidate countries of central and eastern Europe : Bulgaria,
the Czech Republic, Estonia, Hungary, Latvia,  Lithuania, Poland, Slovakia, Slovenia and Romania. Malta
and Cyprus benefit from a specific financial instrument installed by Regulation (EC) 555/2000 of 13 March
2000 on the implementation of operations in the framework of the pre-accession strategy for the Republic of
Cyprus and the Republic of Malta, (OJ L 068 , 16/3/2000).

7

                                                
Under EDIS, the Commission can waive the current requirement for ex ante approval of
the tendering and contracting of projects.

The  rate  of  progress  varies  substantially  in  the  different  countries.  The  eight  acceding
states  from  central  and  eastern  Europe  should  be  making  applications  for  their
implementation  agencies  in  late  2003  and  early  2004.  Cyprus  and  Malta  should  be
granted full waiver of ex-ante control in  2003. The obligation to complete the transition
to fully decentralised management for PHARE by the date of accession is stipulated in a
clause in the Accession Treaty.

In order to ensure a high degree of complementarity and monitoring of the functioning
of EDIS, the capacity for delegation will be maintained in each new Member State for
up to one year after accession.

SAPARD  is  the  first  EU  external  aid  programme  to  be  implemented  in  a  fully
decentralised manner. This means that once the SAPARD Agency receives the Conferral
Decision from the Commission, it becomes responsible for calls for grant applications,
for project selection, for grant approval, for contracts with beneficiaries, for treasury and
debt management, for payments, for keeping accounts, and for ex-post controls. On the
basis of national accreditation, the National Fund approves the management and control
systems  implemented  according  to  the  criteria  of  the  Multi-Annual  Financing
Agreement.  The  National  Authorising  Officer  as  Head  of  the  National  Fund  bears  the
full  financial  responsibilities  and  liabilities  for  Community  funds.  The  Commission
inspectors  carry  out  audits  to  determine,  on  a  basis  of  reasonable  assurance,  that  the
system will work as planned. If the outcome of the audit is positive, a draft decision is
made granting a Conferral of Management to the SAPARD Agency, the National Fund
and the measures requested in the National Accreditation Act.

In 2001 and 2002, the Directorate General for Agriculture granted provisional Conferral
to  all  eight  SAPARD  Agencies12  in  the  acceding  countries  as  well  as  to  Bulgaria  and
Romania.

Subsequently, the Commission departments will carry out Clearance of Accounts audits
on  the  accounts  and  the  conformity  of  expenditure,  and  make  financial  corrections  as
necessary.

The Commission has been stringent in its requirements concerning SAPARD, in order to
ensure that, after accession, there will be reasonable assurance that European Agriculture
funds are properly managed.

In general, better awareness of modern sound financial management within the candidate
countries  can  be  seen  and  new  methodologies  have  been  introduced.  With  the

12 

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia in respect of
the functions and criteria as stipulated in the Council Regulations 1258/1999, 1266/1999 and1268/1999 and
Commission  Regulation  2222/2000.  The  Conferral  audit  ascertained  that  the  national  procedures  are  in
compliance with the Multi-annual Financing Agreement and in particular that
- the accounts are accurate, complete and timely,
- the segregation of duties is implemented,
-  there  are  written  procedures  for  each  function  and  operation  and  that  there  are  written  agreements  with
delegated Bodies carrying out control functions,
- the Sapard Agency and the National Fund have a full audit trail for every item entered into account
- the computer system is fully protected and controlled.

8

                                                
completion  of  the  Conferral  of  the  management  of  SAPARD  aid,  acceding  countries
have achieved the basic conditions that will allow them to take full responsibility for the
implementation of EU agricultural funds.

Steady  progress  has  also  been  made  as  far  as  ISPA  is  concerned.  The  principal
requirements  for  both  financial  management  and  control  and  the  treatment  of
irregularities follow closely those applicable to the Cohesion and Structural Funds.  The
key elements relate to internal financial controls which ensure the accuracy of declared
expenditure,  adequate  internal  audit  capability,  a  sufficent  audit  trail  and  appropriate
treatment of irregularities.  The setting up of satisfactory systems for ISPA is therefore a
significant  step  in  the  preparation  for  future  management  of  the  Cohesion  Fund  and
Structural Funds.  This is given a further dimension by the procedure envisaged for the
candidate  countries  to  move  towards  EDIS  for  ISPA.  The  granting  of  a  conferral  of
EDIS is subject to a prior inspection whereby the Commission ensures compliance with
specific conditions and criteria which relate principally to sound financial management
and control.

In 2002, the Commission completed the audit work started the previous year by carrying
out a second cycle of systems audits in the ISPA countries to assess the adequacy of the
systems  established  for  management  of  ISPA  funds  and  their  compliance  with
Community  requirements.    By  following  up  on  previous  audits  and  completing  the
coverage  of  the  implementing  bodies  and  systems,  the  Commission  ensured  that  the
candidate  countries  were  fully  aware  of  the  standards  applicable  for  managing
Community  funds  and  it  was  verified  that  the  key  elements  of  the  management  and
control  systems  were  in  place.    When  it  was  recognised  that  these  were  deficiencies,
within a deadline, recommendations were made for their correction.

One candidate country submitted its formal application for EDIS at the end of 2002.  A
significant  number  of  other  countries  should  complete  their  preparations  for  EDIS  in
2003.

The  Commission  will  also  give  a  high  priority  to  Financial  Control  in  its  November
2003  Inspection  Reports  and  in  the  Evaluation  Report  on  the  implementation  of
commitments necessary for programming the structural funds.  This will pay particular
attention to the progress made in financial management and control in the context of the
Action Plans, with a view to accelerating corrective action where required.

1.1.2.  Development  of  a  general  financial  control  and  audit  capacity  (“Public  Internal
Financial Control – PIFC”)

The Commission’s interest in financial control and audit in the candidate countries goes
beyond  the  control  of  the  pre-accession  instruments.  Indeed,  in  application  of  the
principle  of  equivalent  protection  of  national  and  Community  funds,  the  Commission
has  actively  encouraged  candidate  countries  in  developing  a  general  financial  control
and audit capacity that can guarantee sound financial management in the public sector,
regardless of whether Community or national funds are at stake.

The request for assistance in this area originally emanated from the applicant countries,
which  asked  for  guidance  on  the  development  of  effective  internal  control  structures
within  the  framework  of  their  transition  towards  modern  economic  and  financial
policies.

9

Being  interested  directly  in  the  establishment  of  sound  financial  management  by  the
applicant  countries  before  and  after  accession,  the  Commission  has  in  this  framework
developed  a  modern  internal  control  approach  (Public  Internal  Financial  Control  -
PIFC),  based  on  the  experience  acquired  within  and  outside  the  Union.  This  approach
includes  three  basic  concepts:  the  managerial  responsibility  for  sound  financial
management  of  national  budgetary  funds,  the  development  of  internal  audit  capacities,
and  the  establishment  of  a  centralised  body,  responsible  for  the  development  and
harmonisation of the organisation and the methodologies of control and audit systems.

These  principles  of  PIFC  broadly  coincide  with  the  principles  applicable  to  the  sound
financial management of Community funds.

The  Commission  also  gave  its  support  to  the  establishment  of  appropriate  services,  in
particular  the  internal  audit  services  within  all  the  ministries  and  services  for  the
centralised harmonisation of internal control throughout the public sector.

Applicant  countries  obtained  at  the  same  time  more  targeted  support  from  national
experts under "Twinning" conventions, or from specialised agencies.

All  these  efforts  resulted  in  uniform  strategies,  policies  and  legislation  on  internal
control  in  the  applicant  countries.  Although  applicant  countries  have  made  different
degrees of  progress,  the  governments  concerned  were  generally  very  supportive  of  the
internal control model suggested by the Commission.

The  legislation  concerned  being  largely  in  place  in  the  majority  of  the  applicant
countries,  attention  henceforth  was  moved  from  the  analysis  and  development  of
legislation towards training and the implementing measures.

1.1.3.  The reinforcement  of the protection of the  EC’s financial interests  and the fight against
fraud in the applicant countries

In accordance with the  commitments entered  into during the negotiations,  and in close
consultation  with  the  Commission,  applicant  countries  considerably  intensified  their
efforts  in  2002  to  set  up  effective  anti-fraud  coordination  services  (Anti-Fraud
coordination  service, or AFCOS), required to coordinate  the legislative,  administrative
and  operational  activities  linked  with  the  protection  of  the  financial  interests  of  the
Communities.

By  the  end  of  2002,  such  coordination  services  were  established  in  eleven  applicant
countries,  Estonia,  Lithuania,  Cyprus  and  Slovenia  having  defined  such  structures  in
2002.13    In  the  other  applicant  countries,  where  services  of  this  type  already  existed
before,  the  activities  carried  out  in  2002  primarily  aimed  to  make  the  anti-fraud
coordination services completely operational. This implied, in particular, a more precise
definition  of  the  AFCOS’  operating  procedures  and  the  relations  between  the  AFCOS
and other institutions and bodies involved in the protection of the financial interests of
the Communities, as well as between the AFCOS and the European Anti-Fraud Office.
In  addition,  the  physical  operational  framework  of  the  AFCOS  was  strengthened,
training  activities  were  carried  out  and  staff  was  recruited.  These  measures  all
contributed  to  a  reinforcement  of  the  candidate  countries’  administrative  capacity  to
react  swiftly  to  possible  indications  of  irregularities  and  suspected  fraud.  By  making

13  

Bulgaria adopted a decision on this subject in January 2003.

10

                                                
their anti-fraud structures more effective, the candidate countries were thus in a position
to demonstrate their commitment to the protection of Community funds.

In  order  to  enable  the  authorities  of  the  applicant  countries  to  exchange  their  first
experiences  concerning  the  creation  and  the  operation  of  their  anti-fraud  coordination
services,  a  first  stage  was  passed  with  the  organisation  of  regular  meetings  bringing
together  representatives  from  the  candidate  countries’  AFCOS’  and  OLAF  were
organised. A first meeting of this type took place in Brussels on 7 and 8 October 2002.
In  addition  to  their  intelligence  and  investigation  services,  the  candidate  countries’
prosecution  services  were  also  invited  to  attend.  This  meeting  was  followed  by  two
parallel  working  sessions  involving  on  the  one  hand  prosecutors  from  the  applicant
countries and magistrates  from the  "magistrates, judicial  advice  and  follow-up" unit of
the Office and, on the other hand, representatives of the  candidate countries’ AFCOS’,
investigators  from  the  Office  and  members  of  the  intelligence  services.  Further  such
meetings took place thereafter.

These meetings represent a useful forum to exchange information and experiences and to
follow  the  efforts  made  by  the  applicant  countries  to  strengthen  their  administrative
structures with a view to protecting the financial interests of the Communities.

Such activities as well as other forms of cooperation between OLAF and the candidate
countries will receive in future aid under a specific programme, the multi-country "anti-
fraud"  PHARE14  programme  adopted  on  16  May  2002.  This  programme  provides  for
multi-annual assistance (a total of 15 million euros) in three principal fields: the creation
of  anti-fraud  structures,  the  installation  of  communication  networks  and  databases  and
the strengthening of the operational know-how of the anti-fraud coordination structures
and  of  the  police  and  prosecution  authorities  with  whom  they  cooperate.  The
implementation of the programme started in 200315.

At  operational  level,  the  Office  has,  in  specific  cases,  been  cooperating  for  some  time
already with the applicant countries’ authorities as the following case illustrates.

Fraud by  a consulting company  -  External aid to applicant countries

14 

15

Multi-country PHARE concerning the fight against fraud affecting the financial interests of the Community
(PH/2002/1412).
Outside  the  framework  of  the  PHARE  Multi-country  anti-fraud  Programme,  PHARE  support  in  the  past,
present and future in the fields of Justice and Home Affairs, Customs and Borders, has a direct bearing on
increasing overall capacity in the fight against fraud.

11

                                                
In  July  2002,  in  accordance  with  Article  3  of  Regulation  No  1073/99,  the  European  Anti-Fraud  Office
(OLAF)  launched  an  external  investigation  on  the  basis  of  information  received  from  the  Community
delegation in Croatia. The information showed the possibility of double invoicing by a German firm within
the framework of financing a consulting company as regards harmonisation of national law with Community
law. The financial impact is estimated at approximately euros 110,000, mainly on PHARE and OBNOVA
financing. The Office found evidence of an irregularity connected with projects managed by the  German
firm in Slovakia, the Czech Republic and  Croatia.  These irregularities  included  overcharging  and double
invoicing.  The Office also alerted the Czech prosecutor and the Czech police proceeded to a search of the
offices, seizing computers, data and several thousand documents.  The evidence collected by the Office
was presented to the Prosecutor General in Berlin. An arrest warrant was issued. The German authorities
arrested a suspect, the court case being due to take place in 2003.

The Community delegation brought to an end the  project in  Croatia  due to  the lack  of  results  in  August
2002, shortly after the beginning of the investigation.

The  projects  in  the  Czech  Republic  and  Slovakia  were  completed  to  the  satisfaction  of  the  Czech  and
Slovak authorities, under the arrangements for decentralised management of Community funds.

Since then the Commission has taken action to suspend payment to the Czech authorities of an amount
equivalent  to  all  outstanding  funds  in  two  ongoing  projects  by  the  same  German  firm  in  the  Czech
Republic, to protect the Community’s financial interest, pending outcome of the Berlin Court case.

In  order  to  facilitate  the  communication  on  irregularities,  as  envisaged  by  the  pre-
accession  instruments  (PHARE,  ISPA,  SAPARD)  and  Community  legislation,  the
Office undertook to equip the administrations  of the  applicant countries  with  terminals
of the AFIS anti-fraud information system16. Fifteen terminals of this type are currently
in operation, covering ten applicant countries. At the same time, guidance was provided
on the communication of irregularities under the pre-accession  instruments, in order to
ensure a clear understanding of the procedures which should be applied.

1.2. Strengthening the legal instruments for detection, control and sanctions

An  effective  policy  of  protection  of  financial  interests  is  achieved  through  the
mobilisation  of  all  the  authorities  concerned  at  Community  and  national  level.  The
management  of  80  %  of  the  Community  funds  is  decentralised.  The  collection  of  the
own  resources  of  the  Community  is  the  responsibility  of  the  Member  States17.    In
addition,  the  Commission  departments  manage  a  part  of  the  budget  directly  while
guaranteeing the sound financial management of the system.

The development which follows shows how the overall system of control, follow-up and
sanctions set up at the level of the Member States and the Community aims to guarantee
that the different levels of responsibility work in a complementary way, while respecting
the principles of effectiveness and equivalence of the protection of the financial interests
on the territory of the European Union.  This echoes the presentation made this year by
the Member States, in Title II of the report, of the organisation of their checks and the
coordination  of  their  departments  involved  in  the  protection  of  financial  interests  and
certain  analyses  presented  in  Title  III  concerning  the  notification  of  frauds  and  other
irregularities.

16

17

On AFIS, see also point 2.1.
See Part II of the report where the latter give an account of the organisation of their services in managing
funds,  checking  they  were  appropriately  used,  collecting  duties  and  recovering  the  amounts  received
without justification and lost income.

12

                                                
1.2.1.  Detection and control

As  regards  controls,  as  is  shown  in  part  II  of  the  report,  the  Member  States  first
contribute to the protection of the financial interests by a broad monitoring of operations
(customs, transactions, programmes or plans) and a systematic checking of the regularity
of procedures. This approach is supplemented by systems audit strategies and control of
the use of funds. Finally, on the basis of suspicions of fraud, administrations detect the
irregular  facts  or  behaviour  which  can  lead  to  bringing  individual  responsibilities  into
question at administrative or penal level. Title III (point 11.3 in particular) in this regard,
enables  it  to  be  seen,  on  the  basis  of  the  communications  from  the  Member  States  of
frauds and other irregularities, that in certain sectors, the overall control system selected
by a Member State influences recovery (size of the payments suspended before closure
of programmes, share of recoveries a posteriori).  Suggestions are also made (point 11.2
in particular) to adapt the control and investigation  strategies  to  the type of  risk  (cases
with significant amounts, sectors or products with a high risk of irregularity).

At Community level,  checks  for the protection of financial interests are  structured in a
similar way. The checks on the regularity and sound application of applicable legislation
are carried out, in coordination with the Member States, by the authorising Directorates-
General, also responsible for checks on the use of funds and the systems audits provided
for  by  the  various  sectoral  regulations,  with  the  national  administrations.    The
partnership  is  often  very  detailed,  as  it  appears  below.  In  the  event  of  problems,  the
Commission has to take the appropriate measures.

Development of the Joint Audit Arrangement in traditional own resources

Under  the  Joint  Audit  Arrangement,  the  Commission  and  the  internal  audit  services  of  certain  Member
States,  cooperate  in  the  field  of  traditional  own  resources,  to  facilitate  the  exchange  of  experience,
expertise and techniques as regards internal audit.  According to this approach, the internal audit service of
the Member State concerned carries out the check in accordance with an appropriate module18 covering
the preselected customs and/or accounting field.  Once it has completed its work, it sends its report at the
same time to the national administration and the Commission. The latter examines the results of the audit
work carried out and checks the working papers and the methodology used.  The Commission then draws
up its own report. Possible anomalies - specific or structural - are the subject of a budgetary regularisation
under standard conditions. If the analysis of the systems were to make it possible to qualify an anomaly as
structural, the Commission will be informed of the measures proposed by the Member State with a view to
mitigating the underlying weaknesses of the system. The Commission and the Member States, in particular
Denmark, Austria and  the  Netherlands  who  are  the  pioneers,  found a  substantial benefit  to carrying  out
controls  within  the  framework  of  such  an  approach.    Seven  checks  have  already  been  carried  out  with
these Member States in this connection, including three in 2002.

Audit missions in the Structural Funds

18

The following modules are currently available: Free circulation, including A accounts (external transit (T1
and TIR), warehousing, generalised preferencial schemes, inward processing, separate accounts.

13

                                                
Thus, as seen from the data provided by the Member States as regards control staff19, the national systems
of detection, communication and follow-up of irregularities show certain weaknesses.  Improvement in this
field  was  identified  as  a  priority20  and  the  Commission  committed  itself,  within  the  framework  of  the
discharge  procedure  of  2000,  to  carry  out  audits  covering  the  application  of  Regulation  1681/94  for  the
Structural Funds, and Regulation 1831/94 for the cohesion fund. These audits cover, in particular, 1) the
checking of  the national  irregularity  notification  systems  for  the  Structural  Funds  and  the  cohesion  fund,
and  2)  the  application  of  Article  8  of  Regulation  438/2001  and  of  Article  3  of  Regulation  448/2001,
concerning respectively the accounting of the recoverable amounts and the financial correction procedures.

The conclusions and recommendations of these audits, carried out between November 2002 and January
2003,  will  be  notified  to  all  the  Member  States  for  what  concerns  them  as  well  as  to  the  European
Parliament, the Council and the Court of Auditors in 2003.

Different  types  of  control  are  involved  in  the  protection  of  the  Communities’financial
interests and coordination between the different responsible services  is  essential. Thus,
anomalies  detected  in  a  routine  control  or  at  the  time  of  an  audit  can  lead  to  a  more
detailed investigation on the operators' individual responsibility. This last type of action
which has the purpose of detecting facts or irregular acts liable to lead to administrative
or criminal proceedings is the responsibility of the European Anti-Fraud Office21.  The
following investigation illustrates this complementarity of checks:

Case concerning fraud in the fisheries sector

During 2002, information reached OLAF concerning the non-observance by a company of transformation of
the minimum price to be paid to the fish producers for the marketing year 2000/2001 in Greece. Within the
framework of an external investigation on the basis of (EC) Regulation N°1258/99 regarding the Common
agricultural policy and of (EC) Regulation N°2185/96, the Office carried out checks on the spot at certain
economic  operators  and  verified  information.  Irregularities  concerned  in  fact  at  least  8  cooperatives.  In
January  2003,  the  investigation  report  estimated  the  amount  to  be  recovered  at  1,472,033  euros.    The
Greek judicial authorities were alerted and opened an investigation. As it does as a general rule, the Office,
in association with the Directorate General Agriculture, sent, in February 2003, its recommendations to the
Greek Ministry of Agriculture. A judicial and administrative follow-up was put in place.

The  different  approaches  to  controls  described  above  are  complementary  but,  as  it
emerges  from  Title  II  of  the  report,  the  very  limited  share  (8%  on  average,  all  sectors
included)  of  manpower  assigned  at  national  levels  to  such  anti-fraud  controls
(investigation services of the ministries, police and judicial authorities) may indicate that
insufficient  account  has  been  taken  of  the  criminal  law  dimension  of  serious  acts
prejudicial  to  Community  public  finance.    In  this  context,  OLAF  endeavours,  in
accordance with the principle of subsidiarity, to encourage cooperation with the national
authorities  and  to  structure  its  own  investigative  capacities,  where  the  action  of  the
Member States seems less effective. It has been assigned its own administrative powers
of  investigation  by  the  legislator  and,  although  the  investigations  targeted  at  operators

19
20  

21

See Title II of the report
See the White Paper on the reform (Action 97) and the Commission Communication on 7 August  2001 on
this subject (Doc. C (2001) 2517 concerning the improvement of the financial follow-up and control of the
Structural Funds). See also Item 1.2.2 of the 2001-2003 Action Plan.
See the progress report on the activities of the European  Anti-Fraud office (OLAF) previously  mentioned
(COM (2003) 153 of 27.3.2003), in particular point 1.1.2

14

                                                
and  companies22  remain  difficult  to  organise  on  the  ground23,  it  has  the  capacity  to
establish direct links with the police and judicial authorities.

1.2.2.  Ensuring more efficient financial follow-up and reinforcing sanctions

The Commission is required to follow the procedures for recovery of Community funds
unduly  received  in  the  Member  States  and  to  give  an  account  of  them  in  the  annual
revenue and expenditure account24. Under this chapter, significant measures on recovery
more  adopted  in  2002.  Moreover,  the  important  effort  carried  out  by  the  Commission
since 2000 to renew the rules of financial management within the institutions led in 2002
to the adoption of the new financial regulation25.

1.2.2.1. 
decentralised management of Community funds

Improving  effectiveness  and  clarifying  responsibilities  in  the  field  of  the

From  the  financial  point  of  view,  it  is  for  the  Member  States  or  the  non-member
countries to carry out the recovery from the final beneficiaries  and to pay the amounts
concerned  to  the  Commission  (see  Title  III  for  the  statistics  by  area).    This  concerns
funds  unduly  paid  under  Community  policies  implemented  in  a  decentralised  manner
(EAGGF-Guarantee,  Structural  Funds,  external  aid).  Under  the  terms  of  existing
legislation, the Commission is required for its part to follow the procedures for recovery
carried  out  by  the  Member  States  in  this  framework,  and,  if  necessary,  to  apply  the
clearance  procedures26.  The  slowness  of  these  procedures  and  the  accumulation  of
Community  debts  are  a  subject  of  concern  both  for  the  Commission,  the  Court  of
Auditors and for the Budgetary Authority, in particular the European Parliament which
raises it regularly in its resolutions on the protection of financial interests27.

Within  the  framework  of  the  implementation  of  the  White  Paper  on  internal
administrative reform, the Commission committed itself to improving the effectiveness

22

23

24 

25

26

27

The sectoral dispersal of legal bases applicable for on the spot checks and inspections, mentioned in Article
9  of    Regulation  (EC,  Euratom)  n°  2988/95    leads  the  Commission  to  envisage,  as  a  complement  to  the
inquiries proper of OLAF (see previous footnote),  in 2003 to follow up the 2001-2003 Action Plan (Item
1.2.2)  and  propose  a  Council  Regulation.  Without  affecting  existing  mechanisms,  this  regulation  would
create a single new base for antifraud investigations conducted by the national investigation services upon
OLAF’s  request  and  would  facilitate  an  effective  and  harmonised  follow  up  of  the  results  of  the
investigations, in particular regarding the rules of confidentiality and of data protection.  See the progress
report on the activities of OLAF previously mentioned, recommandation n°3, under item 1.1.2.
In  particular  checks  on  the  spot  envisaged  by  Regulation  (EC)  n°  2185/96,  the  Community  anti-fraud
missions in third countries under Regulation (EC) n° 515/97.  See the evaluation report  under  Article  15,
recommendation n°3.  In order to reinforce OLAF’s own investigation powers, the Commission considers
extending this framework to direct expenditure.
In  compliance  with  the  Financial  Regulation,  the  Commission  produces  for  the  1st  May  the  consolidated
annual revenue and expenditure account of the preceding year.
New financial Regulation: Regulation (EC, Euratom) N°1605/2002 of the Council applicable to the General
Budget of the European Communities (OJ L248 of 16.9.2002); new implementing arrangements: Regulation
(EC,  Euratom)  N°2342/2002  of  the  Commission  establishing  the  implementing  provisions  of  the  (EC,
Euratom) Regulation N°1605/2002 of the Council Regulation (OJ L357 of 31.12.2002).
On 30 June 2002, for the period 1972-2000, the Community debts related to the regularisation of advance
payments  or  following  mistakes,  formal  or  substantial  irregularities,  and  more  rarely,  frauds,  exceeded  3
billion  euros:  2,3  billion  euro  for  EAGFF-Guarantee,  387  million  euro  for  the  Structural  funds  and  373
million euro for direct expenditure (see COM (2002) 671, page 3)
Items 6 to 8 of the resolution on the Commission’s 2001 annual report of 13 March 2003.

15

                                                
of  recovery28  by  clarifying  the  responsibilities  of  the  different  actors.  In  its
communication  of  3  December  200229  which  aims  in  particular  to  clear  the  arrears  of
amounts  linked  with  irregularities  awaiting  to  be  recovered  in  the  EAGGF  Guarantee
Section, the Commission announced the setting up of a temporary “recovery” task force,
to  allow  the  latter  to  complete  the  clearance  of  cases  prior  to  1999.  The  results  of  the
work of this cell will be presented in the 2003 report.

1.2.2.2. 
sanctions

Simplifying  the  direct  management  of  Community  funds  and  strengthening

With regard to Community  debts  arising  from  direct  management  by  the  Commission,
the new financial framework30 applicable from 1 January 2003, and the implementation
by the Commission  of  its  role,  implements  the  principle  of  the  separation  of  functions
(authorising  officer,  delegated  authorising  officer,  accountant,  auditor,  anti-fraud
investigator).    Moreover,  it  improves  the  establishment  of  Community  debts  and
recovery methods (by compensation, by using preliminary guarantees, by distraint).

With  regard  to  sanctions,  the  new  financial  regulation31  stipulates  henceforth  that
unreliable  operators  providing  misleading  or  fraudulent  information  shall  be  excluded
from participating in a market and any future procedure for a certain period32. Moreover,
candidates  and  subcontractors,  either  in  a  conflict  of  interests  situation  or  guilty  of
making a false statement in the tendering procedure shall be excluded from participation
in  this  market.    The  information  concerning  them  will  be  captured  in  a  centralised
database,  also  accessible  to  the  other  European  institutions.  The  same  exclusion
provisions shall apply to subsidy recipients. This is linked to a proposal for a directive
concerning national procedures for the award of public supply contracts, currently being
examined by the European Parliament and the Council33.

28  

29
30  

31  
32  

33

Communication from Mrs Schreyer to the Commission on Action 96 of the White Paper (Doc.COM (2000)
200 final/2 of 05.04.2000 "More effective management of funds unduly received" on 13 December 2000  –
SEC(2000)2204/3. See also Item 1.2.2 of the Action Plan 2001-2003 quoted above.
COM (2002) 671 final of 3.12.2002.
See above the references to the new financial Regulation and the detailed rules for implementation and new
internal  procedure  provisions  concerning  the  recovery  of  the  debts  born  from  direct  management  and  the
recovery  of  fines,  flat-rate  sums  and  penalties  under  the  treaties.  In  addition,  so  as  to  fulfill  its  duties
regarding the financial follow-up of files gone into criminal procedures, the Commission asked its services
(OLAF/Legal Service) to prepare a draft decision authorising the member of the Commission in charge of
the fight against fraud to act on behalf of the Commission before the jurisdictions of the Member States or
of third countries in criminal procedures concerning the Communities’ protection of financial interests.
In particular Articles 93-95 and 113.
In  the  event  of  serious  fault  in  professional  matters,  in  the  event  of  judgement  for  fraud,  corruption,
participation in a criminal organisation or any other illegal activity undermining the financial interests of the
Communities, or where they are declared for serious breach of implementation for non-observance of their
contractual  obligations  following  an  award  for  a  contract  or  the  granting  of  a  subsidy  financed  from  the
Community budget.
A proposal for a Directive COM (2000) 275 final of 10.5.2000 concerning the coordination of  procedures
for the award of public supply contracts, public service contracts and public work contracts (OJ C 29 E of
30.1.2001).  One of the objectives of the new directive is to compel the authorities to exclude non reliable
operators. The Council and Parliament judged that the implementation of  Article  46  of  the  proposal  for  a
Directive does not require the setting up of a system of exchange of information.

16

                                                
2.  COOPERATE  WITH THE MEMBER STATES AND NON-MEMBER COUNTRIES

The EC treaty, in Article 280(3), stipulates that Member States shall organise close and
regular  cooperation  among  themselves,  with  the  help  of  the  Commission34.  The
Commission assumes its responsibility in particular by providing assistance in the field
of intelligence as well as in the operational field.

This  involves  the  effective  cooperation  with  the  national  authorities  whenever  the
Commission  asks  the  Member  States  to  start  an  investigation  on  the  basis  of  the
information  available  to  it.  In  accordance  with  the  priority  identified  by  the  Overall
Strategic Approach under the heading “Community service Platform”, the Commission
has throughout 2002 deployed its efforts to strengthen partnership in the framework of
external  investigations35.    The  results  of  such  partnerships  are  illustrated  by  a  few
significant actions below.

2.1. Cooperation  with  the  competent  authorities  in  the  fight  against  certain  forms  of
criminality

2.1.1.  Joint civil action before the American courts (cigarette fraud)

The  Member  States  and  the  Community  have  common  interests:  this  reality  on  the
ground  is  extremely  well  illustrated  by  the  fight  against  cigarette  smuggling  which
affects in particular customs duties, excise duties and VAT receipts, VAT being both a
national income and own resource of the Community.
The  European  Commission,  supported  by  ten  Member  States36,  is  carrying  out  in  the
United  States  judicial  proceedings  against  cigarette  manufacturers  whom  it  accuses  of
taking part in a cigarette smuggling system on the territory of the European Union. This
has  resulted,  amongst  other  damages,  in  very  significant  losses  for  Community  and
national finances during at least the last ten years.  This case is of a considerable order of
magnitude and illustrates the will to cooperate of both the Community and the Member
States,  which  go  well  beyond  ordinary  litigation.  The  civil  action  concerns  a  massive
international  smuggling  and  money-laundering  scheme  involving  very  considerable
amounts.  It  is  important  to  underline  that  the  cigarette  smuggling  is  linked  to  other
serious forms of  organised crime, in particular drug-trafficking and the  related  money-
laundering.  What  starts  as  drug  trafficking  proceeds,  therefore  ends  up  as  smuggled
cigarettes  in  the  EU  and  other  countries,  with  the  proceeds  from  this  activity  being
transferred subsequently into the countries of origin of the firms.

These civil lawsuits in the United States complement the strenuous efforts undertaken by
the Commission and all of the Member States effectively to control tobacco smuggling
and  money  laundering.  These  efforts  have  met  some  notable  successes  on  the  whole.
However,  cigarette  smuggling  and  money  laundering  remain  major  problems,  and  in

34

35  

36

Of course, this cooperation concerns the Member States with the whole array of the means at their disposal,
including  their  repression  apparatus.    This  is  the  reason  why,  the  Commission  and  the  law  maker  have
granted OLAF the necessary powers to be the interlocutor of the law enforcing and judicial authorities.
Notwithstanding  this  cooperation,  as  it  is  recalled  in  the  « Article  15 »  report,  the  Commission  and  the
European Anti-Fraud Office, in compliance with the principles of subsidiarity and proportionality laid down
in the treaty and secondary legislation, assume their own responsibility by exercising the powers conferred
by  the  European  legislator  as  regards  autonomous  investigations,  in  accordance  with  Article  3(1)  of
Regulation  N°  1073/199921.  For  these  investigations  the  Office  has  the  direct  responsibility  for  the
financial, administrative and judicial follow-up (see point 1.2.2.2 above).
Belgium, Germany, Greece, Spain, France, Italy, Luxemburg, The Netherlands, Portugal and Finland.

17

                                                
particular a major drain on the EC and Member States’ public finances.  The EC and the
Member States have determined that the remedy to this problem requires attacking it at
source.

The  civil  lawsuits  were  filed  in  the  United  States  because  the  defendants  are  US
companies  suspected  of  having  organised  from  smuggling  the  United  States,  in
contravention of US law.  The US jurisdiction constitutes therefore the adequate forum
for  an  appeal  introduced  on  the  basis  of  the  Racketeer  Influenced  and  Corrupt
Organizations Act  (RICO), which is  an  important  tool  in  fighting  organised  crime.    In
addition, the US jurisdiction provides the opportunity to obtain court-ordered injunctive
relief, which could be an efficient tool for preventing this type of crime.

A first civil action carried out in November 2000 against cigarette manufacturers Philip
Morris,  R.J.  Reynolds  and  Japan  Tobacco  before  the  "United  States  District  Court  -
Eastern  District"  of  New  York  was  rejected  for  procedural  error.  The  action  was
relaunched in  August 2001 with the ten  Member States  acting as co-applicants. On  19
February 2002, the court rejected the allegations based on smuggling, a decision which
is currently under  appeal. The  Commission introduced  however  a  new  case  against  RJ
Reynolds  for  money  laundering,  this  option  having  been  preserved  by  the  American
judge.

In addition, on 15 January 200337, the Court of First Instance rejetected the complaints
made  by  the  three  cigarette  manufacturers  Philip  Morris,  R.J.  Reynolds  and  Japan
Tobacco  which  aimed  to  have  the  civil  action  rejected  on  the  grounds  of  the  lack  of
competence of the European Commission to bring a case before American jurisdiction.
Eight countries of the EU supported the Commission in this procedure, with the support
of the European Parliament38. The applicants made an appeal.

The  Commission  wishes 
the
determination of the Community, to fight fraud where it harms the financial interests of
the Union.

these  conclusions  strengthen 

to  emphasise 

that 

2.1.2.  Cooperation  against  certain  forms  of  criminality  prejudicial  to  the  interests  of  the
Communities

Among  the  key-sectors  identified  in  the  Overall  Strategic  Approach,  the  Commission
mentioned  the  need  to  improve  the  fight  against  organised  crime,  in  particular
transnational  crime  affecting  Community  interests  linked  to  the  fight  against  fraud  or
corruption. In certain very specific fields where a Community policy or basic legislation
already exists, in particular as regards protection of the euro or the fight against piracy
and counterfeiting39 the experience gained on the ground can be put to use to strengthen
cooperation with the Member States, and to adapt the regulatory framework if necessary.

37     

38

39  

Judgement of the Court of First Instance "Philip Morris,  Reynolds  and  Japan  Tobacco  v  Commission"  in
linked cases T-377/00, T-379/00, T-380/00, T-260/01 and T-272/01.
Spain, France, Italy, Portugal, Finland, Germany, Greece and the Netherlands.
EC Regulations N°3295/94 and N°1367/95 (OJ L of 30.12.1994 and OJ L 133 of  17.6.1995) Green Paper
on the fight against counterfeiting and piracy in the internal market - COM(1998) 569 final.

18

                                                
(cid:1)  The legislative framework40 being in place to protect the euro against counterfeiting,
the Commission has set up transnational and multi-disciplinary exchange,  assistance
and  training  projects41.  During  2002,  seven  projects  were  implemented  under  this
Pericles  programme,  involving  the  representatives  of  OLAF,  the  European  Central
Bank  and  Europol.  The  protection  of  coins  is  the  subject  of  a  specific  Community
action  entrusted  to  the  European  Technical  and  Scientific  Centre,  managed  by  two
agents of the Commission (OLAF) one of whom is located at the Paris Mint. In 2002,
initiatives were taken for the analysis of counterfeit coins, the authentication of euro
coins and the establishment of a database relating to the materials used.

(cid:1)  Industrial  and  Commercial  counterfeiting,  and  more  generally,  economic  crime
against intellectual property, contribute to sustaining the underground economy, often
by smuggling circuits which cause losses of own resources for the Community. This
development calls for an improvement and strengthening of the  existing mechanism
making it possible, to ensure the safety and protection of the consumer, the respect of
the  rights  of  intellectual  property  holders,  as  well  as  the  financial  interests  of  the
Community.

In  2002,  the  Commission  prepared  two  new  legal  instruments  which  it  proposed  in
January 2003: a proposal for a Regulation42 which aims to extend intellectual property to
new  products,  to  facilitate  the  approaches  by  the  holders  of  rights  with  the  customs
authorities and to simplify the action of the competent authorities of the Member States
in  the  event  of  suspicion  of  counterfeiting  linked  with  goods  from  third  countries;  a
proposal for  a  Directive43  which is  intended to  harmonise  in  the  national  legislation  of
the European Union instruments enabling intellectual property rights to be respected and
to define a framework for the exchange of information between the competent national
authorities. The proposal would guarantee identical conditions to the owners of rights in
the  EU,  would  strenghten  measures  against  offenders  and  would  act  as  a  deterrent  to
counterfeiters and pirates.

2.2. Cooperation with non-member countries

Since  1998,  the  Commission  has  endeavoured  with  the  Council  bodies  to  remove
obstacles  to  the  fight  against  economic  and  financial  criminality  at  international  level
and, in particular the Swiss Confederation. It recognised in particular the usefulness of
broadening  into  other  fields  such  as  tax44  and  direct  expenditure,  the  mechanisms  for
administrative  cooperation  established  in  the  protocol  of  1997  on  mutual  assistance  in

40  

41  

42  

43  

44

Regulations N°1338/01 and 1339/01 of the Council, and Council Decision which constitutes the legislative
base 1st and 3rd pillars allowing for the cooperation of all the institutional actors concerned (ECB, Europol,
the Commission/OLAF), the central offices and the competent authorities of the Member States as well as
third countries. The list of competent authorities was published in July 2002 (OJ C 173 of 19.7.2002, 2002
C 178/06).
Decision  of  the  Council  of  17/12/2001  drawing  up  an  action  programme  on  exchange,  assistance  and
training for the protection of the euro against counterfeiting (Decision 2001/923/EC, OJ L of 21.12.2001)
Proposal  for  a  Council  Regulation  on  the  intervention  of  the  customs  authorities  with  regard  to  goods
suspected of contravening certain intellectual property rights as well as the measures to be taken with regard
to goods contravening certain intellectual property rights (Doc.  COM (2003) 20 final of 20.01.2003).
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  concerning  the  measures  and
procedures  aimed  at  ensuring  the  respect  of  intellectual  property  rights  (Doc.  COM  (2003)  46  (01)  of  30
January 2003).
See Commission Communication to the Council on the report concerning the negociations with countries on
the taxation of savings (SEC (2002) 1287 final of 27.11.2002).

19

                                                
customs matters45. Moreover, judicial cooperation,  in particular in the  fight  against tax
and  customs  fraud  and  laundering  of  the  products  of  such  fraud  suffered  from  gaps.
Obstacles  persisted  with  regard  to  requests  for  access  to  documents  from  Swiss
economic operators and recipients of Community funds.

In  its  resolution  of  13  March  2003  on  the  protection  of  the  Communities’  financial
interests  and  the  fight  against  fraud  –  2001  annual  report,  the  European  Parliament
expresses  its  concern  at  the  lack  of  progress  in  the  anti-fraud  negociations  with
Switzerland in 2002.  In fact, significant progress has not yet been made on a series of
key  questions.    For  the  Commission,  the  future  agreement  should  lead  to  a  qualitative
improvement in the cooperation on the basis of European Union standards in the area of
administrative  assistance,  judicial  assistance  and  the  fight  against  laundering.  The
Commission reaffirms its attachment to the aim set by the Council in the mandate given
on 14 December 2000 and intends to conclude the negotiations with Switzerland in 2003

Cooperation  with  non-member  countries  is  also  developing  through  operational  and  in
particular  Community  investigation  missions  carried  out  under  Articles  19  and  20  of
Regulation N°515/97.  There follows a notable example of this operational cooperation.

Investigation –Electricity company in Kosovo

At the end of April 2002, the European Anti-Fraud Office was alerted by the mission of the United Nations
in Kosovo (UNMIK) of a suspicion of fraud and decided to open an external investigation in accordance
with Article 5, Paragraph 1 of Regulation (EC) n° 1073/1999.
Following  information  obtained  from  Kosovo,  it  was  established  that  the  European  funds  concerned
(roughly  4.2  million  USD,  approximately  4  million  euros)  had  been  transferred  to  a  bank  in  Gibraltar.
Another attempt by the principal suspect to transfer the funds from Gibraltar to Belize was thwarted by the
bank.
The Attorney General of Gibraltar, at the request of OLAF, was able to obtain from the Supreme Court, the
freezing  of  the  bank  accounts  concerned.  In  August  2002,  OLAF  was  able  to  ensure  the  return  to  the
budget of Kosovo of the full amount which had been misappropriated.  It launched a procedure to ensure
the  repayment  of  the  balance  and  to  have  access  to  the  bank  account  details.  In  July  2002,  the  Office
transferred to the German judicial authorities all information and documents that it was able to obtain on
suspected fraud, during its investigation. In December 2002, the principal suspect, a former employee of
the United Nations in Kosovo appeared before the German prosecutor's office in Bochum and was taken
into  custody.  The  German  court  decided  that  it  was  competent  to  try  the  case  (“rational  personal”)  and
sentenced  the  accused  in June 2003  to  three and  a half years  in  prison  for  the  misappropriation  of  the
funds intended for the KEK.
Despite  the  complexity  of  the  international  relations  which  had  to  be  put  in  place,  this  inquiry  was
successfully  concluded  within  a  short  timeframe  thanks  to  the  collaboration  of  the  German,  Gibraltar,
Kosovo and Serbian authorities.  The participation of the judicial authorities in Germany and Gibraltar was
a  key  in  the  production  of  evidence  of  the  offence,  as  well  as  the  contacts  established  with  the  United
Nations in New York.

45

Agreement in the form of exchange of letters between the European Economic Community and the Swiss
Confederation – Joint Declaration (OJ L 169 of 27.06.1997 p. 0077 – 0084).

20

                                                
3.  AN INTER-INSTITUTIONAL STEP TO PREVENT AND FIGHT AGAINST CORRUPTION

3.1. The interinstitutional framework

Since  May  1999,  the  Community  has  had  a  legal  framework  to  fight  inside  the
institutions, bodies and agencies against fraud, corruption and any other illegal activity
undermining  the  financial  interests  of  the  European  Community  and  to  guarantee  the
safety  of  Community  interests  against  irregular  behaviour46.  In  2002,  this  legal
framework  has  led  to  several  disputes47  which  provided  useful  information  on  the
consistency  of  the  interinstitutional  framework  of  internal  investigations48:  this  applies
without  exception  to  all  the  institutions,  bodies  and  agencies  set  up  by  the  EC  and
Euratom treaties or by the Council, whatever their prerogatives, to the members or the
institutions whether or not they are covered by the staff regulations and whether or not
they are subject to disciplinary control. It emerges in particular from recent case law that
the “Communities’ financial interests” mentioned in article 280 of the EC Treaty include
not only the income and expenditure which come under the Community budget but also
from the budget of other bodies or agencies set up by the EC Treaty, such as the ECB
and  the  EIB49  and  as  well  as  all  the  funds  and  resources  managed  by  the  Community
institutions, bodies and agencies, whatever their origin.

It follows moreover from the progressive setting up of this framework that the  internal
investigation  function  for  the  purposes  of  protecting  Community  interests  cannot  be
interpreted  as  an  attack  on  the  autonomy  of  management  of  the  various  bodies,  who
decide in particular on the appropriate follow-up action to be taken apart from any penal
follow  up.  In  its  judgement  of  10  July  2003,  the  court  recalls  the  guarantees  aimed  at
ensuring  the  strict  independence  of  OLAF,  the  latter’s  subjection  to  respect  fully
Community law, the clear demarcation between the subject of its powers and its means
of action and the diverse specific rules to which their conduct is subject.

The question also arose in connection with the bodies set up within the framework of the
3rd pillar:  Europol, which is in  theory  financed  exclusively  by  the  Member  States  and
whose staff have their own staff regulations is not concerned; Eurojust on the other hand

46  

47  

48

49 

Adoption on 25 May 1999 of Regulation (EC) N° 1073/1999 of the European Parliament and of the Council
and Council Regulation (Euratom) N° 1074/1999 of 25 May 1999 concerning investigations conducted by
the European  Anti-Fraud Office (OLAF) giving the latter the responsibility to investigate serious  matters,
relating to the discharge of professional duties liable to constitute a breach of the obligations of the officials
and  other  servants  of  the  Communities,  liable  to  lead  to  disciplinary  and,  where  appropriate,  criminal
proceedings and to inquire into any possible breach of the similar obligations on the part of members of the
institutions and bodies, heads of offices and agencies or members of staff of the institutions, bodies, offices
and agencies not subject to the staff regulations. Interinstitutional Agreement of 25 May 1999 between the
European  Parliament,  the  Council  of  the  European  Union  and  the  Commission  of  the  European
Communities concerning internal investigations by the European Anti-Fraud Office (OLAF) – Commission
Decision N° 1999/352/EC, ECSC, EURATOM of 28 April 1999 .
As  a  result  of  the  request  for  dismissal  introduced  by  71  deputies  of  the  European  Parliament,  the  Court
considered  that  the  decision  of  this  institution  as  a  general  application  measure  which  applies  to  all  the
members  of  the  European  Parliament,  notwithstanding  their  statutory  prerogatives  (Judgement  of  26
February  2002  of  the  Court  of  First  Instance  in  the  T-17/00  case  (Rothley  and  70  other  members  of  the
European Parliament).
See the judgement of the CFI referred to above and conclusions of the Advocate General on 3 October 2002
in connection with cases C11-00 Commission/ECB and C15-00 Commission/EIB.
Judgement  of  the  Court  of  Justice  of  10  July  2003  in  cases  C-11/00,  Commission  v  ECB  and  C-15/00,
Commission v EIB, declaring void the decision of 7.10.1999 taken by the European Central Bank and the
decision of 10.11.1999 by the European Investment Bank.

21

                                                
will  be  in  a  very  major  part  financed  by  the  Community  budget  and  will  have  a
secretariat made  up  of  officials  subject  to  the  staff  regulations  of  the  Community  civil
service.  This  is  why  Article  38(4)  of  the  Council  Decision50  makes  it  possible  for  the
European Anti-Fraud Office to carry out internal investigations within Eurojust51.

3.2. Disciplinary and specialised authorities

Each institution, body or agency has its own disciplinary authorities, sometimes with a
responsibility to carry out internal investigations. In February 2002, the Commission for
its  part  created  an  Investigation  and  Discipline  Office 
to  conduct
administrative  investigations52  and  to  prepare  disciplinary  proceedings.  On  the  other
hand, for anything referring to serious facts or the Communities’ financial interests, on
the  basis  of  its  expertise  in  penal  matters  and  the  field  of  economic  and  financial
criminality, OLAF is informed first of all.

instructed 

In addition, the new financial regulation53 of 25 June 2002 provided for the setting up by
each institution of a specialised body, independent at functional level, which decides on
the  possible  existence  of  financial  irregularities  and  their  consequences.  The  opinion
which  these  bodies  are  required  to  give  does  not  prejudge  the  competence  of  the
responsible  authorities  as  regards  fraud  and  corruption.  The  overall  setting  up  of  the
internal inspection  mechanism  could  be  the  subject  of  protocols  intended  to  avoid  any
overlapping of responsibilities.

Internal investigation concerning a delegation of the Commission.

Cases  of  internal  corruption  often  involve  the  improper  application  of  the  procedures  for  the  granting  of
public supply contracts.

The European Office for the fight against fraud opened an investigation regarding a Commission employee
working in a delegation in Zagreb, in Croatia, who was suspected of corruption. The allegation was that the
offers for the purchase of computer equipment and services had been systematically doctored. This would
have led to the conclusion of contracts with companies with whom two employees had relations.  In the
follow up to the recommendations made by OLAF in its investigations report addressed to the departments
in  September  2002,  the  Commission  is  preparing  recovery  orders  for  the  double  invoicing  and  opened
disciplinary measures against one of its agents.

The internal investigations are in general opened on the basis of information provided by
members of staff of the institutions54or even on the basis of information acquired during
an  external  investigation.    All  information  concerning  officials,  servants,  heads  or
members  of  institutions,  bodies  and  agencies  is  evaluated  by  the  European  Anti-Fraud

50

51  

52  

53  

54

Council decision n° 2002/187/JHA of 28 February 2002, setting up Eurojust with a view to reinforcing the
fight against serious crime (OJL 63 of 6.3.2002).
To take account of the sensitive activities of Eurojust as regards investigations and proceedings, the Council
Decision  excludes  access  from  OLAF  to  any  information  held  or  created  within  the  framework  of  these
activities.
See Article 2 of the Commission Decision of 19 February 2002 (C(2002) 540). Article 5 paragraph 2 of this
same decision clarifies the division of responsibilities in the field of internal administrative investigations.
Article 66 paragraph 4  of  Regulation  (EC,  Euratom)  n°1605/2002 of  the  Council  of  25  June  2002 on  the
financial Regulation applicable to the European Community budget (OJ L 248 of 16.09.2002).
In accordance with Article 4 of the model decision annexed to the interinstitutional agreement of 25 May
1999.

22

                                                
Office.    Since  the  Commission  decision  of  April  200255,  the  servant  or  official  who
supplied in good faith, information to the European Anti-Fraud Office, may request from
the institution, protection against any inequitable or discriminatory treatment.

4.  THE STRENGTHENING OF THE CRIMINAL LAW DIMENSION

The  strengthening  of  the  criminal  law  dimension  in  the  field  of  illegal  activities
undermining  the  Communities’  financial  interests  calls  for  initiatives  from  the
Commission targeted at the specific nature and needs of the fight against these forms of
criminality against Europe.In addition, the creation of an area of freedom, security and
justice, in accordance with the requests of the October 1999 Tampere Council, involves
a  strengthening  of  cooperation  between  the  Member  States,  and  between  the  different
bodies responsible for judicial and police cooperation.

Some  remarkable  progress  has  been  made  in  this  area  in  2002,  in  particular  in  the
ratification  of  Convention  instruments,  on  the  debate  on  the  project  for  a  European
Public Prosecutor and in judicial cooperation in criminal law.

4.1. Penal sanctions in the field of the protection of financial interests

4.1.1.  The  ratification  of  the  conventions  on  the  Protection  of  the  financial  interests    of  the
European Communities and some of its protocols

In  the  field  of  the  protection  of  financial  interests  in  general  an  important  stage  was
reached with the entry into force on 17 October 2002, following their ratification by all
the Member States, of the Convention on “Protection of Financial Interests”56, of its first
protocol57, as well as the protocol of 29 November 1996 relating to the  competence of
the  Court  of  Justice.  These  ratifications  are  detailed  in  title  II  of  the  report.  Under  the
terms  of  this  Convention  and  of  its  first  protocol,  the  Member  States  are  required  in
particular to incorporate the penal definition of fraud and corruption (active and passive)
harmful to the Communities’ financial interests, into their national law and to envisage
criminal liability for the heads of companies for these offences.  This does not prejudge
the jurisdiction of the Commission, under the terms of Article 280 of the EC Treaty, or
its capacity to make proposals with a view to strengthening the criminal law dimension.
The  Commission  has  at  present  to  examine  the  way  in  which  the  Member  States
conformed to their obligation as regards the criminalisation of fraud and corruption (as
well as money laundering after the ratification of the second protocol), and to present the
result of this analysis.

The  second  protocol58  dating  from  1997,  on  the  other  hand,  has  not  yet  entered  into
force, in the absence of ratification by all the Member States, in spite of the call from the

55

56

57

58

Commission Decision of 4 April 2002 concerning conduct to be taken in cases of suspicion of serious acts
(doc. C(2002) 845).
Convention drawn up on the basis of article K3 of the Treaty on European Union, relating to the protection
of the financial interests of the European Communities  – OJ C 316 of 27.11.1995.
Protocol of the Convention on the protection of the financial interests of the European Communities  – OJ C
313 of 23.10.1996.
Second protocol of the Convention on the protection of the financial interests of the European Communities
concerning  the  laundering  of  the  proceeds  of  fraudulent  acts  prejudicial  to  the  Communities’  financial
interests,  the  liability  of  legal  persons,  the  confiscation  of  goods  and  cooperation  with  the  Commission  –
OJC 221 of 19.07.1997.

23

                                                
Council in its conclusions of 8 November 200259.  This new delay is prejudicial to the
effectiveness  of  the  action  at  Community  level  in  the  area  of  money  laundering  and
technical and  operational  cooperation between the  prosecution authorities  and  with  the
Commission (OLAF). The specific nature of this close and regular cooperation does not
prejudge  the  necessary  coordination  by  the  Commission  (OLAF)  with  the  competent
authorities in the fight against criminality.

Given the urgency to give full effect to cooperation between the Member States and the
Commission, such as it arises moreover from Article 280(3) of the EC treaty60 and from
secondary  legislation,  the  Commission  maintains  in  any  event  its  proposal  for  a
Directive  related  to  the  protection  of  the  Communities’  financial  interests61,  which  it
regards  as  the  most  appropriate  means  to  ensure  an  effective  and  proportionate
application of Community law. Enjoying the support of the European Parliament and the
Court  of  Auditors,  the  proposal  for  a  directive  would  moreover  enable  in  fact  the
Community, once it was adopted, to carry out its responsibilities as regards checks.62

4.1.2.  Green  Paper  on  the  criminal  law  protection  of  the  Community’s  financial  interests  and
the creation of a European Public Prosecutor.

The  requirement  to  prosecute  in  a  more  effective  way  the  authors  of  criminality
undermining  the  Community’s  financial  interests,  a  fortiori  in  the  framework  of  an
enlarged  Europe,  led  the  Commission  to  propose  the  creation  of  a  European  Public
Prosecutor, in order to remedy the splintering of the area of criminal law in this field63.
The  Commission  adopted  a  Green  Paper  on  a  European  Public  Prosecutor  on  12
December  200164,  and  organised  a  wide-ranging  debate  throughout  2002  on  this  topic
with  all  the  interested  parties:  national  Parliaments  and  governments,  Community
institutions  and  bodies,  professions  connected  with  criminal  trials,  experts  and
academics, concerned non governmental organisations. The Commission then organised,
on 16 and 17 September 2002, a public hearing with the representatives of the interested
parties.

In the main, reactions are for the most part favourable to the principle of the creation of a
European  Public  Prosecutor  but  the  governmental  authorities  on  this  point  retaining
overall  a  low  profile  in  relation  to  the  European  Parliament65,  the  Supervisory
Committee and the Court of Auditors or in relation to the experts and representatives of
civil society. Many insist that the Commission proposal should be refined to meet at the

59  

60  

61

62

63

64

65

Item  10  of  the  conclusions  of  the  Economic  and  Financial  Affairs  Council  of  8  November  2002  on  the
protection of financial interests and the fight against fraud (document 13244 FINAL 409)
As stated in Article 1(2) of regulation 1073/99, Article 2(2) of the Commission Decision  n°1999/352/CE,
Euratom  as well as  Council regulation 2185/96 (Article 4).
JOCE C240E on 28.08.2001
This  same  analysis  is  the  basis  of  a  proposal  for  a  directive  for  the  criminal  law  protection  of  the
environment based on article 175 of the EC Treaty on which the Court of Justice will have to give its view
soon and thus clarify the question of responsibilities in the area of criminal law in the treaties.
COM(2000)34  complementary  Contribution  of  the  Commission  to  the  Intergovernmental  Conference  on
institutional  reforms    –  the  criminal  law  protection  of  the  Community’s  financial  interests:  a  European
Public Prosecutor, 29.9.2000, COM(2000)608. A proposal for inserting a new article 280 b of the EC Treaty
was not taken up the Nice European Council.
COM(2001)715.  The European Council in its conclusions of Laeken, on 14 and 15 December 2001 asked
the Council to examine this Green Paper quickly, taking into account the diversity of the legal systems and
traditions.
See in particular points 59 to 62 of the resolution of the European Parliament of 13.02.2003 concerning the
protection of financial interests – Annual report 2001.

24

                                                
same  time  the  criteria  of  effectiveness  and  full  respect  of  basic  rights.    A  part  of  the
opinion favourable to the project defends in addition the idea of placing at Community
level the function of the review of the European prosecutor's acts.

The Green Paper has therefore fulfilled its aim and, in line with its proposal to the 2000
Intergovernmental  Conference (IGC), the  Commission  submitted  to the Convention on
the  Future  of  Europe  a  substantial  contribution  and  participated  actively  in  the  work.
Within  the  Convention,  some  governments  considered  that  the  responsabilities  of  a
European  Public  Prosecutor  should  be  broader  than  the  Commission  proposal,  other
governments reiterated their opposition to the creation of a Public Prosecutor.  The draft
Treaty  establishing  a  Constitution  includes  a  proposal  which  enables  the  Council
unanimously to establish a “European Public Prosecutor’s Office”, responsible both for
combating offences affecting the Union’s interests and serious cross border criminality.
The  Commission  welcomes  this  possibility,  while  regretting  the  weakness  of  the
proposal.

4.2. Judicial cooperation in penal matters

In accordance with the requests of the October 1999 Tampere Council, the adoption of a
European area of freedom, security and justice involves a strengthening of cooperation
between  the  Member  States,  in  particular  by  the  alignment  of  criminal  law66  and  the
application  of  the  principle  of  mutual  recognition.    Progress  in  this  area,  in  2002,  in
particular the framework decision concerning the European arrest warrant67, intended to
replace  the  extradition  procedures  between  Member  States  will  have  a  positive  impact
for protection of financial interests.

Moreover, the progressive adoption of a European area of freedom, security and justice
strengthens the need for the partnership between the bodies set up within the framework
of  the  "third  pillar"  (title  VI  of  the  treaty  on  the  EU)  and  the  Community  bodies
responsible  for  the  protection  of  financial  interests.  In  particular,  cooperation  between
judicial  cooperation  and  police  bodies  (responsible  as  regards  international  organised
criminality)  reached  a  new  stage  in  2002,  following  the  extension  of  the  mandate  of
Europol and the creation of Eurojust decided by the Council.

In annex to the Council decision of 6 December 2001, extending the mandate of Europol
to  all  serious  forms  of  international  criminality  listed  in  the  annexe  of  the  Europol
Convention68,  the  Council  had  called  for  the  negotiation  of  an  agreement  between
Europol  and  the  Commission  to  take  account  of  the  competencies  of  OLAF  and  the
Commission. The negotiations69 pursued in 2002, ended on 18 February 2003 with the
signing  of  an  administrative  cooperation  arrangement.  This  arrangement  places  the
general framework for cooperation in the fields of respective jurisdiction, in particular as

66

67

68  
69

Communication from the Commission to the Council and to the European Parliament on the creation of an
area of freedom, security and justice in the European Union  – COM (final 2001)628.
Framework decision of the Council of 13.06.2002 relating to the European arrest warrant and the surrender
procedures between Member States - 2002/584/JAI - OJ L 190 of 18.07.2002.
OJ C362 of 18.12.2001.
Negociations  begun  in  early  2001  with  the  adoption  of  Regulation  (EC)  1338/2001  of  the  Council  of  28
June 2001 concerning the protection of the euro against counterfeiting.  In this area, the Commission report
(COM(2001) 77 final of 13.12.2001) establishes that all the Member States did not manage to comply with
in  particular  Article  6  of  the  Council  Framework  decision  of  29.05.2000  (2000/383/JHA-OJL  140  of
14.06.2000).  This Article provides for each Member State to ensure that conduct deemed to be offences of
counterfeiting are punishable by effective, proportionate and dissuasive criminal penalties.

25

                                                
regards  consultation,  mutual  assistance  and  exchange  of  information  for  areas  where  a
common  interest  exists,  except  for  the  exchange  of  personal  data.  Moreover,  the
administrative arrangement stipulates that, in the field of its operational activities where
its  independence  applies,  OLAF  can  conclude  arrangements  with  Europol  directly  to
specify the practical cooperation methods.

In  addition,  as  a  result  of  the  creation  of  Eurojust  by  decision  of  the  Council  of  28
February 2002, work progressed in  order to ensure the synergy between the respective
competencies  of  Eurojust  and  OLAF  to  encourage  the  exchange  of  operational
information between these two bodies. One should in particular specify the articulation
between  the  "close  and  regular  cooperation"  defined  in  Article  280-3  of  the  EC  treaty
(between the competent authorities and with the Commission) and cooperation between
the national authorities organised via the Eurojust members, within the framework of the
3rd pillar70.    The memorandum of  understanding  negotiated  in 2002  and  signed  by  the
Office and Eurojust on 14 April 2003, envisages close coordination between the unit of
magistrates of OLAF and Eurojust members.

In  accordance  with  the  Action  Plan  of  the  Commission  for  2001-2003  on  the  fight
against fraud71, 2002 therefore marked a  step  forward  in  the  definition  of  the  practical
methods  of  cooperation  between  bodies  which  have  the  aim  of  becoming  privileged
interlocutors, from the point of view of the respect of the principles laid down in Article
280 of the  EC treaty.  This  represents  of  course  only  a  first  stage  in  the  process  which
should lead to a coherent, transparent and legible system at the level of all the European
bodies  involved  in  the  fight  against  transnational  criminality  and  in  particular,  for  the
protection  of  financial  interests,  towards  the  establishment  in  the  treaty  of  a  European
public prosecutor.

5.  FOLLOW UP OF THE ACTION PLAN 2001-2003

The  Commission  presents  here  a  progress  report  on  the  implementation  of  the  2001-
2003 Action Plan on the protection of the Communities’ financial interests72.  It aims to
highlight  the  achievement  of  actions  planned  for  2002  in  compliance  with  the
achievement  of  the  main  objectives  decided  in  the  overall  strategic  approach  of  June
2000  and  given  the  necessary  adaptations  of  the  Commission  timetable  and  work
programme.

70  

71  

72

The Council Decision indicates in its recital 8 that "the Eurojust competencies are without prejudice to the
competencies  of  the  Community  as  regards  protection  of  financial  interests".  The  Commission  made  a
statement,  annexed  to  the  Council  Decision,  according  to  which  "the  protection  of  the  Community’s
financial  interests  is  a  responsibility  shared  between  the  Community  and  the  Member  States  and  in  this
connection, it is important to stress that at the level of the treaties, Article 280 of the EC treaty constitutes
the  specific  legal  basis  to  lead  the  cooperation  projects  with  the  competent  national  authorities  (Article
280,3  EC)  or  to  take  the  measures  necessary  to  prevent  and  fight  fraud  and  any  other  illegal  activity
undermining  the  Community’s  financial  interests  (Article  280  (4)  EC).  It  is  in  particular  within  this
framework that the close and regular cooperation between the European Anti-Fraud Office (OLAF) and the
national prosecution authorities on the one hand and between the Commission (OLAF) and Eurojust on the
other should be guaranteed. "
Commission  communication  of  15  May  2001,  Protection  of  the  financial  interests  of  the  Communities.
Fraud prevention. Action plan for 2001-2003 (COM(2001)254 final), para. 2.1.2.
COM (2001) 254 final of 15.5.2001.

26

                                                
The  table  in  the  annex73  shows  the  relevant  elements  in  terms  of  compliance  with  the
provisional timetable, the departments responsible as  well  as the  identification of legal
or  administrative  instruments.    The  link  is  made  each  time  with  the  initiatives  in  the
Action Plan and when information is supplied on the follow up beyond the year 2002.

73

The  table  does  not  include  actions  where  no  initiative  or  follow  up  is  planned  for  2002.    Regarding  the
columns in the table:
- the first two columns recall the objective and action featuring in the Action Plan adopted in May 2001;
- the third column identifies the lead directorate general
-  the  fourth  column  indicates  if  and  how  the  objective  was  achieved;  the  follow  up  elements  make  it
possible to go beyond the strictly annual period of the table
- the fifth column provides, where appropriate, a summary explanation of the conditions for implementation
and the impact of the initiative.

27

                                                
TITLE II – IMPLEMENTATION OF ARTICLE 280 BY THE MEMBER STATES IN
2002 - Measures taken to protect the Community’s financial interests-

In accordance with Article 280 of the EC Treaty, the Commission’s  Annual  Report
also  presents  the  efforts  made  by  the  Member States  over  the  previous  year  to
combat  fraud  and  other  illegal  activities  affecting  the  financial  interests  of  the
Community.

Unlike previous  years, the Member States’  also replies to the  different  items  of  the
questionnaire are set out in an annex to the  Report.  They  can  thus  be  consulted  by
those wishing to have a complete picture of the action taken by Member States over
the previous twelve months to protect the Community’s financial interests in each of
the sectors covered. This Title of the Report will therefore be limited to an overview
of the main developments notified by the Member States.

The  Commission  has  based  this  overview  on  the  Member States’  replies  to  a
questionnaire  (“Article 280  questionnaire”)  that  has  been  adapted  in  the  light  of
experience while preserving the necessary  continuity with previous  years. This will
make  it  easier  to  keep  track  of  Member States’  efforts  to  combat  fraud  in  recent
years.

The  overview  begins  with  a  snapshot  of  the  main  legislative,  regulatory  and
administrative  developments  in  the  Member States  contributing  to  the  protection  of
the  Community’s  financial  interests  against  fraud  and  irregularities.  A  separate
paragraph  is  devoted  to  each  of  the  three  main  areas  of  Community  resources  and
expenditure  (traditional  own  resources,  agricultural  spending  and  structural
measures).

As in previous years, the second section (point 7) deals with implementation of the
Convention  on  the  protection  of  the  Community’s  financial  interests  and  its
protocols.  The  state  of  ratification  of  these  “third  pillar”  instruments  is,  however,
limited  to  the  Second  Protocol  since  the  process  of  ratifying  the  Convention  itself
and its other protocols was completed in 2002 by those Member States which had not
yet done so.

The  third  and  fourth  sections  (points  8  and  9)  relate  in  turn  to  the  organisation  of
controls,  in  terms  of  staffing  levels,  in  the  three  sectors  concerned  (own  resources,
agricultural expenditure and structural measures) and interdepartmental coordination
within each Member State. The aim is to give an initial picture of the system for the
protection of the Community's financial interests set in place by each Member State.
The  Commission  has  endeavoured  to  analyse  the  figures  communicated  by
Member States for this part of the Report.

The  fact  that  the  annual  report  is  drawn  up  on  an  annual  basis  and  follows  a
horizontal,  multisectoral  approach  means  that  it  is  difficult  to  assess  in  depth  all
the
aspects  of 

the  Community's  financial 

the  protection  of 

interests  by 

28

Member States.74  The  Commission  is  therefore  considering  the  possibility  of
adopting a more focused, multiannual approach in future.

6.  TEXTS CONTRIBUTING TO THE IMPLEMENTATION OF ARTICLE 280 OF THE EC TREATY -
PRINCIPAL LEGISLATIVE, REGULATORY AND ADMINISTRATIVE DEVELOPMENTS

The  new  measures  contributing  to  the  implementation  of  Article 280  of  the  Treaty
reported by Member States in response to the Article 280 questionnaire for 2002 are
of  various  types:  new  legislative  measures,  institutional  changes,  adoption  of  texts
interpreting  the  Community  legislation  on  the  protection  of  financial  interests,  and
introduction of new IT systems.

Clearly, the impact in the Member States of these different measures on the degree of
protection of the Community's financial interests is not the same.

The  most  salient  developments  in  2002  reported  by  the  Member States  are
summarised  below  by  area  of  activity  (own  resources,  agricultural  expenditure,
structural measures). The summary is not exhaustive.

A  complete  list  of  all  the  new  measures  contributing  to  the  implementation  of
Article 280 of the Treaty in 2002 is still provided for consultation (Tables 1.1., 1.2.
and 1.3.).

As  pointed  out  by  several  Member States  in  their  replies  to  the  questionnaire,  the
lack of any new measures in 2002 is not a basis for drawing general conclusions on
the  degree  of  protection  of  Community's  financial  interests  in  the  Member State
concerned;  on  the  contrary,  it  can  reflect  more  intensive  legislative  or  regulatory
activity in previous years.

6.1. Own resources

Table  1.1.  sets  out  by  Member State 
administrative developments which occurred in 2002 in the own resources field.

legislative,  regulatory  and

the  new 

One  of  the  most  significant  developments  in  the  area  of  own  resources  was  the
amendment  of  Denmark’s  Customs  Act  enabling  the  Danish  customs  and  tax
authorities to seize any amount of cash exceeding €15,000.

In France, following the entry into force in December 2001 of the new Article 28-1
of  the  Code  of  Criminal  Procedure  authorising  certain  customs  officers  to  conduct
judicial  investigations, in particular into  fraud  affecting  the  Communities’  financial
interests, new arrangements were adopted in 2002 in order to enable such officers to

74

Parliament has on two occasions stressed that the list of new national measures should be accompanied
by a Commission analysis pinpointing any weaknesses in the protection of the Communities’ financial
interests  (Parliament  resolution  of  13  March  2003  on  the  protection  of  the  Community’s  financial
interests and the fight against fraud – annual report 2001; Parliament resolution of 29 November 2001
on the Commission annual report 2000 on the protection of the Communities’ financial interests and the
fight  against  fraud  and  on  the  Commission  communication  on  protecting  the  Communities’  financial
interests, Fight against fraud, Action plan for 2001-2003).

29

                                                
operate  as  part  of  an  independent  service,  thereby  increasing  the  resources  made
available to the judicial authorities in the economic and financial field.

In  Italy  the  Customs  Agency  issued  a  circular  introducing  new  procedures  for  the
computerised management of the separate accounts for own resources.

The  UK  authorities  report  that  their  customs  administration  played  an  active  part,
together with the authorities of the other Member States, in the working party on the
draft  mutual  assistance  convention  drawn  up  under  the  auspices  of  the  World
Customs  Organisation  with  the  aim  of  modernising  and  revising  the  Nairobi
Multilateral  Convention  on  mutual  assistance.  The  proposed  new  convention  will
help  the  international  customs  authorities  to  apply  more  effective  controls  and  will
have a positive impact on tax checks and the fight against fraud in trade between the
EU and third countries.

In  Belgium  new  legislation  on  bankruptcies  was  adopted  which  will  prevent  shell
companies  being  used,  by  facilitating  preparation  of  the  statement  of  affairs,
determination of the causes and circumstances of the bankruptcy  and establishment
of  the  de  facto  or  de  jure  liability  of  directors  who  have  engaged  in  serious  and
organised tax evasion.

The  Irish  authorities  report  the  adoption  in  March 2002  of  the  CIS  (Customs
Information  System)  and  Naples  2  Conventions  and  of  related  instruments.  Ireland
has thus been able to implement the agreement on the provisional application of the
CIS Convention since 1 June 2002.

6.2. Agricultural expenditure

There were several significant new developments in 2002 in the field of agricultural
expenditure.

The Austrian authorities report that the number of payment agencies was reduced in
2002 from three to two through the transfer, from 16 October onwards, of the tasks
of the payment agency for  rural  development  (Agriculture  Ministry)  to  Agrarmarkt
Austria  (AMA).  The  aim  of  this  change  is  to  concentrate  the  money  flows,
administrative procedures and notification systems, to standardise and unify the audit
system,  to  improve  technical  expertise,  efficiency  and  funds  recovery,  and  to
concentrate and standardise certification of the clearance of accounts by the payment
agency.

In  Greece  controls  and  penalties  were  strengthened  as  regards  rural  development
measures  in  particular.  A  ministerial  order  provides  for  penalties  in  the  event  of
breaches  of  the  Community  and  national  rules,  in  the  form  of  financial  corrections
covering  all  or  part  of  the  Community  funding,  together  with  initiation  of  the
procedure for recovering amounts unduly paid and exclusion of the body concerned
in cases of serious irregularities.

Among  the  other  interesting  developments  of  a  horizontal  nature,  mention  can  be
made of the strengthening in Spain of the body responsible for coordinating controls
and penalties in the field of the common agricultural policy and the introduction in
Italy of procedures for imposing penalties under Regulation No 4045/89.

30

All  the  new  measures  adopted  by  the  Member States  in  the  field  of  agricultural
expenditure can be consulted in the Annex (Table 1.2.).  The concrete application of
these new measures will be the subject of a follow up action.

6.3. Structural measures

Special Report No 10/200175 of the Court of Auditors pinpointed certain weaknesses
in  the  national  systems  for  detecting,  reporting  and  following  up  irregularities
concerning  the  Structural  Funds.  In  the  light  of  the  Special  Report,  the  new
legislative,  regulatory  and  administrative  measures  taken  by  the  Member States  in
2002 with regard to the Structural Funds deserve special attention.

Among the significant developments observed in 2002, mention can be made of the
entry  into  force  in  the  Netherlands  of  two  acts  that  have  a  major  impact  on  the
protection of the Community's financial interests. One is the EC Grants Monitoring
Act, which governs the right to recover funds, powers of appointment and the right to
be informed.  It applies  among other things to the Structural Funds.  A report on  the
use  of  EU  grants  from  May  to  December 2002  inclusive  will  be  submitted  to  the
Dutch  Parliament  in  the  autumn  of  2003.  The  decentralised  management  bodies
covered  by  the  Act  are  to  provide  government  departments  with  details  of  the  EU
grants they have received. The second piece of legislation, the Government Accounts
Act (Eighth Amendment), confers powers on the Dutch General Government Audit
Office with regard to monitoring the use of EU aid down to the final beneficiary.76

In Finland the regional development legislation was reviewed and overhauled. Like
the previous legislation, the new rules  contain  provisions  governing the  granting of
funds,  payment,  monitoring,  control,  action  taken  on  any  irregularities  and  the
criteria for recovery. The province of the Åland Islands reports that it has adopted a
new Act on the protection of financial interests which introduces criminal penalties
for offences against public finances irrespective of the origin (provincial, national or
Community) of the funds.

The  Greek  authorities  undertook  a  wide-ranging  overhaul  of  the  procedure  for
recovering  amounts  unduly  or  illegally  paid  under  Community  programmes,  which
started in 2002, with a view to establishing a national system for financial corrections
in accordance with Commission Regulation No 438/2001.

In  Portugal  a  Decree-Law  was  adopted  which  applies  to  the  Cohesion  Fund,  as  an
integral part of Community Support Framework (CSF) III, the same financial control
standards as those in force for the Structural Funds. Given the large amounts at stake
in  Cohesion  Fund  operations  in  Portugal,  the  Portuguese  authorities  take  the  view
that the adoption of legislation establishing the framework in which they operate and
the  bodies  responsible  for  monitoring  them  constitutes  a  major  step  forward  in
applying  the  essential  measures  for  safeguarding  the  Communities’  financial
interests.

75

76

Special  Report  No  10/2001  concerning  the  financial  control  of  the  Structural  Funds,  Commission
Regulations (EC) Nos 2064/97 and 1681/94 (OJ C 314, 8.11.2001).
For  further  details  on  the  EC  Grants  Monitoring  Act  and  the  Government  Accounts  Act  (Eighth
Amendment), see the Dutch contribution to the Annual Reports 2000 and 2001 on the implementation
of Article 280 of the EC Treaty.

31

                                                
The  procedures  for  monitoring  and  inspecting  projects  were  also  tightened  in  the
United Kingdom, with special reference to spending financed by the European Social
Fund.

A  full  list  of  the  new  measures  taken  by  the  Member States  with  a  view  to
implementing  Article 280  in  the  field  of  structural  policies  is  given  in  the  Annex
(Table 1.3.).

7.  TEXTS  CONTRIBUTING  TO  THE  IMPLEMENTATION  OF  THE  CONVENTION  ON  THE
PROTECTION OF THE COMMUNITIES’ FINANCIAL INTERESTS

The year was marked by the ratification by the last Member States which had yet to
do  so  of  the  Convention  on  the  protection  of  the  European Communities’  financial
interests,77 of the First Protocol,78 which defines active and passive corruption, and of
the  Protocol  of  29 November 1996  concerning  the  interpretation  of  the  Convention
by the Court of Justice.79 This enabled these three “third pillar” instruments to enter
into force on 17 October 2002.

The Member States’ criminal law now has to include harmonised definitions of and
penalties  for  fraud  and  active  and  passive  corruption  affecting  the  Communities’
financial interests. Criminal-law cooperation between  the  Member States  in  matters
of  jurisdiction,  mutual  judicial  assistance,  extradition  and  the  transfer  and
centralisation of prosecutions is furthermore reinforced.

On  the  other  hand,  the  Second  Protocol,80  signed  on  19 June 1997,  containing
provisions  on  money  laundering,  the  liability  of  legal  persons,  confiscation  of  the
instruments  and  proceeds  of  infringements  and  vertical  cooperation  with  the
Commission (OLAF) still has to be ratified by Italy, Luxembourg and Austria.81

77

78

79

80

81

that 

the  European  Communities’ 

Convention, drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of
the  European  Communities’  financial  interests,  signed  in  Brussels  on  26 July 1995  (OJ  C  316,
27.11.1995). Ratification of the Convention by Belgium was notified on 12 March 2002, by Ireland on
the  Act  of
3 June 2002  and  by  Italy  on  19 July 2002.  The  Belgian  authorities  state 
17 February 2002 giving assent to the Convention and its three Protocols was published in the Official
Gazette on 15 May 2002 and has entered into force.
Protocol, drawn up on the basis of Article K.3 of the Treaty on European Union, to the Convention on
in  Dublin  on
the  protection  of 
27 September 1996  (OJ  C  313,  23.10.1996).  Ratification  of  the  Protocol  by  Belgium  was  notified  on
12 March 2002,  by  Ireland  on  3 June 2002,  by  Italy  on  19 July 2002  and  by  the  Netherlands  on
28 March 2002.
Protocol, drawn up on the basis of Article K.3 of the Treaty on European Union, on the interpretation,
by way of preliminary rulings, by the Court of Justice of the European Communities of the Convention
on  the  protection  of  the  European  Communities’  financial  interests,  signed  in  Brussels  on
29 November 1996 (OJ C 151, 20.5.1997). Ratification of the Convention by Belgium was notified on
12 March 2002, by Ireland on 3 June 2002 and by Italy on 19 July 2002.
Second  Protocol,  drawn  up  on  the  basis  of  Article  K.3  of  the  Treaty  on  European  Union,  to  the
Convention on the protection of the European Communities’ financial interests – Joint Declaration on
Article 13(2) – Commission Declaration on Article 7 (OJ C 221, 19.7.1997).
Ratification by Germany and Finland was completed in 2003.

interests,  signed 

financial 

32

                                                
Table 2.1. in the Annex shows in greater detail the state of progress with ratification
of the Second Protocol. It indicates the date on which the Member State notified the
Council of ratification.

The  implementation  of  all  four  agreements  by  the  Member States  is  the  subject  of
Table 2.2.,  which  lists  the  new  steps  taken  in  2002  with  a  view  to  transposing  the
1995 Convention and its Protocols and any aspects or provisions not yet covered by
national measures and any difficulties encountered.

Progress  in  transposing  the  Convention  and  its  Protocols  was  achieved  notably  in
Germany, the Netherlands, Portugal and Finland.

Other  Member States  report  that  the  transposal  of  these  instruments  was  largely
completed before 2002.

8.  ORGANISATION  OF  DEPARTMENTS  RESPONSIBLE  FOR  PROTECTING  THE  COMMUNITIES’
FINANCIAL INTERESTS

Protection  of  the  Communities’  financial  interests  is  largely  based  on  the  primary
responsibility  of  the  Member States,  which  have  the  task  of  managing  more  than
80% of expenditure and of collecting all the traditional own resources. The different
types of control provided for by sectoral regulations involve a wide range of  actors
and  staff  at  various  levels  of  the  national  administration  (payment  agencies,
management  authorities,  central  and  decentralised  national  services,  local  authority
services).

These  controls  contribute  to  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.

They  consist  of  what  are  known  as  regularity  controls,  required  by  the  sectoral
regulations, and controls that are more targeted on the fight against fraud, as required
by Article 280 of the EC Treaty.

Regularity controls comprise documentary checks, sometimes called “first-level” or
ex  ante/a  priori  checks,  aimed  at  assessing  compliance  with  procedures  and  the
criteria determined by regulation for the granting of financing or of advantages.

They  also  include  ex  post/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. These checks are often
based  on  a  risk  analysis,  as  required  by  the  Community  rules  for  a  number  of
sectors.82

82

See, for example, Commission Regulation (EC) No 3122/94 of 20 December 1994 laying down criteria
for risk analysis as regards agricultural products receiving refunds (OJ L 330, 21.12.1994);
Commission  Regulation  (EC)  No  2064/97  of  15  October  1997  establishing  detailed  arrangements  for
the  implementation  of  Council  Regulation  (EEC)  No  4253/88  as  regards  the  financial  control  by
Member States of operations co-financed by the Structural Funds (OJ L 290, 23.10.1997) ; Regulations
(EC) 1260/99 and 438/2001.

33

                                                
In  addition,  Member States  are  required  to  take  more  targeted  measures  to  combat
fraud.  These  controls  (anti-fraud  investigations)  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.

Since the organisation of departments is the Member States’ sole responsibility, they
were  asked  to  describe  their  control  activities  in  functional  terms  according  to  the
above  classification.  This  starts  from  the  sector  controlled  rather  than  the
organisational entity to which the staff concerned are assigned.

Tables 3.1., 3.2. and 3.3.  in  the  Annex  set  out  the  Member States’  estimates  of  the
staff  numbers  assigned  in  2002  to  each  type  of  control  (ex  ante,  ex  post  and
anti-fraud)  in  the  three  sectors  covered  (traditional  own  resources,  agricultural
expenditure  and  structural  measures).  To  arrive  at  comparable  data,  the  types  of
information sought and the control concepts were spelled out as clearly as possible.
In  the  last  two  columns  of  each  table,  the  staff  numbers  assigned  to  control  in  the
Member States are given alongside the amount of expenditure or resources checked.
These data will enable Member States to make an initial assessment of their efforts to
afford effective and equivalent protection to the Community’s financial interests and
assign them the same status as their own, as required by Article 280 of the Treaty.

However, since they are estimates, based on possibly divergent interpretations of the
underlying control and staff definitions, the data should be interpreted  with caution
and used for  guidance only. The principal interest is to identify some  major  trends,
which  should  be  refined  with  the  Member  States  within  the  framework  of  a
structured dialogue.

It can be seen from the tables that, in all the Member States and all the areas covered,
the  vast  majority  of  human  resources  were  assigned  in  2002  to  ex  ante  checks  (ex
ante checks: 81%; ex post checks: 11%; anti-fraud investigations: 8%).

This  tends  to  show  that,  generally,  priority  was  given  to  supervision  and  prior
verification mechanisms that come into play, in the case of revenue,  when customs
declarations are presented and, in the case of expenditure, when requests for finance
are vetted.

From  a  quantitative  standpoint,  checks  on  the  use  of  funds  or  on  project
implementation  (ex  post/a  posteriori  checks)  usually  require  fewer  resources  since
they  are  carried  out  on  the  basis  of  programming,  sampling  techniques  or  risk
targeting.

As far as staff numbers assigned to anti-fraud investigations are concerned, account
has to be taken of the fact that the inspectors responsible for them often cover several
sectors  (in  Greece,  for  example,  this  is  the  case  with  the  unit  for  prosecuting
economic  offences)  and  that  some  Member States  have  included  in  their  figures
officials with powers to conduct judicial investigations.

Overall, the Member States assigned more staff to traditional own resources (50,467)
than to the other two sectors  (agricultural expenditure: 16,240; structural measures:
6,769).

34

The  amount  to  be  checked  per  member  of  staff  was  highest  in  the  case  of  the
Structural  Funds  (€3.10 million  per  staff  member;  agricultural  expenditure:
€2.56 million;  own  resources:  €0.29 million).83  This  result  appears  to  confirm  the
findings  of  the  comparative  analysis  carried  out  in  1995  and  1998  on  the
implementation of Article 209a (280 since Amsterdam) of the Treaty.84

The data are commented on below by budget area.

Although these data show how the control approach varies from one Member State to
another,  they  fall  far  short  of  providing  a  genuine  qualitative  assessment,  which
would  require  a  more  detailed  examination  of  the  control  instruments  and  methods
used by each Member State.

8.1. Traditional own resources

In this area:

–  ex ante checks correspond to the supervision and control by the customs
authorities required by Article 4(13) and Article 4(14) respectively of the
Community  Customs  Code,  as  well  as  to  the  documentary  checks  and
inspections  of  goods  required  by  Article  68  of  the  Code,  with  the
exception of checks on export refunds for agricultural products;

–  ex post checks are those required by Article 4 (14) and Article 78 of the

Community Customs Code;

–  anti-fraud investigations are the investigations conducted in the event of
suspected irregularities, including those carried out where appropriate by
the investigation and prosecution departments.

In  the  field  of  traditional  own  resources,  most  of  the  staff  numbers  appear  to  be
employed  on  ex  ante  checks  in  most  Member States  (for  all  the  Member States,  ex
ante  checks:  80.4%;  ex  post  checks:  9.8%;  anti-fraud  investigations:  9.8%).
Nevertheless,  there  is  little  uniformity  between  the  Member States  as  regards  the
allocation of staff between the three types of control (ex ante and ex post checks and
anti-fraud investigations).

As shown in Table 3.1. in the Annex, two Member States (Denmark and the United
Kingdom) assigned more staff to ex post than to ex ante checks.

One  Member State 
resources 
investigations (43.4%) than to each of the other two types of control.

(Spain)  devoted  more  human 

to  anti-fraud

The  figures  appear  to  indicate  that  the  Member States  are  implementing  different
control strategies based to a greater or lesser extent on one or other methodology.

83

84

These  figures  are  based  on  contributions  to  the  budget  and  operational  expenditure  by  each
Member State in 2001.
Protection of the Community’s financial interests - Synthesis document of the comparative analysis of
the reports supplied by the Member States on national measures taken to combat wastefulness and the
misuse  of  Community  resources  (COM(95)  556  final);  Supplement  on  controls  and  administrative
penalties (1998).

35

                                                
It  should,  however,  be  pointed  out  that  some  Member States  had  difficulties  in
producing  a  breakdown  by  type  of  control,  while  others  stress  that  their  inspectors
cover several sectors, which makes it impossible to carry out more detailed analyses,
e.g. of the amount to be checked per member of staff.

This  amount  varied  between  €0.05 million  and  €2.51 million.  For  all 
the
Member States  taken  together,  the  figure  was  around  €0.29 million.  In  the  case  of
Denmark  and  to  a  lesser  extent  Belgium  and  the  United  Kingdom,  the  figure  was
much higher.

information  provided  by 

Additional 
Member States pursuant to Article 17(3) of Regulation No 1150/2000
Under  Article 17(3)  of  Regulation 
the
Member States  are  also  required  to  transmit  statistics  on  staff  numbers  assigned  to
the customs departments at national level.

(EC,  Euratom)  No 1150/2000,85 

the  annual  reports  submitted  by 

the

These  reports  enable  the  data  submitted  by  the  Member States  in  reply  to  the
Article 280  questionnaire  to  be  supplemented.  However,  in  absolute  terms,  the
figures communicated in reply to the Article 280 questionnaire are lower than those
transmitted  by  the  Member States  under  Regulation  No 1150/2000.  The  difference
springs quite naturally from the fact that the scope of the Article 280 questionnaire is
limited  to  specific  areas  of  control,  whereas  the  summary  reports  contain  more
general data.86

On the basis of the summary reports for 2002,87 the total number of customs officials
was 89,566. In comparison with 2001, this represents a reduction of 2.00%; a fairly
the  exceptions  being  Greece,  Spain,
widespread  decline  can  be  observed, 
Luxembourg, Finland and Sweden.

The  number  of  staff  assigned  to  ex  post  checks,  according  to  the  annual  reports
submitted  under  Regulation  No 1150/2000,  totalled  14,184  in  2002,  an  increase  of
9% on 2001. None of the increases observed are significant, except in the case of two
Member States: in Ireland the number rose from 43 to 99 between 2001 and 200288.
The  figures  for  the  United  Kingdom  (919  officials)  also  differ  greatly  from  those
given for the previous year (101 officials) owing to an internal reorganisation of the
customs service and the tax administration.

Data transmitted in application of Article 17, paragraph 3 also give a general image
of  activity  in  terms  of  the  number  of  accepted  declarations  and  the  number  of
declarations submitted to a  posteriori  controls.  Both  the  global  number  of  accepted

85

86

87

88 

Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC,
Euratom on the system of the Communities’ own resources (OJ L 130, 31.5.2000).
The  data  communicated  under  Regulation  No 1150/2000  comprise  controls  on  export  refunds  for
agricultural  products;  in  the  Article 280  questionnaire,  these  were  included  under  the  heading
‘Agricultural expenditure’. Furthermore, the Article 280 questionnaire was strictly limited to inspection
staff.
In  the  absence  of  any  reply  from  Portugal,  the  Commission  used  the  figures  communicated  by  this
Member State in 2001.
The actual number of staff involved in post clearance checks at National level remains unchanged from
the 2001 level. The increase in the number listed from the 2001 figure is due to the inclusion of staff
carrying out warehouse controls etc who were not previously included in such figures.

36

                                                
declarations and the global number of controlled declarations have increased. These
numbers have shown a constant increase  since 1999. Member  States  have accepted
114,74,680 declarations  for  the  year  2002,  corresponding  to  an  increase  of  5.85%
compared  to  2001.  In  addition,  national  customs  services  controlled  7,943,620
declarations in 2002, corresponding to an increase of 2.4% as compared to 2001. A
certain  number  of  Member  States  have  witnessed  significant  decreases  in  the
percentage of controlled declarations, while the number of accepted declarations has
increased. Member States will be invited to provide more detailed information in the
framework of the Advisory Committee on Own Resources.

8.2. Agricultural expenditure

In this area, the checks carried out by Member States are as follows:

–  a  priori  checks  correspond  to  the  physical  checks  and  the  documentary
checks  on  payment  requests  carried  out  by  the  customs  authorities  and
the payment agencies. They include checks on export refunds, checks on
aid  for  the  internal  market  and  checks  as  part  of  interventions  for
regulating agricultural markets;

–  a  posteriori  checks  are  the  on-the-spot  inspections  on  undertakings

provided for by Regulation No 4045/89;

–  anti-fraud investigations are the investigations conducted in the event of

suspected irregularities.

In this area too, the staff numbers assigned to ex ante checks in the Member States in
2002  greatly  exceeded  those  assigned  to  both  other  types  of  control  (for  all  the
Member States, ex ante checks: 88%; ex post checks: 7.5%; anti-fraud investigations:
4.5%), but practice appeared to be more uniform from one Member State to another,
something which can be partly explained by the nature of the obligations laid down
by regulation.

As  regards  ex  ante  and  ex  post  checks  in  particular,  the  control  obligations  and
methods  of  risk  analysis  are  laid  down  more  precisely  by  the  Community  rules
(scrutiny of 5% of expenditure required by Regulations Nos 4045/89 and 386/90, for
example).  This  appears  to  confirm  the  findings  of  the  comparative  analysis  of  the
implementation of Article 209a,89 which identified a correlation between, on the one
hand, the definition of common rules for management, control and sanctions and, on
the other, the equivalence of the control systems.

As  can  be  seen  from  Table 3.2.  in  the  Annex,  anti-fraud  investigations  were  the
category of control to which most Member States  assigned  the least  staff (less  than
10% in the case of ten Member States). Three Member States  were  an  exception to
this,  however  (Italy:  28.9%;  Austria:  12.1%;  Finland:  19.3%).  One  Member State
was unable to estimate staff numbers involved in this activity and stressed that it is
mandatory  under  its  legislation  to  report  suspicions  of  fraud  to  the  public
prosecutor’s office.

89

See general introduction at point 3.

37

                                                
It  can  be  concluded  on  the  basis  of  these  figures  that  in  the  sector  of  agricultural
expenditure,  as  in  the  field  of  own  resources,  the  protection  of  the  Communities’
financial  interests  appeared  to  rely  above  all  on  ex  ante  checks.    Moreover,  the
agricultural  expenditure  audit  departments  protect  the  financial  interests  of  the
European  Union  in  the  framework  of  the  clearance  of  accounts  by  their  ex  post
checks on the management and control systems applied in the Member States.

8.3. Structural measures

In this area:

–  ex ante checks are the checks and verifications carried out on projects or
operations  at  different  levels  (management  bodies,  payment  agencies,
decentralised or intermediate authorities, final beneficiaries) to ensure the
accuracy,  regularity  and  eligibility  of  applications  for  Community
assistance90;

–  ex  post  checks  are  the  on-the-spot  inspections  and  verifications  carried
the  management  and  payment
from 

independent 

out  by  staff 
departments91;

–  anti-fraud  investigations  are  all  the  investigations  carried  out  following

suspicions of fraud.

In the area of structural measures, most of the Member States’ inspection staff (68%)
were  likewise  assigned  to  ex  ante  checks,  although  the  differences  with  ex  post
checks  (27.9%)  were  less marked than  in  the other  sectors.  This  is  in  line  with  the
conclusions of the comparative analysis of the implementation of Article 209a of the
Treaty, which found that the concept of control adopted by the Member States in the
field of structural measures tended to be that of external control.

Table 3.3.  in  the  Annex  shows  that  three  Member States  (Greece,  Spain  and
Portugal92) allocated more human resources to ex post than to ex ante checks in 2002.

Relatively  few  resources  (4.1%)  were  assigned  to  anti-fraud  investigations.  Three
Member States  indicated  that  anti-fraud investigations were  included  in  the  data  on
the other types of control.

Overall, the staff numbers assigned by the Member States to this sector, for all types
of control taken together, were small (6 769) compared with total control personnel
in the areas of own resources (50 467) and agricultural expenditure (16 240).

This cannot be explained by the share of the budget to be controlled since the level of
control,  expressed  in  terms  of  the  share  of  the  budget  to  be  controlled  per  staff
member, was higher than for the other two sectors.

An  explanation  could  possibly  be  sought  in  the  nature  of  the  expenditure  to  be
controlled  (relatively  large  projects  compared  with  agricultural  spending),  which

90

91

92

See Annex to Title II, point 3.3.
See Annex to Title II, point 3.3.
Complementary information for Portugal: see the note to the table under under point 3.3 of the Annex
to Title II.

38

                                                
calls  for  a  different  control  strategy,  as  well  as  in  the  difficulties  encountered  by
Member States in collecting details of staff numbers from all the bodies involved at
the different levels of  the  national administration,  which is heavily decentralised  in
this area.

This appears to be confirmed by the low rate of response to the question concerning
the  number  of  officials,  including  in  the  criminal  prosecution  departments,
responsible for anti-fraud investigations in this area: only seven Member States were
able to provide the data requested.

As regards the amount to be checked per member of staff, most Member States were
close  to  the  figure  of  €3.10 million  for  all  the  Member States  taken  together,  the
exceptions  being  Greece  (€16.15 million),  Spain  (€15.00 million)  and  Portugal
(€10.88 million)93.

In  the  light  of  the  Court  of  Auditors'  Special  Report  No 10/2001  and  given  the
greater  decentralisation  of  control  responsibilities  towards  the  Member States  since
2001, it nevertheless seems that the level of risk in this area should be considered as
high,  and  that  the  organisation  of  the  fight  against  fraud  should  be  particularly
effective  in  order,  wherever  possible,  to  compensate  for  the  shortcomings  of
upstream controls.

9.  COORDINATION BETWEEN DEPARTMENTS WITHIN THE MEMBER STATES

Effective  action  by  the  Member States  to  combat  fraud  and  irregularities  requires
close  coordination  between  the  different  departments  responsible  for  the  control  of
Community resources and expenditure.

It  can  be  seen  from  the  Member States’  contributions  that,  in  some  cases,  new
horizontal  measures  were  taken  in  2002  in  order  to  strengthen  coordination  and
information  exchange  between  the  different  departments  involved  in  the  protection
of financial interests. Sweden reports that it has set up a board under the authority of
the Economic Crimes Bureau with the main task of improving cooperation between
the  departments  directly  or  indirectly  responsible  for  protecting  the  Community’s
financial interests.

Most  of  the  coordination  and  information  exchange  mechanisms  reported  by  the
Member States  operate,  however,  at  sectoral  level  (traditional  own  resources,
agricultural expenditure, structural measures).

Tables  4.1.,  4.2.  and  4.3.  in  the  Annex  list  by  sector  the  new  measures  taken  by
Member States in 2002 with a view to organising such coordination.

These  comprise  measures  to  coordinate  controls  and  investigations  carried  out  by
different  bodies  (in  order  to  avoid  duplication  or  indeed  lack  of  action  in  specific
cases),  measures  to  exchange  information  between  the  different  departments
responsible  for  controls  and  investigations  (administrative  authorities,  police,
customs,  judicial  authorities,  etc.)  and  measures  enabling  the  administrative
authorities to report cases of suspected fraud to the judicial authorities.

93

For these last two Member States, see the notes to the table under point 3.3 of the Annex to Title II.

39

                                                
TITLE III – STATISTICS AND ANALYSES

10. THE SITUATION IN 2002

10.1.  Introduction

The Community legislation defines the conditions for the notification of frauds and
other irregularities by the Member States with a view to protecting the Community’s
financial interests in all areas of activity94. The Member States are obliged to inform
the  Commission  of  all  irregularities  with  an  impact  above  €4,000  (€10,000  for
traditional own resources) and of the various stages in the procedure for recovering
the amounts involved.

The distinction  between irregularities and  frauds  is due  to  the  fact  that  frauds95  are
acts  which  a  judge  alone  is  authorised  to  determine  the  criminal  nature  following
judicial proceedings.  In this context, as long as the judicial procedure has not come
to an end, the Commission is informed of irregularities, some of which give rise to
suspicions of fraud.  It is clear that the quality of the information,  and  in particular,
the speed with which the Member States notify cases as well as the accuracy of their
data  and  the  fact  that  it  involves  a  centralised  management  system,  impact  on  the
overall statistical image of irregularities (sometimes fraudulent) which may appear in
the management of Community funds.  It has to be recognised that the reliability of
the communication system suffers from these different difficulties.

The  practices  of  the  national  administrations,  still  vary  despite  the  efforts  made  at
harmonisation.  The data communicated by the Member States  is  often incomplete,
in  particular  a  number  of  cases  do  not  include  any  mention  of  the  amounts  or  of
references  to  the  identification  of  the  products  concerned.    Also  the  distinction
between  “frauds”  and  other  irregularities  remains  due  to  the  fact  that  the  Member
States  do  not  always  have  the  same  view  of  criminal  risk.  Consequently,
communications refrain, in a not  insignificant  proportion,  from  identifying  the case
as a fraud or a simple irregularity.

Therefore, the figures which are presented here must be handled with great caution.
It  would  in  particular  be  inappropriate  to  draw  simple  conclusions  on  the  level  of
frauds  in  this  or  that  part  of  the  Union  or  on  the  efficiency  of  the  services  which
contribute  to  the  protection  of  financial  interests.    The  Commission  is  working  in
close  cooperation  with  the  Member  States  to  improve  the  notification  system  for

94 

95

See  in  particular  Article  3(1)  of  Council  Regulation  (EEC)  No 595/91  of  4  March  1991  (OJ  L  67,
14.3.1997), Commission Regulation (EC) No 1681/94 of 11 July 1994 (and No 1831/94 of 26 July 1994
(OJ  L  191,  27.7.1994)  for  expenditure,  and  Article  6(5)  of  Council  Regulation  (EC,  Euratom) No
1150/2000 for traditional own resources.
See  the  definition  in  Article  1  of  the  Convention  on  the  protection  of  the  Communities’  financial
interests of 26 July 1995 (OJC No 316 of 27.11.1995), entered into force on 17 October 2002.

40

                                                
irregularities, in particular to clarify the concepts of “fraud” and “irregularity”96.  The
Commission is also endeavouring to make progress with the recovery procedures for
old  cases  and  to  clear  the  important  backlog  of  debts  which  exists  in  certain  fields
(see point 12.2 below).

It  must  be  noted  in  addition  that  the  results  of  the  notifications  from  the  candidate
countries did not justify a specific development at this stage. This is not surprising,
given  that  the  management  of  Community  funds  has  been  delegated  to  these
countries  only  recently.  The  Commission  however  ensures  that  the  conditions
necessary  for  the  notification  of  irregularities  are  met  in  the  perspective  of  these
countries’ membership.

10.2.  Cases notified by the Member States

In general, the number of frauds and other irregularities as notified for the year 2002
is on  the  rise:  after  a  fall  in  2001,  the  figure  rises  by  13.1%  in  own  resources  (see
Annex  1),  36  %  in  agriculture  (see  Annex  3);  in  structural  actions,  the  number  of
cases more than quadrupled, a trend which ties in with the closure of programmes for
the  period  1994-1999  (see  Annex  5).  The  number  of  detected  cases  in  direct
expenditure is also on the rise (+21%, see Annex 6).

In all areas except direct expenditure, amounts are also on the increase, which is in
line with average term trends: respectively by 35.8% and by 41% in traditional own
resources (see Annex  1)  and in agriculture (see  Annex  3).  In  the  field  of  structural
actions, the total amount has tripled, which is in line with the increase in the number
of cases (see Annexes 4 and 5).  In direct expenditure (Annex 6) the total amount is
stable.

It  is  to  be  reminded  that  the  financial  impact  of  frauds  and  other  irregularities  is
below 1% of the budget concerned, with the exception of structural actions due to the
closing schedule mentioned above.

10.2.1. Traditional own resources (see Annex 1)

Article  6(5)  of  Regulation  N°  1150/2000  requires  Member  States  to  inform  the
Commission, via the OWNRES system, of cases of fraud and irregularity where the
amount involved is greater than €10,000. This information enables the Commission
to describe trends in this area:

10.2.1.1. 

Number of cases of fraud and irregularity

In all, for the period 1989-2002– on the basis of the data available on 06.06.2003 -
the  OWNRES  system  containes  30,184  notifications  (16,666  master  records  and
13,518 updates).

96

The  Commission  opened  a  dialogue  with  the  representatives  of  the  Member  States  to  clarify  basic
concepts  and  to  convince  all  the  Member  States  that  the  communication  of  irregularities  in  no  way
prejudices the outcome of criminal judicial proceedings.  A working document concerning the practical
modalities  for the communication of irregularities  was established.  Discussions are continuing  in  the
Advisory Committee on the Coordination of Fraud Prevention.

41

                                                
In  2002  alone,  the  Member  States  reported  2,119 cases,  as  against  the  1,873  cases
notified  in  2001,  an  increase  of  13.1%.  As  the  number  of  cases  reported  between
1997 and 2001 tended to fall year on year, this rise reverses the trend.

In comparison with 2001, the increase in the number of cases is particularly marked
in  Belgium  (+63.5%),  Denmark  (+40.3%),  Greece  (+136.4%),  Italy  (+48.5%)  and
Sweden  (+88.9%).  However,  the  number  of  cases  reported  by  the  Netherlands  and
the United Kingdom fell significantly, by 15.6% and 35.4% respectively.

10.2.1.2. 

The amounts established rose by 35.8% in comparison with 2001.

received 

in  2002 

totalling
The  notifications 
€324,544,459, a rise of 35.8% compared to 2001. This increase confirms the overall
upward  trend  in  amounts  established  since  1998,  apart  from  the  exceptionally  high
figure  in  2000  that  was  due  to  the  New  Zealand  Milk  Products  case.  Recoveries
totalled  €80,562,638  in  2002,  24.82%  of  the  amount  established  compared  with
21.46% the previous year.

involved  duties  established 

Analysis of the amounts established revealed that in some Member States the amount
grows  irrespective  of  any  rise  or  fall  in  the  number  of  cases.  In  comparison  with
2001  the  increase  in  the  amount  established  is  particularly  striking  in  Belgium
(+253.4%), Germany (+324.5%), the Netherlands (+465.4%) and Ireland (+79.4%).
By contrast, the amounts established fell in Finland (-75.1%), Greece (-97.5%), Italy
(-56.7%), Spain (-61.7%) and the United Kingdom (-52.3%).

By comparing the information contained in the reported submitted in 2002 with the
data  for  2001  it  was  possible  to  come  up  with  some  explanations  for  these  major
fluctuations. In Belgium, 26 of the 484 cases involved imports of bananas from the
USA  under  false  AGRIM  certificates,  and  there  were  62  cases  of  cigarette
smuggling. There was also one case of irregularities involving anti-dumping duty in
connection with imported silicon. The increase in the figure established by Germany
was in part due to 28 cases of irregularities involving sugar. The amount established
by  Greece  fell  in  comparison  with  2001  because  the  previous  year,  Greece  had
reported two cases concerning beef and veal involving approximately €6,2 million.

In  2001,  Finland  had  reported  a  large  figure  relating  to  imports  of  petroleum
derivatives;  in  2002,  there  was  no  such  discovery.  The  increase  in  the  amount
established  in  Ireland  stems  from  two  cases,  worth  about  €0.622  million,  of  cars
imported  from  the  USA.  In  2002,  Italy  reported  100  cases  of  smuggled  cigarettes.
The  amount  established  fell  sharply  by  comparison  with  2001,  when  Italy  had
reported  22 cases  of 
involving
approximately  €78,2 millions.  The  rise  in  amounts  established  in  the  Netherlands
derives from 19 cases of cigarette smuggling worth €50,03 millions.

in  connection  with  bananas 

irregularities 

In Spain the amount established fell in comparison with the previous year because in
2002  Spain  had  reported  12  cases  of  irregularities  relating  to  aeroplanes  involving
€17,85 million. In Sweden the number of cases increased, but the amount of duties
involved remained small. As regards the United Kingdom, even after comparing the
data for 2001, there appears to be no specific reason that explains the overall fall in
the number of cases and amount established. It is possible that there was less activity

42

in 2002. In any case, the Member State will be invited to explain the situation at the
next meeting of the Advisory Committee on Own Resources.

10.2.2. Agricultural expenditure (Annexes 2 and 3)

In  2002,  Member  States  reported  3,285  irregularities  under  Regulation  (EEC)  N°
595/91 against  2,415  irregularities in  2001.   This is an increase  of more  than  36%.
The  total  amount  affected  in  2002  was  about  €198  million  as  against  about  €140
million in 2001, an increase of more than 41%.  All the irregularities notified for this
sector only correspond however to 0.46% of the agricultural budget.  Moreover, the
average  amount  per  irregularity  has  decreased  since  1994.  Annex  2  gives  an
overview per Member State of the number of irregularities, the amounts affected and
the percentage of the EAGGF expenditure.

In 2001, training was given to staff of all Member States to ensure that 2002 would
be  the  first  year  in  which  all  communications  of  irregularities  under  Regulation
(EEC)  N(cid:2)  595/91  were  forwarded  to  OLAF  in  digital  format  rather  than  on  paper.
Unfortunately, not all Member States are yet using the digital format. At the end of
2002,  three  Member  States  (Germany,  Greece  and  Spain)  were  still  using  paper
format. Among these three, Germany and Spain are responsible for more than 52%
(1,709 communications) of the total number of communications.

Another  problem  is  the  very  late  communication  of  irregularities.  Over  2,147
communications  were  communicated  past  the  deadline97.  The  digital  format,
however, should make it easier to communicate on time.

Chart 10.1 below illustrates how the communications were sent:

Chart 10.1: Irregularities communicated by Member States

digital
47%

paper
53%

OVER
DUE
65%

ON
TIME
35%

There is, as stated in the 2001 Annual Report, no certainty that the total number of
communications received represents the total of frauds and irregularities detected by
Member States. One reason for this is the fact that some Member States did not send
communications in each quarter but only in one or two quarters.  Another reason is
the fact that some Member States already reported irregularities for the year 2003 in

97

Irregularities have to be reported within 2 months following the end of each quarter (Art. 3 and Art. 5
Reg. 595/91)

43

                                                
the  first  two  months  of  the  year  2003.    In  this  period,  irregularities  from  the  last
quarter  of  the  previous  year  are  normally  reported,  therefore  it  is  likely  that  these
communications relate to irregularities of 2002.   It must also be taken into account
that  not  all  communications  for  the  4th  quarter  2002  (deadline  28  February  2003)
were  sent  and  received  on  time.    OLAF  received  from  Spain  and  Germany
respectively 300  and 250 communications concerning 2002 in April  2003.  History
shows that some Member States still report cases 6 months past the deadline.  Chart
10.2. gives an idea how the communications were sent throughout the year.

Chart 10.2: Irregularities communicated by Member States in the year 2002

1250

1000

750

s
e
s
a
c

f
o

r
e
b
m
u
n

500

quarter I

quarter II

quarter III

quarter IV

The 2001 Annual Report stated that there could  be a break in the trend of a steady
and  significant  increase  in  the  number  of  cases  over  recent  years.  The  figures  for
2002 show that the trend of a steady and significant increase in the number of cases
is  still  there.  The  total  cases  reported  for  2002  are  3,285.  These  3,285  cases  alone
amount to ± €198 million compared to ± €140 million in 2001, that is an increase of
870 cases and close to 60 million euros. Striking is the fact that the average amount
per irregularity is decreasing since 1994.  In chart 10.3., the total number of cases per
year and the total amount per  year  are shown. Annex 3 gives an overview over the
years 1998-2002.

44

 
 
Chart 10.3: Irregularities communicated by Member States period 1971 – 2002

1,00
0
900
800
700
600
500
400
300
200
100
0

€
n

i

t
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i

19
71

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72

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19
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20
00

20
01

 impact

case

350
0
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500

s
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20
02

The  highest  number  of  communications  in  2002  was  from  Spain,  Germany  and
France. In monetary terms, Italy was the Member State that reported the highest level
of fraud and irregularities, i.e. almost €80 million, followed by Spain with a reported
amount of more than €59 million. Spain and Italy account for more than 70% of the
total amount of fraud and irregularities. The amounts reported by Germany, France,
Ireland  and  the  United  Kingdom  are  low.  Whilst  these  four  Member  States  have  a
relatively high number of cases the amount affected is relatively low. In Annex 2 an
overview is given per Member State.

Chart 10.4: Link between total amount and average amount

f
o
n
o

i
l
l
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m
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l

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90

80

70

60

50

40

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r
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e

30

20

10

0

B

DK

D

EL

E

F

IRL

I

L

NL

A

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FIN

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UK

total amount

average amount

€
n
o

i
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m
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a
e
g
a
r
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v
a

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00

Chart  10.4.  gives  an  impression  of  the  relation  between  the  total  amount  of  the
irregularities per Member State and the average amount per irregularity by Member
State.  Almost  all  Member  States  have  a  comparable  relation  between  the  total
amount and the average amount per case.  Striking are however the results for Greece
and  Spain.    Spain  reports  a  large  number  of  cases  with  a  relatively  low  amount
involved. The opposite is true for Greece: the average amount per case is extremely

45

 
 
 
 
 
 
 
 
 
 
 
 
high compared with the total amount involved. An analysis of the nominal data “type
of irregularity”, and the modus operandi will give a clearer view on these cases.

Member  States  should  report  the  year  of  expenditure  in  their  communications.
However,  only  in  26.7%  of  cases  do  Member  States  actually  report  the  year  of
expenditure.  A  point  of  concern  is  that  Member  States  report  a  relatively  high
number of cases, i.e. 25.3%, in which the irregularity or fraud took place 5 or more
years ago.

In addition, Member  States  also  report  the  date  of discovery  of the irregularity and
the  date  it  was  reported  to  OLAF.  Chart  10.5.  shows  an  overview  of  the  lapse  (in
years)  between the  discovery  and the reporting of the  irregularity.  In  two  cases  the
irregularities  were  discovered  more  than  20  years  ago  but  only  now  reported  to
OLAF. Both cases were qualified as “fraud” and the total amount involved was over
€4 million. The other cases, which were reported 10  years or more after  discovery,
were either qualified as “fraud” or were not qualified. The total amount involved was
almost €13 million.

Almost 90% of irregularities are notified within 2 years following their discovery.

Chart 10.5: Years between the discovery and the reporting of the irregularity

s
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1

1
<

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6
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8
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<
7
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9
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>
-
<
8
1

0
2
>
-
<
9
1

0
2
>

years between discovery and reporting of the irregularity

The very late reporting of a case could implicate that not all necessary actions were
taken by a Member State to limit or to reduce the financial impact of an irregularity.
This could be the case when for instance a Member State starts their administrative
or judicial procedures at the same time as the reporting time.  This could also have
consequences  concerning  the  recovery  possibilities,  the  “diligence”  of  a  Member
State and the Clearance of Accounts procedure.

46

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.2.3. Structural measures (Annexes 4 and 5)

For  what  concerns  structural  measures,  Member  States  are  due  to  report  cases  of
irregularities under Article 3 of Regulations N° 1681/9498 and 1831/9499 within two
months from the end of each quarter. Under Article 5 of the same Regulations they
have to submit updates of the cases communicated.

The year 2002 has been, in many aspects, a very particular one:

Chart 10.6: Communications received under

Regulations No 1681/94 and 1831/94

Electronic
20%

Paper
80%

Firstly,  some  Member  States  started  reporting  cases  of  irregularity  in  electronic
format.

For  the  moment,  administrations  from  only  4 countries  (Netherlands,  Finland,
Portugal and Sweden)  reported  cases digitally.  Chart 10.6 provides  a quantification
of the cases received in electronic format, 98% of which came from the Netherlands.

Secondly,  but  most  important,  as  the  programming  period  1994-1999  draws  to  its
closure the number of cases of irregularities reported has dramatically increased from
1,194  of  2001  to  4,656  of  last  year.  Also  the  amounts  affected  reported  increased
from  €216  million  to  over  €614  million.    Annexes  4  and  5  show  respectively  the
breakdown of communications per Member State and the general trend of new cases
reported per year.

Also  in  2002,  as  in  2001,  the  majority  of  cases  communicated  by  Member  State
concerned  Structural  Funds  (EAGGF  Guidance  Section,  ESF,  ERDF,  FIFG).  With
regard to the Cohesion Fund (which amounts to approximately €3 billion a year), out
of  the  four  beneficiary  Member  States  (Greece,  Spain,  Ireland  and  Portugal),  only
Spain  did  not  report  any  case  of  fraud/irregularity.  However  only  four  cases  were
communicated  to  OLAF  involving  almost  €10  million  and  the  irregularities  were
either detected before the final payment or the amounts were fully recovered.

98

99

Regulation  1681/94  applies  to  the  Structural  Funds,  that  is  to  say  European  Regional  Development
Fund  (ERDF),  European  Social  Fund  (ESF),  European  Agriculture  Guidance  and  Guarantee  Fund
(EAGGF) – Section Guidance and Financial Instument for Fishery Guidance (FIFG).
Regulation 1831/94 applies to the Cohesion Fund.

47

                                                
From the total number of cases communicated, the European Regional Development
Fund (ERDF) was the most affected in 2002, both in terms of cases reported (2,716)
and of amounts affected (over €403 million).

The analysis of patterns across Member States in the previous year was confirmed in
2002  for  the  European  Social  Fund  (ESF)  as  the  Netherlands  communicated  the
highest number of cases. Germany turned out to be the country having reported the
highest  number  of  cases  in  general,  especially  concerning  the  ERDF.  In  fact,
Germany and the Netherlands alone reported more than half of the total both in terms
of number of cases and in amounts.

Charts  10.7  and  10.8  help  highlighting  some 
communications from the different Member States.

interesting  aspects  of 

the

Chart 10.7: Number of cases and amounts per Member State

)
€
0
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0

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0

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E

Affected amounts per MS (left)

Number of cases (right)

It  should  be  noted  that  Member  States  have  been  ordered  according  to  the  budget
allocated from the Structural Funds, Denmark being the one with the lowest amount
and  Spain  the  one  with  the  highest100.  The  darker  line  (the  one  with  rhombus
markers)  shows  the  amounts  affected  by  irregularities  reported  by  each  Member
State,  while  the  lighter  one  (with  square  markers)  reflects  the  number  of  cases
communicated.  Chart  10.7  highlights  that,  apart  from  two  relevant  exceptions
(Germany and the Netherlands), there is a clear link between the budget allocated to
each Member State and the irregularities communicated.

Such link is even more evident in chart 10.8 where only the total irregular amounts
per  Member  State  are  shown  and  the  linear  trend  (dark  straight  line)  stresses  it.  If
Germany and the Netherlands are taken out of the chart, the dependence of the two
variables would be even more evident.

100 

Luxembourg has not been taken into account given the fact that it reported no irregularities. Figures are
those related to the programming period 2000-2006

48

 
 
 
 
 
                                                
Chart 10.8: Total amount of irregularities in relation to budget allocated per Member State

)
€
0
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150.000

100.000

50.000

0

-50.000

DK

A

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IRL

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Affected amounts per MS (left)

 Linear

10.3.  Cases under investigation by OLAF

It must  be born  in  mind that  more detail of  OLAF’s  activity  is  given in the  annual
Activity report provided under Regulation N°1073/99.

In 2002,  OLAF dealt with 415 new  cases,  as  compared  with  381  in  2001.  Activity
therefore is regularly on the rise and is broken down below by budget area.

Budget area

2001

New cases in 2002

Traditional own resources
EAGGF TOTAL
- Agricultural trade/export subsidies
- Subsidy and aid
Structural actions
Direct expenditure
Internal policies
External policies
Internal cases
Total

74
105
70
35
66
103
37
66
33
381

155
36
22
14
38
136
39
97
50
415

The  second  table  presents  data  related  to  cases  that  were  closed  in  2002  and  their
budgetary  impact,  reflecting  phases  of  the  activity  for  each  budget  area.  It  shows
steady increase of activity, not so much as regards the number of cases as from the
point of view of amounts. Ongoing investigations are not presented in this table.

49

 
 
 
Budget area

Number of
cases closed
2001

Number of
cases closed
2002

2001

2002

(Amount in million of euros)

Traditional own resources

EAGGF TOTAL

- Agricultural trade/export subsidies

- Subsidy and aid

Structural actions

Direct expenditure

Internal policies (expenditures)

External policies

Internal cases

Total

98

364

281

83

66

122

52

70

13

663

168

50

28

22

270

128

57

71

36

652

276,15

198,50

19,00

8,50

47,50

21,60

13,90

7,70

20,80

464,90

218,70

65,00

153,70

211,00

28,90

17,40

11,50

13,72

564,60

937,22

10.3.1. Traditional own resources

In  the  field  of  traditional  own  resources  155  new  investigations  were  opened,
compared with 74 in 2001. These new cases concern mainly frauds on anti-dumping
duties of Asian origin (China and South-East Asia). 168 cases were closed in 2002,
98 in  2001,  with  a  budgetary  impact  of  approximately  €464.9  million:  this  amount
includes  €375.90  million  in  agricultural  and  in  the  sugar  sector  €29  million  for
customs duties on the cigarettes, combustible products and alcohol.

The  investigations  currently  under  way  in  the  field  of  anti-dumping  duties  cover
much higher amounts (approximately €60 million for two cases concerning imports
of  television  sets  and  recordable  CDs).    OLAF  increased  its  efforts  in  this  field,
taking  into  account  not  only  the  financial  interests  of  the  European  Union  but  also
the economic interests which the tariff measures protect, in particular the situation of
the Community’s industry.

10.3.2. Agriculture

In  the  field  of  agriculture  expenditure,  36  new  cases  were  opened  in  2002  (14  for
agricultural  subsidies  and  22  for  direct  aid)  compared  with  105  in  2001  and
investigations in the field were still under way at the end of the reporting period.

50  cases  were  officially  closed,  representing  a  financial  impact  of  €208.7  million
(including  €153.7  million  for  direct  aid).    In  this  field  in  2002,  OLAF  paid  close
attention  to  the  problems  raised  by  the  long  term  set  aside  programme  in  Greece.
This  work  is  now  completed  and  OLAF  forwarded  its  final  report  to  the  Greek
judicial and administrative authorities, in order that they ensure properly the follow
up of the judicial and financial actions of recovery against the companies and persons
involved.  The financial impact is at least €3.4 million and could reach €20 million.

In July 2002, OLAF  closed  a  case  concerning  the  export,  by  a  Belgian  operator  of
tinned meat products, unduly declared for export, involving refund during the period
from  1996  to  2001.    The  Belgian  authorities  launched  a  recovery  procedure  for  an
amount of €7 million.  The Belgian company is a subsidiary of a Netherlands meat

50

marketing  group,  for  which  a  similar  fraud  mechanism  had  been  noted  in  the
Netherlands and which had also been the subject of follow up measures.

10.3.3. Structural funds

In 2002 the Structural Funds sector opened 38 new investigations compared with 66
in 2001 broken down as follows: 42% ESF, 38% ERDF, 16% EAGGF  –  Guidance
and 4% FIFG. In particular, priority was given to serious or transnational cases that
may have had a significant impact on Community interests. During the same period
270 investigations (compared with 66 in 2001) were closed, a particular effort having
been made to clear the ongoing cases.

The  fraudulent  mechanisms  detected  at  the  time  of  these  investigations  concern  in
particular false invoices, false statements of expenditure connected with the absence
of  supporting  documents.  Efforts  were  made  to  improve  cooperation  with  national
authorities, particularly in relation to spot checks. In the same vein, close cooperation
has been developed with the Commission departments involved.

10.3.4. Direct expenditure (Annex 6)

The  direct  expenditure  and  external  aid  sector  is  managed  exclusively  by  the
Commission. The activity in this field increases, despite the decreasing share of these
policies  from  the  general  budget  of  the  Communities  (less  than  0.5%  since  2001).
This is explained by the aim of the Commission of ensuring effective protection in a
field where it is a direct administrative authority and where OLAF is, in general, the
only  investigative  body.    In  2002,  136  new  investigations  were  opened  (compared
with 103 in 2001) including 97 in the field of external aid.  During the same period,
128 files were closed (122 in 2001) with an impact of approximately €28.9 million.

Consequently, the budgetary impact mentioned in this report relates only to the cases
that  closed  in  2002,  given  that  these  figures  do  not  give  a  complete  picture  of  the
overall fight against fraud against the budget. Moreover, it can often be the case that
the  incidence  is  not  connected  to  the  EU  budget  strictu  sensu,  but  also  have
consequences for national budgets or budgets of separate institutions.

10.3.5. Internal investigations

Internal  investigations  cover  of  course  all  the  sectors  of  Community  activity  and
they remain a priority activity of OLAF.

In 2002, 50  new  investigations  were  opened,  compared  with  33  in  2001.    36  cases
were  closed  compared  with  13  in  2001,  which  indicates  an  increase  in  the  activity
which  is  linked  with  better  cooperation  between  the  European  institutions.  The
budgetary  impact  of  €13.72  million,  a  slight  reduction  in  relation  to  the  previous
financial  year  (€20.87  million)  has  no  link  with  the  objective  sought  which  is  not
mainly financial.

51

11. SPECIFIC ANALYSIS: TRENDS

11.1.  Traditional own resources

Notification of cases of fraud and irregularities under Article 6(5) of Regulation N°
1150/2000 revealed the following tendencies:

11.1.1. The breakdown of frauds and irregularities by customs procedure and the typology of
cases of fraud and irregularity confirm the importance of fraud in the area of goods put into
free circulation.

2002 figures (69.37% of the cases and 51.59% of the amounts detected) confirm the
leading  place  of  cases  involving  goods  put  into  free  circulation  but  also  show  a
downward trend: with regard to the number of cases, the fall is 4.04% in relation to
2001  and  10.29%  in  relation  to  2000;  regarding  the  amounts,  the  fall  is  34.9%  in
relation to 2001 and 41.1% in relation to 2000. The detailed breakdown of frauds and
irregularities  detected  by  type  of  fraud  for  goods  put  into  free  circulation  makes  it
possible to observe the high share - and slightly higher in number of cases as well as
in amounts - of undeclared goods.

On the other hand, the impact of transit fraud (number of cases: + 4.78% in relation
to 2001 - amounts detected: + 16.06% in relation to 2001) is higher. A slight increase
is also to be noted in fraud in customs warehousing  (+ 1.95% in relation to 2001).
The heading other procedures is also on the increase; the globalisation of information
under this heading, already demonstrated in previous years, distorts the analysis.

11.1.2. The breakdown of cases of fraud and irregularity by type of goods and origin confirms
the impact, in particular, of  fraud involving cigarettes.

Examination of the 25 most important types of goods involved in fraud cases reveals
the  same  picture  as  in  previous  years:  in  terms  of  numbers  of  cases  and  amounts
established, fraud involving cigarettes and bananas accounts for the largest share and
is growing. The figures for 2002 also highlight a significant trend of fraud involving
sugar and aluminium. Examination of the 25 most common places of origin reveals
that  products  of  USA  and  Chinese  origin  are  still  top  of  the  list,  and  are  moving
farther ahead of products of Japanese origin. The number of cases recorded under the
headings  unspecified  or  unknown  remains  high,  which  to  some  extent  undermines
the analysis of impact by origin.

11.1.3. Improving the reporting of cases of fraud and irregularity

The  notifications  by  the  Member  States  of  cases  of  fraud  and  irregularity  do  not
always  reflect  the  true  picture.  Experience  shows  that  there  needs  to  be  real
improvement  in  both  the  quantity  and  quality  of  the  information  supplied.  To
encourage the communication of increasingly precise and up-to-date information that
reflects  both  the  customs  and  budgetary  reality,  the  Commission  is  redoubling  its
efforts regarding the gathering and analysis of data sent in by the Member States. To
this end the Commission has adopted a twin-track strategy:

52

11.1.3.1. 
under Article 6(5) of Regulation N° 1150/2000.

Comparison  of  amounts  entered  in  the  separate  account  and  cases  reported

In March 2002, the Commission asked the Member States to draw up a full list of the
amounts entered in their separate accounts at 31 December 2001.

While  awaiting  the  final  results,  the  Commission  conducted  a  preliminary  analysis
based on the first replies it received in an attempt to find out whether it was possible
to establish a link between the amounts entered in the separate account and the cases
reported  using  the  OWNRES  software.  This  initial  study  showed  that  the  methods
used by the Member States to generate the two kinds of data made it impossible in
many cases to establish a link between them. It was equally true that the proportion
of  cases  where  such  links  could  be  established  varied  considerably  from  one
Member State to another. This situation was partly due to differing interpretations of
fraud  and  irregularity  which  led  some  Member  States  to  adopt  a  third  category
(neither  fraud  nor  irregularity)  and  not  report  the  amounts  concerned.  The
Commission points out that under Article 6(5) amounts over €10 000 entered in the
separate account must be reported.

Analysis of the replies from the other Member States is underway and should make it
possible to refine the initial conclusions and outline the key reasons for this state of
affairs.  The  objective  is  to  propose  technical  and  operational  solutions  at  national
and/or Community level.  This question will be examined at the next meeting of the
Advisory  Committee  on  Own  Resources  in  July  2003,  with  a  view  to  proposing
technical  and  operational  solutions  at  national  and/or  Community  level.  The
Commission will take the measures necessary to ensure that the reporting of cases of
fraud and irregularity in 2003 takes account of these comments.

11.1.3.2. 
quality of communications.

Development  of  a  more  effective  tool  for  transmitting  data  to  improve  the

A  number  of  anomalies  and  other  transmission  problems  have  highlighted  the
difficulties faced by the Commission and the Member States in managing the data on
fraud and irregularity using the OWNRES software. After registering and examining
the  needs  of  the  users  (the  Member  States  and  the  Commission),  the  Commission
departments  concerned  have  set  about  installing  a  more  reliable  and  user-friendly
application on the web to make the necessary improvements regarding the methods
of  transmission  and  the  quality  of  information.  This  application  will  replace  the
current communication tool, which has proved to be too expensive and inefficient.

The application will not need to be specially installed. The Member States can enter
and update reports of fraud and irregularity in real  time and  the data will  be stored
immediately. Member States will be able to modify entries at any time. There will be
a system to enable encrypted data to be transmitted securely. The system should be
put into operation in September 2003, following a presentation seminar organised by
the Commission for the Member States.

11.2.  Agricultural expenditure (EAGGF-Guarantee)

By the end of April 2003, OLAF had received 3,285 cases for 2002. As mentioned
above, not all cases that occurred during 2002 have been communicated yet. Until all

53

communications  for  2002  are  received  by  OLAF,  it  is  impossible  to  give  a  full
picture  of  the  situation.  Nevertheless,  a  number  of  conclusions  can,  however,  be
drawn.

Products involved

The following charts represent figures concerning the products that were involved in
fraud and irregularities. Chart 11.1. gives an overview of how often a certain product
was involved in an irregularity. The selection is based on the first 2 characters of the
Combined Nomenclature (CN-code). In annex 10, an overview is given of these CN-
codes. The largest number of reported irregularities, i.e. 1,548 cases, has the code 99,
which stands for “unknown”. This means that Member States are unable to identify
the  products  in  more  than  47%  of  the  irregularities.  This  is  remarkable  especially
when  it  concerns  export  declarations  as  the  CN-code  is  clearly  stated.    In  second
place  comes  code  01,  which  concerns  live  animals.  Member  States  reported  561
irregularities  with  a  total  amount  of  €6.2 million.  Code  00,  which  stands  for  “not
applicable”  concerns  irregularities  linked  to  direct  aid,  for  instance  the  rural
environment protection scheme with a total amount involved of almost €4.4 million.
The following chart gives  an overview of the products involved and the number of
irregularities.

Chart 11.1: Reported cases and the products or goods involved

s
e
s
a
c

f
o

r
e
b
m
u
n

1800

1600

1400

1200

1000

800

600

400

200

0

1548

561

287

206 172 138 86

59

49

43

25

24

23

16

8

7

7

7

7

4

4

3

1

99 01 00 02 04 10 22 07 08 24 16 17 11 12 20 15 18 19 35 21 23 53 29

cn-code

It is more useful, however, to look at the amounts involved. Analysis on the basis of
the  amounts  can  help  identifying  the  areas  and  sectors  with  higher  risks  and,  more
important, help to develop a control and/or investigation strategy so that the limited
sources of manpower can be better used.

In chart 11.2., an overview is given of the products in which the highest total amount
as well as the average amount per product are reported101.

101

In charts 11.1 and 11.2, the CN Code is used to give an overview of the manner in which a product is
involved in an irregularity. The top 12 categories are the following:
- Code 00: Not Applicable

54

 
 
                                                
Chart 11.2: Total amount and average amount per case

€

n
o

i
l
l
i

m
n

i

t
n
u
o
m
a

l

a
t
o
t

80

70

60

50

40

30

20

10

0

1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00

€

n
o

i
l
l
i

m
n

i

t

n
u
o
m
a

e
g
a
r
e
v
a

99 08 07 02 22 17 01 04 00 24 10 16 11 35 12 19 20 15 53 18 23 21 29

CN-chapter

total amount average amount

The highest total amount was found in the irregularities in which the Member States
reported  an  “unknown”  for  the  product.  The  total  amount  was  ±  €75  million.  The
average amount,  that  is the amount per  irregularity,  however,  was  relatively  low  at
about €48.750. This shows that reporting an “unknown” does not help to identify the
irregularities and, looking at a higher goal, does not help to improve the fight against
fraud.  The information has no added value.

Where  Member States have reported  a product,  the highest  total amount  as  well  as
the  highest  average  amount  was  reported  for  “edible  fruit  and  nuts,  peel  of  citrus
fruits or melons” (code 08). France, Greece, Italy and Portugal reported irregularities
in this  area.  In  ±  61%  of  these  cases  the  irregularity  has  been  qualified  as  “fraud”.
The total amount involved was ± €35.8 million and the average amount per case was
± €730,000.

Second “best“ in this chart of irregularities is code 07, “edible vegetables and certain
roots  and  tubers”.  Five  Member  States  reported  irregularities:  Germany,  France,
United  Kingdom,  Italy  and  the  Netherlands.  The  total  amount  involved  was
± €30 million  and  the  average  amount  per  case  was  ±€500,000.  In  ±  34%  of  these
cases the irregularity was qualified as “fraud”.

Also  worthy  of  mention  is  code  17,  “sugars  and  sugar  confectionery”.  The  total
amount of the reported irregularities may not be as high but the average amount per
irregularity,  however,  is  relatively  high.  Germany,  Denmark,  Spain,  France,

- Code 01: Live animals
- Code 02: Meat and Edible Meat Offal
- Code 04: Dairy Produce
- Code 07: Edible Vegetables
- Code 08: Edible Fruit and Nuts
- Code 10: Cereals
- Code 16: Preparations of Meat
- Code 17: Sugars and Sugar Confectionery
- Code 22: Beverages, Spirits and Vinegar
- Code 24: Tobacco
- Code 99: Unknown or Non Described Product

55

 
 
 
 
 
 
 
 
                                                                                                                                                        
Great Britain,  the  Netherlands  and  Portugal  reported  irregularities.  The  average
amount  per  irregularity  was  ±  €390,000.  None  of  these  cases  were  qualified  as
“fraud”.  These  cases  were  either  qualified  as  an  “irregularity”  (±  37%)  or  did  not
receive a qualification.

The graph also highlights irregularities in which a relatively low average  amount is
reported. To have an insight in the areas and/or sectors where relatively low amounts
are involved could  also help in the process of setting priorities  concerning  controls
and investigations. These irregularities concern the following products:

(cid:1)  Code 21: Miscellaneous edible preparations

(cid:1)  Code 18: Cocoa and cocoa preparations

(cid:1)  Code 01: Live animals

(cid:1)  Code 23: Residues and waste from the food industries; prepared animal fodder

(cid:1)  Code 10: Cereals

The average amount per case is less than €15,000.

11.3.  Structural measures

In paragraph 10.2.3 it was stated that Member States’ behaviour in the reporting of
irregularities is not consistent. The following analysis tries to give some explanation
to that statement.

Chart 11.3102  shows  the  average  amount  of  the  irregularities  in  each  Member  State
and how they are distributed in relation to the overall mean (straight horizontal line).
It  is  quite  striking  to  note  the  significant  differences  between  Member  States  and
especially the “distance” between the highest average value (Italy, €285,006) and the
smallest (Sweden, €10,063).

102 

Member  States  are  listed  in  order  according  to  the  budget  allocated  from  the  Structural  Funds
(programming period 2000-2006), being Denmark the one  with the  lowest  amount  and  Spain  the  one
with  the  highest.    Luxemburg  has  not  been  taken  into  account  given  the  fact  that  it  reported  no
irregularities.

56

                                                
Chart 11.3: Distribution of national average values in relation to EU15 mean

300.000

250.000

200.000

150.000

100.000

50.000

)
€
0
0
0
1
n
i
(

s
t
n
u
o
m
a
d
e
t
c
e
f
f

A

0

DK

A

B

FIN

S

IRL

NL

F

UK

P

EL

I

D

E

Average MS amount

EU15 mean

Furthermore,  in  chart  11.4,  communications  have  been  divided  into  five  classes
according  to  the  amount  affected  by  irregularities  (€4,000  to  10,000;  €10,001  to
50,000;  €50,001  to  150,000;  €150,001  to  1  million;  over  €1  million).  The  largest
number of cases communicated relates to amounts between €4,000 and €50,000 (first
two classes in the chart) and accounts for 66% of the total number of cases reported
to OLAF.

Chart 11.4: Distribution of communications according to amounts

s
e
s
a
c

f
o
°
N

1800
1600
1400
1200
1000
800
600
400
200
0

0-10000€

10001-50000€

50001-150000€

150001-1mln€

> 1 mln€

Amounts

It should be stressed that Sweden (the country with the lowest average value) did not
report  any  cases  involving  amounts  higher  then  €150,000.  For  Finland  and  Austria
(second  and  third  lowest  average  amount)  reported,  respectively,  only  the  2%  and
3%  of  cases  involves  amounts  higher  than  €150,000.  On  the  contrary,  39%  of  the
cases  from  Denmark  and  26%  of  the  cases  communicated  by  Italy  are  above
€150,000,  followed  by  Germany  (19%),  United  Kingdom  (17%),  the  Netherlands
(16%) and Spain (15%).

Also  the  types  of  irregularity  reported  differ  among  Member  States.  Italy  and
Germany  (to  a  lesser  extent)  communicated  several  cases  of  “falsification”  (of
documents,  supporting  documents,  requests  for  aid,  accounts)  103.  Despite  the  high

103 

As reported by the Italian authorities,  70%  of  the  cases  involving  amounts  between  €150,000  and €1
million involved “falsifications”. 55% of the cases involving amounts higher than €1 million were the
result of the same problem.

57

 
 
 
 
 
                                                
amounts reported, no other Member State, have encountered the same situation, with
almost  insignificant  exeptions  in  Spain,  Portugal  (1  case  each)  and  the  United
Kingdom (3 cases).

Table  11.5  illustrates  some  figures  concerning  the  most  frequent  types  of
irregularities  together  with  an  indicative  implicated  amount  and  the  indicative
average amount:

Table 11.5: Most frequent types of irregularity reported by Member State

Codes

Type of irregularity

Frequency
(alone)

Frequency
(with other
codes)

Indicative
implicated
amount

Indicative
average amount

Incorrect accounts

102
210 Missing  or 

incomplete  supporting

document
Incorrect supporting documents

211
325 Not eligible expenditure
405
601
612

Irregular termination
Failure to respect deadlines
respect 
to 
Failure 
regulation/contract conditions
Action not completed

811
831 Overfinancing
999 Other irregularities

Falsifications104

other

95
253

69
643
254
193
135

401
75
1074
55

134
258

170
255
10
47
26

52
62
45
27

17,596,993
49,069,034

76,842
96,025

28,224,792
97,444,689
39,807,292
57,140,024
16,251,750

95,924,525
12,906,923
147,258,390
18,374,684

118,095
108,513
150,785
238,083
100,942

210,268
94,211
131,598
224,081

It  must  be  noted  that  due  to  the  reporting  method  a  single  case  may  contain  more
than  one  type  of  irregularity.  Therefore  it  has  been  specified  how  many  times  the
type of irregularity has been communicated alone and how many times together with
other  codes.  The  implicated  amount  shown  as  “indicative”  sums  up  all  the  values
related to that specified code, distorting the real total results.105

The exact total amounts are those reported in annex 4.

It is important to underline that the most frequent types of irregularity are the same as
in the year 2001.

As with last year, it should be stressed that the «999 – other irregularities» code has a
great impact on the overall evaluation. Under this code the irregularities that do not
fit  any  other  possible  description  provided  for  by  the  communication  system  are
reported.

However,  their  weight  on  the  total  has  decreased  since  last  year  (23%  in  2002
compared  to  28%  of  2001  concerning  frequency  and  23%  against  35%  for  the

104 

105

The category  “falsifications” refers to different  specific types of irregularity and  has  been  reported  in
this  way  because  many  times  reference  has  been  made  to  it  in  the  text.  The  types  of  irregularity
included  in  this  category  are  the  following:  falsified  accounts,  false  or  falsified  documents,  false  or
falsified request for aid, false or falsified supporting documents, false or falsified certificates.
Therefore the ‘total’ row has been omitted. The values expressed under “indicative implicated amount”
and “indicative average amount” columns are only “virtual”.

58

                                                
amounts).  Nevertheless,  the  availability  of  more  precise  information  in  this  field
would certainly aid interpretation of the statistics concerned.

Finally,  it  should  also  be  stressed  that  in  relation  to  the  most  frequent  type  of
irregularity  («325  –  no  eligible  expenditure»)  the  Netherlands  reported  the  highest
number of cases (205 of the 613 in the column “Frequency (alone)”) and Austria (0),
Belgium (0) and  Italy  (1)  communicated  the  lowest.  The  United Kingdom  used  the
generic code «999» most frequently (125 on 420), while Italy and Finland used it in
only 2 cases.

Overall,  the  quality  of  the  information  communicated  by  the  Member  States
improved this  year in  comparison with  previous  years.  However, more  effort could
be  made  in  terms  of  consistency  and  respect  of  the  time  limits  fixed  by  sectoral
regulations  for  the  transmission  of  the  communications  to  OLAF.  This  situation
should further improve with the adoption of the electronic system of transmission by
more Member States.

12. FINANCIAL MONITORING

The Commission is responsible for monitoring the recovery by the Member States of
amounts  unduly  paid  and  lost  resources.  The  year  2002  is  in  line  with  preceding
years.  However,  to  the  exception  of  agriculture  where  the  Commission  is  already
implementing  specific  measures,  the  amounts  recovered  in  2002  amounted  to
approximately  one  fourth  of  the  new  amounts  concerned  by  fraud  and  other
irregularities in the area of traditional own resources and that of direct expenditure,
and  almost  40%  in  structural  actions.  Given  the  lengthy  procedures,  especially
judiciary procedures at national level, and taking into account that  total  amounts to
be  recovered  are  much  lower  than  1%  of  the  sectoral  budget,  this  result  is  rather
encouraging.  The  Commission  however  is  not  satisfied  with  it  and  expects
improvements  to  result  from  the  revision  of  management  and  control  methods  as
well as from efforts targeting the burden of the past.

12.1.  Traditional own resources (Annex 7)

Article  8  of  Decision  2000/597/EC,  Euratom  delegates  the  collection  of  traditional
own resources to the Member States.106 The Commission monitors the way in which
the  Member  States  perform  this  task  to  ensure  the  amounts  are  recovered  in
accordance with Community legislation on customs and financial matters107. To this
end, the Commission has developed an overall monitoring strategy that allows it to
evaluate  action  taken  by  the  Member  States  and  take  remedial  measures  where
necessary.108

There  are  three  main  principles  in  this  strategy:  a  sample  survey of  the  ongoing
processing  of  cases,  the  write-off  procedure  for  amounts  of  own  resources  above

106 
107  
108  

Council Decision 2000/597/EC, Euratom of 29.9.2000 (OJ L 253, 7.10.2000).
The Community Customs Code, Decision 94/728/EEC and Regulation (EC, Euratom) N° 1150/2000.
For details of the strategy see the reporter on the protection of financial interests and the fight against
fraud for 2000.

59

                                                
€10,000 that are considered irrecoverable and application of the principle of financial
responsibility for certain errors made by national administrations.

12.1.1.  Sample survey

In  view  of  the  very  large  number  of  reports  of  cases  of  fraud  and  irregularity
(hereinafter  fraud  reports and mutual  assistance forms), to help it monitor  recovery
the  Commission  set  up  a  system  for  analysing  the  data  known  as  the  B  Sample,
which involves a detailed examination of certain especially difficult cases reported in
the context of mutual assistance.

The  aim  of  the  procedure  is  to  monitor  recovery  operations  in  a  certain  number  of
representative  cases  until  final  clearance.  Two  reports  of  this  type,  B94  and  B98,
have been produced.109 A third such report was supposed to appear in 2001, but the
original sample had to be changed as four cases of irregularities regarding origin no
longer  needing  processing,  following  a  the  ruling  of  the  Court  of  First  Instance  on
Turkish  TV  sets110.  A  new  sample  was  subsequently  selected  but  this  required
additional information to be gathered. The third report, report B2003, should appear
at the end of 2003.

12.1.2. The write-off procedure

The  Member  States  take  the  necessary  measures  to  make  available  traditional  own
resources,  except  in  cases  where  recovery  proves  impossible  for  reasons  not
attributable to the Member State concerned. Write-off cases (amount >10,000 €) are
reported to the Commission for examination. Where the Member State demonstrated
due diligence when attempting to recover the amount, the amount can be written off.
Where this is not the case, the Member State is held responsible under Article 8 of
Decision  2000/597  and  Articles  2  and  17  of  Regulation  No  1150/2000.  Examining
the diligence of the Member States is a highly effective way of convincing national
administrations to take recovery very seriously, as they can be held financially liable
in the event of non-recovery. Analysis of cases under Article 17(2) also provides the
Commission with an opportunity to make observations on the establishment of own
resources,  the  way  in  which  the  separate  account  is  kept  and  whether  national
legislation complies with Community law.

In  2002,  six  Member  States  (Germany,  Spain,  Italy,  Ireland,  United  Kingdom,
Netherlands and Portugal) submitted 87 requests for amounts to be written off to the
Commission  under  Article  17(2)  of  Regulation  N°  1150/2000  for  a  total  of
€103,018,053.43. In all, however, 88 cases were examined. The results, in financial
terms, of the review of the 88 cases (11 from Germany, 7 from Spain, 35 from Italy,
1  from  Ireland,  6  from  the  United  Kingdom,  27  from  the  Netherlands  and  1  from
Portugal) are as follows:

109

110 

Commission  reports  on  the  recovery  of  traditional  own  resources  in  cases  of  fraud  and  irregularities
(Sample B 94, COM(97) 259 final, 9.6.1997, and Sample B98, COM (1999) 160 final 21 April 1999).
Joined  cases  T-186/97,  T-187/97,  T-190/97  à  T-192/97,  T-210/97,  T-211/97,  T-216/97  to  T-218/97,
T-279/97, T-280/97, T-293/97 and T-147/99, Kaufring AG et al. v Commission, 2001 [ECR] II – 01337.

60

                                                
Commission position

Number of cases

%  cases

Exemption granted

Supplementary info
Inappropriate111

Refusal

30

18

30

10

Total

88 cases

34.10

20.45

34.10

11.35

100 %

Amount in €

12,556,341.20

5,602,022.24

35,279,189.81

2,491,791.54

€55,929,344.79

%

22.45

10.02

63.08

4.45

100 %

For the year 2002, at 10 April 2003, 52 cases had already been referred (15 from the
Netherlands, 20 from Spain, 1 from Ireland, 6 for Austria, 10 for the UK) for a total
amount of €22,658,845.11.

12.1.3.  Application of the principle of financial responsibility

12.1.3.1. 
errors

The  financial  responsibility  of  the  Member  States  for  their  administrative

The  Own  Resources  Decision  requires  the  Member  States  to  take  all  possible
measures to  collect  traditional  own  resources.  As  this  responsibility  is  remunerated
(25%)  and  to  ensure  the  sound  and  efficient  management  of  public  funds,
Member States  are  financially  liable  for  any  lack  of  diligence  on  the  part  of  the
Member  States  that  results  in  a  loss  of  resources.  This  approach  means  that  the
Commission holds the administrations financially responsible for their own errors.112

In 2002, four Member States (the United Kingdom, France, Austria and Italy) made
available  to  the  Community  budget  own  resources  that  they  had  been  unable  to
recover  from  the  debtors  owing  to  errors  made  by  their  own  administrations.  The
total  amount  transferred  by  the  four  Member  States  came  to  €7,471,501.  Other
Member  States,  while  understanding  the  principle  of  financial  responsibility,  are
continuing  to  submit  counter  arguments.  To  resolve  this  question  of  different
interpretations  of  Community  law,  the  Commission  brought  a  test  case  regarding
financial  responsibility  before  the  Court  of  Justice  on  8  November  2002
(Case C-329/02).

In all, 27 cases were opened in 2002. At the end of 2002, there were 114 cases open,
involving in principle €50,861,860 as against €50,933,636 in 2001. The slight drop in
the  amount  is  mainly  due  to  the  fact  that  the  new  cases  of  financial  responsibility
opened  in  2002  were  offset  by  the  stripping  out  of  the  amounts  involved  in  the
Turkish televisions case and the withdrawal of a file.

111 
112 

When the conditions for application of Article 17 of the above-mentioned Regulation are not met.
These  cases  are  identified  on  the  basis  of  Articles  220(2)(b)  (administrative  errors  that  could  not  be
reasonably detected), 221(3) (statute-barring as a result of inactivity on the part of the customs service),
Articles 869 and 889 of the rules implementing the Community Customs  Code or  where  the  customs
service  has  failed  to  comply  with  the  Community  Customs  Code  and  thereby  created  legitimate
expectations on the part of the operator.

61

                                                
12.1.3.2. 

 External financial responsibility

Moreover, throughout  2002, the Commission  has continued to develop  the  external
aspect of the principle financial responsibility with a view to increasing the liability
of  partners  to  international  trade  agreements  that  the  Union  has  concluded  or  will
conclude with non-member countries. Progress is still slow owing to the attitude of
Member  States  and  certain  non-member  countries.  Following  discussions  in  the
Council  between  the  Commission  and  the  Member  States,  on  6 June  2002,  the
Member States finally agreed that the financial liability clause should be included in
the directions for negotiation with Albania and the ACP countries. The wording was
established  subject  to  the  outcome  of  horizontal  discussions  that  the  Commission
undertook  to  begin  with  the  Member  States  and  that  took  place  in  the  Council’s
Customs  Union  Group  on  31  January  and  10  March  2003.  Bearing  in  mind  the
results of these discussions, which were extremely fruitful from a technical point of
view  but  did  not  cover  the  political  dimension  as  expected  by  most  of  the
Member States, the Commission is considering ways of making the best progress on
this matter.

12.2. 

(EAGGF Guarantee Section): Expenditure

In  2002,  Member  States  communicated,  pursuant  to  Regulation  595/91,  3,285
irregularities for a total amount of € 198,079,000 (see Annex 2).

The situation as regards recovery in 2002 (see Annex 8) is presented as follows:

– 

– 

– 

– 

the  overall  sum 
communications prior to 2002;

to  be  recovered  was  €2,177,477,000,  for 

the

to this amount, €171,579,000 were added relative to the communications
received during 2002;

the  amounts  relating to the cases  for  which  a  legal  procedure  is  current
account  for  overall  approximately  €738,466,000,  with  regard  to  the
period prior to 2002;

finally in the same period, the amounts declared irrecoverable pursuant to
Article 5, par. 2 of Regulation 595/91, and which are waiting for a formal
decision within the framework of the procedure of auditing of accounts,
were €149,798 000.

On  3  December  2002,  the  Commission  adopted  a  second  communication  on  "the
improvement  of  the  recovery  of  the  debts  of  the  Community  resulting  from  direct
management  and  from  the  shared  management  of  Community  expenditure"
[COM(2002) 671 final ].

With  regard  to  the  EAGGF  Guarantee  sector,  the  Commission  concluded  that  an
important  arrear  still  exists  concerning  the  information  on  the  recovery  of  the
amounts unduly paid, with regard to the cases of irregularities communicated by the
Member  States  under  Regulation  595/91.  In  order  to  clarify  the  situation  and  to

62

prepare formal decisions on the financial consequences113, the Commission decided
to create a Task force on "Recovery" (hereafter mentioned "TFR").

The Task Force, which is a joint action of OLAF and of DG AGRI, will examine all
the  cases  of  irregularities  related  to  the  EAGGF-Guarantee  communicated  by  the
Member  States  for  1995,  1996,  1997  and  1998  and  for  which  the  final  recovery
situation of the unduly paid amounts has not yet been notified.

Except  for  Italy,  the  communications  for  the  years  previous  to  1995  have  already
been the subject of a previous review which began in 1999; the final conclusions are
currently examined within the framework  of the procedure  of auditing of  accounts.
For  Italy,  the  Task  Force  will  also  examine  all  the  EAGGF  Guarantee  cases
communicated for the years prior to 1995, to clarify the real situation of the recovery
of the amounts unduly paid.

The Task  Force will prepare formal  decisions  on  the financial  consequences for  all
the  communications  from  all  the  Member  States  done  before  1999.  These  formal
decisions on each Member State will be taken separately within the framework of the
procedure of Auditing of Accounts114.

12.3.  Structural measures (Annex 9)

In 2002,  Member States communicated pursuant to  Regulations 1681/94 (financing
of the structural policies) and 1831/94 (financing of the Cohesion Fund) 4,656 cases
of irregularities for an overall amount of €614,094,000  (see annex 4).

The situation as regards recovery in 2002 (see annex 9) is presented as follows:

– 

– 

an  amount  of  €337,656,000  remains  to  be  recovered  concerning  the
communications  of  irregularities,  pursuant  to  Regulations  1681/84  and
1831/84, received before 2002;

to this amount, €368,287,000 were added relating to the communications
received during 2002.

In  the  field  of  the  Structural  Funds,  i.e.  measures  part-financed  under  multi-annual
programmes, the crucial phase with regard to the financial follow-up are that of the
closure  of  the  intervention  in  question.  As  regards  the  1994-1999  programming
period, the closure of the programmes has started, the deadline for the presentation of
the  balance  being  on  31  March  2003.  A  considerable  number  of  cases  which  were
communicated under Article 3 of Regulation 1681/94 have normally to be the subject
of a discharge except  for the actions suspended for legal reasons.  The Commission
will  finish  the  exercise  of  closure  in  2003.  The  results  of  the  closure  are  already
apparent under the communications of 2002. Almost 40% of the amounts affected by
the irregularities were the subject of recovery; for the majority of cases, by means of

113 
114

In accordance with Article 8(2) of Regulation 729/70.
As provided for by Regulations 729/70 and 1258/1999 (which apply to the expenditure carried out as
from  1  January  2000),  as  Commission  Regulation  1663/95  establishing  the  detailed  rules  for  the
application  of  Regulation  729/70  with  regard  to  the  procedure  of  auditing  of  the  EAGGF  Guarantee
accounts.

63

                                                
withdrawing  the  amount  of  the  request  from  the  balance  submitted  to  the
Commission.

The new Regulation 448/2001 makes it an obligation for the Member States to notify
the  Commission,  once a year, of the  balance  of  pending  recoveries.  This  facilitates
the  financial  follow-up  and  the  charging  to  the  Member  States  of  the  amounts  lost
because of their negligence.

12.4.  Direct expenditure (including external aid)

The direct  expenditure sector of the budget is  managed mainly  by the  Commission
and the European Office for the fight against fraud has special responsibility in this
area.    In  cases  of  direct  expenditure,  fraud  and  irregularity  investigated  by  OLAF
where  it  is  not  considered  appropriate  to  launch  criminal  proceedings,  the  Office
ensures that important elements arising either during the course of investigations or
from the final investigation reports are communicated to the authorising Directorate
General (DG) for the expenditure in question so that appropriate safeguard measures
and/or recovery action may be initiated in a timely manner. OLAF also supports the
authorising  DG  throughout  the  financial  follow-up  and  recovery  process  with  the
provision of advice and additional explanations as necessary.

Where, however, OLAF’s investigations lead it to believe that further criminal action
should  be taken in a case or where  criminal  proceedings  are  already  in  progress,  it
ensures that the  necessary  steps  are  taken  for  the  Commission  to  bring  such  action
(or  equivalent  measures  under  the  law  of  the  country  concerned)  with  a  view  to
securing the recovery of unduly paid funds.

In  this  area,  50  direct  expenditure  fraud/irregularity  cases115  were  referred  to  the
Follow-up  unit  in  OLAF  during  the  reporting  period.  Most  cases  are  still  ongoing
because of protracted legal proceedings, some of a criminal nature.  In the reporting
period,  6  cases  were  closed;  of  which  (only)  3  cases  had  a  financial  impact
(‘financial  follow  up’)116.  The  total  of  actual  financial  recoveries  in  the  reporting
period  amounted  to  €3,485,222.  Many  of  the  fraud/irregularity  cases  in  question
involved  (as  has  been  the  situation  in  2001)  unauthorised  expenditure,  false  or
inflated  claims  for  payment  of  expenses,  or  the  non-delivery/fictitious  delivery  of
contracted projects, goods or services.

As regards the  investigations conducted  on  all  EU  policies  by  the  European  Office
for the fight against fraud, attention must be drawn to the fact that the figures do not
take account of cases which required no financial follow up upon closure. Hence the
differences  in  case  numbers  and  financial  impact  between  the  present  figures  and
those shown above regarding the investigations by the Office.

The  data,  extracted  from  the  internal  database  (Case  management  system)  are
periodically reviewed and updated.

115
116 

26 cases external aid; 19 cases direct expenditure and 5 cases Anti-Corruption.
Of the latter in 2 cases nearly everything has been recovered (€ 5.832,00).

64

                                                
STATISTICAL ANNEXES

65

ANNEX 1
Traditional own resources
(updated 06 June 2003)

 Number of cases of fraud and irregularity reported by the Member States117 1998 – 2002  (Amounts in euros)

Member States

1998

Cases

1998

Amounts
established

1999

Cases

1999

Amounts
established

2000

Cases

2000

Amounts
established

2001

Cases

2001

Amounts
established

2002

Cases

2002

Amounts
established

(cid:1) %
Cases
2001-2002

(cid:1) %
Amounts
2001-2002

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

345

127

332

12

73

221

64

174

5

303

159

17

42

97

8 428 400

12 728 705

31 302 491

302 256

3 845 653

18 324 016

2 247 954

17 937 254

1 577 693

9 852 694

8 090 594

1 304 203

1 673 757

8 157 054

294

102

496

14

119

268

40

293

5

205

116

14

36

65

10 262 848

8 373 297

45 980 735

437 308

8 157 274

24 447 596

7 830 492

15 058 257

417 184

8 530 166

11 213 033

526 374

5 104 165

4 879 518

306

106

491

0

116

253

37

227

2

264

93

19

36

17

7 890 138

9 417 388

60 768 581

0

8 534 724

29 987 111

1 855 105

39 770 402

35 620

17 679 935

6 544 668

1 293 330

1 598 820

1 084 527

296

67

364

11

134

217

34

206

0

205

101

11

20

18

8 067 110

5 043 982

25 743 627

6 752 905

29 705 373

17 267 564

1 381 900

98 557 975

0

12 192 585

17 341 792

1 489 355

3 140 752

2 550 351

484

94

372

26

121

199

36

306

0

173

119

15

18

34

28 512 202

5 869 957

63,5%

40,3%

253,4%

16,4%

109 272 731

2,2%

324,5%

167 594

136,4%

- 97,5%

11 368 398

25 666 442

2 479 009

- 9,7%

- 8,3%

5,9%

- 61,7%

48,6%

79,4%

42 720 132

48,5%

- 56,7%

0

N/A

N/A

68 937 482

- 15,6%

465,4%

19 553 727

2 004 205

17,8%

36,4%

12,8%

34,6%

782 783

- 10,0%

- 75,1%

2 599 246

88,9%

1,9%

United Kingdom

499

99 552 879

534

104 419 824

496

330 805 155

189

9 673 612

122

4 610 551

- 35,4%

- 52,3%

TOTAL

2 470

225 325 603

2 601

255 638 071

2 463

517 265 504

1 873

238 908 883

2 119

324 544 459

13,1%

35,8%

117 

Member States must notify cases of fraud and irregularity where the amounts exceed €10 000 in accordance with a Community obligation laid down in Article 6(5)
of Regulation n° 1150/2000 of 22 May 2000.

66

                                                
ANNEX 2

update 07/05/2003

EAGGF GUARANTEE

IRREGULARITIES COMMUNICATED BY THE MEMBER STATES UNDER

REGULATION N° 595/91

2002

(amounts in € 1.000)

Number of cases

Amounts

% of EAGGF expenditure

49
84
712
17
997
451
212
244
0
58
80
109
20
18
234
3,285

3,686
2,436
19,795
4,668
59,272
10,809
7,528
79,916
0
2,358
1,002
2,309
367
289
3,645
198,079

0.39
0.20
0.29
0.18
1.00
0.11
0.44
1.41
0.00
0.21
0.09
0.31
0.04
0.04
0.11
0.46

Member States
B
DK
D
EL
E
F
IRL
I
L
NL
A
P
FIN
S
UK
TOTAL

67

ANNEX 3

(update 07/05/2003)

EAGGF GUARANTEE

IRREGULARITIES COMMUNICATED BY THE MEMBER STATES

YEARS 1998 – 2002

YEAR CASES

AMOUNT

% OF BUDGET

EAGGF-BUDGET

2002

3,285

2001

2,415

2000

2,967

1999

2,697

1998

2,412

198,079

140,685

474,562

232,154

284,841

0.46

0.34

1.17

0.59

0.73

42,781,898

41,866,940

40,437,400

39,540,800

39,132,500

* The concept "irregularity" includes fraud. The qualification as fraud, meaning
criminal  behaviour, can only be made following a penal procedure.

s
e
s
a
c

f
o
°
N

3 5 0 0

3 0 0 0

2 5 0 0

2 0 0 0

1 5 0 0

1 0 0 0

5 0 0

0

1,4 0

1,2 0

1,0 0

0,8 0

0,6 0

0,4 0

0,2 0

0,0 0

B
u
d
g
e
t
a
r
y

i

m
p
a
c
t

E AGGF  Gu a ran tee

1 9 9 8

1 9 99

2 0 0 0
y ear

EA GGF-BUDGET

CA SES

20 0 1

20 0 2

68

 
 
 
ANNEX 4

STRUCTURAL ACTIONS

IRREGULARITIES COMMUNICATED BY THE MEMBER STATES UNDER
REGULATIONS N° 1681/94 AND 1831/94

2002

Update 01/07/2003

Member State

Number of cases

Implicated amounts (in
1.000 €)

B

DK

D

EL*

E

F

IRL*

I

L

NL

A

P**

FIN

S

UK

Total

14

22

1,958

176

183

463

126

107

0

932

87

58

82

54

394

4,656

1,257

4,424

290,370

23,951

43,737

22,897

16,046

30,496

0

120,552

3,107

13,524

2,248

545

40,940

614,094

* It includes 1 communication concerning the Cohesion Fund** It includes 2 communications
concerning the Cohesion Fund

69

ANNEX 5

STRUCTURAL ACTIONS

TREND OF THE IRREGULARITIES* COMMUNICATED BY THE MEMBER STATES
UNDER REGULATIONS 1681/94 AND1831/94 AND THEIR IMPACT ON THE BUDGET

1997- 2002

Year

Number of
cases

Amounts
(x1000)

Part of
budget

Total budget

(x 1000)

2002

2001

2000

1999

1998

1997

4,656

614,094

2.01%

30,556,348

1,194

201,549

0.68%

29,829,680

1,217

114,227

0.45%

25,556,000

698

407

309

120,633

0.39%

30,654,450

42,838

0.15%

28,365,990

57,070

0.22%

26,304,900

*The  concept  of  “irregularity”  includes  “fraud”.  The  classification  of  fraud,  meaning  criminal
behaviour, can only be made following a criminal procedure.

s
e
s
a
c

f
o
°
N

5.000

4.000

3.000

2.000

1.000

0

STRUCTURAL ACTIONS

700.000

600.000

500.000

400.000

300.000

200.000

100.000

0

s
t
n
u
o
m
a
d
e
t
c
e
f
f

A

1997

1998

1999

2000

2001

2002

amounts (x1000)

number of cases

Year

70

 
 
 
ANNEX 6

DIRECT EXPENDITURE

Suspected Fraud and other irregularities investigated by OLAF (1)

Year

2002
2001
2000
1999
1998
1997

Number
of
Cases

164
135
148
107
24
41

Amounts

(x1000 €)

 42 605
 42 548
 170 374
 73 300
 11 000
 18 000

%
of
Budget

0,32%
0,35%
1,33%
0,87%
0,09%
0,17%

Total
Sectoral Budget
(x1000 €)

      13 434 546 (2)
12 299 409
12 788 618
8 425 287
11 750 900
10 681 600

(1) Since 2001 the figures do not include all cases investigated, but only those that were closed in that period.
(2) Payments appropriations 2002 - General Budget of the European Union for financial year 2002.

s
e
s
a
C

f
o
r
e
b
m
u
N

200

100

0

1,5%

1,0%

0,5%

0,0%

t
c
a
p
m

I

t
e
g
d
u
B

1997

1998

1999

Year

2000

2001

2002

% of Budget

Number of Cases

71

 
 
 
ANNEX 7
Traditional own resources
(updated 6 June 2003)

Cases of fraud and irregularity reported by Member States for 2002 (Amounts in euros)

Member States

Number of cases
notified for 2002

Amounts
established

Cases as a % of
EUR-15 total

Average amount per
case

Amounts recovered
in cases notified for 2002

(1)

(2)

(3)

(4)

(5) = (3) / (2)

(6)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

484

94

372

26

121

199

36

306

0

173

119

15

18

34

United Kingdom

EUR–15 TOTAL

122

2 119

28 512 202

5 869 957

109 272 731

167 594

11 368 398

25 666 442

2 479 009

42 720 132

0

68 937 482

19 553 727

2 004 205

782 783

2 599 246

4 610 551

324 544 459

58 910

62 446

293 744

6 446

93 954

128 977

68 861

139 608

0

398 483

164 317

133 614

43 488

76 448

37 791

153 159

2 739 915

4 919 918

50 033 346

0

2 347 877

6 292 134

1 153 006

668 892

0

4 300 262

1 226 413

251 350

540 992

2 420 601

3 667 932

80 562 638

8.8 %

1.8 %

33.7 %

0.1 %

3.5 %

7.9 %

0.8 %

13.2 %

0.0 %

21.2 %

6.0 %

0.6 %

0.2 %

0.8 %

1.4 %

100 %

72

ANNEX 8

EAGGF GUARANTEE

update 07/05/2003

SITUATION OF RECOVERY IN CASES COMMUNICATED UNDER
REGULATION N° 595/91

(amounts in € 1.000)

To be recovered
cases communicated cases communicated
before 2002

To recover

in 2002

In Justice Amounts

"irrecoverable"

before 2002 before 2002

73,966
9,756
243,797
59,230
170,855
68,012
6,919
1,415,158
36
34,591
5,388
30,317
100
711
58,640
2,177,477

2,775
350
15,448
4,668
57,004
9,349
4,747
70,604
0
2,046
801
1,570
39
164
2,013
171,579

20,338
0
46,757
32,242
48,814
36,866
4,124
518,926
0
2,753
0
18,910
16
178
8,541
738,466

605
8,042
20,685
5,538
15,302
2,314
524
81,036
0
2,874
590
665
0
0
11,623
149,798

Member
States

B
DK
D
EL
E
F
IRL
I
L
NL
A
P
FIN
S
UK
TOTAL

* In justice: awaiting outcome of judicial proceedings in national courts
** Amounts irrecoverable: awaiting formal decision in Clearance of Account procedure

73

ANNEX 9

STRUCTURAL ACTIONS

SITUATION OF THE RECOVERY IN THE CASES COMMUNICATED UNDER
REGULATIONS N° 1681/94 AND 1831/94

(Amounts in 1.000 €)

Update 01/07/2003

Member State

Total to recover
before 2002

Total to recover
2002

BELGIQUE

DANMARK

DEUTSCHLAND

ELLAS

ESPANA

FRANCE

IRELAND

ITALIA

LUXEMBOURG

NEDERLAND

ÖSTERREICH

PORTUGAL

SUOMI

SVERIGE

887

482

69,409

9,510

37,403

19,883

6,068

126,317

0

1,383

88

16,519

865

249

561

4,124

248,056

8,939

25,728

8,021

272

18,969

0

18,969

514

1,006

934

117

UNITED KINGDOM

48,593

28,723

Total

337,656

368,287

74

ANNEXES

75

ANNEXE TITLE I 

 FOLLOW UP OF THE 2001-2003 ACTION PLAN

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

1.1.1. 

Reinforce

Fraud-proofing
legislation 
contract
management

and

Preliminary
analysis of certain
new legislative
initiatives

(Action 94 of the
White Paper on
Reform)

OLAF, with the
help of a
specifically
created
interdepartment
al group
(legislation
aspect)

BUDG with the
help of OLAF
and the Legal
Service

initiatives 
budget 

the 
in  all  areas  of 
(own 

reinforcement  of
This  action  concerns 
the
legislative 
Community 
and
expenditure)  from  a  fraud-proofing  perspective,
on  the  basis  of  a  selection  by  OLAF  and  the
specific interdepartmental group.

resources 

It also covers the contracts aspect, namely:

(cid:1)  all  expenditure  directly  managed  by  the

Commission and its departments;

(cid:1)  certain  types  of  contractors  and  operators,
the  recipients  of  grants  under

mainly 
Community programmes.

Action ongoing

10 October 2002, 

the
On 
Commission’s 
the
fraud-proofing  of  legislation  and  contract  management
(SEC(2001) 2029, 7.11.2001).

Parliament  welcomed 

Communication 

concerning 

The year 2002 was devoted to implementing the legislation
aspect  and  preparing  standard  procurement  contracts  and
standard  grant  agreements  for  use  by  the  Commission
specially
departments.  The 
established for legislative aspects, determined the criteria for
selecting  high-risk  areas  and  identified  the  legislative
initiatives to be submitted to OLAF.

interdepartmental  group, 

As far as the contracts aspect is concerned, the cooperation
initiated  in  2001  between  OLAF  and  the  central  contracts
unit  in  DG  BUDG  focused  in  2002  on  the  drafting  of
manuals and the updating of existing guides.

76

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

1.1.2. 

security 
sectors

Greater
for  key

Development of
information system
allowing the
exclusion of
tenderers who have
been convicted

(Action 94)

MARKT,
OLAF,  BUDG,
JAI

Action ongoing

In  January 2002  Parliament  examined  at  first  reading  the
proposal  for  a  Directive  on  the  coordination  of  procedures
for  the  award  of  public  supply  contracts,  public  service
contracts and public works contracts, COM (2000) 275 final,
10.5.2000 (OJ C 29 E, 30.1.2001), and the Council adopted
a common position in March 2003.

legislation 

Community 

The purpose of the proposed Directive is to recast
the 
public
procurement,  the  aim  of  which  is  to  create  a
genuine  single  market  in  public  purchasing,  in
order to modernise and simplify the existing legal
framework and make it more flexible.

on 

One of the objectives of the directive is to oblige
the contracting authorities to exclude non reliable
tenderers (bidders convicted for participation in a
criminal organisation, corruption or fraud harmful
to  the  Communities’  financial  interests  or  for
money laundering).  A  political  compromise  was
found  on  the  obligation  for  the  contracting
authorities 
the  competent
authorities  of  another  Member  State,  which
requires  information  on  the  personal  situation  of
the economic operators concerned.

to  cooperate  with 

Given  the  results  of  the  system  therefore  put  in
place, 
the
usefulness  of  an  identification  system  for  the
operators concerned.

the  Commission  will  examine 

For direct management, see at 1.2.2 the recasting
of  the  Financial  Regulation,  which  sets  up  a
procedure  for  excluding  non-reliable  tenderers
from contracts and grants.

77

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

This  action  aims  at  reducing  the  circulation  of
counterfeit euro notes and coins and at enhancing
against
of 
the 
counterfeiting.

effectiveness 

fight 

the 

It  is  addressed  to  the  Member  States,  which  are
invited to amend their legislation in line  with the
provisions of the Framework Decision of 29 May
2000.

Publication  of  the  list  of  competent  authorities
complies  with  Article  10  of  Regulation  No
1338/2001, which is addressed to the departments
responsible  for  the  detection  of  counterfeits,  the
intelligence services and the representatives of the
central banks, including in Member States outside
the euro area.

OLAF,  ECFIN,
JAI,  SJ,  ECB,
Europol

Protection of the
euro against
counterfeiting:
closer cooperation
between the
Member States, the
Commission, the
ECB and Europol

Objective achieved

With  the  adoption  of  the  basic  Regulations  Nos  1338/2001
and 1339/2001, the action has been completed.

As  part  of  the  implementation  of  this  action,  the  list  of
Member  State  and  third  country  authorities  responsible  for
applying the Regulations was published.

Adoption of the Commission Recommendation of 19 August
2002  concerning  medals  and  tokens  similar  to  euro  coins,
which is aimed at strengthening the protection of euro coins
against counterfeiting.

78

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

Training, exchange
and assistance
programme

Setting up and
developing the role
of the European
Scientific and
Technical Centre
(ESTC) for the
protection of the
euro

OLAF, ECFIN

Objective achieved

As  far  as  implementation  is  concerned,  seven  projects  had
been  launched  by  the  end  of  2002  under  the  Pericles
and
Programme 
2001/924/EC).

(Council  Decisions 

2001/923/EC 

OLAF, ECFIN

Objective achieved in 2001

In 2002, three initiatives in particular were taken:

-  establishment  of  common  basic  procedures 

for

analysing counterfeit coins;

-  agreement on the parameters and criteria to be used for

authenticating euro coins;

-  creation  of  a  database  on  materials  used  by

counterfeiters.

The  competent  national  authorities  of  four
Member  States  (D,  I,  E  and  EL)  organised
seminars on the  fight against euro counterfeiting.
Europol was mandated by three Member States to
manage a project for the exchange of senior staff.
The  ETSC118  organised  a  seminar  for 
the
CNACs119 and OLAF held a technical meeting for
budget experts.

The  budget  earmarked  for  implementation  of  the
in  2002  was  approx.
Pericles  Programme 
€475,000.

These  actions  are  intended  to  provide  assistance
to  police  forces  and  other  authorities  responsible
for guaranteeing the authenticity of euro coins.

118 
119 

European Technical and Scientific Centre.
Coin National Analysis Centres.

79

                                                
Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

Action to combat
piracy and
counterfeiting:
implementation of
Green Paper

MARKT,
OLAF, TRADE,
TAXUD, JAI

Action ongoing

Proposal for a regulation and proposal for a directive.

regulation  aims 

to  extend
The  proposed 
intellectual property to new products, to facilitate
the  approaches  by  the  holders  of  rights  with  the
customs  authorities  and  to  simplify  the  action  of
the competent authorities of the Member States in
the  event  of  suspicion  of  counterfeiting  linked
with goods from third countries.

The  proposed  directive  intends  to  harmonise  in
the  national  legislation  of  the  European  Union
instruments  enabling  intellectual  property  rights
to be respected and to define a framework for the
exchange  of  information  between  the  competent
national authorities.

The  Commission  will  present  the  proposals  to
Parliament and the Council in 2003 (COM(2003)
20 final and COM(2003) 46 final).

80

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.1. Fostering a culture of prevention and tightening up legal texts

in 

three  main  areas: 

Under  the  programme,  the  Community  is  to
provide  assistance 
the
establishment  of  anti-fraud  structures,  links  and
databases,  and  the  strengthening  of  operational
expertise.  Implementation  of 
the  programme
began in 2003.

1.1.3.  Involving  the

applicant
countries in fraud
prevention

Creation of anti-
fraud structures
inside the candidate
countries,
reinforcement of
controls

ELARG, OLAF,
BUDG

Action ongoing

A  multi-country  anti-fraud  section  of  the  Phare  programme
for  the  protection  of  the  Communities’  financial  interests
(PH/2002/1412) was adopted on 16 May 2002.

the  anti-fraud  provisions  concerning 

In  2002 
the
management  of  the  national,  frontier  region  and  multi-
country PHARE programmes were aligned on those of ISPA
and  SAPARD.  The  financial  protocol  for  each  PHARE
programme provides  for the immediate introduction, by the
candidate countries, of a notification  mechanism  equivalent
to that established by Commission Regulation No 1681/91.

the 
activities 

By the end of 2002 eleven candidate countries had identified
their Anti-Fraud Coordinating Service (AFCOS) responsible
for  coordinating 
legislative,  administrative  and
the
linked 
operational 
Community’s  financial  interests,  after  Estonia,  Lithuania,
Cyprus  and  Slovenia  had  designated  such  services  in  the
course  of  the  year.  Bulgaria  definitively  identified  its
AFCOS in early 2003.

to  protection  of 

81

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.2 Strengthening legal instruments for detecting, monitoring and penalising fraud

1.2.1. 
detection 
control 
financial 
including 
international level

Improving
and
the
field,
at

in 

Conclusion of a
cooperation
agreement with
Switzerland
covering the fight
against fraud

OLAF, RELEX

Action ongoing

The  negotiations  have  been  going  on  for  more
than  two  years  on  account  of  the  restrictive
position  taken  by  the  Swiss  authorities.    Despite
the  efforts  made,  the  negociations  have  not  yet
been concluded.

On 14 December 2000, the Council gave the Commission a
negotiating mandate to conclude an anti-fraud agreement.

The Commission is pursuing  the  negotiations  to  establish  a
framework  for  effective  cooperation  against  Community
fraud. The key points yet to be settled are:

- 

- 

checks and inspections  in  the  context  of  administrative
assistance;

judicial  assistance  in  tax  and  customs  matters,  and  in
particular  the  conditions  for  the  execution  of  searches
and seizures (dual criminality);

- 

assistance in laundering cases.

Objective achieved

(Council  Regulation 

On  25 June 2002,  the  Council  adopted  the  new  Financial
Regulation 
(EC,  Euratom)  No
1605/2002  on  the  Financial  Regulation  applicable  to  the
general  budget  of  the  European  Communities,  OJ  L  248,
16.9.2002).

On  23 December 2002, 

the  Commission  adopted 

the

all 

These  measures 
authorising,
concern 
accounting and management departments affected
by  direct  expenditure  and  is  aimed  at  improving
financial  monitoring  and  penalties.  With  this
action the Commission is implementing its policy
on  recovery.  It  is  a  response  to  requests  from
Parliament, the Council and the Court of Auditors

Improving
1.2.2. 
financial  follow-up
and penalties

BUDG,  OLAF,
ADMIN,  AGRI,
REGIO,  EMPL,
RELEX, 
SJ,
MCG120

Implementation of
the Communication
of
13 December 2000
on Action 96 of the
White Paper on
recovery of unduly
paid funds (SEC
(2000) 2204)

120 

Monitoring and Coordination Group for Reform Actions 92-98.

82

                                                
Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.2 Strengthening legal instruments for detecting, monitoring and penalising fraud

Regulation laying down the implementing rules for the new
Financial  Regulation 
(EC,
Euratom)  No 2342/2002,  OJ  L  357,  31.12.2002).  This
instrument entered into force on 1 January 2003, at the same
time as the Council Regulation.

(Commission  Regulation 

On  3  December  2002, 
its
Communication  on  improving  the  recovery  of  Community
entitlements  arising  from  direct  and  shared  management  of
Community expenditure (COM(2002) 671)

the  Commission  adopted 

On  9  December  2002,  the  practical  rules  needed  for  the
application  of  certain  provisions  of  Council  Directive
76/308/EEC on mutual assistance for the recovery of claims
relating  to  certain  levies,  duties,  taxes  and  other  measures
were laid down by Commission Directive 2002/94/EC.

for detailed information on progress on Action 96
of  the  Reform  White  Paper  (more  effective
management of recovery of unduly paid funds).

the 

In  its  Communication  of  3  December  2002  on
improving 
of  Community
recovery 
entitlements,  which  relates  in  particular  to  the
EAGGF  Guarantee  Section, 
the  Commission
announced that it would be setting up a temporary
task  force  on  recovery  composed  of  specialists
from DG AGRI and OLAF.

Action 97:
improved financial
monitoring and
control of structural
funds.
Implementation of
the Commission
Communication of
7.8.2001 (C(2001)
2517).

REGIO

Action completed

In  accordance  with  the  Commission  Communication  of  13
December  2000  (COM(2000)2204),  a  new  regulation  was
in  2002  on  sound  financial  management  of
adopted 
assistance  granted  from  the  Cohesion  Fund,  including  the
follow  up  of  recovery  and  financial  corrections  concerning
assistance  granted  from  the  Cohesion  Fund  (Commission
Regulation (EC) No 1386/2002 of 29 July 2002 laying down
detailed rules for the implementation of Council Regulation
(EC) No 1164/94).

See interdepartmental protocols at 3.1.1.

83

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

1. A COMPREHENSIVE ANTI-FRAUD POLICY FOR LEGISLATION

1.2 Strengthening legal instruments for detecting, monitoring and penalising fraud

Integration of
administrative
measures and
penalties in the
field of direct
expenditure

Harmonisation of
on-the-spot
inspection
arrangements

OLAF,  INFSO,
RTD, 
other
departments

Action ongoing

Internal  procedures  for  recovery  in  relation  to  direct
on
expenditure  were 
17 December 2002.

consolidated 

reviewed 

and 

A report by the Internal Audit Service (IAS) will
be presented in early 2003, following an audit that
is underway in the Member States.

OLAF, 
departments

other

Action ongoing

Comparative study of legal bases:

On the basis of work by OLAF, the Commission considers it
useful to continue the discussion on the scope of legislation,
since  certain  loopholes  have  been  found  with  regard  to
cooperation  and  coordination  with  the  national  authorities.
This  cooperation  should  be  stepped  up  from  the  standpoint
of information exchange and administrative assistance, and,
in  the  case  of  investigations  led  by  OLAF,  the  legal
instruments available at Community level for  the protection
of financial interests in the field of direct expenditure should
be strengthened.

See  the  report  evaluating  the  first  three  years  of
OLAF’s  activities  required  by  Article  15  of
Regulation No 1073/1999 (COM(2003) 154 final)
(see  point 1.1.2.  of 
the  report,  on  external
investigations).

84

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

2. A NEW CULTURE OF COOPERATION

2.1. Establishing a Community platform of services

2.1.1.  Rationalising
making
of

and 
better 
use 
cooperation
structures

Analysis of services
which the
Commission/OLAF
can offer to the
institutions and to
the Member States,
evaluation of
possible synergies

OLAF

Action ongoing

The following are scheduled for 2003:

-  Validation of the file with the Member States;

- 

- 

Further 
selective  contacts  with  certain  national
authorities  already  consulted  and  organisation  of  new
consultations;

Presentation of draft  to  Cocolaf  during  the  first  half  of
2003;

-  Creation of specialised working parties in Cocolaf.

Cocolaf is to be asked to discuss the definition of
the  nature  and  content  of  each  of  OLAF’s  three
main  functions  (Intelligence,  Operations,  and
Policy  and  Programming)  and  the  creation  on  a
regular  basis  of  specialised  working  parties  in
Cocolaf in order to enable OLAF  to  draw  on  the
Member  States’  know-how  and  experience  and
take their needs into account.

An analysis  will also be carried out, on the basis
of the full range of its current functions, of all the
services that OLAF can offer, in order to establish
close  and  effective  cooperation  with  all  the
Office’s partners.

Strengthening
current coordination
structures

OLAF

Action postponed

94/140/EC
of  Commission  Decision 
Amendment 
establishing  Cocolaf  (the  Advisory  Committee  for  the
Coordination  of  Fraud  Prevention  (OJ  L  61,  4.3.1994)  was
planned for the second half of 2002 but has been postponed
until 2003.

The main objective of this measure is to improve
cooperation with the national administrations and
cooperation bodies.

The action is aimed at updating the Decision.

85

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

2. A NEW CULTURE OF COOPERATION

2.1. Establishing a Community platform of services

2.1.2.  Widening  the
of

scope 
information-
gathering,
use
improving 
and  analysis  of
intelligence

Evaluation of
possible synergy
with national or
external anti-fraud
bodies (Eurojust,
Europol, Interpol,
etc.)

OLAF

Action ongoing

See below.

Structure relations
with Eurojust,
Europol, Interpol

OLAF, JAI,
other police and
judicial
cooperation
bodies

Action ongoing

Opening  of  negotiations 
a  memorandum  of
understanding between Eurojust and OLAF (actual signature
on 14 April 2003).

for 

The  agreement  between  the  Commission  and  Europol,  on
which  discussions  began  in  early  2001  in  connection  with
the  adoption  of  Council  Regulation  (EC)  No 1338/2001  of
28 June 2001  on 
the  euro  against
the  protection  of 
counterfeiting, was finalised on 18 February 2003.

OLAF  maintains  appropriate  contacts  with  international
organisations such as Interpol, the WCO or the World Bank
in the field of cooperation.

See 
the
the  Commission  Report  evaluating 
activities  of  OLAF  pursuant  to  Article 15  of
and  1074/1999
Regulations  Nos 1073/1999 
(COM(2003) 154 final, 2.4.2003).

The memorandum of understanding with Eurojust
should provide for the practical arrangements  for
mutual exchanges of information and cooperation
on practical cases and on more general issues.

The  administrative  arrangement  between 
the
Commission  and  Europol  also  covers  possible
cooperation between OLAF and Europol.

86

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

2. A NEW CULTURE OF COOPERATION

2.2. Developing a closer partnership with Member States

2.2.2.  A  policy  of
evaluation 
and
forward planning

the
Inventory  of 
new measures taken
by  Member  States
in 2001-2002

OLAF

Objective achieved

the  protection  of 

The  Annual  Report  2001  on 
the
Communities’ financial interests and the fight against fraud
for  by
(COM(2002)  348 
Article 280(5)  of  the  EC  Treaty,  summarises  both  the
Community  initiatives  and  the  measures  taken  by  the
Member States and presents the  major  fraud  trends,  broken
down by Community policy.

final,  2.7.2002),  provided 

The  Annual  Report  gives  an  overview  of  the
efforts  made  by  the  Commission,  outlines  the
measures  taken  by  the  Member  States  for  the
application  of  Article 280  of  the  EC Treaty  and
addresses  various  aspects  of  the  organisation  of
national  authorities 
it
in 
analyses trends in fraud and irregularities.

this  context.  And 

Annual evaluation
of OLAF’s
operational
activities (Articles
11 and 12 of
Regulations Nos
1073/1999 and
1074/1999)

Future action by the Commission is set out in its Action Plan
2001-2003  on  the  protection  of  the  Communities’  financial
interests and the fight against fraud (COM(2001) 254 final,
15.5.2001).

As  from  2001, 
the  Commission  ensures  a
follow-up and an update of its Action Plan via its
the
Annual  Report  on 
Communities’ financial interests.

the  protection  of 

OLAF

Objective achieved

The  Office’s  reports  provided  for  by  Articles  11  and  12  of
Regulations  Nos  1073/1999  and  1074/1999  were  published
in  OJ  C  234,  30.9.2002  and  OJ  C  328,  30.12.2002
respectively.

One  of  the  aims  of  these  reports  is  regularly  to
inform  Parliament,  the  Council,  the  Commission
and  the  Court  of  Auditors  of 
the  Office’s
activities.

See  also  the  Commission  Report  ‘Evaluation  of
the  activities  of  the  European  Anti-Fraud  Office’
drawn  up  pursuant  to  Article 15  of  Regulations
Nos 1073/1999  and  1074/1999  (COM(2003)  154
final, 2.4.2003).

87

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

2. A NEW CULTURE OF COOPERATION

2.2. Developing a closer partnership with Member States

Definition of
OLAF’s strategic
objectives

OLAF

Action ongoing

is  preparing 

the  establishment  of 

OLAF 
its  activity
programme  foreseen  by  Article  11  of  Regulations  (EC)
1073/1999  and  1074/1999,  taking  into  account  the  broad
orientations from the other institutions.

SJ,  SG,  OLAF,
JAI,  ADMIN,
IAS and BUDG

Evaluation of
OLAF’s activities,
pursuant to Article
15 of Regulations
Nos 1073/1999 and
1074/1999

Action ongoing

Preparation  of  Commission  report  in  2002.  A  high-level
interdepartmental  working party  was set  up for the  purpose
by Commission decision on 15 January 2002.

Overall  evaluation  of  the  Office’s  activities,  in
accordance  with  the  Commission’s  mandate,  to
assess  whether  the  objectives  of  the  legislation
have been achieved. See also at 3.2.2.

The report has been adopted on 2 April 2003 and transmitted
to  the  other  institutions  together  with  the  opinion  of  the
Supervisory Committee (COM(2003) 154 final, 2.4.2003).

88

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

3. AN INTER-INSTITUTIONAL APPROACH TO PREVENT AND COMBAT CORRUPTION

3.1. Raising awareness among officials of the institutions of the principles of sound project management

3.1.1. 

Improving
coordination  and
cooperation
between  OLAF
other
and 
Commission
departments
(Action 93)

3.1.2.  Drawing  up
for
financial

guidelines 
sound 
management
(Action 92)

Conclusion of
memoranda
between OLAF and
the specialised
financial
departments

OLAF, 
SG, 
ADMIN
(IDOC), 
departments

IAS,
CFS,

other

Action ongoing

The IAS Protocol was concluded in 2001 and extended by a
follow-up document in 2002.

This  measure  aims 
between  OLAF  and 
departments.

to  reinforce  cooperation
the  other  Commission

Protocols  are  being  negotiated.    The  protocols  to  come
between  OLAF  and  the  departments  responsible  for  the
Structural Funds  will define  respective  responsibilities  with
regard to financial follow up.

Training plan,
codes of conduct

IAS,

OLAF, 
BUDG,
ADMIN, SG

Action ongoing

Merged  with  the  following  action  (Typology  of  high-risk
behaviour).

Typology of
high-risk behaviour

OLAF

Action ongoing

The Practical Guide to prevent any conduct prejudicial to the
financial  interests  at  different  stages  of  programmes  and
projects is being finalised.

This  action  is  aimed  at  awareness-raising  and
prevention  of  risk  behaviour  among  officials,
servants and members of the Commission.

89

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

3. AN INTER-INSTITUTIONAL APPROACH TO PREVENT AND COMBAT CORRUPTION

3.2. Improving the legal framework for administrative investigations

3.2.1. 

Reforming

disciplinary
procedures

ADMIN
(IDOC),  OLAF,
SG

Adjustment of
administrative
practices,
amendment of rules
and disciplinary
obligations laid
down in the Staff
Regulations
(Actions 57 and 58)

Action completed

On  19 February 2002,  the  Commission  adopted  Decision
C(2002)  540  concerning  the  conduct  of  administrative
investigations and disciplinary proceedings.

One of the objectives of the proposal is to reform
disciplinary  proceedings  (Actions  57  and  58),  in
order to:

The  Commission  adopted  a  proposal  for  a  Council
Regulation  amending  the  Staff  Regulations  of  officials  and
other  servants  of  the  EC  (COM(2002)  213/3)  on  24  April
2002, now under consideration by the Council.

A legal basis was introduced in the recasting of the Financial
Regulation  for  the  creation  of  an  advisory  Financial
Irregularities Panel (Action 66 of the Reform White Paper),
and  will  be  in  operation  from  January  2003. 
  The
Commission must adopt a decision to establish this body in
July 2003.

–   increase  the  efficiency  and  speed  of  the
and

investigations 

administrative 
disciplinary proceedings;

–   strengthen  prevention  and  transparency  with

regard to disciplinary matters.

3.2.2. Improving the
effectiveness  and
consistency 
of
administrative
investigations

Analysis of
conditions of
implementation of
Article 4 of
Regulation No
1073/1999 in
Community
institutions and
bodies

OLAF

Action ongoing

See report under Article 15 at 2.2.2.

Analysis and evaluation of the internal checks and
inspection function conferred on the Office with a
view to recommendations if appropriate.

90

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

4. STRENGTHENING THE CRIMINAL-LAW DIMENSION

4.1. Following up the Commission communication on criminal-law protection of the Communities’ financial interests

4.1.1.  Reviving  the
the

debate  on 
criminal-law
of
protection 
financial interests

Ongoing
discussions on the
detailed
arrangements for
introducing a
European public
prosecutor in
relation to the
protection of
financial interests

OLAF, JAI

Action completed

More than 12,500 copies of the Green Paper on criminal-law
protection  of  the  Community’s  financial  interests  and  the
establishment  of  a  European  Prosecutor,  adopted  by  the
Commission on 11 December 2001 (COM(2001) 715), have
been distributed in Europe.

Initial  analysis  of  reactions  received  in  response
to the public consultation suggests that  there  is  a
majority trend towards support for the principle of
a  European  Prosecutor.  A  minority  remains
seriously hostile to the idea.

In 2002, the Commission led public discussion on this issue,
taking  part  in  twenty  or  so  seminars  in  the  Member  States
and  the  applicant  countries.  It  held  a  public  hearing  in
Brussels  in  mid-September  2002,  with  a  panel  representing
all the interests concerned.

At  the  same  time  as  discussions  are  going  on
about  revision  of  the  Treaties,  the  consultation
highlighted  a  number  of  institutional  and  legal
issues  that  will  need  full  study  in  2003  on  the
basis of further academic work.

On  the  basis  of  nearly  200  replies,  the  Commission
presented  a  summary  of  the  debate  in  the  form  of  a  Green
Paper  follow-up  report  (COM(2003)  128),  adopted  on  19
March 2003.

At  the  same  time,  in  the  run-up  to  the  forthcoming  Treaty
review, the Commission has defended its proposal in various
political contexts, in particular the Convention on the future
of Europe.

91

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

4. STRENGTHENING THE CRIMINAL-LAW DIMENSION

4.1. Following up the Commission communication on criminal-law protection of the Communities’ financial interests

(definitions  of 

The  aim  of  this  measure  is  to  incorporate  into  a
instrument  certain  criminal-law
Community 
provisions 
illegal  behaviour,
liabilities  and  penalties,  cooperation  with  the
Commission)  which 
third-pillar
instruments  (Convention  on  the  protection  of  the
financial  interests  of  the  European  Communities,
signed  by  the  Member  States  on  26  July  1995,
and its two protocols).

appear 

in 

4.1.2.  Speeding  up
into
entry 
the 
legal
force 
of 
in
protection 
criminal matters

Implementation  of
certain  provisions
of  the  Convention
on the protection of
financial 
interests
and its protocols on
the  basis  of  new
Article 280 EC

OLAF

Action ongoing

The  Commission  presented  in  October  2002  an  amended
proposal  for  a  Directive  on  the  criminal-law  protection  of
the Community’s financial interests (COM(2002) 577 final).
Despite the positive position of the European Parliament and
the Court of Auditors, the Council is reticent to deal with the
proposed directive.

92

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

4. STRENGTHENING THE CRIMINAL-LAW DIMENSION

4.2. Stepping up cooperation and facilities for action in criminal matters

4.2.1. 

Simplifying

judicial
assistance
procedures

Follow-up to
Commission
Communication on
the creation of
Eurojust

Establishment of a
European judicial
cooperation unit

JAI/OLAF

Action completed

See next action.

JAI/OLAF

Action completed

On  28  February  2002,  the  Council  adopted  Decision
2002/187/JHA setting up Eurojust with a view to reinforcing
the fight against serious crime.

Memorandum of understanding between Eurojust
and OLAF (see at 2.1.2).

Eurojust  began  operating  on  6  March  2002  (OJ  L  63,
6.3.2002).

93

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

4. STRENGTHENING THE CRIMINAL-LAW DIMENSION

4.2. Stepping up cooperation and facilities for action in criminal matters

4.2.2.  Stepping  up
in
cooperation 
criminal  matters
for  the  criminal-
law  protection  of
financial interests

Vertical
cooperation with
the Member States
in combating crime
affecting the
Communities’
financial interests

Mutual  recognition
in
decisions 
of 
criminal matters

OLAF/JAI

Action ongoing

2002/465/JHA 

Framework  Decision 

Council 
of
13 June 2002  on  joint  investigation  teams  (OJ  L  162,
20.6.2002).  This  Framework  Decision  is  in  force  and  will
cease  to  have  effect  when  the  Convention  on  mutual
assistance in criminal matters between Member States of the
EU will enter into force in all Member States.

The  Convention  of  26.07.1995  on  the  protection
of financial interests was ratified and entered into
force in October 2002. Ratification of the Second
Protocol,  the  key  to  unlocking  the  close  and
regular cooperation provided for by Article 280 of
the Treaty, has not yet been achieved.

An  analysis  of  the  technical  and  operational  assistance
which the Office can offer to the judicial authorities is under
way in the context of the service platform (see at 2.1.1).

The  effectiveness  of  administrative  investigations  is  one  of
OLAF’s  concerns,  reflected  in  its  follow-up  and  advisory
functions  in  both  the  legal  (institutional  and  Community
law)  and  judicial  (national  law)  fields.  These  functions
include support for the judicial expertise of the  Magistrates
Unit  reporting  direct  to  the  Director-General  of  OLAF.
Creation of the service platform should enable better use to
be made of the contribution provided by these functions.

JAI/OLAF

Action completed

Framework  Decision 

Council 
of
13 June 2002  on  the  European  arrest  warrant  and  the
surrender  procedures  between  Member  States  has  been
adopted (OJ L 190, 18.7.2002).

2002/584/JHA 

94

Objectives

Measures

Lead dept.

Implementation and follow-up

Comments

4. STRENGTHENING THE CRIMINAL-LAW DIMENSION

4.2. Stepping up cooperation and facilities for action in criminal matters

Cooperation in
police matters

OLAF, 
Europol

JAI,

Action completed

A  draft  cooperation  protocol  has  been  finalised  and  signed
on  18th  February  2003  between  the  Commission  and
Europol.

Closer  cooperation  with  Europol  in  combating
illegal  activities  related  to  the  protection  of
financial interests.

95

ANNEXE TITLE II :

- Implementation of Article 280 by the Member States in 2002 –

Measures taken by the Member States to protect the Communities’ financial interests

Texts  contributing  to  the  implementation  of  Article  280  of  the  EC  Treaty  -  principal

legislative, regulatory and administrative developments

1.1.  Own resources:

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002
B

Circular “Criminal liability of legal persons – application in respect of customs and excise” of
30 July 2002, C.D. 802.1 – D.C. 12.900.
This circular comments on the Law of 4 May 1999 establishing the criminal liability of legal
persons  (Moniteur  belge  of  22  June  1999)  and  specifies  its  consequences  for  the  conduct  of
criminal investigations in customs and excise cases, the establishment of the minutes and the
criminal proceedings.

Article  71  of  the  Law  of  28  December  1992,  which  lays  down  tax,  financial  and  other
provisions, procures the legal basis for taxation officials to serve in public prosecution offices.
In all, it concerns sixteen posts in the public prosecution offices in Brussels, Ghent, Antwerp,
Tournai,  Liège,  Mons  and  Charleroi.  About  half  were  not  filled  at  the  beginning  of  2001.  A
candidate selection process took place and was completed in 2002. On 1 May 2002 an official
joined the Court of Appeal in Mons and three others took up posts at the Court of Appeal in
Antwerp. On 1 June 2002, one of the two posts vacant in Ghent was filled. The vacant post in
Brussels was filled on 1 July 2002.

Bankruptcy  is  regularly  used  as  determining  factor  in  all  the  mechanisms  of  serious  and
organised fraud by those who, operating behind a “straw” man or “front” companies, intend to
rid themselves of them to complicate the tracing of the fraud mechanisms used and claims on
their property.
The legislation on bankruptcy did not seem sufficient to frustrate the abuse of legal personality
in  such  practices.  In  view  of  this,  the  new  legislation  on  bankruptcy  contains  two  special
provisions.
The first implements Article 54 of the law on bankruptcies. The second supplements Articles
265, 409 and 530 of the Companies Code. They tend essentially to facilitate the drawing up of
the  liquidation  balance  sheet,  the  determination  of  the  causes  and  circumstances  of  the
bankruptcy and the responsibility of administrators in fact or law who have become guilty of
serious and organised tax fraud.
This amending law of 4 September 2002 was published in the Moniteur Belge of 21 September
2002.

96

1.1.  Own resources:

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

Between  1  July  2001  and  30  June  2002,  in  735  cases  the  allocation  of  a  VAT  number  was
suspended. The VAT identification  number,  which is  the  key  element  in  carrousel  files,  was
not allocated. It is remarkable to find that none of these suspended files became the subject of a
complaint  either  to  the  administration  or  before  the  courts.  This  manifest  lack  of  reaction
makes one wonder about the true intentions of the applicants.

The  development  of  a specific  IT  application  to  obtain  information  about  doubtful  taxpayers
for the competent services is essential for the registration procedure. From 1 January 2003, all
the administration’s offices will have this IT application.
The additional protocol to this European convention on legal aid of 20 April 1959, concluded
in  Strasbourg  on  17 March  1978,  stipulates  concretely  that  aid  cannot  be  denied  for  the  sole
reason  that  the  application  concerns  a  tax-related  offence.  The  ratifying  provision  was
submitted on 28 February 2002 to the European courts, and entered into force on 29 May 2002.

On  10  July  2002  Belgium  and  France  signed  an  administrative  arrangement  on  information
exchange. This arrangement, which comes into force on 1 September 2002 (see Moniteur belge
of  25  October  2002)  provides  for  an  automatic  and  spontaneous  exchange  of  information
between the two countries concerning direct and indirect taxes. As for the rest, it also defines
the methods for implementing simultaneous checks.
By analogy with the officials serving in courts of appeal (cf. law of 10 June 1997), a draft law
also provides for the grant of the status of criminal police to a limited group of tax officials.
This applies to tax officials serving in the OCDEFO (Central Office for Combating Organised
Financial Crime) on the one hand, and to a small group of customs officers on the other hand.
This preliminary draft law was adopted by the Chamber of representatives at its plenary of 18
December 2002 and then sent to the Senate.

DK On 31 May 2002 the Folketing (Danish Parliament) adopted an amendment to the Customs Act
(Bill No L 30) as part of the Government’s anti-terror package. The Act came into effect on 8
June 2002.
The aim is to prevent people who are entering and leaving Denmark from carrying money etc.
if there is reason to suspect that the money etc. being carried stems from a crime or will be used
for committing a crime, including the financing of terrorism.
Travellers who bring with them sums of money etc. with a value in excess of EUR 15 000 are
obliged  to  declare  these  large  sums  of  money  etc.  to  the  customs  and  excise  authorities  and
must stop at customs control without having to be asked. At the same time as the amendment to
the Customs Act, the customs and excise authorities are being given the power to retain sums
of  money  etc.  with  a  value  in excess  of  EUR 15 000. The  value  limit  is  the  same  as  that  set
with regard to the law on measures to combat money laundering.
The state customs and excise authorities shall immediately  inform  the  police  of the  retention
and  transfer  the  matter  to  the  police  who  can  then  also  assess  whether  there  are  grounds  to
arrest the person concerned.
There have been no significant legislative, administrative developments in 2002 seeing that the
implementation of the new National Customs Code in 2001 addressed, to a significant extent,
issues relating to the implementation of Article 280. Regarding administrative developments, a
proposal is being discussed in the context of the working group to set up a special unit at the
main Customs Offices to deal with all matters relating to combating fraud.
Instruction No 2/2002 of 11 March 2002 on the processing of requests for a posteriori checks
on proof of origin, issued by the Director of the Department of Customs and Excise.
Instruction  No  4/2002  of  10 September 2002  on  the  regulation  of  Risk  Analysis  Units  and
action  against  smuggling  in  customs  zones,  issued  by  the  Director  of  the  Department  of
Customs and Excise.

EL

E

97

1.1.  Own resources:

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002
F

Decree  No  2002-1372  of  18  November  2002  gives  effect  to  the  Council  Decision  of
29 September 2000 on the European Communities' own resources system.

In  addition,  the  French  authorities  have  issued  Decree  No  2002-1499  of  18  December  2002
giving  effect  to  the  Convention  based  on  Article  K.3  of  the  Treaty  on  European  Union
concerning the protection of the Communities' financial interests of 26 July 1995.

Following  the  enactment  of  a  new  Article  28-1  in  the  Code  of  Criminal  Procedure  so  that
customs  officials  can  be  authorised  to  conduct  judicial  enquiries,  particularly  concerning
fraud vis-à-vis Community financial  interests  (traditional  own  resources  and  agricultural
expenditure),  new  provisions  were  adopted  in  2002  to  provide  officials  with  an  autonomous
service  to  boost  the  resources  available  to  the  judicial  authority  in  economic  and  financial
terms. This was the Order of 5 December 2002 setting up a nationwide service known as the
"National  Judicial  Customs  Service"  and  Decree  No  2002-1415  of  5  December  2002
concerning the involvement of customs officials in certain investigative work and amending the
Code of Criminal Procedure.

These  new  provisions  make  it  easier  to  ensure  that  there  is  no  violation  of  the
non-accumulation of powers under the Customs Code and the Code of Criminal Procedure.
A  circular  issued  by  the  Ministry  of  Justice  concerning  criminal-law  policy  in  relation  to
Community fraud on 18 December 2002 explains the national provisions set in place to protect
Community  financial  interests  and  urges  investigating  magistrates  to  make  contact  with  the
judicial  customs  service  wherever  there  are  suspicions  concerning  receipts  or  expenditure
under the Community budget. The point here is to proceed as effectively as possible against
physical  and  legal  persons  responsible  for  violations  by  combining  the  criminal-law  and
customs elements.
Ireland adopted the CIS and Naples 2 Conventions and related instruments on 27 March 2002.
Consequently, we are now in a position to apply the Provisional Application Agreement for the
CIS Convention with effect from 1 June 2002.
Ireland enacted Regulations giving effect to Council (Recovery) Directive No. 76/308 as most
recently amended by Council Directive No. 2001/44 on mutual assistance for the recovery of
claims  between  Member  States.  These  Regulations  update  and  consolidate  previous
Regulations in this regard.
Ireland enacted an amendment to Section 908A of its Taxes Consolidation Act, 1997 (Revenue
Offence  –  Power  to  obtain  information  from  financial  institutions).  The  effect  of  this
amendment  is  to  extend  the  existing  power  of  access  to  records  and  information  held  by
financial  institutions  for  the  purposes  of  investigating  serious  tax  offences  to  investigations
involving the evasion or attempted evasion of all taxes including offences under the Customs
Acts.  This power has already been used in one case involving the smuggling of cigarettes from
outside the EU.
Concerning  significant administrative  developments,  in  the  area  of  a  posteriori  audit  control,
the  Irish  Customs  Service  introduced  in  2002  an  electronic  risk  analysis  system  known  as
IRAC (Integrated Risk Analysis for Customs). The objective of the system is provide speedier
and more comprehensive risk based profiles of operators so as to enable enhanced targeting of
operators for audit.
The Customs Agency, with its Circular No 25/D of 29 March 2002, initiated new automated
management procedures for the separate accounting of own resources.
In addition, Note No 949 of 10 October 2002 issued instructions for dealing with the cases of
requests for dispensation from the obligation to  make  available any  unrecovered amounts,  as
mentioned  in  Article  17(2)  of  Regulation  No  1150/2000,  for  the  successive  drafting  of  the
Annual  Report  on  the  activity  and  audit  results  in  the  sector  of  own  resources,  within  the
meaning of paragraph 3 of the same article.

98

IRL
1

I

1.1.  Own resources:

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

The  Region  of  Sicily  has  set  up  a  databank  in  which  to  enter  regional  and  de  minimis  aid
distributed  by  the  Region  pursuant  to  Article  15(3)  of  Regional  Law  No  32  of  2000,  which
derives from the Commission’s communications. Once it is up and running, the system should
ensure effective and targeted checking in respect of the maximums, which provides:
a)

information to the company to which aid is granted, on the nature of the aid itself and
the submission by the company of a written declaration stating that the new aid will not
bring  the  cumulative  amount  of  the  de  minimis  aid  received  to  a  level  in  excess  of
100 000 euros;
the registration of a single data bank of all information concerning the application of
the regulation.

b)

b)

The system should also ensure effective and targeted checking in respect of the rule relating to
accumulation, which stipulates the following:
a)

companies which request aid, following announcements of competition or calls for an
expression  of  interest,  must  submit  to  the  implementing  agency  a  self-certification
concerning previous benefits received;
subsidised  investments  must  be  shown  in  the  supplementary  note  of  the  beneficiary
company’s  balance  sheet,  in  such  manner  that  any  false  declarations  will  incur  the
infringement penalty stipulated by Article 2621 of the Italian Civil Code;
c)
the  institution  of  a  databank  on  aid,  which  will  be  available  to  all  interested  parties
(competing companies, trade unions, environmental associations, public authorities and offices
responsible for checks, including labour inspectorates).

A2

P

New working guidelines have been adopted for procedures for recovering and writing off debts
on own resources.
Early Warning System (EWS) for the transit procedure.
The Early Warning System was introduced on 1 December 1998. The aim of the system is to
detect irregularities/offences in consignments of sensitive goods as soon as possible in order to
be able to initiate investigation procedures and to take anti-fraud measures at an early date.
In  February  2002  the  annex  in  which  sensitive  goods  are  listed  was  amended  so  that  the
product  numbers  now  appear  as  six-figure  numbers  rather  than  the  previous  four-figure
numbers. This leads to a more selective sample of goods that are liable to be declared under the
Early Warning System.
Decree-Law  No  248-A/02,  14  November  2002,  instituting  an  exceptional  system  for  the
settlement of tax debts and social security debts aiming to provide taxpayers with favourable
conditions for full settlement of their debts and amends for associated infringements, thereby
avoiding  the  consequences  of  failure  to  observe  requirements  (particularly  access  to  tax
benefits), was approved.

FIN  General :  On 31.10.2001 the state treasury issued an order to the accounting offices regarding
amendment  of  the  financial  regulations.  The  accounting  office’s  financial  regulations  must
include  orders  regarding  measures  to  be  taken  upon  observing  errors  or  abuses  in  financial
management (the responsibility and duty to notify of the person who makes this observation;
the duty to initiate measures; notification of the abuses to the national audit office; notification
of  violations;  notification  of  errors  and  abuses  observed  in  the  administration  of  eu  funds;
follow-up measures). The accounting offices must bring their existing financial regulations into
line with this order of the state treasury without delay, and by 30.4.2002 at the latest.

S3

99

1.1.  Own resources:

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002
UK4

Legislative
UK  Customs  and  other  Member  States  have  been  actively  engaged  in  the  WCO  Mutual
Assistance  Project  Group  to  modernise  and  revise  the  multi-lateral  Nairobi  Convention  on
mutual assistance. The new proposed Convention will assist customs authorities world-wide to
carry  out  more  effective  controls  and  will  impact  positively  on  fiscal  controls  and  the  fight
against fraud for EU-third country trade.
The introduction of regulatory and civil evasion penalties did not take place during 2002. It is
now anticipated that these will be implemented during 2003. These penalties will cover a range
of offences against Community provisions from genuine errors to deliberate dishonesty
Administrative
UK Customs’ Business Assurance Programme for CAP  Imports has been  further refined  and
enhanced to better reflect the risks inherent in International Trade. Transactions are subject to a
structured programme of post-clearance assurance activities, depending upon risk.
Two multi-agency Memoranda of Understanding were signed with Croatia designed to combat
serious organised crime

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

a)  horizontal  developments  (general  control  and  preventive  measures  in  the  field  of
EAGGF-Guarantee)5
D

Development  of  a  catalogue  of  measures  ranging  from  IT  security  criteria  to  uniform
0implementation of Regulation (EC) No 2025/2001 by the IT audit units
Extending  access  to  information  in  the  HIT  database  to  departments  not  involved  in
agricultural administration
Increasing  efficiency  by  conducting  veterinary  checks  in  conjunction  with  premiums-related
checks on the basis of integrated risk analysis and an integrated control report

100

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

EL

The  following  important  decrees  were  issued  in  connection  with  the  Directorate  for  the
Management of Agricultural Products (OPEKEPE) pursuant to Regulation (EC) No 1663/95.
1.  Decree no. 227700/2002 by the Minister for Agriculture (Government Gazette 215B) on the
responsibilities of the Directorates of the Ministry of Agriculture following the closure of the
GEDIDAGEP and the incorporation of the OPEKEPE as the paying agency with effect from
03.09.2001.  This  decree  makes  the  materially  competent  directorates  of  the  Ministry  of
Agriculture  responsible  for  issuing  regulatory  and  individual  administrative  notices  in
connection  with  the  paying  agency.  Specifically,  provision  is  made  for  the  Directorate  of
Finance of the Ministry of Agriculture to issue notices to recover payments made in error under
the EAGGF Guarantee Section.

2. Joint  decree  no.  245798/2002  (Government  Gazette  1012B) approving  amendments  to  the
structural  and  operational  regulations  of  the  departments  of  the  OPEKEPE  (body  corporate
under private law). This decree makes changes to the administrative structure of the central and
regional  departments  of  the  OPEKEPE  and  how  they  operate,  in  order  to  improve  the
managerial and auditing work it carries out under the constant supervision of the Ministry of
Agriculture. It includes provisions to:

(cid:1) 

(cid:1) 

set up an Accompanying Measures and Agricultural Development Measures Section at
the OSDE Directorate;
increase  the  number  of  regional  departments  from  10  to  11  and  describe  their
responsibilities  in  detail.  These  responsibilities  include  auditing  payments  and
accredited clearance bodies in order to ensure no irregular payments have been made
and that Community and national legislation on aid and other guarantee measures are
being applied correctly.

3.  Decree  no.  227195/2002  (Government  Gazette  265B)  transferring  auditing  responsibilities
from the Olive Oil Aid Audit Agency (OE.E.E.) to the Independent Olive Oil Aid Control Unit
(A.Y.M.E.E.)  at  the  OPEKEPE.  This  independent  unit,  which  is  incorporated  into  the
administrative structure of the paying agency, exercises important auditing duties in the olive
oil production aid sector (which were exercised by the O.E.E.E. before it was closed). It audits
paying agencies, cooperative associations and olive oil presses and submits official reports on
any  irregularities  it  finds  so  that  sanctions  can  be  imposed.  It  will  continue  to  report  to  the
European Commission on its audits and work in general.

4. Joint decree no. 507/3/12/2002 implementing a financial aid programme in mountainous and
disadvantaged areas for the 4th year of the 2000-2006 period and appointing the OPEKEPE as
the paying agency in accordance with the requirements of Regulation (EC)  No  1663/95. The
same  will  apply  to  other  agricultural  development  measures  subject  to  similar  regulatory
arrangements.

E

Minister of the Presidency, Royal Decree 1441/2001 of 21 December, adopting the Statute of
the Spanish Agricultural Guarantee Fund (FEGA).
This  adapts  the  structure  of  the  FEGA  to  improve  performance  of  its  functions,  including
supervision of the coordination and harmonised application, on national territory, in general, of
controls and penalties  resulting  from  application  of the  CAP, in  particular  controls  set  up  by
Regulation 3508/92.

101

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

F

Following  the  entry  into  force  in  December  2001  of  a  new  Article  28-1  in  the  Code  of
Criminal Procedure so that customs officials  can  be  authorised  to  conduct judicial  enquiries,
particularly  concerning  fraud  vis-à-vis  Community  financial  interests,  new  provisions  were
adopted  in  2002  to  provide  officials  with  an  autonomous  service  to  boost  the  resources
available to the judicial authority in economic and financial terms.
Two  regulations  were  adopted  on  5  December  2002.  One  was  Decree  No  2002-1415
concerning  the  involvement  of  customs  officials  in  certain  investigative  work  and  amending
the Code of Criminal Procedure and the other an Order setting up a nationwide service known
as  the  "National  Judicial  Customs  Service".  This  service,    to  which  all  customs  officers
authorised to  conduct judicial inquiries  belong,  is  also competent  in  the  area  of  the  EAGGF
(Guarantee section).
A circular issued by the Ministry of Justice was also sent to all courts on 18 December 2002.
The  aim  of  this  circular  was  to  outline  the  legal  framework  and  the  persons  and  bodies
involved  in  the  protection  of  the  Community's  financial  interests  and  to  set  guidelines  for
criminal-law policy. The point here is to proceed as effectively as possible against physical and
legal persons responsible for offences by combining the criminal-law and customs elements.
Finally, Decree No 2002-1455 of 12 December 2002 sets out the respective roles of the
interministerial coordinating committee on controls (EAGGF - Guarantee section), the control
services and the paying agencies in the application of Regulations (EC) Nos 1469 and 745/96
(blacklist)

IRL The Department of Agriculture and Food has recently introduced a Risk Management system.
This system seeks to assess the key risks (strategic, operational, financial, reputational) facing
the  Department  in  achieving  its  objectives  and  to  outline  measures,  at  departmental  and
divisional  level  to  address  these  risks.  The  system  was  introduced  into  the  agricultural
payments area, covering  all  expenditure financed  by  the  EAGGF  –  Guarantee  section, in  the
first part of 2002 and has since been extended to other areas of the Department.
Cattle Identification and Tracing – Council Regulation 1760/00
Additional validation checks were introduced in respect of calf birth registration concerning the
breed of dam.
The  requirement  for  veterinary  proof  and  official  authorisation  in  respect  of  late  calf  birth
registrations was strengthened.
Facilities were introduced to record the existence and disposal of still-born animals.
A  project  was  undertaken  to  replace  all  non-standard  metal  tags  in  respect  of  older  animals
with standard tags.
A  project  was  commenced  to  provide  supplementary  double  plastic  identification  tags  in
respect of all older single tagged animals.
Further exercises were conducted to update the data on the database  in regard to the identity
and location of older animals.
Four  regional  units  were  established  to  conduct  targeted  enquiries  and  investigations  into
animal identification issues.
Legislative  Decree  10/12/2002  No  305  issued  “Sanctioning  provisions  implementing
Regulation (EEC) No 4045/89 on the EAGGF – Guarantee section financing system, pursuant
to Article 4 of the Law of 29 December 2000, No 422”.
The  Customs  Agency,  with  its  Circular  No  77/D  of  13  December  2002,  issued  detailed
instructions on the correct application of the provisions of Articles 3 and 5 of Regulation No
595/91,  three-monthly  review,  compilation  and  forwarding  of  any  recorded  frauds  or
irregularities against EAGGF funds.
As a result of the new integrated management and control system (GBCS) EU Regulation No.
2419/2001,  as  from  the  1  January  2002,  all  results  of  physical  controls  have  been  combined
under the GBCS and applied to all relief schemes for cattle

NL

I

102

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

P

A

Answer for the agriculture sector:
–  Amendment of Council Regulation (EEC) No 4045/89 from the end of 2002
–  Reduction in the number of payment offices from 3 to 2 -> see point 4.2
Unified  Control  System:  Legislative  Order  No  35/02  of  29  May  2002  places  on  a  formal
footing the integration of the Autonomous Regions of Madeira and the Azores in the Unified
Control  System  (UCS)  in  connection  with  the  implementation  of  operations  for  updating  the
system for the identification of agricultural parcels and statutory physical checks in the context
of the EAGGF – Guarantee Section.
National  System  for  the  Identification  and  Registration  of  Bovine  Animals:  Decree-Law
No 99/02 of 12 April 2002 amended Decree-Law No 338/99 of 24 August 1999 approving the
Regulation for the Identification, Registration and Movement of Animals by providing for the
penalty system applicable, with the penalties being graded in accordance with the seriousness
of the infringement committed.
FIN General development : see point 1.1.

Åland  :  improved  cooperation  with  the  Ministry  of  Agriculture  and  Forestry  through  a
memorandum of understanding which results in more precise and organised controls so that the
payment office satisfies EU requirements.

S6

UK There  have  been  no  significant  changes,  but  the  requirements  on  accreditation  continue  to
demand care and attention. From the 2002 scheme year the Rural Payments Agency (RPA) has
implemented a programme continuing the inspection requirements under all the bovine subsidy
schemes with those required under the Cattle Identification Regulations. The Combined Bovine
Risks Analysis (CoBRA) system enables RPA inspectors to undertake multiple bovine subsidy
and identification checks during one visit which will include a physical ear tag check of every
bovine payment against data held on the Cattle Tracing System (CTS). This helps ensure that
any anomalies are assessed for their impact across bovine schemes and provides an integrated
approach to reporting anomalies. Under the new system inspectors send and receive inspection
data by secure Email thus reducing the amount of time taken to report inspection findings to
staff.

b) developments in the field of export restitutions

D

F

I

Production  of  an  animal  transport  manual  to  make  it  possible  to  standardise  supervision  of
compliance with animal-safety provisions in connection with live-animal transport and uniform
implementation of Regulation (EC) No 615/98
See answer to point 4.2

With its note with protocol No 30180 of 24 December 2002, the Customs Agency updated the
instructions concerning the physical checks at the time of export of agricultural products that
benefit from a repayment following the issuing of Commission Regulation (EC) No 2090/2002
detailing methods for the implementation of Regulation (EEC) No 386/90.

103

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

S

The implementing regulation for Council Regulation (EEC) No 386/90 on physical checks on
products qualifying for export refunds, previously Regulation No 2221/95, was replaced at the
end  of  2002  by  Commission  Regulation  (EC)  No 2090/2002.  The  implementing  regulation,
which entered into force on 1 January 2003, did not mean any major developments compared
to  earlier  and,  during  the  period  in  question,  Sweden  has  not  implemented  any  ensuing
legislative, regulatory or administrative developments.

As  far  as  Sweden  is  concerned,  the  effect  of  one  of  the  developments  is  nevertheless
significant; at least the development is important for smaller customs offices (customs offices
with  a  relatively  low  frequency  of  refund  goods).  Previously,  in  each  product  sector,  each
customs office was required to inspect the first consignment in each inspection period if it was
uncertain  whether  there  would  be  more  than  one  refund  export,  in  order  to  maintain  the
frequency of inspections. With the new wording  of  the  regulation, that  requirement  has  been
“relaxed”, which means that the risk analysis can be applied more effectively and inspections
can therefore be adapted to the most important risk areas.
c) developments in the field of intervention expenditure

E

Ministry  of  Agriculture,  Fisheries  and  Food.  -  Royal  Decree  330/2002  of  5  April  2002
transposing certain elements of the European regulations governing cotton production aid.
This includes the introduction of control arrangements and spells out the relations between the
body which coordinates aid and the paying agencies of the autonomous communities

104

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

F

In the milk and milk products sector, Decree No 2002-1001 on cows milk production and on
the arrangements for recovery of the additional charge levied on buyers and producers of milk
was adopted on  16 July 2002. This decree outlines the circumstances under which a producer's
approved status could be withdrawn, listing the deficiencies which could lead to such a step. It
introduces a 30-day default procedure whereby approved status may be withdrawn from buyers
who do not comply with the regulations. It sets out the conditions under which approved status
can be restored at the request of the buyer if, after a minimum period of six months, an in-depth
inspection shows that the regulations are once again being respected. It also sets up an annual
procedure for renewing approved status. Finally, it defines materials accounting, in accordance
with opinion of the Chair of the interministerial coordinating committee on controls, which set
out in 2001 the general principles of this type of accounting which is essential for ensuring the
tracability of information on granting aid and the effective carrying out of checks.

Following adoption of this Decree, a circular (ONILAIT MPL No 02.05) was distributed on 6
December 2002. This circular, on the approved status of milk buyers, sets out the implementing
regulations for Articles 5 and 13 of Decree No 2002-1001.

The control mechanism for producers of milk for direct sales was also updated, to take account
of  the  legislative  changes  arising  from  the  entry  into  force  of  Decreee  No  2002-1001.  This
update was detailed in Circular DPEI/SPM/SDEPA/C2002-4045 of 8 October 2002, which lays
down  the  mutual  obligations  of  the  paying  agency  and  the  Departmental  Directorates  of
Agriculture  and  Forestry  which  are  responsible  for  carrying  out  on-the-spot  checks  and
describes the preparatory stages of the checks, their nature and the way in which they should be
reported.

Finally,  two  circulars  were  issued  by  the  paying  agency  regarding  the  implementation  of
Regulation (EC) No 2571/97 on the sale of butter at reduced prices and the granting of aid for
cream, butter and concentrated butter for use in the manufacture of pastry products, ice-cream
and  other foodstuffs.  The  purpose  of  these  two  circulars,  which  are  adressed  to  retailers  and
purchasers, is to standardise the sales statements in such a way as  to  facilitate  administrative
control over product destinations.

FIN Council of State Decree (860/02) on reimbursement of storage costs payable for assignable C-
sugar from marketing year 2001/2002: specifies size and payment date of reimbursement
Ministry  of  Agriculture  and  Forestry  Decree  on  certain  items  to  be  complied  with  in
intervention purchases of grain (17.5.2002): specifies control procedures relating to acceptance
of grain

Ministry  of  Agriculture  and  Forestry  Order  on  inspections  relating  to  industrial  butter  aid
(2.4.2002  1190/524/2002):  division  of  quality  inspections  between  the  Veterinary  Medicine
and Food Standards Research Institute and the National Food Administration

Ministry  of  Agriculture  and  Forestry  Direction  to  the  National  Board  of  Customs  regarding
quarterly  inspections  and  annual  stocktaking  of  intervention  warehouses  for  butter  and
skimmed  powdered  milk  (30.7.2002  2385/571/2002):  more  specific  instructions  on  annual
stocktaking

Ministry of Agriculture and Forestry Direction to Customs regarding inspections of EU Food
Aid (4.4.2002, Doc.No. 1271/524/2002)

d) developments in the field of direct aid

105

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

E

F

P

Ministry of Agriculture, Fisheries and Food. - Royal Decree 1322/2002 of 13 December 2002
Basic  national  rules  on  agro-environmental  requirements  for  the  full  payment  of  direct  aid
under the CAP, and for its implementation, coordination and control.
No new legislative or regulatory texts on the control of animal or area-based aid were adopted
in 2002. The legal basis for these controls is still Community legislation, fleshed out in national
circulars  (ministerial  instructions  to  a  department):  circulars  on  area-based  aid,  on-the-spot-
checks and follow-up to checks on animal aid.
National System for the Identification and Registration of Bovine Animals: Publication of
Order 25586/02 of 2 December 2002 of the Minister of  Agriculture,  Rural  Development  and
Fisheries  laying  down  measures  for  greater  operationalisation  and  reliability  in  the
identification of bovine animals by setting up new modules in the NSRIBA database.
School milk: Adaptation of Order in Council No 398/02 of 18 April 2002 regulating the terms
of application in Portugal of the system for the granting of aids for the supply of milk and milk
products  to  pupils  at  educational  establishments  on  the  mainland  and  in  the  Autonomous
Regions of the Azores and Madeira, particularly as regards the conditions of eligibility for the
aid, whether in terms of type(s) of product or in terms of the quality and quantity of products
for which aids are granted. According to the said Order in Council, it is the responsibility of the
INGA,  or  National  Institute  for  Agricultural  Guarantee  and  Intervention  (NIAGI),  either
directly or via bodies indicated by it, to inspect and discuss all the supporting documents for
the distribution of aided milk products so that the product used is not diverted from its intended
purpose  and  the  amount  to  be  paid  matches  the  quantities  actually  consumed,  with  all  the
administrative support allowing the necessary checks to be carried out within the extent of its
powers being established for the purpose.
System of supplementary taxation: By virtue of the recent changes in Community legislation
on  the  supplementary  taxation  system,  Decree-Law  No  240/02  of  5  November  2002,  laying
down  the rules  governing  the  system  of  supplementary  taxation  applying  to  the  quantities  of
cow's milk or cow's milk equivalent delivered to a purchaser or sold directly for consumption
which  is  provided  for  in  Regulation  No  3950/92  of  28  December  1992  and  Regulation  No
1392/01 of 9 July 2001, was published.

Sheepmeat and goatmeat sector: Publication of Legislative Order  No  37/02  of  1 July  2002
laying  down  the  objective  criteria  according  to  which  the  supplementary  payments  will  be
made  to  producers  of  sheepmeat  and  goatmeat  and  the  respective  rules  for  the  granting  of
subsidies,  including  the  penalty  framework,  in  accordance  with  the  necessary  and  adequate
measures to ensure the correct application of Regulation No 2550/01 of 21 December 2001.

FIN Several Decrees of the Ministry of Agriculture and Forestry were issued in 20027
S8

UK At the very end of 2001 Regulation (EC) No. 2419/2001 came into force. It laid down detailed
rules for applying the integrated administration and control system for certain Community aid
schemes established by Council Regulation (EEC) No. 3508/92. It applied to aid applications
relating to marketing years or premium periods starting from 1st January 2002. In the interests
of  clarity  and  rationalisation  the  new  regulation  replaced  its  much-amended  predecessor
(Regulation (EEC) No. 3887/92) and introduced certain new provisions. There is cooperation
between paying agencies on day to day administration and control issues as the need arises.
The most significant change in the field of direct aid will emerge out of the Mid-Term Review.
Along  with  the  de-coupling  of  aid  and  digressive  subsidy  payments,  it  is  likely  that  cross-
compliance will impact substantially on the associated control regimes.

e)  developments  in  the  field  of  rural  development  measures  financed  by  EAGGF-
Guarantee

106

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

D

EL

Further  development  of  guidelines  on  the  use  of  management  and  control  systems  in
connection with rural development measures.
Joint decree no. 518/350/2003 and its implementing decree no. 430/2003 make provision for:
a)  ongoing  on-site  and  administrative  audits  by  local  action  teams  at  all  stages  of  the
implementation  of  investment  programmes  (in  order  to  ensure  local  programme  projects
are  being  carried  out  properly  and  final  recipients  are  honouring  their  contractual
obligations)  and  all  publicity,  information  and  evaluation  procedures.  Certified  loans  are
audited for accuracy and measures are taken to identify and rectify irregularities;

b)  audits  by  authorised  officers  of  the  Ministry  of  Agriculture,  the  Ministry  of  Economy  &
Finance  and  other  ministries  and  the  European  Commission  and  the  European  Court  of
Auditors  of  the  aforementioned  local  action  teams  and  final  recipients  over  the  entire
the
performance  of 
“administration and audit” system using the Integrated IT System, in conjunction with the
information submitted by the local action teams;

the  contract.  Administrative  audits  are  carried  out  under 

c)  sanctions in the event of irregularities identified either in connection with the final recipient
or  the  team’s  administration  and  audit  system  which  infringe  national  and  Community
legislation, with a simultaneous procedure to be set in motion in order to recover sums paid
in  error  or  even  deregister  the  agency  in  the  case  of  serious  irregularity.  If  programme
plans are not completed on time for reasons for which the team or the final recipient is to
blame, the Ministry of Agriculture will ask for the entire sum paid in aid to be returned and
for the letter of guarantee to be forfeited.

(cid:2) 

joint decree no. 19/2002 setting up the monitoring committee for the LEADER Community
initiative 2000-2006;

(cid:2)  decree no. 198/2002 by the Minister for Agriculture inviting expressions of interest in the

submission of local programme plans;

(cid:2)  decision no. 830/2002 by the Minister for Agriculture approving local programmes etc. and

related circular no. 833/2002 from the special secretariat-general and

(cid:1)  decisions nos. 846/2002, 1587/2002 and 305809/8184/2002 by the Minister for Agriculture
on international competitions to select a mid-term evaluation consultant for the operational
programme and implementation contractors for specific programme projects.

E

F

Ministry  of  Agriculture,  Fisheries  and  Food.  -  Royal  Decree  708/2002  of  19  July  2002.
Additional measures for the rural development programme concerning CAP flanking measures
The    DERF/DEPSE  departmental  note  of  13  August  2002,  which  cancels  and  replaces  the
previous  departmental  note  of  27  July  2001,  updates  the  general  principles  applicable  to
controls of all RDR measures and their consequences.
It  draws  attention  to  the  general  provisions  implementing  Articles  58-64  of  Regulation  (EC)
No 445/2002 and includes the latest updates to the Commission's guidelines (ref: VI 10535/99,
rev  7)for  applying  the  applications,  controls  and  sanctions  systems  for  rural  development
measures introduced by Council Regulation (EC) No 1257/1999.
The note is specifically concerned with stipulating the  content  of  administrative  controls, the
way  in  which  on-the-spot  checks  should  be  carried  out,  both  before  and  after  final  payment,
and the concept of irregularities

107

1.2.  Agricultural expenditure (expenditure financed by EAGGF - Guarantee section):

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

IRL Early Retirement Scheme

In February 2002, the European Commission agreed to a formal amendment to Ireland’s Rural
Development Plan, so as to limit the inclusion of Widow’s and Widower’s pensions in the list
of State pensions defined as national retirement pensions to recipients of those pensions who
are aged 66 years or over.
The  Alternative  Enterprise  Scheme  Division  in  cooperation  with  the  Livestock  Division
introduced some simultaneous inspections for compliance with Good Farming Practice.
Within the scope of the directive “agriculture and livestock development policies”, the Region
of Valle d’Aosta has created an operative structure called the “farming system”, whose aim is
to  coordinate  the  administrative  and  information  technology  procedures  required  for  the
implementation of the  rural development  plan (rdp),  with the aim  of  setting  up  an integrated
and simplified system for managing regional farming.

The  Regional  Agency  for  Agricultural  Supplies  in  the  Region  of  Tuscany  (ARTEA)  has
produced  some  manuals  on  the  management  of  procedures  for  checking  the  measures  of  the
rural development plan (Reg. EC No 1257/99).
A  recently  established body  is the  Veneto  Agency for  Payments  in  Agriculture  (AVEPA),
which was recognised by the Minister for Agricultural and Forestry Policies with the decree of
26  June  2002  as  the  organisation  responsible  for  disbursing  the  RDP  interventions  in  the
Veneto Region.
The  above  Agency  established  an  agreement  with  AGEA  for  the  transfer  of  functions  and
works with the Region of Veneto in line with that agreement for the authorisation of payments
relating to all the RDP measures mentioned in Regulation (EC) No 1257/99.
The policy regulations reducing the subsidy for the countryside development programme
(Official Gazette dated 22 January 2002, No. 15) became effective on the 1 February 2002.
This gives a closer interpretation of Article 64 of the EC Regulation No. 445/2002 in
connection with the consequences of non-compliance with subsidy obligations within the
framework of the Netherlands countryside development programme.

Regulation  governing  the  subsidy  for  the  countryside  development  programme  (Official
Gazette  2002,  No.  91).  This  regulation  replaces  provincial  decrees  under  which  previously
implementation was given to Appendix 2 of the Provincial Programme (POP).
Compensatory  payments:  Order  in  Council  No  134/02  of  9  February  2002,  amending  the
Regulation  for  Implementing  the  Compensatory  Payment  Assistance  approved  by  Order  in
Council  No  46  -  A/01  of  25  January  2001,  introducing  in  Article  12(2)  the  penalties  arising
from the failure to comply with the rules relating to sound agricultural practices.

I

NL

P

FIN Åland  :  a  bill  which  concerns  the  financing  of  rural  commerce  has  been  referred  by  the
Provincial  Board  for  Åland  to  Åland’s  Lagting  for  consideration.  A  new  provincial  law  is
expected to enter into force during 2003.
The  bill  concerns  rural  development  and  the  aid  co-financed  by  the  EU  is  start-up  aid,
environmental aid and LFA aid. National investment aid can be granted under the bill. This is
not co-financed by the EU.
Under the law, the previous provincial legislation is brought more in line with EU rules. The
law includes provisions on the different forms of aid, the financing of such aid, the procedure
for  the  grant  of  aid,  monitoring  and  control,  recovery  and  sanctions.  As  far  as  recovery  is
concerned, it is proposed in the bill that, where repayment is not made voluntarily, it must be
able  to  be  effected  using  the  arrangements  laid  down  in  the  Law  on  recovery  of  taxes  and
charges by enforcement order (FFS 367/1961).

108

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

a) horizontal developments (covering two or more structural funds)

B

EL

Decision  of  18  July  2002  by  the  Walloon  Government  organising  the  reform  of  the  Audit
Committee  and the  OLAF  Inter-administrative  Working  Group,  whose  role  was  described  in
the 2001 report. For these two committees, the Government decided to ask the administrations
to  designate  by  name  a  full  representative  and  a  replacement,  so  as  to  guarantee  their
systematic presence at meetings and to allow the decisions required to be taken in their name to
be adopted in session; it also decided to amend the internal rules of the Audit Committee and
the  OLAF  Inter-administrative  Working  Group,  so  that  the  rules  stipulate  that  problems  not
resolved satisfactorily within three months of their examination by the Committee or the OLAF
Working  Group  are  communicated  to  the  Minister-President  and  the  functionally  relevant
Minister for the presentation of a notification proposal to the Government.
On 28 October 2002 the Ministry of Foreign Affairs drew systematic attention to a procedure
for the notification and follow-up of the irregularities specified in Regulation (EC) No 1681/94.
The document laying down this notification procedure was sent to the various Administrations
of  the  Ministry  of  Finance  since changed into  SPF  Finances  by  internal  notes  of  28  October
2002, although SPF Finances is not competent to allocate interventions paid from the structural
funds.  The  purpose  of  that  distribution  was  to  allow  each  Administration  to  examine  the
possible  implications  of  that  communication  in  the  event  that  an  irregularity  were  to  be
discovered  during  a  tax  check  and,  where  necessary,  to  establish  collaborations  with  the
regional  authorities  competent  in  the  matter  for  certain  more  detailed  investigations  in  these
sectors.

In  2002,  an  extensive  review  procedure  commenced  for  the  recovery  of  amounts  unduly  or
unlawfully  paid  under  co-financed  Community  programmes,  which  had  been  established  by
virtue  of  Joint  Ministerial  Decision  (JMD)  2007892/461/27-5-98  “Recovery  of  unduly  or
unlawfully  paid  amounts  from  national  resources  or  resources  of  the  European  Union  in  the
framework of implementation of Community policies”.

Under  the  new  JMD  being  drafted,  a  new  national  fiscal  adjustments  system,  in  accordance
with the provisions of Commission Regulation (EC) 438/2001 is being established, while at the
same time, an adjustment of the recovery procedure is made to new institutions and new data
under  the  3rd  CSF,  as  such  are  derived  from  the  Community  and  national  legal  framework
adopted for managing expenditure from Structural Funds and the Cohesion Fund for the 2000-
2006  planning  period. The  drafting  of the  new  Ministerial  Decision  for  the  recovery  of  such
amounts is expected to be completed shortly within 2003.
The Paying Authority conducted a tender procedure for awarding the study “Risk analysis in
sampling  of  actions  to  be  audited  under  the  3rd  CSF”  with  a  view  to  developing  a  sampling
methodology  for  actions  to  be  audited  in  accordance  with  the  provisions  of  Article  10  of
Commission Regulation (EC) 438/2001. Selection of the contractor was made in 2002, while
deliverables associated with this study are expected to be in by the end of May 2003.
The  Paying  Authority  in  conjunction  with  the  Financial  Control  Committee  (FCC)  prepared
joint audit questionnaires to verify actions taken by the Final Beneficiary and the management
systems  of  the  Special  Management  Services,  which  will  be  uniformly  applied  by  the  audit
instruments, depending on the audit level.

109

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

F

Decree  No  2002-633  of  26  April  2002  confers  upon  the  interministerial  committee  for  the
coordination  of  controls  of  operations  co-financed  by  the  European  Structural  Funds
(CICC-Structural  Funds)  the  responsibility  for  ensuring  that  all  of  the  authorities  concerned
comply with the requirements regarding the control of operations co-financed by the European
Structural Funds and that the management and control systems implemented are effective.

The CICC for Structural Funds defines the overall framework of controls and ensures that these
are carried out, undertakes systems audits, receives summaries of controls carried out by other
departments;  evaluates  the  results  and  draws  up  the  annual  report  on  controls  required  by
Article 13 of (EC) Regulation No 438/2001 of 2 March 2001.
It provides the Ministries concerned with recommendations which might help to improve the
management and control systems, proposes appropriate measures and is informed of how these
are followed up. It organises consultations with the Ministries concerned or any other Ministry
involved  in the  management  or  control  of  operations  co-financed  by  the  European  Structural
Funds. It coordinates the network of auditors.

It seeks to promote the coordination of national and Community controls.
On winding up the assistance, it draws up the validity declarations required by Articles 15 and
17 of (EC) Regulation No 438/2001 of 2 March 2001.
Article 60 of the amending finance act for 2002 No 2002-1576 of 30 December 2002 conferred
upon  the  CICC  for  Structural  Funds  its  own  power of  scrutiny  with  regard  to  the  authorities
responsible for the management and payment of structural funds, including regional authorities,
intermediary organisations or relays and final beneficiaries of European Structural Funds.
Furthermore,  the  Prime  Minister's  circular  of  15  July  2002  relaunched  the  process  of
programming  and  carrying  out  operations  by  strengthening  partnership  and  effective
organisation.  It  also  specified  the  requirements  laid  down  by  Community  rules  regarding
management  and  control  by  defining  specifically  the  roles  and  tasks  of  the  different  people
involved.
The  circulars  of  19  August  and  27  November  2002  from  the  Ministries  responsible  for
supervising  the  management  of  structural  funds  and  the  circular  from  the  Prime  Minister  of
24 December 2002  were  intended  to  simplify  the  management  of  the  European  Structural
Funds.
The Region of Sicily: see point 1.1.

The TES Law: On the 1 May 2002, the Law on supervision of EU-subsidies came into force in
the Netherlands. As well as regulating the right of recovery and the authority to issue
instructions, the law regulates the right to information. The TES Law is also applicable to the
Structural Funds. In the latter part of 2003a report on the allocation of EU subsidies will be
submitted to the Dutch Parliament for the period May to December 2002. Decentralised control
bodies that come under the law are required to submit details of European subsidies that they
have received to the respective policy departments. At the same time as the TES Law, the
eighth amendment to the Dutch Government Budget Accounts Act came into force. With this
amendment, the the Netherlands Court of Audit receives the power to monitor EU subsidies
right down to the level of the end-beneficiary. The Netherlands contribution to the Annual
Report under Article 280 EU Treaty 2000 and 2001 includes an explanation of the TES Law
and the eighth amendment to the Dutch Government Budget Accounts Act.

I

NL

110

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

Simplification:  The  European  Commission  is  currently  engaged  on  a  project  for  greater
simplification,  clarification,  coordination  and  flexibility  of  the  administration  of  structural
policy  during  the  period  2000-2006.  The  aim  is  to  achieve  a  more  accurate  and  a  more
transparent  policy  and  to  improve  financial  control.  In  this  context,  the  Member  States,
including  the  Netherlands,  have  asked  for  a  simplification.  This  project  will  only  become
effective after the year 2002.
Scheme  for  supervision and  control:  Supervision and  control  by  the  policy  departments  over
the  disbursement  of  EU  subsidies  has  been  tightened  in  2002.  A  supervisory  and  control
scheme has been drawn up by the ministries
Regulation 438/2001: Under EC Regulation No. 438/2001, the disbursing state has received a
new system of forms. A form is to be attached to the ‘Certificate of Expenditure’, in which all
requests  for  repayment  must  be  listed.  This  form  has  been  introduced  for  use  with  the
municipal programmes Objective 2 and Urban 2. The form is not yet in use for Objective 3 and
Equal,  but  will  be  introduced  as  quickly  as  possible.  However,  it  is  being  used  for  the  IIIB
NEW,  North  Sea  programmes  and  Interreg  C  under  the  responsibility  of  the  Ministry  of  the
Ministry of Housing, Spatial Planning and the Environment (VROM).
Urban: Urban 2 cities have similar procedures to that of the Objective 2 cities.

Bearing in mind that the CSF III legal framework was concluded in 2001, with the following
being prominent:
(cid:1)  Decree-Law No 168/01 of 25 May 2001 regulating the operation of the National Control
System  (NCS)  vis-à-vis  the  obligations  laid  down  in  Regulation  No  438/01  of  2  March
2001, and

(cid:1)  Order  in  Council  No  684/01  of  5  July  2001  laying  down  detailed  rules  for  articulation
among  the  different  NCS  control  levels,  in  particular  as  regards  the  planning,
implementation  and  reporting  of  control  activity,  the  circulation  of  information,  audit
methodologies and the communication of irregularities to the EC,

2002 was characterised by the actual operationalisation of the model for articulation among the
bodies  performing  control  functions  at  the  different  levels,  with  a  view  to  fulfilment  of  the
obligations stipulated by current Community regulations.
The forms of coordination established between the different players are referred to in Point 4.3
of this questionnaire.

P

FIN General development : see point 1.1.

Åland  :  By  a  decision  of  29 April 2002,  Åland’s  Lagting  adopted  a  provincial  law  on  the
application in the province of Åland of Chapter 29 of the Criminal Code. The law means that
crimes against public finances in Åland are penalised under Chapter 29 of the Criminal Code,
in the version that applies in the State. The law is intended to protect the financial interests of
the province and of the Community and  means  that the  requirements  laid down  in  the  Fraud
Convention with regard to criminal law provisions are satisfied. Under the law, crimes against
public  finances  will  be  penalised  in  the  same  way,  irrespective  of  whether  the  crimes  are
against  the  province,  the  State  or  the  European  Communities.  The  provisions  of  the  new
provincial law have been implemented by ÅFS No 60/2002.

Åland’s Lagting has supplemented the provincial law on the Provincial Board’s Audit Office to
the effect that external auditors may be brought in to carry out checks on EC aid. This means
that several auditors can be used for the “5%” and other checks. The law was supplemented by
ÅFS No 27/2002.

111

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

S

Sweden has not adopted any new laws or regulations during the period in question.
However, there have been certain new administrative developments in 2002. The Internal Audit
Division of the National Labour Market Board has been appointed to issue audit certificates for
Social Fund Objective 3 and Equal for  the  2000-2006  programme  period. The  Internal  Audit
Division  of  Gävleborg  County  Administrative  Board  has  been  appointed  to  issue  certificates
for Objectives 1 and 2 and for the Interreg IIIA, Interreg IIIB Northern Periphery, Leader + and
Urban  II  Community  initiatives  and  for  structural  aid  to  the  fishing  industry  not  covered  by
Objective 1.  These  arrangements  apply  only  where  the  managing  authorities  are  here  in
Sweden.  For  the  Interreg  programme,  where  the  managing  authorities  are  situated  in  other
countries, there is no responsibility, e.g. Interreg Öresund.

UK Department of Trade and Industry : The DTI operates a zero tolerance policy towards fraud.
While  no  new  legislation  was  adopted  during  the  reference  period,  DTI  continues  to  work
issuing  and  offering  guidance  and  assistance  to  other  Government  Departments  in  both
reporting  and  identifying  irregularities.  DTI  was  included  in  a  series  of  meetings  with
OLAF/DG Regio that took place in England in December 2002. The meetings were helpful in
helping to demonstrate the procedures for notifying and following –up reports in place in the
United Kingdom.

b)  developments in the area of the ERDF

B

the  operational  administrations  for 

Publication  of  a  vade-mecum  addressed 
the
to 
implementation of projects co-financed by the ERDF, as regards programmes coordinated by
the  Directorate  for  European  Programmes  (DEurP):  definition  of  eligible  zones,  project
management, information to be passed on to the DEurP, first-level checks – Regulations Nos
1260/1999 and 438/2001, eligibility of expenditures, working groups, useful definitions, main
regulatory  texts.  This  document  and  the  CD  ROM  mentioned  under  1.3a)  are  intended  to
reinforce  the  monitoring  of  the  service  provided  and  consequently  to  improve  the  ability  to
detect frauds and attempted frauds.
In 2002, the service known as the “Control of European Structural Funds” was created within
the section “Management,  Finances  and  Budgets”. This service  is  responsible for  monitoring
actual expenses and additionally reports to the Paying Agency of the Objective 2 and Urban 2
programmes. The director-General with the responsibility for this newly created service is also
responsible for communicating irregularities to OLAF.
Application  of  the  recommendations  from  the  DG  Regio  audit  (November  2001)  to  the
administrative  and  control  systems,  resulting  in  particular  in  a  separation  of  the  control
functions
Implementation of new structures relating to the programme period 2000-2006.

D

EL

Production and amendment of guidelines on assistance regarding measures to be implemented
using ERDF funding
Promotion of a special structural framework for carrying out technical assistance – support and
management  regarding  respective  resource  actions  (Pres.  Decree  4/2002,  Gov.  Gazette
3/iss.A/14-01-02).
Publication of a Technical Assistance – Support Guide (March 2002)

Operation of a Support Office to deal with Integrated Information System (IIS) matters, as well
as a special software application (discoverer) for easier utilisation of IIS data available.
Establishment  of  a  framework  for  activating  measures  related  to  SME  at  PEP  (JMD
192249/EYS4057,  19-08-2002,  Gov.  Gazette  1079/iss.  B/19-0802002  and  JMD  206883/EYS
5066, 23/10/2002, Gov. Gazette 1470/iss. B/21-11-02).

112

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

I

NL

Valle  d’Aosta  is  adopting  the  administrative  act  approving  the  implementation  methods  of
Regulation (EC) No 438/01 and Regulation (EC) No 1681/94 concerning the programmes for
the period 2000-2006.
For Community Initiative Programme URBAN II 2000-2006, there is a first-level audit at
local  level  and  a  second-level  audit  by  the  Ministry  of  Infrastructures  and  Transport  and  the
Ministry of the Economy and Finance – Community Structural Funds Department.
The  programme  provides  for  control  paths  (within  the  meaning  of  Article  38  of  Regulation
(EC) No 1260/99) adopted by all the Departments and Sections involved in the programme.
Coordination is carried out by the Intersectorial Committee, by means of periodic meetings.
The scheme for irregularities: The scheme for irregularities of the Ministry for Economic
Affairs (EZ) and the Ministry of Agriculture, Nature Management and Fisheries (LNV) started
in 2002. This scheme gives insights into procedures and regulations relating to the notification
of irregularities. The scheme has been made available to all contract partners and contact
persons in the field of irregularities. The Ministry of Housing, Spatial
Planning and the Environment has used the EZ and LNV (Ministry
of Agriculture, Nature Management and Fisheries) scheme as a basis for its own scheme for its
own Interreg programme. It has been agreed that the concept will shortly be sent to OLAF.
Testing audit plans: Target 2 cities will arrange for their audit plans to be tested by the Audit
Service  of  the  the  Ministry  of  Interior  and  Kingdom  Relations  (BZK)  for  the  preparation  of
their 2002 annual reports.

FIN Regional  Development  Act  (602/2002)  and  Council  of  State  Decree  (1225/2002)  on  funding
granted  in  administrative  sector  of  Ministry  of  the  Interior  concerning  financing  of  regional
development measures. These include provisions on the granting, payment, monitoring, audit
and sanctions for abuses of funds, such as the grounds for recovery and increases in the amount
recovered.

Åland : see a)

c)  developments in the area of the ESF field

B

EL

“Decree  by  the  Government  of  the  French  Community  establishing  the  implementation
methods  of  the  cooperation  agreement  relating  to  the  coordination  and  management  of  aid
granted by the European Commission in the areas of human resources and to the creation of the
ESF Agency, concluded in Brussels on 2 September 1998 between the Walloon Government,
the  Government  of  the  French  Community  and  the  College  of  the  French  Community
Commission  of  the  Region  of  Brussels-Capital,  approved  by  decree  of  the  Council  of  the
French Community on 5 May 1999”,
approved on 4 September 2002.
This  decree  provides  for  the  creation  of  a  “management”  department  and  an  “inspection”
department, which are distinct from one another.

Approval of the draft decree on the 16 October 2002 by the Flemish parliament
relating to the establishment of the VZW ESF-Agency
By  virtue  of  Joint  Decision  118267/12-12-00  of  the  Ministers  for  Internal  Affairs,  Public
Administration  and  Decentralisation,  National  Economy  and  Finance,  and  Labour  &  Social
Security  and  implementing  the  provisions  of  Law  2860/00  “Management,  monitoring  and
auditing of the Community Support Framework and other provisions”, a Special Management
Service was set up for the O.P. “Employment and Vocational Training”.

113

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

By  virtue  of  Joint  Decision  80056/3-9-01  of  the  Ministers  for  Internal  Affairs,  Public
Administration  and  Decentralisation,  National  Economy  and  Finance,  and  Labour  &  Social
Security,  ESF  Programme  Planning  and  Implementation,  Community  Initiatives  and  other
Sources  of  Financing,  and  Control  and  Evaluation  Directorates  were  abolished  and  the
responsibilities  regarding  the  auditing  of  ESF  interventions  for  the  Operational  Programmes
and  Community  Initiatives  programs  for  the  periods  1989-1994  and  1994-1999  were
transferred  to  the  Special  Management  Service  for  O.P.  “Employment  and  Vocational
Training”.
Ministry of Labour and Social Affairs - Royal Decree 683/2002 of 12 July 2002, laying down
rules  for  the  functions  and  management  procedures  of  the  unit  administering  the  European
Social Fund (UAFSE):
- it defines the functions of the UAFSE as paying and managing agency and determines powers
of control over actions co-financed by the ESF

E

Internal procedures manual of the UAFSE: this sets out the methods to be applied by the unit in
exercising its control powers as managing and paying agency.

IRL National  Administrative  Requirements  were  enhanced  through  the  promulgation  of  ESF
Circulars “ESF PA5” and “ESF PA6” to augment the Structural Funds Regulations themselves
and  the  earlier  Circulars  implemented  by  the  ESF  National  Authority.    ESF  PA5  refers  to
additional  certification  requirements  being  demanded  by  the  ESF  Paying  Authority  whereas
ESF  PA  6  refers  to  the  implementation  of  various  recommendations  emanating  from  the
Preventive Audit Report of the ESF Paying Authority, the EHRD-OP Managing Authority and
the EQUAL CI Managing Authority, by DG Emploi published in February 2002.
Valle  d’Aosta  is  adopting  the  administrative  Act  approving  the  implementation  methods  of
Regulation (EC) No 438/01 and Regulation (EC) No 1681/94 concerning the programmes for
the period 2000-2006.

I

The Commune of Milan approved the following guidelines in 2002:
“Guidelines  for  the  accounting  and  certification  of  expenditure”,  approved  by  D.D.G.  No
10529 of 5 June 2002, which amended and replaced D.D.G. No 5728 of 27 March 2002.
The guidelines allow the periodic checking of expenses carried out for ESF activities and the
final certification of the expense by an Auditor entered in the Register of Auditors.
For  some  projects,  and  as  in  previous  years,  auditing  commissions  have  been  confirmed  or
nominated,  in  which  there  participate  members  of  the  Commune  or  of  interested  parties
(Ministries, Region, External Certifying Bodies). The commission follows the project through
from start to finish, with meetings on average every month in which 7/8 members take part; it
is set up when provided for in the announcement of the project.
Finally, in some cases checks are carried out by dependants of the Commune on the conformity
of the services rendered with what the project requires.
The Special Directive on Equal under point 6 of the Federal Ministry of Economic Affairs and
Labour General Framework Directives on the grant of assistance from Federal funds (in force
since February 2002).

A

FIN Ministry  of  Labour  Direction  on  the  local  verification  of  delivery  of  products  and  services,

based on Commission Regulation (EC No 438/2001, Doc.No. 3870/0551/2002 TM).
Åland : see a)

114

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

UK In 2002  DWP  put  in  place improvements  to  the  administrative  processes for Monitoring  and
Inspection  systems  on  ESF  projects.    This  has  been  achieved  by  working  closely  with  all
English  regions  to  develop  existing  guidance  and  to  meet  the  needs  of  new  and  improved
arrangements  for  managing  ESF.    During  the  period  we  have  introduced  the  following
administrative processes:

(cid:1) 

(cid:1) 

(cid:1) 

established  new  systems  and  processes for  ensuring  that  we  meet,  and  report  on,  the
requirement to audit 5% of the programme value
established  improved  systems  for  reporting  ESF  irregularities  to  the  European
Commission
introduced  a  new  system  of  assurance  by  requiring  ESF  projects  to  have  annual
certificates provided by external authorities to support the payment process

d)  developments in the area of the EAGGF - Guidance section

E

Ministry  of  Public  Administrations  -  Royal  Decree 355/2002  of  12  April  2002. This  amends
and expands the basic institutional structure of the Ministry of Agriculture, Fisheries and Food:
It assigns to the Directorate-General of Rural  Development  the  role  of  general and territorial
development  of  programmes  co-financed  by  the  European  Union  which  fall  within  the
Ministry's area of competence.

IRL The Department of Agriculture and Food has recently introduced a Risk Management system.
This system seeks to assess the key risks (strategic, operational, financial, reputational) facing
the  Department  in  achieving  its  objectives  and  to  outline  measures,  at  departmental  and
divisional  level  to  address  these  risks.  The  system  was  introduced  into  the  agricultural
payments  area,  covering  all  expenditure  financed  by  the  EAGGF  –  Guidance  section,  in  the
first part of 2002 and has since been extended to other areas of the Department.
The  Department  of  Agriculture  and  Food  circulated  guidelines 
implementing
to 
Divisions/bodies on the financial monitoring and control arrangements for structural funds. In
association with the two Regional Assemblies (these are the managing authorities for the two
Regional Operational Programmes), seminars were held for all involved in the implementation
of EAGGF Guidance measures at which the requirements were fully explained.
Financial Management and Control Procedures governing the EAGGF (Guidance) cofinanced
Forestry Measures of the Regional Operational Programmes were finalised and implemented in
2002.
The  Region  of  Tuscany  has  produced  and  submitted  to  the  services  of  the  European
Commission the report on the management and checking methods of the PU document for the
LEADER PLUS Community initiative, within the meaning of Regulation (EC) No 438/01.

I

Valle  d’Aosta  is  adopting  the  administrative  Act  approving  the  implementation  methods  of
Regulation (EC) No 438/01 and Regulation (EC) No 1681/94 concerning the programmes for
the period 2000-2006.
The irregularities scheme mentioned in 1.3 b) also applies to EAGGF - Guidance

New: Special Directive on Leader Plus (No 26.100/01-II/6/02); Regulation No 445/2002

NL

A

FIN Åland : see point a)

e)  developments in the area of the FIFG

115

1.3.  Structural actions :

New  legislative,  regulatory  and/or  administrative  developments  contributing  to  the
implementation of Article 280 of the Treaty in 2002

IRL At  the  beginning  of  2002,  NDP/EU  Structural  Funds  Section  and  Internal  Audit  Unit  of  the
Department  of  the  Marine  and  Natural  Resources  gave  a  presentation  to  Implementing
Agencies,  and  Implementing  Departments  on  the  Financial  Management  and  Control
Procedures  for  FIFG  2000  –  2006.    All  areas  of  financial  management  were  covered  in  the
presentation. Department Circular FIFG/1-2001 was circulated to all relevant persons involved
in the Programme.
The irregularities scheme mentioned in 1.3 b) also applies to FIOV

NL

P

The  Portuguese  authorities  have  submitted  a  list  of  new  legislative  and

ministerial decrees, adopted in 2002.

FIN Ministry  of  Agriculture  and  Forestry  Direction  on  recovery  of  structural  aid  for  fisheries
(FIFG) (14.10.2002 Doc.No. 3363/701/2000), which deals with the analysis of violations and
abuses leading to recovery, the reporting of abuses and directions regarding recoveries.
Åland : see a)

UK9

f)  developments in the area of the Cohesion fund

IRL The Department of Finance issued a Guidance Note (D/Finance Circular 41/2002) in December
2002  to  implement  the  provisions  of  Commission  Regulation  1386/2002   (management  and
control  systems  and  financial  corrections  for  Cohesion  Fund  assisted  projects  first  approved
after 1 January 2000). The purpose of the circular is to set out the process by which Ireland will
implement the provisions of Regulation 1386/2002 in relation to Cohesion Fund expenditure.
The circular  sets out the mandatory procedures to be followed by the Intermediate Bodies and
Implementing Bodies in relation to (i) processing and certification of claims for Cohesion Fund
payments and (ii) institution of required financial control systems.
Pursuant  to  Regulation  No  1164/94  of  16  May  1994,  with  the  amendments  introduced  by
Regulations  Nos  1264/99  and  1265/99,  both  of  21  June  1999,  Decree-Law  No  17/02  of  29
January 2002 regulating the operation of the control of the Cohesion Fund as a component of
the NCS of CSF III, was published.

P

116

2.  

Texts contributing to the implementation of the Convention on the Protection of
the Community’s financial interests

2.1.    State of ratification, in the Member State, of the Second Protocol to the Convention
of 26 July 1995 on the protection of the Community’s financial interests10

B

12.03.2002

DK 2.10.2000
D11
EL12

26.07.2000

E

F

20.01.2000

4.08.2000

IRL 3.06.2002
I13

L

NL

A
P14

FIN
15
S16

28.03.2002

15.01.2001

12.03.2002

UK 11.10.1999

  2.2.        New  steps  taken  in  2002  to  transpose  the  1995  Convention  and  its  protocols17.
Aspects, or rules, still uncovered by national measures, possible difficulties to adopt them

B18

DK
19

117

  2.2.        New  steps  taken  in  2002  to  transpose  the  1995  Convention  and  its  protocols17.
Aspects, or rules, still uncovered by national measures, possible difficulties to adopt them

D

F

IRL
20

I

On  30  August  2002  the  Act  implementing  the  Second  Protocol  of  19  June  1997  to  the
Convention on the protection of the European Communities' financial interests, the joint action
to combat corruption in the private sector of 22 December 1998 and the Framework Decision
of 29 May 2000 on the application of criminal-law and other penalties to improve protection
against  counterfeiting  in  view  of  the  introduction  of  the  euro  of  22  August  2002  (Federal
Gazette  2002  I,  p.  3387)  came  into  force.    With  regard  to  the  Second  Protocol,  the  field  of
application  of  section  261  of  the  Criminal  Code  (money-laundering  and  concealment  of
unlawful  earnings)  regarding  earnings  deriving  from  bribery  and  corruption  was  extended  to
cover  corruption  of  Community  officials  and  office  holders  in  EU  Member States.
Furthermore, the circle of persons covered  by  section  30 of the  Administrative  Offences  Act
(Ordnungswidrigkeitengesetz  -  fines  imposed  on  legal  persons  and  associations  of  persons),
whose  conduct  may  result in the imposition  of  a fine  on legal  persons  was  extended.  It  now
generally covers actions by persons who are responsible for running companies. This includes
supervision of the management or other top-level control functions. The extension of the field
of  application  of  section  30  makes  it  possible  to  include  all  legally  liable  partnerships.  The
maximum fine for deliberate criminal acts was also increased from €500 000 to €1 million.

The  Act  ratifying  the  Second  Protocol  was  signed  and  promulgated  on  21  October  2002
(Federal Gazette, 2002 II, p. 2722).  This “Act implementing the Second Protocol of 19 June
1997  to  the  Convention  on  the  protection  of  the  European  Communities'  financial  interests”
extended  the  jurisdiction  of  the  European  Court  of  Justice  and  the  right  and  duty  of
presentation of German courts that were officially the final instance to the field covered by the
Second Protocol.
Decree  No 2002-1499  of  18 December  2002  gives  effect  to  the  Convention  based  on
Article K.3  of  the  Treaty  on  European  Union  concerning  the  protection  of  the  Community’s
financial interests of 26 July 1995.

In 2002 the Italian State did not adopt any new measures to transpose the 1995 Convention and
its protocols.
The  Convention,  the  First  Protocol  and  the  Protocol  concerning  the  interpretation  of  the
Convention by way of preliminary rulings, were ratified by Law No 300 of 29 September 2000,
which  also  amended  the  rules  previously  in  force.  By  virtue  of  these  acts,  all  the  rules  are
covered  by  national  measures  with  the  sole  exception  of  the  rules  of  the  protocol  on  the
interpretation of the Convention by way of preliminary rulings: in line with those rules, Law
No  300/00 authorises  the  Government  to  issue implementing  rules,  but this  has  not  yet  been
done.
The  Second  Protocol  has  not  yet  been  ratified,  but  as  mentioned  in  2.1  above,  its  content  is
almost  completely  included  in  current  legislation.  The  only  aspect  not  covered  is  the
responsibility of legal persons for the offence of money-laundering.

118

  2.2.        New  steps  taken  in  2002  to  transpose  the  1995  Convention  and  its  protocols17.
Aspects, or rules, still uncovered by national measures, possible difficulties to adopt them

NL

The 1995 Convention and its respective protocols have been transposed, as and where
necessary, into national legislation.
Since 2001, the Penal Code has been supplemented in the following sections with new
penalisations so as to ensure complete compliance with the obligations arising from the said
Convention and its protocols:
(cid:1)  Article  323a  of  the  Penal  Code  now  includes  a  separate  penalisation  relating  to  fraud  in

connection with an EU subsidy

(cid:1)  The  (Corruption)  Articles  177,  177a  and  362,363  and  364a  of  the  Penal  Code  have  been
adapted in such a way that they can also include officials from other Member States of the
European Communities. Furthermore, in connection with the 1995 Convention and the first
protocol thereto, the regulations regarding jurisdiction have been published.

(cid:1)  With regard to the second protocol, it is important to note that since 1976 the Netherlands
has had its own legislation on the penal liability of legal persons. It should also be noted that
since  2001  the  Netherlands  has  had  independent  penalties  (not  coupled  to  the  crime  of
handling  stolen  goods)  for  crimes  such  as  the  laundering  of  proceeds  from  criminal
activities.

(cid:1)  In the Netherlands, one result of the protocol regulating the judicial powers of the Court of
Justice is that judges now no longer refer cases to a higher instance where an interpretation
of certain articles of the Treaties is required, but turn directly to the Court of Justice.

A21

The only measure that has not yet been transposed is the introduction of the liability of legal
persons which is provided for in the Second Protocol. Under Article 18(2), the Second Protocol
allows Austria a period of five years from the adoption of the legal instrument to  implement
that obligation. In order to introduce criminal liability for legal persons it is proposed to send a
draft based on the international requirements (EU, Council of Europe, OECD, UN) for general
examination in the first half of 2003 so that ratification of the Second Protocol might take place
by the end of 2003.

119

  2.2.        New  steps  taken  in  2002  to  transpose  the  1995  Convention  and  its  protocols17.
Aspects, or rules, still uncovered by national measures, possible difficulties to adopt them

P

Despite  the  Convention  and  the  respective  Protocols  being  directly  applicable,  the  following
legal instruments relating to this subject were approved:
Act No 5/02 of 11 January 2002, laying down a set of measures for the control of organised
crime  and  economic/financial  crime,  which  were  reflected  in  the  establishment  of  a  special
system for the collection of evidence, the violation of professional secrecy and loss of assets to
the State in relation to unlawful acts of a specified type, such as corruption, money laundering,
criminal association and smuggling if carried out in an organised way. It was specifically laid
down that:
1) the professional secrecy of the members of company bodies of credit institutions and finance
companies  and  also  that  of  tax  administration  officials  must  be  set  aside  when  it  has  been
deemed by the judicial authority directing the proceedings that the information in question is of
interest with a view to ascertaining the truth;
2)  in  the  event  of  a  conviction  for  any  one  of  the  crimes  referred  to  above,  the  difference
between  the  value  of  the  offender’  assets  and  that  which  would  be  plausible  with  its  legal
interest is presumed to constitute an economic advantage

Act No 10/02 of 11 February 2002, which improved legal provisions intended to prevent and
punish the laundering of money from criminal activities. The following are prominent:
1) the laying down of the obligation, on the part of accountancy specialists, external auditors
and  conveyers  of  funds  who  assist  in  accounting  or  audits  of  undertakings,  companies  and
clients and in the conveyance and keeping of assets, to notify the legal body with jurisdiction
for transactions which, by virtue of the amounts involved, the frequency, the financial situation
of  the  players  or  means  of  payment  used,  arouse  suspicion  that  activities  involving  the
laundering of money, other assets or products have been carried out;
2)  the  laying  down  of  the  obligation,  on  the  part  of  notaries,  record-keepers  or  any  bodies
involved in the purchase or sale of property or commercial operations, transactions relating to
funds,  transferable  securities  or  other  assets,  the  opening  or  management  of  bank  accounts,
accounts for savings or transferable securities or the establishment, operation or management
of undertakings, to notify the competent legal authorities  of situations  which, for the reasons
adduced in 1), arouse suspicion that activities involving the laundering of money, other assets
or products have been carried out;
3)  the  compulsory  nature  of  identification  in  connection  with  distance  orders  for  an  amount
exceeding €12 469.95; the data has to be kept for a period of 10 years.

FIN During  2002  Finland  made  progress  in  putting  into  effect  the  Second  Protocol  of  the  1995

Convention.

The Protocol was brought into effect nationally by the “Blanket Act”, i.e. the Act (1191/2002)
putting into effect provisions pertaining to the legislative sector of the Second Protocol relating
to the Convention on the protection of the European Communities’ financial interests.

It  was  proposed  that  the  amendments  required  by  the  Protocol  be  implemented  in  the  Bill
revising the provisions on economic crime (HE 53/2002, vp). The proposals contained therein,
insofar as these were required by the Protocol, were approved in November 2002. The related
Act amending the Criminal Code was ratified on 31.1.2003 (61/2003). The Act will enter into
force on 1.4.2003.

As a result of the Protocol, the penal liability of a legal person has been extended to tax frauds
against  the  Communities’  financial  interests.  In  addition,  attempted  money  laundering  and
conspiracy to carry out serious money laundering are made punishable. On 17.2.2003 Finland
sent the Protocol’s acceptance document for delivery to the Secretary General of the Council.

S22

120

  2.2.        New  steps  taken  in  2002  to  transpose  the  1995  Convention  and  its  protocols17.
Aspects, or rules, still uncovered by national measures, possible difficulties to adopt them

UK
23

121

3.  

Organisation  of  departments  for  the  protection  of  the  Communities'  financial
interests

The following overview tables represent staff assigned to different types of controls in the respective
sectors  (own  resources,  agricultural  expenditure,  structural  actions)  during  the  reporting  period,
estimated in full-time equivalent.24

3.1

Traditional own resources

The  first  table  below  represents  staff  assigned  by  Member  States  to  each  of  the  control
functions (ex ante, ex post and anti-fraud) in the field of traditional own resources.

Having regard to possible differences between Member States as regards the interpretation of
the  definitions  given  in  the  questionnaire,  the  following  results  should  be  interpreted  with
caution.

Table  3.1.  Own  resources :  manpower  assigned  by  each  Member  State  to  the
three types of control25

(1)

(2) =
(1)/(7)

Ex ante

%

(3)

Ex
post

(4)  =
(3)/(7)

%

(5)

(6) =
(5)/(7)

(7) =
(1)+(3)+(5)

(8)

%

Anti-
fraud
investi
gations
26

Total (three
types of
control)

Budget to
be
controlled
(M. €)27

801

74,7 %

155

14,4 %

116

10,8 %

1 072

1’247,1

45
12 65029
2 20032

512
8 246 35
222

38,8 %

98,7 %

54,9 %

30,6 %

92,4 %

58,9 %

8 221

78,3 %

49
17030
33833

42,2 %

2228
- 31
1,3 %
8,4 % 1 47034

434

580

99

808

26 %0

6,5 %

26,3 %

7,7 %

726
9736
56

1 471

14 %

19 %

36,7 %

43,4 %

1,1 %

14,9 %

67239
610
649 43
470

40 %0

83,4 %

88,3 %

86,1 %

64440
100

41

50

38,3 %

13,7 %

5,6 %

9,2 %

850

47,7 %

919

51,6 %

36441
2142
45 44
2645
13

36 148

80,4 %

4 387

9,8 %

4 427

21,7 %

2,9 %

6,1 %

4,8 %

0,7 %

8,8 %

122

116

12 820

4 008

1 672

8 923

377
10 50037

5 50538
1 680

731

735

546

290,9

3’148,7

1820

904,6

1’509,4

160,1

1‘398,9

1’745,7

228,7

165,6

118,3

360,2

1 782

50 467

3’109,0

14’589,2

(9) =
(8)/(7)

Budget to
be
controlled
per
control
agent (M.
€)

1,16

2,51

0,25

0,05

0,54

0,17

0,42

0,13

0,32

0,14

0,23

0,16

0,66

1,74

0,29

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

Total
46

Agricultural  expenditure  (expenditure  financed  by  the  EAGGF-Guarantee

3.2.
section)

The  following  table  represents  staff  assigned  by  Member  States  to  each  of  the  control
functions (ex ante, ex post and anti-fraud) in the field of agricultural expenditure.

Having regard to possible differences between Member States as regards the interpretation of
the  definitions  given  in  the  questionnaire,  the  following  results  should  be  interpreted  with
caution.

Table 3.2. Agricultural expenditure : manpower assigned by each Member States
to the three types of control47

(1)

(2) =
(1)/(7)

Ex ante

%

(3)

Ex
post

(4)  =
(3)/(7)

%

(5)

(6) =
(5)/(7)

(7) =
(1)+(3)+(5)

(8)

(9) =
(8)/(7)

%

Anti-
fraud
investi
gations
48

Total (three
types of
control)

Budget to
be
controlled
(M. €)49

Budget to
be
controlled
(M. €)

B

DK

D

EL
E121
F

IRL

I

L

NL

121

77350

75,8 %

18451

18 %

63,552

6,2 %

1 021

937,9

277

89,6 %

30

0,6 %

309

1 112

3 66554
58757
526
 2 241 62
90265

98,9 %

90 %

76,9 %

97,4 %

90,4 %

4055
5058
158
 29 63
8566

1,1 %

7,7 %

23,1 %

1,3 %

8,5 %

- 56
1559

3164
1167

2,3 %

1,3 %

1,1 %

3 705
65260
68461
2 301

998

5 861,7

2 613,5

6 184,5

9 230,1

1 584,5

643

52,1 %

235

19 %

357

28,9 %

1 23568

5 343,8

401

89,8 %

34

7,5 %

12

2,7 %

44769

1 111,8

0,92

3,60

1,58

4,01

9,04

4,01

1,59

4,33

2,49

The data referred to for Spain are incomplete, for the following reasons :
- an important number of services has not submitted any information for this point ;
- whenever controls were effected by audit firms, the manpower involved in these controls has not been
taken into account ;
- there is no information available on the number of staff affected to anti-fraud investigations

123

                                                
A

P

FIN

S

UK

1 02370
533

183
14875
2 396

86,2 %

95,2 %

2071
27

78,3 %

6
676
87,2 % 314,25

92,5 %

1,7 %

4,8 %

2,5 %

3,7 %

11,4 %

Total

14 299

88 %

1 218

7,5 %

3.3.

Structural measures

14472
0
4573
677
38

724

12,1 %

19,3 %

3,7 %

1,4 %

4,5 %

1 187

560
23474
161
2 74878
16 240

1 052,6

875

815

780,1

3 998,8

41 502,1

0,89

1,56

3,49

4,86

1,46

2,56

The  following  table  represents  staff  assigned  by  Member  States  to  each  of  the  control
functions (ex ante, ex post and anti-fraud) in the field of structural measures.

Having regard to possible differences between Member States as regards the interpretation of
the  definitions  given  in  the  questionnaire,  the  following  results  should  be  interpreted  with
caution.

Table 3.3.  Structural measures : manpower assigned by each Member State to the
three types of control79

Ex-ante %

Ex post %

(7)/(1)

(7)/(1)

Anti-
fraud
investiga
tions80

%

(7)/(5)

B

DK

D

EL
E122
F

IRL

I

L
NL100
A

P

FIN

S

UK

14382
5485
1 87988
6391
236

86,3 %

48,9 %

79,8 %

34,6 %

49,6 %

48095
575

56,4 %

64,8 %

46101
366104
11108
249109
251

51,5 %

95,9 %

6,1 %

83,5 %

89

2383
4486
47589
11992
240

36096
140

42102
16105
170
37110
25

13,7 %

39,8 %

20,2 %

65,4 %

50,4 %

42,3 %

15,8 %

46,9 %

4,1 %

93,9 %

12,2 %

8,9 %

248

48,6 %

200

39,3 %

Total

4 600

68 %

1 890

27,9 %

- 84
1387

11,3 %

1197
173

1,3 %

19,5 %

2103
- 106
0
13111
6112
62

279

1,7 %

4,3 %

2,1 %

12,2 %

4,1 %

Budget
to be
controlle
d (M.
€)81

Total
manpower
assigned
to the
three
types of
control

166

111
2 35490
18293
47694

85198
88899

89
382107
181

299

282

510

155,9

40,9

3’635,6

2’940,1

7’141,7

624,9

2’707,2

4,6

225,8

206,4

83,6

135,6

1’091,4

6 769

20 958,9

Budget
to be
control
led per
control
agent
(M. €)

0,94

0,37

1,54

16,15

15,00

0,73

3,05

2,53

0,54

0,28

0,48

2,14

3,10

1’969,8

10,88

122

The data referred to for Spain are incomplete, for the following reasons :
- an important number of services has not submitted any information for this point ;
- whenever controls were effected by audit firms, the manpower involved in these controls has not been
taken into account ;
- there is no information available on the number of staff affected to anti-fraud investigations.

124

                                                
4.

Co-ordination between departments within the Member State

4.1.    Own resources :

New  arrangements  adopted  in  2002  for  organising  co-ordination  between  the  different
departments within the Member State113
B

The Protocol on cooperation on combating major fraud relating to mineral oils, concluded on
20 July 2000 between the Ministers for Finance and for Justice, provided for the creation of a
support unit located at the National Directorate of Research for customs and excise in Brussels.

A supplement to the initial Protocol was signed by the Ministers for Finance, Justice and the
Interior, and by the Government Commissioner responsible for the simplification of procedures
and for combating major tax fraud. That supplement, which officially associates the Directorate
of  the  Criminal  Police  with  the  Protocol’s  coordinating  structure,  was  approved  by  the
administrative authorities concerned at the beginning of 2002.

A member of the Federal Police was seconded to the support unit.
The  Council  Decision  of  6  December  2001  extending  the  mandate  of  Europol  to  the  fight
against the serious forms of international crime listed in the annex to the Europol Convention
(Official  Journal  of  the  European  Communities,  Series  C,  No  362  of  18  December  2001),
entered into force on 1 January 2002.

Although that decision did not as such give rise to any new administrative provisions, it still is
not without influence on the part played, in the field considered, by customs officers  liaising
with the headquarters of Europol and the National Europol Union.

Since  the  decision’s  adoption,  Europol’s  mandate  covers  fields  such  as  the  falsification  of
administrative documents and illicit trading or deceits and frauds.
Creation  of  a  committee  for  the  purpose  of  creating  a  common  information  system  at  the
Customs Directorate General to meet the needs of all inspection and investigation departments.
The creation of such a system is considered to also address coordination issues.
All administrative  checks  and  inquiries in the field in  question are  carried  out  by  the  French
customs, requiring no coordination with other administrations, just internal coordination.
Under  the  Order  of  30 April  2002,  the  offices  of  the  Directorate  General  for  Customs  and
Indirect Levies (DGDDI) were reorganised. An office responsible for controls policy was set
up  to  improve  the  way  customs  checks  are  coordinated  and  to  make  those  checks  more
effective.
The French customs drew up, on 27 November 2002, an internal set of instructions designed to
optimise  the  processing,  implementation  and  follow-up  of  cases  of  mutual  assistance  which
OLAF  distributes  to  the  Member  States  on  the  strength  of  Regulation  (EC)  No  515/97  of
13 March 1997 concerning mutual assistance in customs and agricultural matters. The point is
to lay down a general framework for intervention on the part of each and every customs official
with  a  view  to  specifying  at  national,  regional  and  local  levels  one  of  the  main  aspects  of
operational cooperation with OLAF. The DGDDI was nominated as the national authority for
all correspondence with the other Member States and with OLAF under the above Regulation
(EC) No 515/97.

EL

F

125

A circular from the Ministry of Justice concerning criminal-law policy relating to Community
fraud  and  dated  18 December  2002  urges  investigating  magistrates  to  contact  the  Judicial
Customs Service wherever any suspicions arise concerning receipts or expenditure under the
Community budget.
In addition, Article 343a of the National Customs Code requires the judicial authority to bring
to the attention of the customs services any information concerning violations in their sphere of
competence,  more  especially  violations  relating  to  the  protection  of  Community  financial
interests (own resources and EAGGF-Guarantee expenditure), whatever the type of instance.

The Region of Tuscany signed an agreement on 23 April  2002  with the Ministry  of

At the regional level:
-
the Economy and Finance.
In summary, the framework agreement provides that:

IRL

I

The Ministry of the Economy and Finance undertakes the activities of:
a.

technical support in the phase of processing expenditure for the implementation of the
relevant interventions on the basis of the needs expressed by the Region;
participation  in  the  checking  activities  at  Level  II  for  the  completion  of  the  tasks
related to the closure of operations concerning regional plans 94/99 and 2000/06 of the
Structural  Funds  in  accordance  with  the  methods  laid  down  by  Regulation  (EC)  No
438/01;
participation in meetings promoted in the context of the region of Tuscany.

The Region undertakes:
a.

to arrange for the extraction of the sample specified in Article 10 of Regulation (EC)
No 438/01;
to  supply  all  data  and  elements  useful  for  the  proper  completion  of  the  checking
operations;
to liaise with the Provincial Department (Ministry of the Economy and Finance) for the
completion of the checking activities, jointly preparing an annual work programme;
to  keep  all  acts  and  final  documents  concerning  the  checking  activities  of  the
Provincial Departments.

b.

c.

b.

c.

d.

A

P

-
The  Region  of  Liguria  has  set  up  an  Office  for  the  Coordination  of  Inspecting
Functions, as part of the Department of Agriculture, charged inter alia with carrying out audits
of finance granted on the authority of the Department.
On 1 July 2002 the tax and customs divisions in the Federal Ministry of Finance were merged
into a single section.
Legislative measures:
(cid:1)  Decree-Law No 305/02 of 13 December 2002, which introduces amendments to the act on
the  organisation  of  criminal  investigation,  attributing  exclusively  to  the  Criminal
Investigation  Department  the  investigation  of  complex  crime,  particularly  as  regards  tax
crimes  involving  sums  exceeding  €500,000,  when  they  assume  special  complexity,  an
organised form or a transnational nature.

(cid:1)  Act No 16-A/02 of 31 May 2002 and Decree-Law No 262/02 of 25 November 2002 which
abolished the AGT, or General Tax Administration, and moved the departments which had
been  under its  aegis  to the  Directorate-General  they  had  formerly  belonged  to.  Hence  the
respective internal audit units were returned to the DGAIEC and the Directorate-General for
Taxes (DGCI).

126

Administrative measures:
(cid:1)  Cooperation  protocol  concluded  on  27  February  2002  between  the  DGAIEC,  the
Directorate-General  for  Taxes,  the  Inspectorate-General  for  Economic  Activities  and  the
Republican  National  Guard,  covering  the  fight  against  fraud,  tax  evasion  and  financial
crime, seeking to identify joint objectives at national and Community level, lay down the
broad  lines  of  intervention  methodologies,  periodically  assess  the  action  carried  out  and
study and plan other forms of cooperation, particularly at training level;

(cid:1)  Administrative  cooperation protocol  concluded on  15  March  2002  between the  DGAIEC
and  the  Directorate-General  for  Energy,  affecting  the  petroleum  sector  and  aiming  at
mutual accessibility to administrative documents and data relating to that sector;

(cid:1)  Cooperation  protocol  concluded  on  13  September  2002  between  the  DGAIEC  and  the
REACT  (European  Anti-Counterfeiting  Network),  an  organisation  representative  of
various  undertakings  which  are  holders  of  intellectual  property  rights  and  registered
trademarks  with  a  view  to  obtaining  information,  by  computerised  means,  on  goods
suspected of being counterfeit or pirated;

(cid:1)  DGAIEC Circulars Nos 7/02 and 20/02 of 29 April and 18 November 2002 respectively,
introducing  internal  procedures  as  regards  the  activity  of  the  DGAIEC  in  the  sphere  of
criminal investigation, laying down (in harmony with Circular No 7/02 of the Procuracy-
General of the Republic), in particular the immediate notification to the Public Prosecution
Service of a customs tax crime;

(cid:1)  Establishment  of  a  Financial  Intelligence  Unit  (FIU)  with  a  view  to  the  exchange  of
information  between  the  Criminal  Investigation  Department  and  the  tax  administration
services (DGAIEC and Directorate-General for Taxes) in relation to the fight against fraud,
and, in particular, money laundering.

S

The responsibilities mentioned below include horizontal measures that encourage coordination
in the fields of own resources, agricultural expenditure and structural measures.

As has already been mentioned, an EU Fraud Council had previously been set up in Sweden
within the Economic Crime Authority, whose tasks include the encouragement of coordination
between  authorities  that  have  a  direct  or  indirect  responsibility  for  protecting  EU  financial
interests. The Council discusses relevant issues in order to minimise or, if possible, remove any
obstacles to the effective protection of EU financial interests. In the course of the year, training
has been run on the reporting of irregularities to OLAF. Specific training measures have also
been implemented for personnel who work on investigating suspected crimes. It should also be
mentioned that an annual report is being drafted on the way in which protection of EU financial
interests functions in the country.

During  the  year,  the  Economic  Crime  Authority  has  also  worked  on  developing  informal
cooperation  with  other  Member  States  in  order  to  exchange  experiences  with  regard  to  the
protection of EU financial interests.

UK UK  Customs,  as  with  all  Member  States,  continues  to  operate  under  the  Customs  2002
Programme that supports the concept of 15 working as 1.  The Programme is a major forum for
co-ordination and exchange of information and the promulgation of  best  practice  on customs
matters  between  Member  States.  2002  also  saw  greater  involvement  of  the  Candidate
Countries.

The Customs 2002 Action Plan is divided into six work areas each of which is controlled by a
Management  Group  made  up  of  representatives  from  all  Member  States.  Examples  of  work
areas  include  a  harmonised  model  for  risk  management  and  the  trial  of  a  'risk  information
form', and seminars on counterfeit goods control.

127

In order to enhance its relations with other MS, UK Customs continually reviews its overseas
deployments. At present it has the following coverage:
(1) Liaison officers covering the following MS:
Austria,  Belgium,  France,  Germany,  Greece,  Ireland,  Italy,  Luxembourg,  Netherlands,
Portugal and Spain.
(2) In addition UK Customs has coverage in the following applicant countries:
Cyprus,  Czech  Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Malta,  Poland,  Slovakia,
Slovenia.
The Administrative Agreement in place between UK Customs and the Rural Payments Agency
(RPA) was substantially revised during 2002. However, those elements of the agreement that
relate to CAP imports remain relatively unchanged. UK Customs perform most tasks related to
own resources and agricultural charges. However, the RPA undertake certain work, including
control of Import Tariff Quota work in respect of beef, and the management of all tariff quotas
controlled by licences. UK Customs remain responsible for most anti-fraud measures.

128

4.2.    Agricultural  expenditure  (expenditure  financed  by  the  EAGGF  -  Guarantee
section):

New  arrangements  adopted  in  2002  for  organising  co-ordination  between  the  different
departments within the Member State114
B

The re-organisation of co-ordination between the different departments as provided for under
the regionalisation of the Ministry of Agriculture and Copernicus Reform was started in 2002
(paying agencies and control services). Results will be notified to OLAF during the first half of
2003.
Agriculture:  As  a  result  of  the  latest  institutional  reform  (special  Law  dated  13  July  2001)
agricultural regionalisation became effective with effect from the 1 January 2002.
As a result of the COPERNICUS reform on the orders of the Federal Government, the Belgian
federal government services are now fully restructured thus strengthening the remaining
powers of the federal government services for agriculture and the powers of the small
businesses sector in 2002.
The final transfer of personnel from the Ministry with responsibility for agriculture and small
businesses to the regional and federal government services, which have inherited these as
stipulated in the reforms, took place on the 1 October 2002. Since the 1 October 2002,
therefore, the Ministry with responsibility for agriculture and small businesses has been fully
relieved of these responsibilities.

BIRB: The necessary protocols were completed well before 2002. With regard to the control
powers assigned in 2002 to other bodies, the protocols that were completed previously will still
be effective and the negotiations for adapted protocols are already at an advanced stage.
Interdepartmental prevention cell: Ongoing compliance on the part of the control services with
European  control  regulations  by  a  strict  follow-up  of  reporting  and  a  striving  for  continuity
with these services, taking account of the different reforms that have been carried out (Agency,
Regionalisation, Copernicus); testing the actual application of existing instructions in sensitive
sectors on the ground by means of preventive on the spot control missions; the establishment of
a good level of coordination of EU control missions.

DK The  Directorate  for  Food  Fisheries  and  Agro  Business  (the  paying  agency)  has  drawn  up
agreements with the agencies to which the Directorate has delegated the task  of  control. The
agreements lay down the general guidelines for the tasks of the authorities in connection with
the fulfilment of the requirements of Commission Regulation (EC) No 1663/95 with regard to
the  authorisation  of  payments,  the  execution  of  payments,  accounting  and  control  etc.  The
agreements  are  reviewed  at  least  once  a  year.  Regular  meetings  between  the  relevant
departments ensure that the quality of the control cooperation  is  continuously  assessed.  With
regard to discussions of general issues, meetings are held between the executive boards of the
directorates at least once a year.

D

–  Centrally  organised  training  courses  for  members  of  national  audit  bodies  in  cooperation

with Austria

(cid:2) 

Introduction of an integrated information system to improve the exchange of information
between  the  veterinary  and  the  premiums  administrations  that  also  allows  IT  access  to
results of controls conducted by other authorities

Extension  of  access  to  the  HIT  data  base  to  departments  not  involved  in  agricultural
administration (e.g. HH-Jonas main customs office with regard to export refunds)

129

F

–  As a new measure in connection with the supervision of agricultural expenditure, in 2002
supervision of compliance with the minimum control requirements under Regulation (EEC)
No 386/90  was  made  a  matter  for  the  Regional  Finance  Directorates  responsible  for  the
customs  offices  of  departure.  Until  2002,  these  had  been  tasks  for  the  central  anti-fraud
department at the Hamburg-Jonas main customs office.

–  Centralising  these  tasks  makes  it  possible  to  obtain  more  accurate  statistics  and  make
supervisory  procedures  more  efficient.  Optimising  the  control  procedure  improves  the
possibilities of taking action to counter fraud.

As  regards  the  customs  service,  an  order  of  30 April  2002  reorganised  the  offices  of  the
Directorate  General  for  Customs  and  Indirect  Levies  (DGDDI).  An  office  responsible  for
controls policy was set up to improve the way customs checks are coordinated, particularly in
the  area  of  the  Common  Agricultural  Policy,  and  to  make  those  checks  more  effective.  This
new  service  is  responsible  for  the  scheduling  of  EAGGF  checks  carried  out  by  the  customs
service,  as  well  as  for  follow-up,  analysis  of  regulatory  risk,  and  liasing  with  Community
control procedures.

In addition, instructions were issued, as they are every year, under the cooperation agreement
between the DGDDI and the DGCCRF (fraud enforcement service) In 2002, these instructions
dealt with legal points aimed at improving the communication of information and documents
between the staff of the two Directorates-General.
As regards matters within the field of activity of the customs service, it should be stressed that
Article  343(a)  of  the  National  Customs  Code  requires  the  judicial  authority  to  bring  to  the
attention  of  the  customs  services  any  information  concerning  violations  in  their  sphere  of
competence, whatever the type of instance.
The French customs drew up an internal set of instructions, distributed on 27 November 2002,
designed  to  optimise  the  processing,  implementation  and  follow-up  of  cases  of  mutual
assistance  which  OLAF  distributes to the Member  States  on the strength  of  Regulation  (EC)
No 515/97 of 13 March 1997 concerning mutual assistance in customs and agricultural matters.
These  cases  of  mutual  assistance  may  relate  to  suspicions  of  fraud  concerning  EAGGF-
Guarantee expenditure. The point is to lay down a general framework for intervention on the
part of each and every customs official with a view to specifying at national, regional and local
levels one of the main aspects of operational cooperation with OLAF.
Fishery products sector (internal aid):

A protocol was signed between the customs service administration and the competent paying
agency (OFIMER), to lay down the practical arrangements for checks relating to the award of
compensatory payments for tuna for processing.

Export refunds sector
The  Technical  Export  Commissions  (CTE)  were  set  up  in  2002.  Each  quarter,  they  bring
together the relevant paying agencies and the adminstrations concerned (i.e. customs, Ministry
of Agriculture and the fraud enforcement service). The aim of these bodies is to facilitate the
putting in place of Community rules and regulations in this sector and to improve the checking
facilities.

Also in this area, in the cereals sector, working parties were organised in 2002 to examine the
rules and regulations pertaining to the prefinancing of export refunds (authorised mixtures) and
to lay  down  those  on the  maximum  tolerated  error  (MTE)  in  weighing.  Collaboration  on  the
MTE issue resulted in a written instruction to services in July 2002.

Finally, a working party on the "dematerialisation" of export certificates was set up in 2002. An
agreement of principle on setting up an Internet server hosted by the competent paying agency
in the milk sector, ONILAIT, was drawn up. The idea here is to enable the customs services to
have  access  in  real  time  to  agricultural  documents  with  a  view  to  facilitating  checks.  The
intention is also to enhance the way information is circulated between the customs services and
all the agricultural offices.

130

Cereals sector:
The protocol between the French paying agencies responsible for the cereals sector (ONIC and
ONIOL) and the French customs was updated on 19 April 2002 with a view to incorporating
legislative changes into  the organisation of checks at the stages of import and export, the
prefinancing scheme and the cereals intervention regime, and the new procedures for the
exchange of information between the signatories.
The same updating procedure is under way in the other paying agencies.
Wine sector
In  the  wine  sector,  a  convention  on  CMO  market  measures  was  signed  in  2002.  This
convention.  This  convention  set  out  the  respective  roles  of  ONIVINS  and  customs  service
officials in the carrying out of checks on market measures in relation to this CMO.
Rural development sector
In the rural development sector, a permanent inspection team for on-the-spot checks has been
set up within the paying agency. This team works in liaison with and under the responsibility of
the Ministry of Agriculture's decentralised departments. Moreover, a coordination unit has been
put in place to improve the consistency of checks carried out by the paying agency.
In  this  area  also,  a  methodological  guide  for  inspectors  carrying  out  on-the-spot  checks  has
been drawn up and a computer tool ("RDR checks") has been developed.
Multi-sector measures
Work  also  began  in  the  last  quarter  of  2002,  under  the  aegis  of  the    interministerial
coordinating  committee  on  controls,  on  defining  the  procedure  to  be  followed  once  an
irregularity has been formally registered.  The purpose of this work is essentially to take into
account  the  recommendations  of  the  19th  meeting  of  COCOLAF  on  11  April  2002  on  the
concept  of  economic  operator,  to  lay  down  provisions  on  the  specific  arrangements  for
information from OLAF where a serious irregularity  is  detected  which  may  involve  risks  for
other  Member  States  or  have  cross-border  implications  and,  finally,  to  ensure  closer
cooperation  between  paying  agencies  as  regards  the  issuing  of  forms  notifying  irregularities.
This  work  was  finalised  at  the  beginning  of  2003  and  a  procedural  note  was  sent  to  all  the
national departments concerned by the application of Regulation (CEE) n° 595/91.

As  regards  coordination  measures  in  the  area  of  post-clearance  checks  (controls  scheduled
under Regulation(EEC) n° 4045/89 or anti-fraud investigations), the measures outlined in the
2001 answer to the questionnaire continue to apply.

In  2002  the  Customs  Agency  initiated  collaboration  with  the  IT  Office  of  the  General
Command  of  the  Guardia  di  Finanza  for  the  exchange  of  information  concerning  refund
payments  made:  every  two  months  the  Autonomous  Service  for  Interventions  in  the
Agricultural Sector (SAISA) of the Customs Agency supplies the said Command with a report
giving the data relating to payments made to the community agencies in the past two months.
For the Region of Veneto, AVEPA (Veneto Agency for Payments in Agriculture) was set up,
and  this  operates  in  collaboration  with  the  Region  of  Veneto  and  with  the  19  Mountain
Communities  of  Veneto,  and  is  responsible  for  authorising  payments  related  to  all  the  RDP
measures mentioned in Regulation (EC) No 1257/99.

IRL
115

I

131

A

The  Region  of  Valle  d’Aosta,  within  the  scope  of  the  directive  on  “farming  and  livestock
development policies”, has set up an operative structure known as the “farming system” whose
purpose is to coordinate the administrative and IT procedures required for the implementation
of  the  rural  development  plan  (RDP),  to  create  an  integrated  and  simplified  system  for  the
management  of  regional  farming.  This  is  organising  better  coordination  between  the  various
offices of the council responsible for the management of the RDP measures, among them the
“System”  itself.  To  that  end,  the  computerisation  of  all  the  administrative  procedures  is  in
progress  and  an  integrated  IT  system  is  being  created,  which  will  allow  networked  cross-
checking  of  business  data  and  of  the  state  of  advancement  of  the  practices,  by  all  offices
managing  the  RDP  measures.  For  that  purpose  new  technologies  are  being  prepared  or  are
already in use, such as computerised mapping tools and datawarehouse systems. The correlated
administrative  measures  are  decisions  and/or  management  measures  mainly  concerning  the
assignment  of  technical  consultancy  and  procurement  directed  towards  the  creation  of  the
integrated system.
The Region of Liguria has set up an Office for the Coordination of Inspection Functions, as
part  of the  Department  of  Agriculture, responsible  inter alia  for  auditing  the  financial  grants
made on the Department’s authority.
–  Transfer of the responsibilities of the Rural Development Payment Office in the BMLFUW

to Agrarmarkt Austria on 16 October 2002,

   (Presidential notification of the BMLFUW No 32/2002); at the same time
–  Coordination of the inspection services for livestock and area premiums with the inspection

services for all rural development measures.

–  Thus, there are now only two payment offices in Austria:
–  Agrarmarkt Austria, Dresdnerstrasse 70, 1210 Vienna
–  Salzburg Customs Office/Refunds, Walserberg 25, 5071 Wals

Cooperation between the customs administration, tax administration and police services.
Affected legal bases: § 246 StGB (deception), § 33 FinStrG (tax evasion) in conjunction with
§ 7 AEG, judicial investigations for customs and taxes under § 197 FinStrG.
Setting-up  of  a  special  commission  consisting  of  members  of  the  customs  administration  (3
financial  crime  authorities,  field  and  internal  audit  services  of  Vienna  Principal  Customs
Office) in respect of export refund fraud, the tax administration in respect of turnover tax fraud
(tax  investigation,  audits  of  large-scale  undertakings)  and  the  executive  (Lower  Austria
Criminal Investigation Department) in respect of deception/fraud under the StGB, setting-up of
interfaces between these organisational units, central information flow via the Federal Ministry
of Finance, Anti-Fraud Division.
Purpose  of  the  special  commission:  many  offences  have  been  committed  whose  punishment
falls within different spheres of competence. However, the different organisational units must
work together. The special commission is not a separate organisational unit; its purpose is to
facilitate  information  exchange.  In  regular  meetings  the  state  of  each  investigation  and  the
action  to  be  taken  by  the  investigators  are  discussed.  (Also  mutual  assistance,  provision  of
information material).

132

P

The  end  of  2002  (beginning  of  the  EAGGF  2003  financial  year)  was  marked  by  a  political
decision of extreme importance, via the publication of Decree-Law No 250/02 of 21 November
2002,  in  relation  to  the  management  and  control  of  aids  to  Portugal’s  farmers  -  the
establishment of a single Management Board for the INGA and the Institute for the Financing
and Support of Development in Agriculture and Fisheries (IFADAP).
The  establishment  of  a  single  Management  Board  for  the  two  paying  agencies,  whose  chief
mandate  is  the  phased  integration  of  the  two  institutes  into  a  single  body,  seeks  to  provide
better  conditions  to  allow  a  more  rational  and  strict  management  of  the  resources  currently
assigned to the two bodies.

By means of this merger, which will have to be concluded on 22 November 2004 on account of
the  said  instrument,  it  is  intended  to  make  the  emerging  body  more  efficient  in  applying
Community regulations, implementing better articulated and more effective control measures,
with the objective of fulfilling, on a unified basis, the institutional mission shared by the two
bodies  in  the  sphere  of  the  EAGGF  -  Guarantee  Section,  thereby  protecting  the  financial
interests of the Community more efficiently.

Reference may also be made to the Administrative Cooperation Protocol concluded on 7 March
2002 between the DGAIEC and the Vine and Wine Institute (IVV), affecting the wine-growing
sector  and  aiming  at  uniformity  of  documentation,  the  exchange  of  information  and  the
planning and implementation of joint controls.

FIN The agreement between the Ministry of Agriculture and Forestry and the Ministry of Finance
on  the  transfer  of  certain  tasks  to  the  National  Board  of  Customs  was  updated.  At  the  same
time, points of the agreement relating to directions and reporting were rendered more specific
(11.7.2002 2267/571/2002).

S

The  Economic  Crime  Authority  runs  regular  training  of  relevant  personnel  within
administrative  authorities  that  deal  with  cases  involving  EU  funds  on  the  subject  of  the
formulation of crime reports etc.

See also 4.1

UK The Forestry Commission and the Agriculture Departments exchange information to meet the
requirements of the Rural Development  Regulation. The protocols are kept under review and
strengthened whenever possible.
2002  was  the  first  full  year  of  operation  of  the  Rural  Payments  Agency  (RPA)  and  the
Inspectorate.  These  arose  from  the  merger  of  the  DEFRA  (Department  for  the  Environment,
Food and Rural Development) regional structure and the Intervention Board on 16/10/01 and
the amalgamation of the DEFRA field inspection staff and the Intervention Board  verification
staff.  Assistance  and  cooperation  in  respect  of  Regulatory  and  other  obligations  between  the
RPA and the other Departments including HM Customs & Excise remains good.
Under  Reg.  (EEC)  No.  3508/92,  the  RPA  exchanges  information  each  year  with  other  UK
paying agencies on cross-border holdings (farms with subsidiary land in other parts of the UK).
This  control  ensures  that  direct  aids  are  paid  correctly  without  duplication  of  entitlement.  It
also  maintains  accurate  databases  of  land  recorded  under  IACS.  Information  on  the
performance of IACS controls is shared between the UK paying agencies via the harmonisation
functions  of  the  UK  co-ordinating  Body,  responsible  as  the  intermediary  for  reporting  of
EAGGF accounting and controls on behalf of the paying agencies.

133

4.3.  Structural actions:

New  arrangements  adopted  in  2002  for  organising  co-ordination  between  the  different
departments within the Member State116
B

These  agricultural  structural  measures  have  been  adopted  in  the  countryside  development
regulation, financed by EAGGF-Guarantee

DK FIFG

D

EL

The  Directorate for  Food  Fisheries  and  Agro  Business  (the  paying  agency)  has  drawn  up  an
agreement with the Directorate for Fisheries to which the Directorate has delegated the task of
control. The agreement lays down the general  guidelines  for the tasks  of  the  authorities  with
regard to the authorisation of payments, the execution of payments, accounting and control etc.
The  agreement  is  reviewed  at  least  once  a  year.  Regular  meetings  between  the  relevant
departments ensure that the quality of the control cooperation  is  continuously  assessed.  With
regard to discussions of general issues, meetings are held between the executive boards of the
directorates at least once a year.

A working party consisting of staff from national ministries and the Länder has been set up to
improve coordination of fundamental questions of financial control that affects all EU funds.
The  existing  national-regional  Budgetary  Law  and  Systems  Committee  has  examined  the
impact  of  EU  requirements  on  national  funding  legislation  and  produced  the  following
documents:
-Guidelines  for  taking  account  of  EU  requirements  when  implementing  national  funding
legislation of 25 April 2002 and
-Guidelines  on  exemptions  from  the  notification  requirement  (incl.  de  minimis)  of
25 April 2002.
The  Guidelines  for  taking  account  of  EU  requirements  when  implementing  national  funding
legislation  examine  overlaps  between  EU  Structural  funds  provisions  and  national  funding
legislation.  The  Guidelines  are  not  final  and  do  not  release  the  administration  from  the
obligation to check whether there are any other overlaps.  The Guidelines on exemptions from
the  notification  requirement  concern  assistance  granted  for  the  most  part  under  national
provisions, in the form, for example, of soft loans, exemption from taxes or levies, or coverage
of losses.
Extension  of  the  centrally  organised  training  programmes  to  allow  access  to  staff  of
independent bodies.
Update of the description of the administrative and control systems with regard to paying out
funds in a Land.
Partial solution of the question  of cooperation  between  internal auditing  and  the  independent
body, particularly with regard to irregularities.
The Paying Authority in conjunction with the FCC and the CSF Managing Authority prepared
common  audit  questionnaires  for  controlling  actions  taken  by  the  Final  Beneficiary  and  the
management  systems  of  the  Special  Management  Services,  which  shall  be  uniformly  applied
by  the  audit  Operation  of  a  “Support  Office”  for  matters  relating  to  the  utilisation  of
information  originating  from  the  IIS  (Integrated  Information  System).  All  auditing  agencies
involved have access to the IIS and utilise available data according to their needs, depending on
the audit level.
Operation of a “Support Office” for matters relating to the utilisation of information originating
from the IIS (Integrated Information System). All auditing agencies involved have access to the
IIS and utilise available data according to their needs.

134

E

F

Ministry  of  Finance  -  Decision  of  1  March  2002  of  the  Directorate-General  for  Community
funds and territorial financing concerning certain aspects of the management of the Objective 1
Community Support Framework and the Objective 2 Single Programming Documents:
-  Instructions  from  the  managing  authority  to  the  implementing  agencies  and  intermediary
bodies  concerning  the  presentation  of  the  certificates  of  expenditure  incurred  and  the  annual
implementation reports
Various instruments were adopted in 2002 relating to the controls of actions co-financed by the
European Structural Funds: Decree No 2002-633 of 26 April 2002, Article 60 of the Amending
Finance  Act  for  2002  and  a  circular  from  the  Prime  Minister  dated  15  July  2002  (see  point
1.3a)  above).  These  instruments  conferred  upon  the  CICC  for  Structural  Funds  the
responsibility for coordinating controls of operations co-financed by the Structural Funds

IRL EAGGF Guidance: Internal Audit Unit

IAU  assisted  in  presentation  to  staff  both  administrative  and  technical  on  audit  and  control
requirements of Regulation 438/01

I

On Farm Investment
Relocation  of  Administrative  service  from  Cavan  to  Wexford.  Both  Administrative  and
Technical Divisions are now located together in Wexford, with consequent improvements
In  co-ordination  and  planning.  (Same  Division  manage  both  national  and  co-funded
expenditure)
ESF
The  operational  separation  between  the  ESF  Paying  Authority  and  the  EHRD-OP  Managing
Authority  and  the  EQUAL-CI  Managing  Authority,  who  all  reside  in  the  Department  of
Enterprise,  Trade  and  Employment,  was  further  clarified  in  relation  to  the  expenditure
certification process.  This clarification included the formal delegation of responsibilities under
Section 9 of the Public Service Management Act from the Secretary General (and Accounting
Officer) of the Department of Enterprise, Trade and Employment to the relevant officials of the
EHRD-OP  and  EQUAL-CI  Managing  Authorities  in  respect  of  financial  management  and
control of the ESF certification process.
The  Department  for  the  Community  Policies  of  the  Presidency  of  the  Council  of
Ministers:

-

with its Note No 7800 of 8 July 2002, distributed to all interested parties the final text
of  working  paper  COCOLAF/11  April  2002/2nd  edition  concerning  the  obligation  to
notify irregularities in accordance with Regulation No 1681/94, drawing attention to its
content. Subsequent clarifications have also been provided on the completion of some
points of the OLAF form provided for the above information;

-
with the  General  Command  of  the  Guardia  di  Finanza,  it  has  undertaken  appropriate
initiatives  to  simplify  and  improve  the  communications  envisaged  by  Regulation  (EEC)  No
1681/94. Most important among the recommendations of all the territorial Departments of the
Inland Revenue is the Special Unit for the Prevention of Community Frauds, which must take
responsibility  for  forwarding  the  forms  to  the  party  and/or  body  involved  in  the  action  of
recovery and to the Department for Community Policies.

135

Since  2001  the  General  Command  of  the  Guardia  di  Finanza  has  begun  initiatives  in
association with the Regions with a view to implementing systematic and regular exchanges of
information on beneficiaries of financing from the structural funds subject to control.
This initiative, which is nearing completion at the national level, was developed further in 2002
by  improving  redefinition  of  the  procedures  governing  the  flow  of  data  and  information  in
concert with the Conference of Presidents of Regions and Autonomous Provinces.
In summary, the framework Convention provides that:
The Regions undertake to supply:
a)

the  databank  of  beneficiaries  of  Community  co-finance  and  the  related  reference
regulations for the programming period 2000-2006;
periodic updates and any amendments of the databank of beneficiaries of Community
co-finance relating to the programming period 2000-2006.

b)

The Guardia di Finanza, for its part:
a)

b)

will note instances coming under the criminal law for the purposes of this protocol, and
undertakes – with the approval of the Judicial Authority – to notify to the Regions the
particulars  of  the  natural  and  legal  persons  involved,  so  that  the  procedures  for
recovering funds wrongly paid may begin;
will ascertain infringements of an administrative nature, undertaking to notify them to
the  Regions  and  indicate  the  provisions  infringed,  the  nature  and  amount  of  the
expenditure, the time or period when the irregularity took place, the manner in which
the  infringement  was  committed,  the  possibilities  for  recovery,  the  date  when  the
infringement was detected, and the identity of the natural and legal persons involved.

Besides the procedures carried out by the regional Administration within the scope of its own
competences, the operative association with the Guardia di Finanza introduces other checking
and guarantee elements on the detection – especially for aid systems – of any improper funding
and its consequent recovery.

In  the  Fisheries  sector  (FIFG  financing),  by  way  of  implementing  the  provisions  of  the
protocol  of  the  agreement  between  the  State  and  the  Regions  on  the  implementation  of
Regulation No 438/01 (No 260/64 of 8 May 2002), a Decree of the Ministry of Farming and
Forestry Policies – General Directorate of Fisheries and Aquaculture established a permanent
technical  committee  comprising  representatives  from  the  Ministry  itself  and  the  Regions
outside Objective 1.
At the regional level, the Region of Veneto:
-

adopted, for the ESF, DGR No 1804 of 6 July 2001 “Ob. 3 ROP Veneto 2000/2006,
Commission Regulation (EC) No 438/01. Organisational provisions”;
with  DGR  No  2845  of  4  October  2002,  formalised  the  coordination  of  the  regional
Departments  and  Offices  responsible  for  second-level  audits  within  the  meaning  of
Regulation 438/01; this measure established the planning Unit for Inspection Activities
and  corporate  Participations  which,  in  relation  to  the  Structural  Funds,  has  the
following responsibilities:
(cid:1) 

to  undertake  coordination  within  the  regional  administration  of  the

-

Offices entrusted with the second-level audits, and the related IT system;

(cid:1) 

to  develop  specific  and  specialised  training  and  information  courses

for the personnel to whom auditing activities are entrusted;

to  develop  relations  relevant  to  the  second-level  audits  with  the  aforesaid  Departments  and
Offices at national and Community level.

136

NL

P

In  the  Netherlands  system,  each  member  of  the  government  is  responsible  for  his/her  own
particular  corner.  These  responsible  members  of  government  are  also  the  key  figures  for
contact with the European Commission, including OLAF. OLAF has asked the Netherlands to
improve central coordination in this system. The Netherlands is of the view that responsibilities
must lie where knowledge and expertise are at their greatest15. In the Netherlands system, the
ministers  concerned  are  individually  liable.  Every  member  of  the  government  is  required  to
deal  with  notifications  of  irregularities  that  are  confirmed  in  his  or  her  particular  area.
However, central coordination could be further improved by discussions led by the Minister of
Finance  on the notifications reported  by  the individual  members  of  government.  The  contact
persons from the departements concerned have together discussed this matter.
As provided for in the legislation applicable to CSF III, a start was made in 2002 with the de
facto coordination exercise between the bodies of the National Control System of the Structural
Funds, including the Cohesion Fund (paying agencies, 2nd level control coordination bodies and
the IGF), on the subject of planning and following-up the implementation of work measures,
methodologies and instruments, the monitoring of questions detected in national or Community
initiative audits, training schemes, the analysis of cases of irregularities requiring notification
to the OLAF and forms of access to information relating to controls conducted by the bodies of
the  NCS.  We  would  draw  attention  to  the  work  carried  out  with  the  objective  of  managing
debtors.
The  information  concerning  the  IGF’s  audits  and  audits  by  other  NCS  bodies,  including  the
financial  consequences,  are  recorded  in  a  database  of  controls  (SIGIFE),  constructed  by  the
IGF and made available to bodies with control functions via a page on the IGF website which
also  includes  the  user's  guide.  Data  is  entered  by  the  actual  bodies  responsible  for
implementing  controls;  they  are  exported  every  quarter  to  the  respective  2nd  level  control
coordinators, who subsequently send them to the IGF. The results  of  the  EC  audits  or  of the
ECA audits are inserted by the IGF.
In 2002, protocols were concluded between the Institute for the Management of the European
Social  Fund  (IGFSE)  and  the  Inspectorate-General  of  the  Ministry  for  Social  Security  and
Labour, to be implemented only in 2003. These protocols, established under Article 3 of Order
in Council No 684/01, regulate intervention from that Inspectorate-General, which will conduct
2nd level controls under the Employment, Training and Social Development Programme.
Under the joint terms of Article 36 of Decree-Law No 54-A/00 of 7 April 2000 and Article 6 of
Implementing  Decree  No  12-A/00  of  15  September  2000,  programme  contracts  were
concluded by the management authorities of the Regional Programmes with the Employment
and  Vocational  Training  Institute  (IEFP)  which  associate  this  Institute  with  the  technical,
administrative and financial management of specified measures.
Founded  on  legal  provisions,  the  Inspectorate-General  and  Audit  Office  for  Management
(IGA),  as  the  body  coordinating  2nd  level  control  of  the  EAGGF-Guidance  Section  and  the
FIFG, joined forces with the bodies of the NCS; noteworthy in 2002 were the drawing up and
dissemination  of  control  instruments  for  use  by  the  1st  and  2nd  control  levels  (in  particular,
control manuals, sample selection criteria and risk analysis) and the exchange of information
on the control effort implemented in connection with those Funds, with a view to ensuring the
checks complement each other.

FIN Cooperation  between  the  EEDCs  and the  other authorities has  been tightened in the  areas  of
exchange of information, control and training, and in order to prevent abuses in advance and to
bring  any  cases  of  presumed  violations  to  pretrial  investigation.  EU  project  groups  operate
within  the  EEDCs,  dealing  with questions  of  cooperation relating  to  projects  which  are  part-
funded by the EU. Other authorities are also involved in these groups. The various sources of
funding  have  carried  out  joint  inspection  missions  to  those  recipients  of  aid  who  administer
projects financed by them. In addition, various bodies of directions have been issued.

137

S

Administrative  procedures  for  Interreg  IIIA  Öresund  region  have  taken  shape  through  an
agreement  between  the  National  Board  for  Industrial  and  Technical  Development,  as  the
paying authority, and  Hovedstadens  Udviklingsråd  (HUR), as the  managing  authority.  Under
the agreement, each Member State is responsible, in accordance with the  EC regulations, for
ensuring that irregularities do not occur and, in the event that irregularities do take place, for
reporting  them  to  the  Commission.  Sweden  and  Denmark  are  responsible  for  reporting  the
irregularities that have arisen in projects with Swedish or Danish aid recipients.

In addition, agreements have also been established between the National Board for Industrial
and Technical Development and the programme secretariat.

The  Economic  Crime  Authority  runs  regular  training  of  relevant  personnel  within
administrative  authorities  that  deal  with  cases  involving  EU  funds  on  the  subject  of  the
formulation of crime reports etc.

See also 4.1

UK Department for Work and Pensions (DWP):

Following the transfer of responsibility for ESF from the Department for Education and Skills
to DWP in 2001 close policy links have been maintained between the Departments to ensure
coherence of objectives in reducing fraud.  Complete integrity of all ESF audit functions was
maintained throughout the process.  Responsibility for independent audit  functions and fraud
investigation was formally transferred to DWP in April 2002.
Department of Trade and Industry (DTI):
The  United  Kingdom  has  a  co-ordinated  reporting  system  whereby  all  the  Managing
Authorities in the UK, including Gibraltar and Northern Ireland; report identified irregularities
to the DTI who forward them to OLAF.
DTI maintains a list of all reported cases, and the follow-up reports under Article 5, which is
updated each quarter and circulated to the OGDs/DAs in the UK.
DTI has offered guidance and advice on the treatment of irregularities in the light of the closure
of the 1994-99 programmes.
Office of the Deputy Prime Minister (ODPM):
The Office of the Deputy Prime Minister took over responsibility for administration of ERDF
from  the  former  Department  for  Transport,  Local  Government  and  the  Regions.  In  2002
ODPM  acted  as  the  co-ordinating  department  for  closure  of  1994-99  programmes  –
organiszing  a  series  of  regular  meetings  at  which  all  departments  and  Government  Offices
responsible  were  present.  The  meetings  reviewed  progress  and  shared  experience  in  tackling
problems encountered in the closure procedures. Note that concentration on this important task
meant that ODPM was unable to consider the introduction of other novel measures in the area
of ERDF administration.
Scottish Executive

On-line access to the integrated database, for the management of ERDF and ESF in Scotland
was made available to everyone involved in the management of these Funds.

The Scottish Executive’s contingency plan for dealing with fraud against ERDF and ESF was
reviewed and updated.

138

1 
The extensive range of existing customs legislation and administrative measures operated by the Irish Customs Service
(part of the Office of the Revenue Commissioners) constitute a comprehensive basis to counter fraud and other illegal activities in
the field of traditional own resources. Substantial penalties apply to smuggling offences; smuggled goods may be seized and are
liable  to  forfeiture.  Details  of  these  powers  have  already  been  forwarded  to  OLAF  (then  UCLAF)  in  response  to  a  previous
questionnaire on this issue. Specific new developments are set out in the body of the table.

2 
The  Austrian  authorities  specify  that  the  following  authorities  have  contributed  to  the  replies  to  the  questionnaire :
traditional  own  resources 
;  EAGGF-Guarantee,  EAGGF-Orientation,  FIFG:
BMLFUW (Federam Ministry of Agriculture, Fisheries, Environment and water management) ; ESF: BMWA (Federal Ministry
of Economics and Employment) ; ERDF: BKA (Federal Chancellery).

:  BMF (Federal  Ministry  of  Finance) 

3 
During  the  reference  period,  Sweden  has  not  adopted  any  new  laws  or  provisions,  nor  regulations  concerning  own
resources.  During  previous  years,  it  brought  important  modifications  to  legislative,  regulatory  and  administrative  provisions
implementing Article 280 of the EC Treaty .

4 
General measures : The United Kingdom points out that UK Customs have in place legislation and a number of systems
that  counter  fraud  and  other  illegal  activities.  Generally,  the  legislation,  regulations  and  administrative  measures  in  place  are
satisfactory

5 

Including measures aimed at applying the Integrated Administration and Control System (Regulation (EC) n°3508/92).

6 
The  Swedish  authorities  indicate  that  Sweden  has  not  adopted  any  new  laws,  regulations  or  administrative  provisions
relating  to  the  Guarantee  Section  of  the  EAGGF  during  the  period  in  question.  In  previous  years  Sweden  has  implemented
comprehensive legislative, regulatory and administrative developments that have contributed to the implementation of Article 280
of the Treaty.

7 

The Finnish authorities have submitted the list of 29 Decrees.

8

On 1 January 2002 the new IACS Regulation (EC) No 2419/2001 was introduced, which inter alia governs controls and
sanctions for agricultural aid. That regulation replaced Regulation (EC) No 3887/1992. As far as area compensation and livestock
aid is concerned, there have been no developments in the system of rules in question. No such developments affect the system of
milk  quotas  either.  During  the  period  in  question,  Sweden  has  not  implemented  any  ensuing  legislative,  regulatory  or
administrative developments.

9 
The United Kingdom points out that there have been no significant legislative, regulatory or administrative developments
in the area of the FIFG.  The Fisheries and Aquaculture Structures (Grants) (England) Regulations 2001 and equivalent legislation
for Scotland, Wales and Northern Ireland remain in force.

10

Second  Protocol,  drawn  up  on  the  basis  of  Article  K.3  of  the  treaty  on  European  Union,  to  the  Convention  on  the
protection of the  European  Communities'  financial  interests  -  Joint  Declaration  on  Article  13  (2)  -  Commission  Declaration  on
Article 7 - Official Journal C 221, 19/07/1997.

11 

Completed on 5.03.2003.

12 
its protocols, has been ratified by Law 2803/2000 (Gov. Gazette 48/03-03-00).

The Greek authorities specify that the Convention on the protection of the Community’s financial interests, together with

13 
pointed out, however, that the contents of the protocol are in large measure implemented by the laws already in force.

The  procedures  for  ratifying  the  Second  Protocol  have  not  yet  been  initiated  in  the  Italian  legal  system.  It  should  be

As regards Article 2 of the Protocol, since 1978 the Italian penal code (P.C.) covers the offence of  money-laundering (Articles
648-bis and 648-ter P.C.).

As regards the responsibility of legal persons, Legislative Decree No 231 of 2001 introduced the responsibility of legal persons for
offences committed by their agents; the instances of crimes also include offences of fraud (640, co. 2, 640-bis P.C.) and corruption

139

                                                
(Articles 318, 319, 319-ter, 320, 321, 322, 322-bis P.C.), for which Article 3 of the Second Protocol requires the Member States to
hold legal persons responsible. Legal persons are held responsible both when the offences have been committed directly by agents
of the organisation in senior positions, and when they have been committed by persons subject to the direction and supervision of
those agents.

The penalties for legal persons conform to the standard indicated in Article 4 of the Second Protocol.

In line with Article 5 of the Second Protocol, confiscation of the proceeds of offences of fraud, money-laundering and corruption
committed by physical persons was already provided for by Article 240 P.C., and, for administrative infringements dependent on
offences for which responsibility of legal persons is recognised, it was introduced by Article 19 of Legislative Decree No 231/01.

14 
The Portuguese authorities indicate that, as was already stated in the 2001 report, the ratification process was concluded
by  Portugal.  Thus  the  second  Convention  Protocol  of  26  July  1995  on  the  Protection  of  the  European  Communities'  financial
interests was approved (jointly with the Convention and the other two Protocols) by Resolution No 86/00 of the Assembly of the
Republic and ratified by Decree No 82/00 of the President of the Republic, both published in the Journal of the Republic, Series I,
A, No 288, of 15 December 2000.

Portugal  notified  the  General  Secretariat  of  the  Council  of  the  European  Union  on  15  January  2001  of  the  conclusion  of  the
ratification process.

15 
Completed  on  26.02.2003.  Åland  :  Åland’s  Lagting  has  adopted  the  Law  on  approval  of  certain  provisions  of  the
Convention  on  the  protection  of  the  European  Communities'  financial  interests,  with  the  result  that  it  enters  into  force  in  the
province of  Åland in respect of the parts  of  the  Convention  that  fall  within  the  competence  of  the  province.  This  happened  on
19 January 2001. As regards ratification of the Second Protocol, this applies to Finland, and not specifically to Åland.  Account
was taken of the protection of financial interests in the abovementioned report containing proposals for new provincial legislation
concerning  inter  alia  rural  development.  Åland’s  legislation  concerning  fisheries  also  includes  provisions  that  are  intended  to
safeguard Community and national financial interests.

16 
protection of the European Communities' financial interests and its supplementary protocols.

General  remarks  :  Sweden  has  ratified  and  transposed  into  national  law  both  the  Convention  of  26 July 1995  on  the

Specific comments on individual instruments:

I. Fraud Convention (26 July 1995)

The  Convention  has  been  transposed  into  Swedish  law  and  the  necessary  legislation  entered  into  force  on  1 July 1999
(Bill 1998/99:32, Report 1998/99:JuU16, Parliament Communication 1998/99:167).

In order for Sweden to be able to satisfy fully the requirements laid down in the Convention, certain legislative amendments have
been made. A new crime, subsidy misuse, was introduced into the Criminal Code. The new crime means that the use of an EU
subsidy  for  a  purpose  other  than  that  for  which  it  was  granted  is  a  punishable  offence.  In  addition,  the  criminalisation  of
corruption  of  foreign  ministers,  members  of  parliament  and  holders  of  public  office  was  extended.  Furthermore,  liability  for
bribery was extended to situations where benefits accrue to someone other than the person whose performance of duties may be
affected  by  the  bribery;  there  were  also  certain  adjustments  to  the  rules  on  the  impeding  effect  of  foreign  criminal  court
judgments.

II. First Protocol (27 September 1996)

The  Convention  has  been  transposed  into  Swedish  law  and  the  necessary  legislation  entered  into  force  on  1 July 1999
(Bill 1998/99:32, Report 1998/99:JuU16, Parliament Communication 1998/99:167).

III. Second Protocol (19 June 1997)

The  Convention  has  been  transposed  into  Swedish  law  and  the  necessary  legislation  entered  into  force  on  1 January 2002
(Bill 2002/01:133, Report 2001/02:JuU2, Parliament Communication 2001/02:3).

In order for Sweden to be able to satisfy fully the requirements laid down in the Protocol, certain legislative amendments have
been made. Attempts, preparations and conspiracy to perpetrate serious offences of receipt of stolen goods or money have been

140

                                                                                                                                                                               
criminalised.  The  rule  on  the  impeding  effects  of  foreign  criminal  court  judgments  has  been  extended  so  that  foreign  criminal
court judgments relating to acts that are covered by the Protocol do not, in certain cases, constitute an obstacle to the institution of
legal proceedings in Sweden.

IV. Protocol on the European Court of Justice (29 November 1996)

The  Convention  has  been  transposed  into  Swedish  law  and  the  necessary  legislation  entered  into  force  on  1 July 1999
(Bill 1998/99:32, Report 1998/99:JuU16, Parliament Communication 1998/99:167).

17 
Communities' financial interests (Official Journal C 316, 27.11.1995);

- Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the European

- Protocol drawn up on the basis of Article K.3 of the Treaty on European Union to the Convention on the protection of
the European Communities' financial interests - Statements made by Member States on the adoption of the  Act drawing up the
Protocol (Official Journal C 313 , 23.10.1996);

- Protocol drawn up on the basis of  Article K.3 of the Treaty on European Union, on the interpretation, by  way of preliminary
rulings, by the Court of Justice of the European Communities of the Convention on the protection of the European Communities'
financial  interests  -  Declaration  concerning  the  simultaneous  adoption  of  the  Convention  on  the  protection  of  the  European
Communities' financial interests and the Protocol on the interpretation by way of preliminary rulings, by the Court of Justice of
the European Communities, of that Convention - Declaration made pursuant to Article 2 (Official Journal C 151 , 20.05.199);

- Second Protocol, drawn up on the basis of Article K.3 of the treaty on European Union, to the Convention on the protection of
the  European  Communities'  financial  interests  -  Joint  Declaration  on  Article  13  (2)  -  Commission  Declaration  on  Article  7
(Official Journal C 221, 19.07.1997).

18 
The Belgian authorities underline that the objectives set by the Convention of 26 July 1995 and aiming, on the one hand,
to designate fraudulent actions that affect the financial interests of the European Communities as criminal offences punishable by
effective, proportional and deterrent criminal penalties (including sentences of imprisonment), and on the other hand, to establish
the criminal responsibility of heads of enterprises, are satisfied by the General Law of 18 July 1977 on customs and excise

19 
The Danish authorities indicate that the Convention and its Protocols were transposed into Danish law by means of Law
n°  228  of  4  April  2000  modifying  the  criminal  law  (serious  VAT  fraud,  fraud  to  Community  resources,  corruption  of  foreign
officials, etc.).

20 
Protocols during 2001, with the enactment of the Criminal Justice (Theft and Fraud Offences) Act, 2001.

The  Irish  authorities  indicate  that  Ireland  completed  all  steps  to  transpose  the  1995  Convention  and  the  associated

21 
The transposition obligations laid down in those four EU legal instruments (including the Second Protocol) had already
been satisfied partially by the existing rules and, in all other respects with one exception (see below), were transposed by Austria
through  the  Strafrechtsänderungsgesetz  (Law  amending  criminal  law  )  1998,  BGBl. I 1998/153,  which  entered  into  force  on
1 October 1998, in particular through:

- introduction of “misuse of assistance” as a criminal offence (§ 153b StGB (Criminal Code));

- extension of the rules on corruption of officials to Community officials and officials of other Member States (§§ 74(4a) and (4b),
304, 307 StGB);

- extension of the list of predicate offences for money laundering (§ 165 StGB).

Reference is made to the amendments to the Finanzstrafgesetz (Law on financial crime) and to the Ausfuhrerstattungsgesetz (Law
on  export  refunds)  by  the  Abgabenänderungsgesetz  (Law  modifying  taxes)  1998,  which  also  serve  to  transpose  the
abovementioned legal instruments.

22 
implemented.

Sweden  has  not  taken  any  new  steps  in  2002  because  the  1995  Convention  and  its  protocols  have  already  been  fully

141

                                                                                                                                                                               
23 

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

24 
controls, i.e. excluding supporting personnel (secretariat, archives,…).

Member  States  were  asked  to  limit  their  estimates  to  staff  that  is  effectively  responsible  for  the  execution  of  these

In case certain staff are responsible for the performance of several types of control (ex-ante, ex post and/or anti-fraud), Member
States were asked to base their figures on an estimate of the relative time spent by the staff concerned on each type of control.

Similarly, should certain staff be responsible for the execution of controls covering several sectors  (own  resources,  agricultural
expenditure and/or structural funds), Member States were invited to base their figures on an estimate of the relative time spent by
the staff concerned on each sector.

If  the  performance  of  particular  control  tasks  has  been  delegated  to  outside  (private)  agencies  or  bodies,  Member  States  were
asked to include the manpower affected by these agencies or bodies for the performance of these tasks in the figures submitted.

Figures are rounded off to the next whole number.
25 

In the field in question:

–  ex-ante controls are represented by the monitoring provided for in Article 4(13) of the Community Customs Code
and by customs controls provided for by Article 4(14) of the Code, excluding controls envisaged by Articles 3 and 4
of Regulation No 386/9025)

–  ex post controls are those provided for by Article 78 of the Community Customs Code;

anti-fraud investigations are those conducted on the basis of suspected irregularities.

26

The Member States who were in a position to do so were asked to include also the  number of staff in the criminal prosecution
departments (police, judicial authorities) allocated to this type of investigation.

27

As the data for 2002 were  not available  when the  Report  was drawn  up, the amounts are taken  from the report on the
Allocation of 2001 EU Operating Expenditure by Member State, Chapter 5 (statistical annex), Table 2a - Own resources payments
by Member State in 2001 - traditional own resources.

28 

Of which 2 were assigned to the Public Prosecutor for Special economic crime.

29 
not distinguish on the basis of the criteria laid down by the Commission. It is therefore impossible to further break down the allocation of staff.

A total of 12 650 staff at main customs offices, border customs offices and inland offices conduct ex-ante controls. These statistics do

30 
for the checks.

170 staff conducted ex post controls under Article 78 of the Customs Code. This figure was arrived at on the basis of the time required

31 
prohibitive.

Statistics on the manpower assigned to anti-fraud investigations are not available, and the cost of making the calculations would be

32 

33 

56% of customs personnel.

8% of all customs personnel.

34 
1400 of all customs personnel (36% of customs personnel) ; 70 inspectors of the Department of Financial Crime (SDOE).
N.B. the Department of Financial Crime (DFC) staff, 70 persons, dealt with all three types of audit, in cases relating to tobacco
and spirits products in which fraud was detected.

35 
(traditional own resources and EAGGF-guarantee).

As  with  previous  reports,  the  statistical  data  provided  by  the  French  customs  does  not  give  a  breakdown  by  sector

142

                                                                                                                                                                               
36

Amongst these 97 agents, the number of customs agents competent for the performance of judicial missions, and having
implemented  judicial  enquiries  in  2002,  amounted  to  48.  These  double  hatted  agents  have  the  competence  to  conduct  both
administrative  investigations  and  judicial  enquiries.    The  scope  of  competence  of  judicial  customs  officials  covers,  notably,
infringements, foreseen by the national customs code, affecting the Communities’ financial interests (own resources and EAGGF
expenditure).

37 

Data relating to the Administrations which answered the questionnaire.

38 
Of  which 4,5  were assigned to the Ministry of  Agriculture, Nature Management and Fisheries (4 of  which for ex  ante
controls and 0,5 for ex post controls) ; 5500 were assigned to the Ministry of Finance (the staff of the customs authorities of the
Ministry of Finance amount to approximately 5 500 full-time equivalents. The  majority of these are responsible for operational
tasks. Administrative information received from the customs authorities is not subdivided according to the categories asked).

39 
Inspection Office for customs management ; 30 were assigned to house inspections/monitoring bodies.

Of  which  628  were  assigned  to  customs  clearance  /  customs  posts  for  merchandise  transport  ;  14  were  assigned  to

40 
management ; 528 to mobile surveillance teams.

Of  which  102  were  assigned  to  field  audits  and  internal  audits  (customs)  ;  14  to  the  Inspection  Office  for  customs

41 
management ; 102 to field audits and internal audits (customs).

Of which 144 were assigned to criminal cases ; 104 to special operation teams ; 14 to the Inspection Office for customs

42 
Refers to the  number  of  staff  of  the  DGAIEC  (Directorate-General  for  Customs  and  Excises)  EEC  who,  during  2002,
were  appointed  as  inquirers  and/or  experts  in  customs  criminal  proceedings.  General  remark  on  anti-fraud  investigations  –
Nationally, there is no group of magistrates exclusively responsible for directing the investigations in question. Even so, it may be
contended  that  the  DCIAP  (Central  Department  for  Investigation  and  Penal  Action)  with  national  jurisdiction,  and  the  DIAP
(Department for Investigation and Penal Action) in  Lisbon, constitute departments for the directing of inquiries into, inter alia,
crimes  of  corruption  or  fraud  in  obtaining  and  diverting  subsidies,  subventions  or  credit,  economic/financial  infringements
committed  in  an  organised  way  or  with  an  international  or  transnational  dimension,  with  13  magistrates  from  the  Public
Prosecution Service at its disposal.

Anti-fraud  investigations  -  The  Criminal  Investigation  Department  has  22  officials  assigned  to  investigations  of  this  type  (1
coordinator, 3 chief inspectors and 18 inspectors).

43 
and inspection is not separately quantified.

Customs: In the case of the 349 persons taking part in Customs clearance, that part of their work which relates to control

44 

45 

Customs: The same anti-fraud staff operate in Customs, excise duty and agricultural aid matters.

Personnel years earmarked to investigate customs crime.

46 
by type of control.

The percentages in columns 3, 5 and 7 do not include the data from the Dutch authorities, which were not broken down

47 

In the field in question:

- a priori controls are physical checks and checks on the file of payment requests carried out by the paying agencies and customs
services. They include controls on internal  market aids, controls on export restitutions, as  well as the controls conducted in the
framework of interventions intended to stabilize the agricultural markets in the following sectors : products of the wine-growing
sector,  cereals  and  rice,  sugar,  olive  oil,  oilseeds  and  protein  plants,  textile  plants  and  silkworms,  fruit  and  vegetables,  raw
tobacco, seeds, hop and bee-keeping, milk and milk products, beef and veal, sheepmeat and goatmeat, pigmeat, fishery products
(see the consolidated Council Regulation N°1883/78 of 2 August 1978 ;

- a posteriori controls are on-the-spot checks and inspections provided for by Regulation No 4045/89;

- anti-fraud investigations are those conducted on the basis of suspected irregularities.

143

                                                                                                                                                                               
48

The  Member  States  who  were  in  a  position  to  do  so  were  asked  to  include  also  the  number  of  staff  in  the  criminal

prosecution departments (police, judicial authorities) allocated to this type of investigation.

49

As  the  data  for  2002  were  not  available  when  the  Report  was  drawn  up,  the  data  are  taken  from  the  report  on  the
Allocation  of  2001  EU  Operating  Expenditure  by  Member  State,  Chapter  5  (statistical  annex),  Table  1a  -  Allocation  of  2001
operating expenditure by sector and Member State - agriculture.

50 

102.23 of which were assigned to customs and excise. 40 were responsible for the ex ante control of investment and start-
up grants to farmers. 67 were responsible for ex ante controls within the ALT, 408 in the BIRB (this is an approximate
figure, taking account of the Belgian reform on the application of the Common Agricultural Policy, notably the abolition
of the national ministry of agriculture and the effective transfer of inspection powers to the federal agency for the security
of the food chain), 100 within DG 3 (figure valid until 1 October 2002, after which date there was a regionalisation and
restructuring after this date and new structures were created within the communities and regions).

51 
50.5 of which were assigned to customs and excise; 8 to the EAGGF Unit. 5 members of staff were responsible for ex
post controls on aid for agri-food investment. As far as post-clearance controls are concerned, account must also be taken of the
Economic Inspection Service of the Public Administration (SPF), to which 11 officials are assigned (not shown in the table). 24
were responsible for the ex post controls within the BIRB, 100 within DG 3.

52 

53 

Of these staff numbers, 2 were assigned to customs and excise in Antwerp; 8.5 to Brussels; 8 to Ghent; 4 to Hasselt; 1 to
Liège;  2  to  Mons;  0  to  the  EAGGF  Unit;  34  to  the  BIRB  (including  27.5  to  the  administrative  departments;  5  to  the
police and 1.5 to the judicial authorities), 4 to DG 3; 10 were assigned to the ALT.

Public Prosecutor for Special economic crime.

54 
applications for payment (cf. Art. 4 of Regulation (EEC) No 386/90).

See  3.1;  in  2002  about  120  staff  at  the  EU  paying  agency  (Hamburg-Jonas  main  customs  office)  were  involved  in  checking

55 
arrived at on the basis of the time spent on the checks.

Over the 2001/2002 control period 51 staff were assigned to ex post controls under Regulation (EEC) No. 4045/89. This figure was

56 
Where there are suspicions of subsidy  fraud, the Subsidy  Act  requires  payment  to  the  Public  Prosecution  Service  of  a
levy and therefore no staff need to be assigned. There are no statistics available on the manpower assigned to anti-fraud investigations and
the cost of making the calculations would be prohibitive.

57 
Ministry of Agriculture in auditing all deliveries of cotton for the 2002 ginning year) ; 437 staff of the OPEKEPE.

Of  which  :  150  Auditors  of  the  Department  for  Financial  Crime  (the  department  of  Financial  Crime  has  assisted  the

58 

OPEKEPE.

59 
were conducted with OLAF (Regulation No. 4045/89) into “long-term set-aside" programmes.

Auditors of the Department for Financial Crime. Within the framework of anti- fraud investigations, joint investigations

60 

Of which : 165 Auditors of the Department for Financial Crime; 487 of OPEKEPE.

61 
are not available for many of them.

These figures do not represent all the staff of the bodies performing control functions throughout the country, as figures

62 
in the case of revenue)

Ex-ante checks (e.g. at the stage of applications for funding in the case of expenditure, and acceptance of the declaration

Because  of  the  way  in  which  the  statistics  are  currently  kept,  it  is  not  possible  to  isolate  the  number  of  full-time  equivalent
customs service staff assigned to ex-ante checks as provided for in Article 2 of Regulation No 386/90, since these staff members
carry  out  both  own  resources  and  EAGGF  (Guarantee  section)  checks  (the  total  number  of  staff  carrying  out  ex  ante  own
resources and EAGGF (Guarantee-section) checks is 8246). Only fruit and vegetable withdrawal checks are identified in terms of
full-time equivalent staff, viz. 35 FTE staff. As well as 2 241.05 FTE staff, 1026 staff/days are given over to on-the-spot checks
on certain aid measures relating to the CMO  milk and milk products which cannot be expressed in terms of FTE staff.

144

                                                                                                                                                                               
63 

- Ex-post checks (e.g. checks on use/outturn)

The number of full-time equivalent customs service staff assigned to ex-post checks under the EAGGF-Guarantee scheme is not
identifiable in the statistics. However, the number of staff/days spent by customs on checking the application of Regulation (EEC)
No 4045/89 was 6 532.5 (for the period July 2001 to July 2002).

64 

- Anti-fraud inquiries proper (search for irregularities)

The  number  of  full-time  equivalent  staff  in  the  customs  service  assigned  to  anti-fraud  inquiries  for  the  protection  of
financial  interests  (traditional  own  resources  and  EAGGF-Guarantee)  is  97.  However,  the  number  of  FTE  staff  specialising  in
agriculture is estimated at 30. Of the above 97 staff, the number of customs officials authorised to conduct judicial inquiries and
who carried out judicial inquiries in 2002 was 48. The scope of activity of judicial customs officers covers violations, as provided
for  in  the  National  Customs  Code,  of  the  protection  of  the  Community’s  financial  interests  (own  resources  and  EAGGF
expenditure).

65 

66 

67 

68 

69 

376 of these staff are  involved in both a  priori and a posteriori controls.

376 of these staff are  involved in both a  priori and a posteriori controls.

2 of these staff are involved in general litigation issues.

Data related to the Administrations which answered the questionnaire.

Ministry of Agriculture, Nature Management and Fisheries.

70 
Of which 628 were assigned to customs clearance / customs posts for merchandise transport ; 27 to house
inspection/monitoring bodies ; 43 to the Salzbourg customs office payment office / refunds ; 270 to the AMA (paying agency
Agrarmarkt Austria) ; 55 to LE (paying agency «rural developmentl» at the BMLFUW). N.B. Of this staff of the AMA and the
LE, 110 (for AMA) and 35 (for LE) are calculated on the basis of staff resposaible for the authorisation of payments within the
paying agency (in each case, they constitute 50 % of this staff).

71 
the BMLFUW (Federal Ministry for Agriculture, Fisheries, Environment and Watermanagement), and for EU financial controls.

Of which 14 are composed of individual auditors in the field and internal audit service/customs ; 6 are responsible, within

72 
for the fight against fraud.

These resources are responsible for criminal affairs. There are no staff nor any specific agency specifically responsible

73 

74 

These 45 staff are assigned to Customs, and are all available for own resources, excise duty and agricultural aid matters.

Of which 2,86 were assigned to ex ante controls and 0,8 for ex post controls in Åland.

75 
SJV : Intervention: 6 (This also includes the checks carried out by the Swedish Seed Testing and Certification Institute
on  behalf  of  the  National  Board  of  Agriculture)  ;  foreign  trade:  15  ;  Direct  aid:  4  ;  KULM:  1  (KULM  =  Competence
Development, Environment within the Rural Programme. Carried out by the National Board of Agriculture) ; company unit: 2 ;
inspection unit : 4 ; customs office: 25, of which at SJV :1½. County Administrative Board : Direct aid and Guarantee section :
90.

76 

National Board of Agriculture Inspection Unit.

77 
(structural measures).

Total of 6 personnel years, of which 2 prosecutors, 2 police officers and 2 auditors. The same team also investigates 3.3

Total  includes  10.5  Forestry  Commission  staff  who  perform  a  mix  of  duties  which  cannot  be  split  between  the  three

78 
previous headings.
79 

In the field in question:
ex-ante controls consist:

145

                                                                                                                                                                               
–  for the Structural Funds, of checks and inspections on projects or actions, carried out at the various levels (managing
authority,  payment  authority,  delegated  or  intermediate  authorities,  final  beneficiaries)  to  ensure  the  accuracy,
regularity and eligibility of requests  for  Community  aid  in  accordance  with  Article  4  of  Regulation  n°  438/2001,
and with verifications foreseen by Article 9, paragraphs 2, 3 and 4, of Regulation 438/2001;

–  for  the  Cohesion  Fund,  of  checks  and  inspections  carried  out  at  different  levels  (implementing  bodies,  managing
authority, payment authority, intermediary authorities) in order to verify the authenticity of expenditure claimed and
execution  of  the  project,  from  the  preparatory  phase  through  the  entry  into  service  of  the  financed  investment  in
accordance  with  Article 2 of Regulation 1386/2002, and  with verifications  foreseen by  Article  8,  paragraphs  2,  3
and 4, of Regulation n° 1386/2002 ;

ex post controls consist:
–  for the Structural Funds, of the on-the-spot checks and inspections provided for by Article 3 of Regulation (EC) No

2064/97 and Article 10 of Regulation (EC) No 438/2001;

–  for  the  Cohesion  Fund,  of  on-the-spot  checks  and  inspections  foreseen  by  Article  9  of  Regulation  (EC)  n°
1386/2002,  allowing  to  verify  the  effectiveness  of  management  and  control  systems  in  place  and  expenditure
declarations related to projects ;

anti-fraud investigations include all investigations conducted on the basis of suspected irregularities.

80 
(police services, judicial authorities) had assigned to this type of investigations.

Member States capable of doing so were requested to also include the manpower which criminal prosecution authorities

81

As  the  data  for  2002  were  not  available  when  the  Report  was  drawn  up,  the  data  are  taken  from  the  report  on  the
Allocation  of  2001  EU  Operating  Expenditure  by  Member  State,  Chapter  5  (statistical  annex),  Table  1a  -  Allocation  of  2001
operating expenditure by sector and Member State – structural measures.
82 

The Belgian authorities note that this is an estimate. Of the total number, 26 were assigned to ex ante controls in the field
of the EAGGF-Guidance Section; 22 to "Article 8" checks; 3 to "Article 9" checks; 3.8 were assigned to checks on the
implementation of Objective 3 within the Brussels region (placement service); 4 were responsible for the ex ante control
of the Objective 2 and Urban 2 programmes; 10 for the FIFG and Leader; 6 for ESF ex ante controls (including 3 for
content control and 3 for financial control).

83 
6.5 of which were assigned to the Audit Unit of the Inspection des Finances, and 1.2 to controls on the implementation of
Objective 3 within the Brussels region (placement service); 2 were responsible for the ex post control of Objective 2 and Urban 2
programmes; 1 for the FIFG and Leader; 6 for ESF ex post controls (including 3 for content control and 3 for financial control);
2 inspectors were responsible, within the labour inspection service, for on-the-spot inspections.

84 

Included in the two previous data.

85 
and 20 to ESF controls.

Of which 5 were assigned to EAGGF and FIFG controls ; 29 to controls in the framework of ERDF, including Interreg ;

86 
and 40 to ESF controls.

Of which 3 were assigned to EAGGF and FIFG controls ; 1 to controls in the framework of ERDF, including Interreg ;

87 
Public Prosecutor for Special economic crime.

Of which ½ was assigned to controls in the framework of ERDF, including Interreg  ; 10 to ESF controls ; and 2 to the

88 
455.

89 
282.

90 

FIFG : 21 ; EAGGF-Orientation : 683 ; ERDF : at least 720 (it is not possible to give a precise indication); ESF : at least

FIFG : 3 ; EAGGF-Orientation : 53 ; ERDF : at least 137 (it is not possible to give a precise indication); ESF : at least

Until now, it has not been possible to give to a precise indication.

91 
management service : 3.

Payment  authorities  and  management  authorities  for  the  3rd  CSF:  60  (Art.  4,  Reg.  438/2001)  ;  staff  of  the  special

92 
management authorities for the 3rd CSF: 60 ; staff of the special management service: 3.

Of  which : ΕDEL: 52 (Art. 10, Reg. 438/2001) ;  ΕDEL: 4 (Art. 9, Reg. 1386/02) ; staff of the payment  authority  and

146

                                                                                                                                                                               
93 
The distinction into manpower assigned to ex-ante and ex-post controls is indicative, seeing that such a distinction is not
made in the respective regulations. Investigations for combating  fraud are conducted  mainly by the DFC, however for the  year
2002 there is no evidence of such controls being conducted. Also, part of the manpower assigned to controls, also deals with fraud
-  irregularities  cases  pertaining  to  the  Structural  Funds.  The  total  manpower  (182  persons)  assigned  to  all  control  stages  is
indicative.

94 
are not available for many of them.

These figures do not represent all the staff of the bodies performing control functions throughout the country, as figures

95 
Of  which : 97 for EAGGF-Guidance (76 of these are involved in both ex-ante and ex-post controls) ;  14  +  4  for  ESF
(including  article  4)  (i.e.  all  members    of  the  ESF  Paying  authority,  the  EHRD-OP  Managing  authority  and  the  EQUAL-CI
managing  authority  have  ex-ante  control  responsibilities  as  part  of  their  duties,  as  do  4  members  of  the  Technical  Support
Structure contracted to assist with the implementation of EQUAL) ; 344 for ERDF ; 3 for FIFG ; 18 for the Cohesion Fund ; 0 for
the Gardai (Police).

96 
Of which : 76 for EAGGF-Guidance (involved in both ex-ante and ex-post controls) ; 5 + 3 for the ESF (including article
10) (1  manager/controller  and  5  controllers  comprising  Ireland’s  ESF  Finanical  Control  Unit  ;  3  members  of  the  Department’s
Internal Audit Unit) ; 266 for the ERDF ; 2 for FIFG ; 8 for the Cohesion Fund ; 0 for the Gardai (Police).

97 

EAGGF – Guidance.

98 
Of  which  EAGGF  –  Guidance  :  108  (of  whom  67  are  involved  in  forestry)  ;  ESF  :  26  (of  whom  5  are  dedicated
exclusively to control activity-Financial Control Unit) ; ERDF : 610 ; FIFG : 5 ; Cohesion Fund : 26 ; Gardai (Police ) : 3 (The
police assign staff to anti-fraud investigations as instances of suspected  fraud are reported; it is estimated that regarding reports of
suspected fraud, the manpower resources required would amount to three fulltime police officers in 2002).

99 

Data relating to the administrations which answered the questionnaire.

100 
of the applicable regulations for the previous period, as the implementation and control for the new period.

The Dutch authorities specify that the number of staff (in full-time equivalent) cover both the implementation and control

101 
Of  which  3  were  assigned  to  ex  ante  controls  of  FIFG  and  EAGGF  –  Guidance  section  within  the  Ministry  of
Agriculture, Nature Management and Fisheries; 43  were assigned to ex ante controls of the ESF  within the Ministry  for Social
Affairs and Employment. Because of the decentralised nature of the ERDF programmes, the number of staff participating actively
in controls linked to this programme  within the Ministry for Economic Affairs is not known.

102 
Of which 0,1 were assigned to controls of ERDF – cities and Urban within the Ministry for the Interior. (NB because of
the decentralised nature of the ERDF, Objective 2 and Urban 2 programmes, the number of staff participating actively in controls
is  not  known.  A  report  is  established  on  a  quarterly  basis  in  the  framework  of  the  urban  programmes  under  Objective 2  and
Urban 2.  Reports  are  regrouped  by  the  Ministry  of  the  Interior  and  sent  to  the  European  Commission.  Given  that  Urban
programmes  have not formed the subject of irregularity communications for 2002, the time that is dedicated to respective controls
was limited to 0,1 staff  (in  full  time  equivalent).  Once  communications  are  effectively  made,  it  will  be  appropriate  to dedicate
more time to these controls) ; 2 were assigned to a posteriori controls of FIFG and of EAGGF – Guidance within the Ministry of
Agriculture, Nature Management and Fisheries ; 1,8  were assigned to  a  posteriori  controls  I  the  framework  of  Interreg  6  and  c
within  the  Ministry  for  Housing,  Spatial  Planning  and  the  Environment  (excluding  interventions  by  the  payment  authority,  the
management authority and the international programming secretariat) ; 38 were assigned to a posteriori controls of the ESF within
the Ministry for Social Affairs and Employment.  

103 
Of  which  0,5  were  responsible  for  anti-fraud  controls  in  the  framework  of  Interreg  6  and  c  within  the  Ministry  for
Housing, Spatial Planning and the Environment (excluding interventions by the payment authority, the management authority and
the international programming secretariat)  ; 1 was assigned to anti-fraud controls in the framework of the ESF within the Ministry
for Social Affairs and Employment.

104 
Of which 4 were assigned to ex ante controls in the framework of EAGGF-Guidance and FIFG ; 264 to ex ante controls
in the framework of the ESF ; and 98 to ex ante controls in the framework of ERDF. N.B. in the case of the ERDF, numbers date
from 2001 given that no statistical overview has been made since.

147

                                                                                                                                                                               
105 
Of which 4 were assigned to ex post controls in the framework of EAGGF-Guidance and FIFG ;  1,5 to ex post controls
in the  framework of the ESF ; and 10 (of  which 4  within the Federal Criminal Police Office - BKA) to ex post controls in  the
framework of the ERDF.

106 

There is no staff of no agency specifically responsible for the fight against fraud.

107 
their respective personnel could, generally, also be mentioned under points 3.1. and 3.2.

NB : Because of their diverse responsibilities and their often complex tasks, the organisational units mentioned here and

108 
In  the  ex  ante  controls,  reference  is  only  made  to  the  human  resources  allocated  to  the  checks  under  Article  9  of
Regulation  438/01  to  be  conducted  by  the  paying  agencies,  excluding  the  checks  of  requests  for  assistance  and  expenditure
statements. If these types of checks are also included, as other Member States have done, the following are the staff numbers : ex
ante checks : 1585 ; ex post checks : 188 ; anti-fraud investigations : 0 ;  total for the three types of check : 1773.

The human resources assigned to the Operational Programme control bodies are indicated. Nevertheless, in a significant number
of programmes, recourse has been had to the services of external auditors (e.g. OP for the Economy, Employment, Training and
Social  Development,  Regional  OPs  for  the  Mainland,  Accessibility  and  Transport).  Also  the  IGF,  or  Inspectorate-General  for
Finance, had recourse on a supplementary basis to contracting external auditors in 2002, a solution which will continue  in 2003.

109 
measures cofinanced by EAGGF - Guidance section) ; ESF : 82,4 FTE ; Åland : 3,75.

ERDF  :  88  FTE  ;  EAGGF  +  FIFG  :  75  FTE  (data  also  include  personnel  assigned  to  controls  of  rural  development

110 
measures cofinanced by EAGGF - Guidance section) ; ESF : 9,82 FTE ; Åland : 5,70.

ERDF  :  19  FTE  ;  EAGGF  +  FIFG  :  2  FTE  (data  also  include  personnel  assigned  to  controls  of  rural  development

111 
measures cofinanced by EAGGF - Guidance section) ; ESF : 4,8 FTE ; Åland : falls under a) and b).

ERDF  :  6  FTE  ;  EAGGF  +  FIFG  :  2  FTE  (data  also  include  personnel  assigned  to  controls  of  rural  development

112 

The same team that is mentioned under point 2.

In  Sweden,  investigations  are  conducted  by  the  Economic  Crime  Authority.  However,  the  role  of  the  authority’s  officials  and
order inspectors includes detecting any irregularities and forwarding information on such irregularities to the competent authority.
For the National Labour Market Board and the ESF Council, 2 personnel years are earmarked for investigation of any suspected
irregularities. The National Labour Market Board and the ESF Council each also have a lawyer equivalent to one personnel year
for  consultation  and  investigation.  If  necessary,  the  National  Labour  Market  Board  also  reallocates  resources  from  ex-ante
controls to investigations. The National Board for Industrial and Technical Development has half a post dedicated to consultation
and investigations.

113

Notably measures :

–  for  the  coordination  of  inspections  and  inquiries  carried  out  by  different  bodies  (in  order  to  prevent  overlapping

action or lack of action on a given case), e.g. ad hoc procedures, programme of periodic meetings, etc.

–  for  the  exchange  of  information  between  departments  responsible  for  inspections  and  inquiries  (administrative
authorities,  police,  customs,  judiciary,  etc.),  including  the  existence  of  a  shared  database  and/or  arrangements  for
allowing each ministry access to the others' bases;

–  for the administrative authorities to communicate cases of presumed fraud to the judicial authorities.

114 

Notably measures :

–  for  coordination  of  the  scrutiny  of  payment  application  files  by  paying  agencies  under  Article  4  of  Regulation
386/90,  the  administrative  checks  under  Article  8(1)  of  Regulation  No  3508/92,  the  on-the-spot  checks  under
Regulation No 4045/89, and anti-fraud inquiries (in order to prevent overlapping action or lack of action on a given
case), e.g. ad hoc procedures, programme of periodic meetings, etc.;

–  for  the  exchange  of  information  between  departments  responsible  for  inspections  and  inquiries  (administrative
authorities,  police,  customs,  judiciary,  etc.),  including  the  existence  of  a  shared  database  and/or  arrangements  for
allowing each department access to the others' bases;

148

                                                                                                                                                                               
– 

in  particular,  departments  which  may  have  access  to  the  databases  provided  for  in  Regulations  Nos  3508/92  and
4045/89 and the access arrangements;

–  for the administrative authorities to communicate cases of presumed fraud to the judicial authorities.

115 
Committee have proved satisfactory.

Internal  Audit  Unit  :  no  new  arrangements  adopted.  Existing  co-ordination  methodologies  via  Departments  Audit

116 

Notably, in the area of the Structural Funds, measures :

–  for coordination of checks and inquiries relating to operations or operators receiving assistance from more than one

Fund;

–  for coordination between ex ante checks at  whatever level (management, payment, delegate or intermediary), and
between  these  checks,  the  sample  checks  under  Article  3  of  Regulation  (EC)  No  2064/97  and  Article  10  of
Regulation (EC) No 438/2001, and anti-fraud inquiries;

–  for  the  exchange  of  information  between  departments  responsible  for  the  various  checks  and  inquiries

(administrative authorities, police, judiciary, etc.);

–  for the administrative authorities to communicate cases of presumed fraud to the judicial authorities.

In the area of the cohesion fund, measures :

–  for coordination between checks on projects prior to Commission approval, checks that projects have been properly

completed and anti-fraud inquiries;

–  for  the  exchange  of  information  between  departments  responsible  for  inspections  and  inquiries  including  the

existence of a shared database and/or arrangements for allowing each department access to the others' bases;

–  for the administrative authorities to communicate cases of presumed fraud to the judicial authorities.

117

Cf. letter (Ref. DAR 2002-0686 M) dated 20 December 2002 concerning the communication of irregularities Structural

Funds Regulation (EC) No. 1681/94 and 1831/94, to OLAF.

149