Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF)
Date: 2004-02-10
Institutions: European Commission
Subjects: EU institution, European Anti-fraud Office, corruption, exchange of information, fraud, judicial inquiry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 10.2.2004 
COM(2004) 103 final 

2004/0035 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1073/1999 concerning investigations conducted  
by the European Anti-Fraud Office (OLAF) 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
  
EXPLANATORY MEMORANDUM 

Motivation and objectives 

The  various  elements  of  the  legal  framework  under  which  the  European  Anti-Fraud  Office 
(OLAF)  carries  out  its  investigations  were  adopted  by  the  legislature  in  1999.  ‘Regulation 
1073/1999  of  the  European  Parliament  and  the  Council  of  25  May  1999  concerning 
investigations  conducted  by  OLAF’  (hereinafter  Regulation  1073/1999)  constitutes  a  key 
instrument in this context, as it lays down the modalities of both internal and external OLAF 
investigations. 

In April 2003, the Commission approved a first evaluation of the Office’s activities,1 which 
also  contained  a  set  of  recommendations  aimed  at  further  enhancing  OLAF’s  operations. 
However,  subsequent  developments,  in  particular,  lessons  learned  from  the  Eurostat  affair, 
revealed a series of additional shortcomings that the Commission’s evaluation report had not 
yet addressed in a comprehensive manner. One of the additional issues identified was the need 
for more substantive and quicker exchange of information between the Commission and the 
Office. In this respect, the Commission and OLAF prepared, as a first step, a Memorandum of 
Understanding  in  order  to  ensure  a  timely  exchange  of  information  with  respect  to  OLAF 
internal investigations in the Commission2. It became clear, nevertheless, that the issue of an 
improved  information  flow  had  to  be  put  into  a  broader  context,  in  terms  of  institutional 
coverage  (with  a  view  to  ensuring  coherent  treatment  across  all  European  institutions  and 
bodies)  as  well  as  in  terms  of  substance.  In  addition,  only  a  proposal  for  legislative  action 
could provide the necessary democratic legitimacy of the rules to be established.  

At  the  end  of  2003,  the  Commission  therefore  committed  itself  to  preparing  an  appropriate 
legislative  proposal  and  to  submit  it  to  the  legislature.  This  approach  was  supported  by  the 
European  Parliament  in  its  resolution  on  the  evaluation  of  the  activities  of  the  European 
Anti-Fraud Office of 4 November 20033 as well as in its resolution of 29 January 2004 on the 
action taken by the Commission further to the discharge for the 2001 financial year4. 

In substance, the proposal has the following main objectives: 

• 

To strengthen OLAF’s operational efficiency 

To  achieve  this  objective,  provisions  are  proposed  that  will  allow  OLAF  to 
concentrate on the priorities to be fixed in its annual work programme, after opinion 
of  the  Supervisory  Committee.  It  goes  without  saying  that  the  work  programme 
should  also  take  into  account  the  views  expressed  by  the  institutions,  and  in 
particular  the  Commission,  on  the  priorities  of  anti-fraud  policies  and  activities. 
Based on the principle that action is taken as appropriate, it should be clarified that 
OLAF  has  discretion  over  whether  or  not  to  open  investigations,  and  therefore  can 
pass on to the appropriate authorities the task of following up cases that are of minor 
significance or lie outside its priority activities. 

1 
2 

3 

4 

COM(2003) 154 final. 
SEC(2003) 871 consolidated 
COM(2003) 154 – 2002/2237 (INI) 
COM(2003) 651 – C5-0536/2003 – 2003/2200 (DEC) 

2 

 
 
  
 
                                                 
More  generally,  the  procedures  for  opening  and  closing  investigation  and  the 
relationship between internal action by the European institutions and bodies, on the 
one  hand,  and  OLAF  investigations,  on  the  other,  must  be  clarified.  As  long  as 
OLAF  is  conducting  an  internal  investigation,  the  institutions,  bodies  and  agencies 
should  not  open  parallel  enquiries  (see  amendment  to  Article  1  (3)).  On  the  other 
hand,  there  should  be  mechanisms  ensuring  that  such  institutions,  bodies  and 
agencies  learn  quickly  whether  or  not  OLAF  is  conducting,  or  plans  to  open,  an 
internal investigation on a given set of facts, and can take over without delay cases in 
which OLAF decides not to intervene (see amendments to Article 5). 

The  proposed  provisions  would  also  give  the  Supervisory  Committee  increased 
oversight over long investigations: OLAF would have to report to the Committee on 
these after 12 months, justifying its decision to continue to pursue the case. For any 
extension  of  the  investigation  beyond  18  months,  the  opinion  of  the  Committee 
would be needed before OLAF decided to continue. Institutions “concerned” by an 
investigation would also have to be informed of the reasons for OLAF’s decision to 
extend  it  beyond  12  months.  Where  the  delay  caused  the  institution  particular 
concern, it would be able to seek the opinion of the Committee. 

As in the past, the decision whether or not to open an investigation will remain with 
OLAF and the Office’s functional independence will be scrupulously respected. 

• 

To improve the information flow between OLAF and the European institutions and 
bodies 

The existing provisions of Regulation 1073/1999 are vague on whether or not, and to 
what  extent,  OLAF  must  pass  on  information  to  the  institution  or  body  concerned. 
However, such information is indispensable for the European institutions to exercise 
their  political  responsibility  in  cases  involving  suspected  wrongdoing  of  their 
officials and / or necessitating administrative action on their part so as to protect the 
interests of the Union. In these cases, there should therefore be a clear obligation for 
OLAF to inform the institution or body concerned (see new paragraph 5a in Article 
6).  In  addition,  the  institution,  body  or  agency  concerned  must  also  be  informed 
when OLAF forwards information to the judicial authorities. 

Furthermore,  it  appears  appropriate  that  not  only  Member  States  but  also  the 
Commission,  as  guardian  of  the  Treaty,  may  request  the  opening  of  external 
investigations  and  is  to  be  informed  of  the  results  (see  amendments  to  Article  5(2) 
and 9(3). 

• 

To ensure fully the rights of the individuals concerned 

For the sake of legal certainty, the Commission proposes to include in the Regulation 
a comprehensive provision on procedural guarantees to be respected in internal and 
external  investigations  (see  new  Article  7a).  These  guarantees  build  on,  and 
complement,  provisions  existing  in  the  Interinstitutional  Agreement  on  internal 
investigations  (and  the  various  individual  decisions  implementing  it)  and  in  the 
future  revised  Staff  Regulations.  Following  their  incorporation  in  the  regulation 
itself, there will be a uniform set of basic guarantees applying for all investigations 
the 
conducted  by  OLAF,  be 

internal  or  external.  As  compared 

they 

to 

3 

 
 
  
 
Interinstitutional Agreement on internal investigations, the following guarantees are 
added: 

– 

– 

– 

Provisions on information to be given by OLAF prior to an interview and on 
the establishment of minutes of the interview; 

Right to be assisted by a person of choice at an interview; 

Right not to incriminate oneself. 

These  guarantees  should  be  observed  not  only  prior  to  the  preparation  of  a  final 
report  but  also  prior  to  the  transmission  of  information  to  national  authorities 
pursuant to Article 10 (see amendment to Article 10(3)). 

• 

To fill a number of gaps jeopardising the effectiveness of OLAF’s investigations 

– 

– 

– 

In  line  with  the  recommendations  contained  in  the  evaluation  report,  it  is 
proposed to clarify OLAF’s powers of investigation in the context of external 
investigations towards economic operators receiving Community funds on the 
basis  of  contract  (direct  expenditure),  thus  closing  a  legal  lacuna  which  has 
become apparent in the present rules. 

OLAF should be granted improved access to information held by the European 
institutions  and  bodies  that  is  related  to  external  investigations.  Access  to 
information  held  by  economic  operators 
internal 
investigations should be facilitated accordingly. 

the  context  of 

in 

Finally,  the  proposal  aims  at  further  strengthening  the  smooth  co-operation 
between OLAF and the Member States in the field of external investigation and 
the related information flow. 

• 

To enhance the role of the Office’s Supervisory Committee 

The  Commission  takes  the  view  that  OLAF  could  benefit  from  improved 
involvement  of  the  Office’s  Supervisory  Committee.  Therefore,  it  is  proposed  to 
strengthen  the  Committee’s  part  in  monitoring  the  application  of  Regulation 
1073/1999,  particularly  in  the  area  of  the  rights  of  the  individuals,  the  length  of 
investigations and as regards the information flow between OLAF and the European 
institutions  and  bodies.  As  regards  protection  of  individual  rights,  the  individuals 
concerned  will  now  be  able  to  seek  the  opinion  of  the  Committee.  Similarly 
concerned  institutions  will  have  this  facility  as  regards  matters  on  which  OLAF  is 
required to inform them. 

Related legal provisions 

It  should  be  noted  that  the  Commission  is  proposing,  in  parallel,  amendment  of 
Regulation 1074/1999, i.e. the legal framework for OLAF investigations carried out under the 
Community law covered by the Euratom Treaty. 

4 

 
 
  
 
Legal basis 

The  Commission  proposal  is  aimed  at  amending  existing  Regulation  1073/1999  and  is 
therefore based on Article 280 of the Treaty establishing the European Community. 

Subsidiarity and proportionality 

The  amending  Regulation  is  fully  compatible  with  the  principle  of  subsidiarity.  Like  the 
original Regulation 1073/1999, this amending Regulation in no way reduces the powers and 
responsibilities  of  the  Member  States  for  taking  measures  to  combat  fraud  affecting  the 
Communities’  financial  interests.  OLAF’s  means  of  action  in  external  investigations  are 
clarified and strengthened only on isolated points where legal loopholes have been found in 
the operation of the existing system and where only more effective intervention by OLAF can 
ensure that it can conduct reliable external investigations which can be used by the authorities 
of  the  Member  States.  In  addition  the  basic  procedural  guarantees  need  to  be  extended  to 
external investigations (new Article 7a) in order to provide a uniform legal framework for all 
OLAF  investigations,  thereby  dispelling  any  uncertainty  about  the  correct  treatment  of 
persons concerned by investigations (e.g. officials of an institution whose involvement could 
become  apparent  in  the  course  of  an  external  investigation).  As  clear  rules,  enshrined  in 
Community  legislation  itself,  are  required  on  the  above  matters  in  the  interests  of  effective 
OLAF action within a framework of legal certainty, these rules also comply with the principle 
of proportionality. 

Fundamental rights 

As confirmed by the Court of Justice (judgment of 10 July 2003, Case C-11/00 Commission v 
ECB, p. 139), Regulation 1073/99 in its original form already reflects the firm determination 
of  the  legislative  authority  to  make  any  powers  granted  to  OLAF  subject  to  full  respect  for 
human rights and fundamental freedoms. In the light of a number of questions that have arisen 
in  connection  with  OLAF’s  practices,  it  would  seem  appropriate  to  make  the  procedural 
guarantees  even  stronger  than  in  the  present  arrangements  and  to  have  them  apply  to  all 
investigations conducted by OLAF, both internal and external. Given that these investigations 
are merely preparatory and their conclusions do not themselves make formal allegations but 
may  in  some  cases  give  rise  to  administrative  or  criminal  proceedings,  these  guarantees 
respect the fundamental rights enshrined in the Charter of Fundamental Rights of the Union, 
and  even  go  beyond  the  minimum  standard  of  protection  that  would  be  required  by  the 
Charter. 

Budgetary impact 

It is proposed that the number of members of OLAF’s Supervisory Committee be increased 
from five to seven. The impact on the Community budget is further explained in the financial 
statement attached to the proposal. 

5 

 
 
  
 
2004/0035 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1073/1999 concerning investigations conducted  
by the European Anti-Fraud Office (OLAF) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 280 thereof, 

Having regard to the proposal from the Commission5, 

Having regard to the opinion of the Court of Auditors, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty6, 

Whereas: 

(1) 

(2) 

(3) 

Clear rules should be laid down which, while confirming the priority enjoyed by the 
European  Anti-fraud  Office  (‘the  Office’)  for  conducting  internal  investigations, 
establish mechanisms enabling the institutions, bodies, offices and agencies to quickly 
take back the investigation of cases in which the Office decides not to intervene. 

It  needs  to  be  made  clear  that  the  decision  to  open  an  investigation  is  left  to  the 
discretion of the Office, which may, even if there are sufficiently serious suspicions, 
decide not to open an investigation in cases of minor importance or not falling within 
the priority areas of action set annually by the Office. Such cases will then be handled, 
in  the  case  of  internal  investigations,  by  the  institution,  body,  office  or  agency 
concerned, or, in the case of external investigations, by the authorities of the Member 
States in accordance with their Community obligations and pursuant to their national 
law. 

The Office must be placed under precise obligations to inform the institutions, bodies, 
offices  and  agencies  in  good  time  of  investigations  in  progress  where  a  member, 
manager,  official  or  other  servant  is  personally  involved  in  the  matter  under 
investigation or where administrative measures may be required in order to protect the 
Union’s interests. 

5 
6 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

6 

 
 
  
 
                                                 
(4) 

(5) 

(6) 

In order to make the Office’s action more effective and in the light of the evaluation of 
its  activities  in  the  first  three  years  since  the  entry  into  force  of  Regulation 
No 1073/99,  certain  aspects  need  clarifying  and  certain  loopholes  closing  as  regards 
the  investigation  measures  the  Office  can  take  in  conducting  its  investigations.  The 
Office must be given the power to carry out the inspections and checks provided for 
by Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning 
on-the-spot checks and inspections carried out by the Commission in order to protect 
the European Communities' financial interests against fraud and other irregularities7 in 
connection  with  internal  investigations  and  in  cases  of  fraud  linked  to  contracts 
concerning  Community  funding,  and  have  access  to  information  held  by  the 
institutions,  bodies,  offices  and  agencies  of  the  Union  in  connection  with  external 
investigations.  The  Member  States  must  implement  appropriate  procedures  to  apply 
enforcement measures on economic operators who oppose inspection measures carried 
out under Regulation (Euratom, EC) No 2185/96. 

It  has  been  found  necessary,  for  the  sake  of  legal  certainty,  to  clarify  the  procedural 
guarantees  applicable  in  internal  or  external  investigations  conducted  by  the  Office, 
without prejudice to more extensive protection which may be available under the rules 
of  the  Treaties,  the  provisions  of  the  Staff  Regulations  and  any  relevant  national 
provisions,  with  due  account  for  the  fact  that  these  investigations  are  merely 
preparatory and their conclusions do not themselves make formal allegations but may 
in some cases give rise to administrative or criminal proceedings. 

The role of the Supervisory Committee should be extended in order to strengthen the 
governance  of  the  Office  while  enhancing  its  independence,  ensuring  proper 
application  by  the  Office  of  Regulation  (EC)  No  1073/99  and  in  particular 
guaranteeing  full  respect  for  individual  rights.  The  composition  of  the  Supervisory 
Committee should be adapted to this enhanced role. 

(7) 

Regulation (EC) No 1073/99 should be amended accordingly. 

(8) 

The  amendments  to  be  made  to  Regulation  No  1073/1999  in  no  way  reduce  the 
powers and responsibilities of the Member States for taking measures to combat fraud 
affecting  the  Communities’  financial  interests.  The  Office’s  means  of  action  in 
external  investigations  are  clarified  and  strengthened  only  on  isolated  points  where 
legal loopholes have been found in the existing system and where only more effective 
intervention  by  the  Office  can  ensure  that  it  can  conduct  reliable  external 
investigations which can be used by the authorities of the Member States. In addition 
procedural  guarantees  need  to  be  extended  to  external  investigations  in  order  to 
provide a uniform legal framework for all investigations conducted by the Office. This 
Regulation  therefore  complies  fully  with  the  principle  of  subsidiarity  enshrined  in 
Article  5  of  the  Treaty  and  the  principle  of  proportionality  enshrined  in  the  same 
Article. 

(9) 

This  Regulation  respects  fundamental  rights  and  complies  with  the  principles 
enshrined in particular in the Charter of Fundamental Rights of the European Union, 

7 

OJ L 292, 15.11.1996, p. 2. 

7 

 
 
  
 
                                                 
HAVE ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 1073/1999 is amended as follows: 

1) 

a) 

Article 1 is amended as follows: 

In paragraph 3, the following second subparagraph is added: 

“While the Office is conducting an  investigation  within  the  meaning of this Regulation, the 
institutions, bodies, offices and agencies shall not open an administrative investigation in the 
exercise of their administrative autonomy on the same matter.” 

b) 

The following paragraph 4 is added: 

“4. The Director of the Office shall each year, after securing the opinion of the Supervisory 
Committee,  determine  the  work  programme  and  the  investigation  policy  priorities  of  the 
Office.” 

2) 

Article 3 is replaced by the following: 

“Article 3 

External investigations 

1. The Office shall exercise the power conferred on the Commission by Regulation (Euratom, 
EC) No 2185/96 to carry out on-the-spot inspections and checks in the Member States and, in 
accordance with the cooperation agreements in force, in third countries. 

As  part  of  its  investigative  function,  the  Office  shall  carry  out  the  inspections  and  checks 
provided for in Article 9(1) of Regulation (EC, Euratom) No 2988/95 and in the sectoral rules 
referred to in Article 9(2) of that Regulation in the Member States and, in accordance with the 
cooperation agreements in force, in third countries. 

2.  With  a  view  to  establishing  that  there  has  been  fraud,  corruption  or  other  illegal  activity 
within the meaning of Article 1, in connection with a contract concerning Community funding 
or funding managed by the Communities, the Office may, in accordance with the procedures 
laid  down  by  Regulation  (Euratom,  EC)  No  2185/96,  conduct  investigations  into  economic 
operators concerned by such funding. 

3.  During  an  external  investigation  and  where  strictly  necessary  in  order  to  establish  that 
fraud, corruption or any other illegal activity within the meaning of Article 1 has occurred, the 
Office may, at its request, be given access to any relevant information held by the institutions, 
bodies,  offices  and  agencies  connected  with  the  matter  under  investigation.  Article 4(2)  and 
(4) shall apply. 

4. When the Office is in possession of information suggesting that fraud or any other illegal 
activity  within  the  meaning  of  Article  1  exists,  the  Director  of  the  Office  may  pass  on  this 
information  to  the  competent  authorities  of  the  Member States  concerned  and,  without 
prejudice  to  the  sectoral  rules  referred  to  in  paragraph 1,  these  authorities  may  conduct 
investigations in accordance with the national law applicable, in which the staff of the Office 

8 

 
 
  
 
may  take  part.  The  competent  authorities  of  the  Member  States  concerned  shall  inform  the 
Director of the Office of the findings made on the basis of this information.” 

3) 

a) 

Article 4 is amended as follows: 

Paragraph 3 is replaced by the following: 

“3. In accordance with the procedures laid down by Regulation (Euratom, EC) No 2185/96, 
the  Office  may  carry  out  on-the-spot  inspections  at  the  premises  of  economic  operators,  in 
order to obtain access to information relating to possible irregularities in connection with the 
matter under internal investigation.” 

b) 

4) 

Paragraph 5 is deleted. 

Article 5 is replaced by the following: 

“Article 5 

Opening of investigations 

1. The Office may open an investigation when sufficiently strong suspicions exist that acts of 
fraud or corruption or other illegal acts within the meaning of Article 1 have been committed. 
The decision whether or not to open an investigation shall take account of the investigation 
policy priorities set in accordance with Article 1(4). 

2. The decision to open external investigations shall be taken by the Director of the Office, 
acting  on  his  own  initiative  or  following  a  request  from  a  Member  State  concerned  or  the 
Commission. 

The  decision  to  open  internal  investigations  shall  be  taken  by  the  Director  of  the  Office, 
acting on his own initiative or following a request from the institution, body, office or agency 
within which the investigation is to be conducted. 

3.  When  an  institution,  body,  office  or  agency  is  planning  to  open  an  investigation  in  the 
exercise  of  their  administrative  autonomy,  it  shall  ask  the  Office  whether  an  internal 
investigation is being conducted into the matter. The Office shall state within 15 working days 
following  this  request  whether  an  investigation  is  open.  If  none  is  open,  paragraph  4  shall 
apply. No reply shall mean that the Office has decided not to open an investigation. 

4. The decision whether or not to open an investigation shall be taken within two months of 
receipt by OLAF of a request as referred to in paragraph 2 or 3. The institution, body, office, 
agency or Member State which made the request shall be informed of the decision.  

When  an  official  or  other  servant  of  an  institution,  body,  office  or  agency  supplies 
information direct to the Office in accordance with Article [22a] of the Staff Regulations, the 
Office shall inform that person of its decision whether or not to open an investigation into the 
matter in question. 

Reasons shall be given for any decision not to open an investigation. 

9 

 
 
  
 
5.  If  the  Office  decides,  at  its  own  discretion,  not  to  open  an  internal  investigation,  it  shall 
without delay send the evidence available to the institution, body, office or agency concerned, 
agreeing with the  institution,  body, office or agency on any  appropriate measures  to protect 
the confidentiality of the source of these items of information. 

If the Office decides, at its own discretion, not to open an external investigation, Article 3(4) 
shall apply.” 

5) 

a) 

Article 6 is amended as follows: 

The following paragraph 5a is inserted:  

“5a. As soon as investigations reveal that a member, manager, official or other servant of an 
institution, body, office or agency may be involved, or show that it might be appropriate to 
take  precautionary  or  administrative  measures  to  protect  the  interests  of  the  Union,  the 
institution,  body,  office  or  agency  concerned  shall  be  informed  of  the  investigation  in 
progress. The information supplied shall include the following: 

(a) the identity of the person or persons under investigation and a summary of the matter; 

(b) any information that may assist the institution, body, office or agency in deciding whether 
administrative measures need to be taken to protect the interests of the Union; 

(c) any special measures of confidentiality recommended. 

The  institution,  body,  office  or  agency  shall  decide  whether  any  precautionary  or 
administrative  measures  are  required,  with  due  account  being  taken  of  the  importance  of 
guaranteeing the effectiveness of the conduct of the investigation and of the specific measures 
of confidentiality recommended by the Office.” 

b) 

Paragraph 6 is replaced by the following: 

“6.  The  Member  States  shall  ensure  that  their  competent  authorities,  in  conformity  with 
national provisions, give the necessary support to enable the Office's employees to fulfil their 
task.  To  this  end  they  shall  apply,  at  the  request  of  the  Office,  appropriate  procedures  to 
submit economic operators to enforcement measures including penalty payments, in cases of 
failure to comply with the second and third paragraphs of Article 5 of Regulation (Euratom, 
EC) No 2185/96. The institutions and bodies shall ensure that their members and staff afford 
the necessary assistance to enable the Office's employees to fulfil their task; the offices and 
agencies shall ensure that their managers and staff do likewise.” 

c) 

The following paragraph 7 is added: 

“7. Where it is found that an investigation cannot be closed within 12 months after it has been 
opened, the Director of the Office may decide to extend the investigation by up to six months. 
The  decision  shall  state  the  reasons  why  the  investigation  has  to  be  extended.  The  Director 
shall send the decision to the Supervisory Committee and inform the institution, body, office 
or agency concerned of it, with the reasons on which it is based. In duly substantiated cases 
the Director may decide, after obtaining the opinion of the Supervisory Committee, to allow a 
further  extension  of  six  months.  The  Director  shall  inform  the  institution,  body,  office  or 
agency  concerned  of  his  decision,  with  the  reasons  on  which  it  is  based.  If  necessary  such 
extension decisions may be repeated on the same terms.” 

10 

 
 
  
 
6) 

The following Articles 7a and 7b are inserted: 

“Article 7a 

Procedural guarantees 

1. In its investigation the Office shall seek evidence for and against the person concerned. 

2. Whenever an investigation reveals that a member, manager, official or other servant of an 
institution, body, office or agency or an economic operator may be involved in a matter, the 
person  concerned  shall  be  informed  provided  that  this  does  not  hinder  the  conduct  of  the 
investigation. 

At all events no conclusions referring by name to a natural or legal person may be drawn on 
completion of an investigation if the person concerned has not been given the opportunity to 
comment on all matters concerning him/her; the person concerned must be given a summary 
of such matters in the invitation to the interview. The person concerned may be assisted by a 
person of his/her choice, who can in no way be involved in the matter under investigation. A 
natural person concerned shall be entitled to avoid self-incrimination. 

In cases where strict secrecy must be maintained for the sake of the investigation and where 
investigation methods have to be employed which come under a national judicial authority or, 
in  the  case  of  an  external  investigation,  a  competent  national  authority,  the  Director  of  the 
Office may decide to defer the obligation to ask the person concerned to comment. He shall 
notify in advance the Supervisory Committee, which may give an opinion. In the case of an 
internal investigation, the Director shall take that decision in agreement with the institution, 
body, office or agency to which the person concerned belongs.  

3. The invitation to any interview, whether with a witness or with a person concerned within 
the meaning of paragraph 2, must be sent with eight working days’ notice; this notice may be 
reduced with the agreement of the person to be interviewed. The invitation shall include a list 
of the rights of the person interviewed. The Office shall draw up a record of the interview and 
shall give the person interviewed access to it so that he/she may either approve the record or 
add observations. 

When, in the course of the interview, it transpires that the person interviewed may be involved 
in the facts under investigation, the procedural rules provided for in paragraph 2 shall apply at 
once. 

4. The procedural guarantees provided for in this Article shall apply without prejudice: 

(a) to more extensive protection which may be available under the rules of the Treaties and 
any relevant national provisions; 

(b) to rights and obligations under the Staff Regulations, in particular the duty of loyalty to the 
Communities. 

11 

 
 
  
 
Article 7b 

Information about decisions to close a case and take no further action  

If,  on  completion  of  an  investigation,  no  evidence  has  been  found  against  a  suspected 
member, manager, official or other servant of an institution, body, office or agency or against 
an economic operator, the investigation into that person shall be closed and no further action 
taken, by decision of the Director of the Office, who shall inform the person concerned and, 
where appropriate, the institution, body, office or agency in writing.” 

7) 

In Article 8, paragraph 3 is replaced by the following: 

“3. The Director shall ensure that the Office's employees and the other persons acting under 
his  authority  observe  the  Community  and  national  provisions  on  the  protection  of  personal 
data,  in  particular  those  provided  for  in  Regulation  (EC)  No  45/2001  of  the  European 
Parliament and of the Council of 18 December 2000.”(*) 

(*) 

OJ L 8, 12.1.2001, p. 1. 

8) 

a) 

Article 9 is amended as follows: 

Paragraph 1 is replaced by the following: 

“1.  On  completion  of  an  investigation  carried  out  by  the  Office,  the  latter  shall  draw  up  a 
report, under the authority of the Director, containing a list of all the stages in the procedure, 
the legal basis, the facts established, the offence concerned, the financial loss, if any, and the 
findings of the investigation, including the recommendations of the Director of the Office on 
the action that should be taken.” 

b) 

Paragraph 3 is replaced by the following: 

“3.  Reports  drawn  up  following  an  external  investigation  and  any  useful  related  documents 
shall be sent to the competent authorities of the Member States in question in accordance with 
the  rules  relating  to  external  investigations  and,  where  appropriate,  to  the  Commission.  The 
competent  authorities  of  the  Member  States  in  question,  in  so  far  as  is  compatible  with 
national  law,  shall  inform  the  Director  of  the  Office  of  the  action  taken  on  the  findings  of 
external investigations sent to them.” 

9) 

a) 

Article 10 is amended as follows: 

Paragraph 2 is replaced by the following: 

“2. Without prejudice to Articles 8, 9 and 11, the Director of the Office shall forward to the 
judicial  authorities  of  the  Member  State  concerned  the  information  obtained  by  the  Office 
during  internal  investigations  into  matters  liable  to  result  in  criminal  proceedings.  He  shall 
first inform the institution, body, office or agency concerned; the information shall include the 
identity  of  the  person  concerned,  a  summary  of  the  facts  established,  the  preliminary  legal 
evaluation and any financial loss. 

Before forwarding the information referred to in the first subparagraph, the Office shall give 
the  person  concerned  by  the  investigation  the  opportunity  to  comment  on  the  matters 
concerning him/her subject to the conditions and in accordance with the arrangements set out 
in the second and third subparagraphs of Article 7a(2).” 

12 

 
 
  
 
b) 

Paragraph 3 is deleted. 

10)  Article 11 is replaced by the following: 

“Article 11 

Supervisory Committee 

1.  The  Supervisory  Committee  shall  reinforce  the  Office's  independence  by  regular 
monitoring of the implementation of the investigative function. It shall ensure that individual 
rights are respected and shall take account of the need to safeguard the Union’s interests. 

The  Supervisory  Committee  shall  give  its  opinion  on  the  decisions  of  the  Director  of  the 
Office in the cases provided for in this Regulation. It shall, at the request of the Director or on 
its  own  initiative,  deliver  opinions  to  the  Director  concerning  the  activities  of  the  Office, 
without  however  interfering  with  the  conduct  of  investigations  in  progress.  It  shall  also 
deliver  opinions  concerning  procedural  guarantees,  at  the  request  of  the  persons  concerned, 
and  about  informing  the  institutions,  bodies,  offices  or  agencies  concerned,  at  their  request. 
All opinions given shall be sent to the Director of the Office and to the person requesting the 
opinion.  The  institution,  body,  office  or  agency  concerned  shall  be  given  a  copy.  The 
Committee shall, where appropriate, indicate any parts of the opinion that need to be treated 
in confidence. 

2. The Supervisory Committee shall be composed of seven independent outside persons who 
possess the qualifications required for appointment in their respective countries to senior posts 
relating  to  the  Office's  areas  of  activity,  appointed  by  common  accord  of  the  European 
Parliament, the Council and the Commission. The Committee shall set one of its members the 
task of preparing its proceedings concerning observance by the Office of individual rights. 

3. The term of office of members shall be three years and shall be renewable once. 

4. On expiry of their term of office, members shall remain in office until their appointments 
are renewed or until they are replaced. 

5.  In  carrying  out  their  duties,  they  shall  neither  seek  nor  take  instructions  from  any 
government or any institution, body, office or agency. They shall treat the files submitted to 
them and their deliberations in strict secrecy. 

6.  The  Supervisory  Committee  shall  appoint  its  chairman.  It  shall  adopt  its  own  rules  of 
procedure. It shall hold at least 10 meetings per year. It shall take its decisions by a majority 
of its members. Its secretariat shall be provided by the Commission. 

7.  The  Director  shall  keep  the  Committee  regularly  informed  of  the  Office's  activities,  its 
investigations, the results thereof and the action taken on them. The Director shall inform the 
Committee of cases where the institution, body, agency or office concerned has failed to act 
on  the  recommendations  made  by  it.  The  Director  shall  inform  the  Committee  of  cases 
requiring information to be forwarded to the judicial authorities of a Member State. 

8. The Supervisory Committee shall adopt at least one report on its activities per year which it 
shall send to the institutions. The Committee may submit reports to the European Parliament, 
the  Council,  the  Commission  and  the  Court  of  Auditors  on  the  results  of  the  Office's 
investigations and the action taken thereon.” 

13 

 
 
  
 
11)  Article 13 is replaced by the following: 

“Article 13 

Financing 

The appropriations for the Office, the total amount of which shall be entered under a special 
budget heading within the section of the general budget of the European Communities relating 
to the Commission, shall be set out in detail in an Annex to that section. 

The  posts  allocated  to  the  Office  shall  be  listed  in  an  Annex  to  the  Commission's 
establishment plan.” 

12)  Article 14 is replaced by the following: 

“Article 14 

Judicial review 

The Supervisory Committee shall be given a copy of any complaint made under Article [90a] 
of  the  Staff  Regulations  and  shall  deliver  an  opinion  to  the  Director  of  the  Office  on  such 
complaint. 

The provisions of the first subparagraph and of Articles [90a and 91] of the Staff Regulations 
shall apply by analogy to the staff of the institutions, bodies, offices and agencies who are not 
subject to the Staff Regulations.” 

This  Regulation  shall  enter  into  force  on  the  day  following  its  publication  in  the  Official 
Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

14 

 
 
  
 
LEGISLATIVE FINANCIAL STATEMENT 

Policy area(s): Fight against fraud 

Activit(y/ies): Supervision of the European Anti-Fraud Office 

TITLE  OF  ACTION:  AMENDMENT  OF  REGULATIONS  (EC)  NO  1073/1999  AND  (EURATOM) 

NO 1074/1999 

1. 

BUDGET LINE(S) + HEADING(S) 

OLAF Budget  

24.010600.03.0100 – Expenditure on the Members of the Supervisory Committee 

2. 

OVERALL FIGURES  

2.1. 

Total allocation for action (Part B): € million for commitment 

2.2. 

Period of application: 

From 2004, indeterminate duration – Members have a renewable three-year term of 
office 

2.3. 

Overall multiannual estimate of expenditure: 

(a) 

Schedule  of  commitment  appropriations/payment  appropriations 
intervention) (see point 6.1.1) 

(financial 

(€ million to three decimal places) 

Year n 

n + 1 

n + 2 

n + 3 

n + 4 

n + 5 
and 
subs. 
years 

Total 

Commitments 

Payments 

(b) 

Technical and administrative assistance and support expenditure (see point 6.1.2) 

Commitments 

Payments 

Subtotal a+b 

Commitments 

Payments 

15 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(c) 

Overall  financial  impact  of  human  resources  and  other  administrative  expenditure 
(see points 7.2 and 7.3) 

Commitments/ 
payments 

1.331 

TOTAL a+b+c 

Commitments 

Payments 

1.331 

1.331 

This corresponds to an additional requirement of €100 000. 

2.4. 

Compatibility with financial programming and financial perspective 

[X]  Proposal is compatible with existing financial programming. 

(cid:133) 

(cid:133) 

Proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  financial 
perspective. 

Proposal  may  require  application  of  the  provisions  of  the  Interinstitutional 
Agreement. 

2.5. 

Financial impact on revenue: 

[X]  Proposal  has  no  financial  implications  (involves  technical  aspects  regarding 

implementation of a measure). 

OR 

(cid:133) 

Proposal has financial impact – the effect on revenue is as follows: 

(€ million to one decimal place) 

Budget line 

Revenue 

Prior to
action 
(Year n-
1) 

Situation following implementation of action 

Year n

n+1 

n+2 

n+3 

n+4 

n+5  

a) Revenue in absolute terms 

b) Change in revenue 

 ∆ 

3. 

BUDGET CHARACTERISTICS 

Type of expenditure 

New 

EFTA 
contribution 

Contributions 
from applicant 
countries 

Heading in 
financial 
perspective 

Non-comp 

Non-diff 

NO 

NO 

NO 

No 5 

16 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

LEGAL BASIS  

Commission  Decision  1999/352/EC,  ECSC,  Euratom  of  28  April  1999  establishing  the 
European Anti-fraud Office (OLAF); Article 4. 

Parliament  and  Council  Regulations  (EC)  No  1073/1999  and  (Euratom)  No  1074/1999  of 
25 May 1999  concerning  investigations  conducted  by  the  European  Anti-Fraud  Office 
(OLAF); Article 11.  

Amendment of these Regulations: Article 280 EC and Article 203 Euratom 

5. 

DESCRIPTION AND GROUNDS 

5.1. 

Need for Community intervention 

On  2  April  2003  the  Commission  adopted  the  evaluation  report  on  the  Office’s  activities 
which  it  subsequently  sent  to  the  other  institutions  and  bodies,  with  the  Opinion  of  the 
Supervisory  Committee.  The  proposals  for  amendment  of  Regulations  (EC)  No  1073/1999 
and  (Euratom)  No  1074/1999,  which  in  particular  recommend  reinforcement  of  the 
Supervisory Committee, are the follow-up action to that report and the address by President 
Romano Prodi in the European Parliament on 18 November 2003 (on the state of the Union 
and  the  Commission’s  legislative  programme  and  work  programme  for  2004),  following  on 
from his address of 25 September 2003. 

The European Parliament, by resolution of 4 December 2003 on the Commission report, also 
supported reinforcement of the Supervisory Committee.  

In its conclusions of 22 December 2003 on the Commission report, the Council welcomed the 
Opinion of the Supervisory Committee and asked it to continue its work of securing OLAF’s 
independence,  stressing  the  importance  of  compliance  with  the  rules  on  protection  of 
fundamental rights.  

The  Supervisory  Committee,  under  the  proposals  for  amendment  of  Regulations  (EC) 
No 1073/1999  and  (Euratom)  No  1074/1999,  would  give  opinions  in  a  larger  number  of 
situations  (concerning  decisions  by  the  Director  of  the  Office,  in  particular  as  regards  new 
extensions  of  investigation  deadlines,  complaints  from  individuals,  procedural  guarantees 
requested  by  persons  concerned  and  information  for  the  institutions  and  bodies  at  their 
request). 

The effect of this reinforcement will be a corresponding rise in the appropriations needed. 

These appropriations are to cover the Committee members’ new term of office. 

5.2. 

Actions envisaged and budget intervention arrangements 

For the exercise of the new functions of the Supervisory Committee mentioned under 5.1, the 
number of members is to be raised from 5 to 7. The frequency of meetings (the Regulations 
impose at least ten each year) should rise with the foreseeable intensification of activities and 
relationships as a result of the new responsibilities.  

One  member  should  be  responsible  in  particular  for  supervising  OLAF’s  respect  for 
individual rights.  

17 

 
 
  
 
What this means in budgetary terms is: 

-  an  increase  in  the  aggregate  annual  attendance  allowance  (basis  for  calculation:  €420  per 
member and per day; two-day meeting each month; 12 meetings a year + same amounts for 
preparation of meetings); 

- increase in the aggregate annual daily-subsistence allowance (basis for calculation: €84.06 
per member and per day); 

- increase in the aggregate annual transport allowance (1st class rail or business class air fare; 
journey  from  place  of  residence  to  the  place  of  the  meeting  –  Brussels  or  Luxembourg; 
average  cost  of  €1000  euros  per  member  and  per  meeting)  and  hotel  (basis  for  calculation: 
€120.54 per member and per day); 

-  an  increase,  more  substantial  in  the  first  year,  in  certain  costs  (equipment,  particularly  IT, 
communication/telecommunications, ancillary expenditure, in particular for special missions) 
with an aggregate allocation estimated at €40 000. 

Aggregate  increase  calculated  on  this  basis  (see  point  7.3):  €100 000  (in  addition  to  the 
€200 000 in the 2004 budget). 

Certain expenditure (transport in particular) cannot be determined precisely until the place of 
origin of all the members is known. 

5.3.  Methods of implementation 

Direct management by the Commission. 

The status of members of the Committee is unchanged.  

6. 

FINANCIAL IMPACT 

6.1. 

Total financial impact on Part B - (over the entire programming period) 

No impact 

6.1.1.  Financial intervention 

Commitments (in € million to three decimal places) 

Breakdown 

Year n 

n + 1 

 n + 2 

n + 3 

n + 4 

Total 

n + 5 and 
subs. 
years  

Action 1 

Action 2 

etc. 

TOTAL 

18 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.1.2.  Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure 

(commitment appropriations) 

Year n 

n + 1 

 n + 2 

n + 3 

n + 4 

Total 

n + 5 and 
subs. 
years 

1. 
administrative assistance 

Technical 

and 

(a)  Technical 
offices 

assistance 

(b)  Other 
administrative assistance: 

technical  and 

- intra muros: 

- extra muros: 

of  which  for  construction 
and 
of 
maintenance 
computerised  management 
systems 

Subtotal 1 

2. Support expenditure 

(a) Studies 

(b) Meetings of experts 

(c) Information and 
publications 

Subtotal 2 

TOTAL 

6.2. 

Calculation  of  costs  by  measure  envisaged  in  Part  B  (over  the  entire 
programming period) 

No impact 

Breakdown  

TOTAL COST 

Commitments (in € million to three decimal places) 

Type  
of outputs 
(projects, files ) 

Number of 
outputs 

Average unit 
cost 

(total for years 
1…n)  

Total cost 

(total for years 
1…n)  

1 

2 

3 

4=(2x3) 

19 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7. 

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE  

When  the  proposals  for  amendment  of  the  Regulations  are  adopted,  the  necessary 
adjustments  will  have  to  be  made  to  transfer  the  posts,  persons  and  appropriations 
from  OLAF  to  the  Commission  (amending  budget  for  2004  or  preliminary  draft 
budget for 2005).  

7.1. 

Impact on human resources 

For the moment there is no plan to schedule additional resources for the secretariat’s 
new  administrative  tasks.  Eight  posts  are  currently  assigned  to  the  Supervisory 
Committee  (1  A.2,  1  A.5,  1  B.3,  1  C.3,  1A.5T  and  3A.7T)  +  1  auxiliary.  The 
theoretical impact of the increased workload corresponding to the Committee’s new 
tasks is estimated at three posts from within existing resources. 

Description of tasks deriving from the 
action 

Types of post 

Staff to be assigned to management of the 
action using existing and/or additional 
resources 

Number of 
permanent posts 

Number of 
temporary posts 

Total 

Officials 
temporary staff 

or 

A 

B 

C 

2 

1 

1 

Other human resources  1 

Total 

5 

4 

4 

6 

1 

1 

1 

9 

According  to the proposals  for amendment  of  Regulations  (EC)  No  1073/1999  and 
(Euratom)  No  1074/1999  (Article  11(6)),  the  Committee’s  secretariat  is  to  be 
attached  administratively  to  the  Commission.  The  OLAF  and  Commission 
establishment plans will have to be adjusted accordingly.  

7.2. 

Overall financial impact of human resources 

See 7.1. 

No  increase  in  staff,  but  Supervisory  Committee  posts  and  appropriations  to  be 
transferred to the Commission. 

Type of human resources 

Amount (€) 

Method of calculation *  

Officials 
Temporary staff 

Other human resources 

459 000 
492 000 

50 000 

(specify budget line) 

Total 

1 001 000 

The amounts are total expenditure for twelve months. 

Real cost for the three posts occupied + 
average  cost  for  the  5  vacant  posts  + 
operating expenditure (rent, electricity, 
cleaning, security, supplies) 
Real cost + operating expenditure (rent, 
electricity, cleaning, security, supplies) 

20 

 
 
  
 
 
 
 
 
 
 
 
7.3. 

Other administrative expenditure deriving from the action 

Budget line 

(number and heading) 
24.010600.030100 – Expenditure on the Members of the 
Supervisory Committee 

It  is  proposed  that  this  line  (€200 000  entered  in  2004) 
be  transferred  from  OLAF  to  the  Commission  (specific 
line in area 24)  

Amount € 

300 000 € 

Method of calculation 

This represents the €200 000 entered in 
the  2004  budget  plus  the  €100 000 
connected  with  the  reinforcement  of 
the Supervisory Committee. 

See 5.2  

24.010600.010102 Outside staff and other management 
expenditure (missions) 

30 000 

Missions for the secretariat of the 
Supervisory Committee 

Total 

330 000 € 

The amounts are total expenditure for 12 months. 

I. 

II. 

Annual total (7.2 + 7.3) 

Duration of action 

III. 

Total cost of action (I x II) 

€1 331 000 

years 

€ 

This corresponds to an additional requirement of €100 000. 

8. 

FOLLOW-UP AND EVALUATION 

8.1. 

Follow-up arrangements 

In  its  conclusions  of  22  December  2003  the  Council  asked  the  Commission  to  amplify  the 
evaluation report on the activities of OLAF by the end of 2004. The Council states that it will 
evaluate the situation of OLAF in the light of future reports. 

8.2. 

Arrangements and schedule for evaluation 

An external management audit of the Office is planned (the Council conclusions mentioned at 
5.1 and 8.1 refer to a two-year time-frame). 

The Supervisory Committee reports on its activities each year. 

9. 

ANTI-FRAUD MEASURES 

Implementation in accordance with the new Financial Regulation. 

Application of Regulation (EC) No 1073/1999. 

21