REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Final evaluation of the Regulation (EU) No 250/2014 of the European Parliament and of the Council of 26 February 2014 establishing a programme to promote activities in the field of the protection of the financial interests of the European Union (Hercule III programme) and repealing Decision No 804/2004/EC
Date: 2021-12-16
Institutions: European Anti-Fraud Office, European Commission
Subjects: EU financing, EU programme, corruption, cross-border cooperation, fraud, fraud against the EU, illicit trade, money laundering

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.12.2021  COM(2021) 809 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Final evaluation of the Regulation (EU) No 250/2014 of the European Parliament and of the Council of 26 February 2014 establishing a programme to promote activities in the field of the protection of the financial interests of the European Union (Hercule III programme) and repealing Decision No 804/2004/EC {SWD(2021) 386 final}  
 
 
1. 

INTRODUCTION 

Fraud and related illegal activities such as corruption, money laundering and illicit trade 
can pose a serious problem to the European Union (EU) and to the Member States, and 
they  can  undermine  both  EU  and  national  finances.  This  is  all  the  more  pressing  at  a 
moment when, partially in response to the pandemic, the EU’s total spending reaches an 
unprecedented  volume  of  around  EUR 1.8  trillion  for  the  EU’s  multiannual  budget  for 
2021-2027.  Efficient  and  proper  spending  of  the  EU  budget,  including  in  the  Member 
States,  is  key  to  maintain  public  (and  taxpayers’)  trust  and  to  boost  the  strength  and 
added-value  of  European  integration.  Conversely,  a  high  prevalence  of  fraud  can  stifle 
economic  growth  and  undermine  the  broader  economic  recovery.  Reinforcing  our  joint 
defences  against  fraud,  both  internal  and  external,  is  thus  an  integral  component  of 
strengthening the EU’s resilience. 

Article 325 of the Treaty of the Functioning of the European Union (TFEU)  makes it a 
joint obligation of the Member States and the EU to protect the EU’s financial interests. 
At EU level, the anti-fraud landscape has recently undergone major changes with the new 
European Public Prosecutor’s Office (EPPO) becoming operational in June 2021, and the 
the  OLAF  Regulation1  strengthening 
recent  revision  of 
the  effectiveness  of 
administrative  investigations  carried  out  by  the  European  Anti-Fraud  Office  (OLAF). 
The EU’s substantive criminal law framework was also reinforced with the Directive on 
the fight against fraud to the Union's financial interests by means of criminal law.2  

There is a general recognition that in parallel, the EU should also support Member States 
in their work to protect its financial interests. After all, the majority of cases of fraud and 
irregularities are detected, investigated and prosecuted at national level.  

During the last EU budget period spanning 2014-2020, the Hercule III  programme was 
the  EU’s  dedicated  facility  to  provide  such  support.  The  programme,  which  was 
administered by OLAF within the Commission, was established by Regulation (EU) No 
250/20143  (‘the  Regulation’).  The  programme’s  general  objective  was  to  protect  the 
EU’s  financial  interests,  thus  enhancing  the  competitiveness  of  the  economy  and 
protecting  taxpayers'  money.  The  specific  objective  was  to  prevent  and  combat  fraud, 
corruption and any other illegal activity affecting the EU’s financial interests. Action to 

1   Regulation (EU, Euratom) 2020/2223 of the European Parliament and of the Council of 23 December 
2020  amending  Regulation  (EU,  Euratom)  No  883/2013,  as  regards  cooperation  with  the  European 
Public Prosecutor’s Office and the effectiveness of the European Anti-Fraud Office investigations, OJ 
L 437 of 28 December 2020. 

2   Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight 
against fraud to the Union's financial interests by means of criminal law, OJ L 198 of 28 July 2017. 

3   Regulation  (EU)  No  250/2014  of  the  European  Parliament  and  of  the  Council  of  26  February  2014 
establishing a programme to promote activities in the field of the protection of the financial interests of 
the European Union (Hercule III programme) and repealing Decision No 804/2004/EC, OJ L 84 of 20 
March 2014. 

1 

 
 
                                                 
protect the financial interests covered the whole expenditure side of the EU budget. On 
the revenue side, action focused on traditional own resources. 

Article 13(2)(b) of the Regulation mandates the Commission to carry out an evaluation of 
the  programme.  The  accompanying  staff  working  document  contains  the  detailed 
findings  of  the  evaluation  of  the  Hercule  III  programme,  and  makes  a  number  of 
recommendations based on that analysis. 

2.  THE HERCULE III PROGRAMME 

The  Hercule  III  programme  is  a  targeted  programme,  the  EU’s  main  programme  to 
protect the EU’s financial interests.  

During preparations for the last multiannual budget, the irregularities and suspected fraud 
cases  detected  during  implementation  of  the  budget  and  reported  by  Member  States4 
under  Article  325  TFEU  showed  that  the  detrimental  financial  impact  throughout  the 
years remained at levels requiring the EU to continue enforcing its obligation to protect 
the EU budget through a programme such as Hercule. To reach that objective, the budget 
for Hercule III amounted to EUR 104.9 million over the period 2014-2020. The eligible 
beneficiaries  of  the  programme  were  national  or  regional  administrations  of  Member 
States and research bodies, as well as educational institutes and non-profit entities set up 
and operational in a Member State for at least one year. 

The programme was implemented on the basis of annual cycles that carried out the work 
programmes adopted by the Commission. Hercule III provided financial support for:  

i. 

ii. 

iii. 

technical assistance (at least 70% of the programme's budget) for measures such 
as  the  purchase  of  technical  equipment  and  information  technology  tools,  the 
support  for  cross-border  cooperation  and  joint  operations,  staff  exchanges,  and 
the  development  and  provision  of  access  to  databases  for  Member  States  and 
OLAF,  
training  (maximum  25%  of  the  programme's  budget)  for  measures  such  as 
conferences and seminars to enable cross-border exchange of experience and best 
practice,  digital  forensics  training,  and  the  development  of  high-profile  research 
activities and studies, and  
any other action that falls within the programmes’ remit (maximum 5% of the 
budget).  

The  programme  provided  financial  support  in  the  form  of  grants,  public  procurement 
contracts and reimbursement of the costs incurred by the participants to the activities. A 
major  change  from  Hercule  II  to  Hercule  III  was  the  increase  in  the  co-financing  rate 
under technical assistance from 50% (Hercule II) to 80% (Hercule III) of the eligible cost 
of technical assistance. 

4   Annual reports under Article 325 of the Treaty on the Functioning of the EU on the protection of the 
Union's financial interests (PIF Reports) are available at: https://ec.europa.eu/anti-fraud/reports_en. 

2 

 
                                                 
In November 2021, OLAF had registered 280 finalised projects out of 336 applications 
(83.3%). For a project to be considered finalised, the technical and financial reports have 
to be submitted and the final payment made. 

3.  THE FINAL EVALUATION 

Under Article 13 of the Regulation and the Commission’s Better Regulation Guidelines, 
the evaluation assessed the programme against five criteria:  

 
 
  effectiveness 

relevance of all programme objectives;  
internal and external coherence of the programme with other areas of EU action; 

in  attaining 

its  objectives  and  expected  results 

including 

sustainability;  

  efficient use of resources, and  
 

the programme’s EU added value. 

The  time  period  covered  by  the  evaluation  is  the  seven-year  programming  period  for 
Hercule III, from 1 January 2014 to 31 December 2020.  

The evaluation methodology  

In carrying out the final evaluation, the Commission primarily drew on a study prepared 
by  an  external  contractor5.  It  also  drew  on  the  impact  assessment  carried  out  in 
preparation for the legislative proposal for the  programme, the Commission’s mid-term 
evaluation6, the annual work programmes of Hercule III, and the annual overviews on the 
implementation  of  the  programme  prepared  by  the  Commission  and  annexed  to  the 
Commission  annual  report  on  the  protection  of  the  EU's  financial  interests  (‘PIF 
Reports’).  An  inter-service  steering  group  (ISSG)  of  relevant  Commission  departments 
was  set  up  to  support  the  evaluation  process.  It  reviewed  the  roadmap,  the  terms  of 
reference for the external contract, and the inception and final reports.  

The  scope  of  the  final  evaluation  covers  all  measures  funded  under  the  Hercule  III 
programme  as  well  as  preparatory  and  implementing  work  carried  out  by  the 
stakeholders  for  these  measures.  It  also  covers  applications  for  grants  submitted  by 
potential beneficiaries that were rejected.  

The external study was based mostly on primary data sources provided in response to the 
evaluation  questions  collected  via  (i)  interviews  of  EU  and  national  civil  servants,  and 
beneficiaries  of  measures  funded  under  the  programme,  and  (ii)  online  surveys  with 

5   The 

by 
https://data.europa.eu/doi/10.2784/62582. 

RAMBOLL 

study 

Management 

Consulting 

is 

available 

at 

6   Report from the Commission to the European Parliament and the Council COM(2018) 3 final - Mid-
Term evaluation of the Regulation (EU) No 250/2014 of the European Parliament and of the Council 
of 26 February 2014 establishing a programme to promote activities in the field of the protection of the 
financial  interests  of  the  European  Union  (Hercule  III  programme)  and  repealing  Decision  No 
804/2004/EC, 10.1.2018. 

3 

 
                                                 
beneficiaries,  unsuccessful  applicants,  participants 
the 
programme,  as  well  as  users  of  services  procured  under  the  programme.  This  research 
included  16  case  studies  in  eight  Member  States.  It  also  used  secondary  data,  such  as 
publicly  available  sources  (e.g.  the  Hercule  III  annual  work  programmes),  applications 
submitted for grants and contracts and final reports submitted by beneficiaries.  

in  events  funded  under 

4.  MAIN FINDINGS OF THE FINAL EVALUATION  

Overall,  based  on  the  evidence  collected,  the  evaluation  found  that  the  Hercule  III 
programme had successfully met its general, specific and operational objectives. Echoing 
the views of many beneficiaries, the evaluation also  concluded that it was  necessary to 
maintain  a  funding  programme  supporting  them  in  their  work  to  protect  the  EU’s 
financial interests, which contributes also to the protection of national financial interests. 
The beneficiaries considered that the results obtained and the programme’s overall output 
largely  outweighed  the  required  investment  in  time,  effort  and  cost  to  participate.  The 
participants also considered the recognition and reputation linked to their participation in 
the programme as a valuable asset.  

4.1.  Relevance 

The programme was seen as highly relevant in addressing the main problems faced by 
stakeholders  in  protecting  the  EU’s  financial  interests,  confirmed  by  a  large  majority 
(80%)  of  applicants  who  responded  to  the  survey.  They  considered  the  programme 
relevant  because  it  complemented  the  work  carried  out  at  Member  State  level.  The 
evaluation  confirmed  that  the  drivers  underpinning  the  Commission’s  proposal  for  a 
regulation  (2011)  establishing  the  Hercule  III  programme  and  the  findings  of  the  mid-
term  evaluation  (2018)  remain  valid  today,  in  particular  the  occurrence  of  fraud  to  the 
European Union’s financial interests.  

Evidence from interviews with stakeholders and 16 case studies demonstrated that, while 
most  Member  States  have  their  own  national  anti-fraud  strategies,  the  programme 
provided additional support that could  be acquired  fast,  enabling  national authorities to 
reach  their  national  objectives  more  rapidly.  Interviews  with  representatives  of  EU 
institutions confirmed this finding, adding that the support was even more relevant where 
the Member States had recently cut the available funding for national agencies.  

During  the  evaluation,  stakeholders  provided  suggestions  to  further  improve  the 
programme. They felt it could focus more on expenditure fraud and be more reactive to 
emerging  threats  areas  such  as  food  fraud,  misuse  of  drones  and  cybercrime.  Some 
stakeholders  highlighted  that  for  the  support  to  remain  relevant  in  future  years,  it  was 
important to continuously adapt the focus of the programme to the ever-changing fraud 
landscape, in particular to new threats and new technologies. 

4 

 
4.2.  Effectiveness 

The  evaluation  concluded  that  the  programme  was  effective  in  its  technical  assistance 
and training by contributing to its stated objectives. Stakeholders highlighted for example 
that  the  funded  activities  minimised  risk  in  key  areas  of  cigarette  smuggling  and 
counterfeiting,  improved  the  prevention  and  investigation  of  fraud  cases,  facilitated  the 
coordination  of  anti-fraud  activities,  exchange  of  information,  knowledge,  experience 
and  best  practice,  as  well  as  developing  high-profile  research  activities,  improved 
cooperation  between  practitioners  and  academics,  and  raised  awareness  of  magistrates 
and legal practitioners in the field of criminal law through conferences. 

There  was  a  broad  consensus  among  different  stakeholders  that  technical  assistance 
measures  (such  as  financing  the  purchase  of  scanners  to  detect  smuggled  goods,  or 
funding training in digital forensics) provided support to the law enforcement authorities 
in the Member States in their work to combat illegal cross-border activities.  

The purchase of modern equipment also produced a number of positive effects that are 
not  among  the  primary  programme  objectives,  but  nevertheless  benefit  national  law 
enforcement agencies. For example, the equipment purchased to carry out border checks 
had  proven  useful  in  detecting  illegal  drugs  or  weapons.  This  proved  also  useful  in 
seizing illegal substances or artefacts that do not primarily undermine the EU’s financial 
interests but pose a more general security threat to the Member States. The acquisition of 
modern technical  equipment  also  increased the health and safety of customs  and police 
officers  as  it  lowered  the  risk  of  exposure  to  radiation.  Lastly,  modern  communication 
and surveillance equipment helped monitor criminal activities while staying undetected. 

The evaluation demonstrated that the measures funded by the programme are sustainable, 
i.e.  they  produced  effects  that  lasted  beyond  the  programme  completion.  The 
sustainability  of  technical  assistance  depends  on  the  nature  and  costs  of  the  purchased 
equipment.  As  long  as  the  equipment  is  used  to  combat  fraud,  it  can  have  long-lasting 
effects.  Training  and  conferences  also  produced  some  sustainable  effects,  in  particular 
when participants shared knowledge and experience at their workplaces after the event. 

The  evaluation  also  indicated  aspects  that  may  hamper  the  effectiveness  of  the 
programme.  The  lack  of  resources  in  Member  State  administrations  and  subsequent 
inability  to  cope  with  the  administrative  requirements  of  the  programme  can  lead  to 
fewer  applications.  Making  more  guidance  available  to  applicants  could  be  a  key  to 
remedy this issue. 

4.3.  Efficiency 

Overall, the evaluation showed that the programme is efficient, both in terms of training 
and  technical  assistance.  Weighing  up  the  costs  and  benefits  of  the  programme,  most 
stakeholders were of the view that the benefits outweighed  the costs (92% of replies to 
the applicants’ survey).   

5 

 
Some applicants suggested lightening the work involved in the application and reporting 
processes, for instance by reducing redundancies in the application form or reducing the 
volume of information requested. They also suggested that it would be useful to provide 
further  guidance  and  support  to  better  understand  the  award  criteria  and  best  practices. 
This  would  help  avoid  common  mistakes  and  reduce  the  time  it  takes  to  prepare 
applications. 

4.4.  Coherence 

The  evaluation  demonstrated  that  the  internal  and  external  coherence  of  the 
programme  was  satisfactory.  Specifically  on  internal  coherence,  the  consultant’s  study 
did  not  identify  any  overlaps  between  activities  funded  by  Hercule  III.  Some  activities 
funded  under  technical  assistance  and  training  may  appear  similar  but  they  target 
different  audiences  and  have  different  objectives.  For  instance,  training  under  the 
technical  assistance pillar focused on providing information  on the use of the technical 
equipment  purchased  whereas  training  under  the  training  pillar  focused  on  raising 
awareness  and  exchanging  best  practice.  Therefore,  the  activities  eligible  for  funding 
under the programme were strongly complementary. 

The  Commission  used  its  internal  consultation  processes  to  ensure  external  coherence 
between the programme and other Commission spending programmes, in particular at the 
stages  of  preparing  the  annual  work  programmes  and  selecting  grant  applications.  The 
Commission prevented overlaps between Hercule III and the Fiscalis 2020, the Customs 
2020  and  the  Justice  programme  by  ensuring  that  the  programmes  pursued  separate 
objectives, as laid down in the legislation. Any residual potential overlaps were avoided 
by providing detail in each annual work programmes, including on the annual objectives, 
type of activities, participants and beneficiaries to prevent duplication.  

the  Anti-fraud  Information  System  (AFIS).  Anticipating 

The evaluation also identified a high degree of complementarity between the programme 
and 
the 
Commission  decided  to  integrate  AFIS  into  the  EU’s  anti-fraud  programme,  the 
successor  of  Hercule  III  for  the  next  budget  period  2021-2027.  Lastly,  the  programme 
leaves  scope  for  Member  States  to  target  their  requests  in  areas  highlighted  in  the 
multiple action  plans adopted by  the  EU on anti-fraud, home affairs and customs.  This 
creates additional synergies and promotes coherence with other areas of EU action.  

this  finding, 

4.5.  EU added value 

The  evaluation  demonstrated  the  programme’s  EU  added  value.  Stakeholders  almost 
unanimously  considered  that  action  taken  under  the  programme  had  significant  added 
value compared to what could have been achieved at national and regional levels without 
the  programme.  In  particular,  respondents  found  the  programme  to  provide  additional 
value in two areas. Firstly, it acted as a driver and enabler to counter and reduce the risk 
of  fraud  for  the  EU’s  finances.  This  was  particularly  the  case  for  technical  assistance 
measures where, according to beneficiaries, the limits set under national budgets would 

6 

 
not have enabled them to make large investments in technical equipment. In this context, 
several  beneficiaries  and  unsuccessful  applicants  mentioned  that  being  associated  with 
the programme provides a higher degree of legitimacy to their work at national level. 

Secondly,  respondents  perceived  the  programme  to  be  a  factor  facilitating  cooperation 
between the Member States through conferences, training and database tools. Such cross-
border cooperation would have been much more difficult to achieve at national level. 

5.  CONCLUSIONS AND RECOMMENDATIONS 

The evaluation concluded that the programme remains relevant. It is coherent, effective, 
efficient and provides EU added value. However, it also identified a number of current 
and foreseeable challenges which the successor programme of Hercule III, the EU’s new 
anti-fraud programme (UAFP) must address.  

Like  the  Hercule  III  programme,  the  UAFP  should  also  continuously  adjust  to  new 
developments  in  the  fraud  landscape,  such  as  technological  developments  and  the 
increasing complexity of criminal activities, notably cross-border crime. This applies in 
equal measure to fraud on both the expenditure and the revenue side of the budget, where 
attempts  to  avoid  tax  and  customs  duties  pose  serious  challenges  to  the  fight  against 
fraud.  The  Commission  should  continue  to  consult  Member  States  when  preparing  the 
new UAFP work programmes to ensure maximum relevance of the support offered.  

The benefits of the programme clearly outweighed the costs incurred by the beneficiaries. 
However,  differences  in  the  administrative  capacity  of  Member  State  administrations 
pose a challenge that could be overcome by providing more guidance for applicants and, 
where possible, by simplifying the procedures. 

The  programme  proved  to  be  internally  and  externally  coherent  but  it  is  important  to 
maintain the internal consultation and coordination procedures to avoid any overlap. For 
example,  the  Commission’s  first  implementing  decision7  under  the  UAFP  already 
explicitly addresses any potential overlap between action under the UAFP and the newly 
established instrument for financial support for customs control equipment8. 

The programme demonstrated clear EU added value. However, despite the good evidence 
base available to  the external  consultant,  it  remains  a  challenge to  assess the impact  of 
the  programme,  especially  in  quantitative  terms,  under  the  monitoring  and  evaluation 
framework applicable to Hercule III. Under the new multiannual budget, the Commission 
is  developing  a  cross-cutting  evaluation  and  monitoring  framework  applicable  to  all 

7   Commission  Implementing  Decision  COM(2021)  5338  final  of  23.7.2021  on  the  financing  of  the 

Union Anti-Fraud Programme and the adoption of the work programme for 2021, 23.7.2021. 

8   Regulation  (EU)  2021/1077  of  the  European  Parliament  and  of  the  Council  of  24  June  2021 
establishing, as part of the Integrated Border Management Fund, the instrument for financial support 
for customs control equipment, OJ L 234, 2 July 2021, p. 1. 

7 

 
                                                 
spending  programmes.  In  addition,  the  UAFP  could  improve  the  current  framework  by 
developing an appropriate number of indicators specific to eligible projects. It would also 
be  useful  to  set  up  a  centralised  database  of  implemented  projects.  This  would  help 
collate  and  store  data  on  implementation  of  the  UAFP  and  would  aid  the  subsequent 
evaluation stage. 

6.  THE WAY FORWARD 

It is reassuring that the conclusions and recommendations presented in this report and, in 
more  detail,  in  the  accompanying  staff  working  document  are  to  a  good  extent  already 
reflected  in  the  UAFP.  In  that  sense,  this  evaluation  lends  good  support  to  the 
Commission’s current practice.  

The UAFP has two main objectives. First, to protect the EU’s financial interests. Second, 
to support mutual assistance between Member States authorities and cooperation between 
them  and  the  Commission  to  ensure  the  correct  application  of  the  law  on  customs  and 
agricultural  matters.  In  addition  to  these  objectives,  what  this  evaluation  has  shown  is 
that protecting the EU’s financial interests often has positive side effects – for the fight 
against  drugs,  in  combating  the  shadow  economy  and  money  laundering,  for  public 
security and even for the environment and the health of officers carrying out checks. 

The new programme combines the activities of the former Hercule  III programme with 
the financing of the AFIS and the Irregularities Management System (IMS). This merger 
of  operational  activities  is  expected  to  generate  synergies  and  to  allow  for  a  better 
strategic alignment of these previously separate strands of work. 

More generally, the UAFP responds to today’s challenges in several ways:  

First of all, as more and more criminal activities  are run in cyberspace, the programme 
supports Member States in strengthening their digital capacity to detect and investigate 
fraud.  To  this  end,  the  UAFP  supports  the  purchase  of  advanced  analytical  tools, 
databases and provides expert training on digital forensics. A stronger focus on data and 
analysis  also  is  fully  aligned  with  the  new  Commission  anti-fraud  strategy  (CAFS), 
which promotes the deployment of advanced analytical tools. 

Secondly,  considering  especially  the  increase  in  EU  expenditure  under  the  new  budget 
and NextGenerationEU, the UAFP shifts the bulk of funding from the revenue side to 
fighting  fraud  against  expenditure,  including  under  the  Recovery  and  Resilience 
Facility.  This  change  of  paradigm  is  amplified  by  the  fact  that  the  EU  has  now 
established  the  new  programme  for  the  purchase,  upgrade  and  maintenance  of  customs 
control equipment (CCE). With a budget of around EUR 1 billion for the current seven-
year period, this new instrument will free up some resources in the UAFP since CCE had 
absorbed  a  substantial  share  of  the  technical  assistance  provided  under  the  Hercule  III 
programme. 

8 

 
Looking  at  the  findings  of  this  evaluation,  the  Commission  considers  that  the  UAFP 
provides a solid base to support Member States and other eligible entities in tackling the 
ever-evolving fraud landscape. It also takes into account the new institutional setting at 
European level with the launch of the EPPO.  

At  a  more  operational  level,  when  summarising  the  key  findings  of  the  evaluation  in 
terms of recommendations for the future, two aspects stand out: first, the desire voiced by 
stakeholders to receive more detailed guidance from the Commission when they prepare 
an application. This is something the Commission, with OLAF as lead service, will look 
into when launching the next calls for proposals in 2022 and beyond, mindful of the need 
for the process to give fair and equal chances to all applicants. Second, the findings of the 
evaluation  invite  the  Commission  to  reflect  again  on  the  delicate  balance  between  the 
strong wish to minimise the administrative burden on applicants and the need  for more 
information readily available for monitoring and ex-post assessments. This balance is not 
easy to strike, and the Commission will look into ways to further fine-tune its reporting 
tools to this end.  

9