I.  Introduction: Context of the Evaluation of Regulation 883/2013

In 1999, the Commission established the European Anti-Fraud Office – OLAF – to give a deterrent answer to fraud, corruption, and other illegal activities detrimental to the financial interests of the Union.¹ OLAF’s primary instrument to provide such deterrence is its ability to conduct administrative investigations in the Union’s institutions, bodies, offices, and agencies (during internal investigations) and in the Member States (during external investigations).² Initially OLAF conducted its investigations under the overarching framework of Regulations 1073/1999 and 1074/1999: the former covered the EC; the latter covered Euratom.³ After a number of evaluations (which identified a series of drawbacks),⁴ long negotiations, and three legislative proposals,⁵ Regulation 883/2013 repealed and replaced both Regulations and currently constitutes the umbrella under which OLAF carries out its investigations.⁶

The aim of Regulation 883/2013 was to repair a number of shortcomings found in the above-mentioned evaluations. The specific objectives of Regulation 883/2013 are the following: (i) to strengthen the protection of procedural guarantees and fundamental rights;⁷ (ii) to enhance the relationship and cooperation between OLAF and the Member States, the Union’s institutions, bodies, offices, and agencies as well as between OLAF and third countries and international organisations;⁸ (iii) to improve the efficiency, effectiveness, and accountability of OLAF while simultaneously ensuring its independence;⁹ and (iv) to reinforce existing governance structures.¹⁰

To achieve these objectives, Regulation 883/2013 implemented several changes compared to the previous legal framework. In order to strengthen the legal position of persons concerned and witnesses, a number of procedural safeguards, such as the privilege against self-incrimination and the right to be assisted by a person of choice, were incorporated.¹¹ Regulation 883/2013 also addressed the need that OLAF better cooperate with its partners at the EU, national, and international levels by providing for rules facilitating the exchange of information,¹² the establishment of anti-fraud coordination services (AFCOS) in the EU Member States,¹³ and the signing (and revision) of administrative cooperation agreements.¹⁴ Efficiency and effectiveness were realized by including an obligation incumbent on the Director-General of OLAF to devise more detailed rules on investigation procedures,¹⁵ introducing criteria for the selection and opening of investigations¹⁶ as well as the consolidation and extension of OLAF’s investigative tools and powers.¹⁷ Lastly, the Regulation of 2013 sought to improve OLAF’s governance and control mechanisms by clarifying the monitoring role and function of OLAF’s supervisory committee,¹⁸ clearly circumscribing the Director-General’s mandate,¹⁹ and by providing a political forum in which views between OLAF and the Union’s institutions on OLAF’s policies can be exchanged and discussed.²⁰

To assess whether the shortcomings identified in the previous regulations were remedied and to ascertain the continuing relevance of OLAF’s current investigative framework – particularly in light of the rapidly evolving field of EU anti-fraud policy²¹ – Regulation 883/2013 obliges the Commission to carry out an evaluation of its application by October 2017.²² The Evaluation Roadmap set the wheels in motion in late 2015 and clarified the scope of the evaluation.²³ The time period covered by the evaluation is 1 October 2013 until the end of 2016. The output consists of a report from the Commission on the evaluation of Regulation 883/2013,²⁴ supported by a Commission Staff Working Document²⁵ and an opinion of the supervisory committee.²⁶ An external consultancy company provided important input for these reports.²⁷ One of the key evaluation criteria (in addition to the Commission’s standard criteria of efficiency, coherence, and relevance) featured in the evaluation is the effectiveness of Regulation 883/2013.²⁸ In particular, the evaluation assesses whether and, if so, how Regulation 883/2013 has contributed to the achievement of the aims of the Regulation in practice and repaired the shortcomings identified.²⁹

As the evaluation has now drawn to a close, this article will focus on the evaluation’s key findings with regard to the effectiveness of Regulation 883/2013, paying particular attention to the interaction with national law, to the effectiveness of external, autonomous³⁰ investigations, and to the exchange of information between OLAF and Member State authorities prior to and during investigations. The evaluation devotes ample attention to these topics, as they will be an important component of any proposal wishing to amend the current Regulation 883/2013 or of a far-reaching overhaul of OLAF’s investigatory framework.³¹ These topics are also the subject of academic interest, particularly – but certainly not only³² – in two comparative studies being carried out by an international group of researchers from a host of EU universities (headed by Utrecht University)³³ under the Hercule III programme to promote activities in the field of the protection of the financial interests of the European Union.³⁴ As a result, this article further draws on the insights of both studies by reflecting on points that may be of use in the follow-up to the evaluation.

Against this backdrop, the article proceeds as follows. First, it will discuss the evaluation’s key findings, especially the shortcomings identified in relation to the effectiveness of the conduct of investigations (section II.1). The crucial issue of the exchange of information between OLAF and Member State authorities will be discussed under section II.2. Second, this article touches on the findings of the mentioned two academic studies under the Hercule III programme with the aim of offering input on further efforts to improve OLAF’s investigative legal framework in the near future (section III). At the end, the article draws conclusions summarising the analysed results (section IV).

II.  Key Findings of the Evaluation

1.  Conducting Investigations

The extension of investigative tools and powers by Regulation 883/2013 allows OLAF to deliver on its mandate with concrete results.³⁵ OLAF’s annual reports demonstrate a clear upward trend both in investigations opened and concluded and in recommendations issued.³⁶ Notwithstanding the positive impact of Regulation 883/2013 on OLAF’s investigative output, the evaluation reveals the limitations of the powers and tools available to OLAF. These limitations are largely due to the references to national law in OLAF’s legal framework: OLAF does not operate on the basis of an exhaustive EU code of procedure. Instead, for the scope, content, and enforceability of its powers, OLAF depends largely on national provisions.³⁷

During on-the-spot inspections – one of OLAF’s crucial investigative powers – OLAF staff must act, subject to the Union law applicable, in compliance with the rules and practices of the Member States concerned.³⁸ In conformity with national law, competent authorities of the Member States must give OLAF the necessary assistance to enforce such checks.³⁹ References to national law are also prevalent in digital forensic operations. While OLAF is endowed with the power to gain access to digital data, such access is subject to the same conditions as those for national administrative inspectors and must comply with national law.⁴⁰

The dependency of OLAF’s powers and their enforceability on national law – in conjunction with persistent procedural differences between these national laws – results in jurisdictional fragmentation of OLAF’s investigatory tools and competences during external investigations. Such fragmentation hampers the effectiveness of OLAF investigations, as it can delay investigations and be detrimental to their quality. Ultimately, such fragmentation also negatively affects OLAF’s ability to ensure equivalent protection of the Union’s financial interests.⁴¹

2.  Exchange of information between OLAF and the Member States

As OLAF relies heavily on Member States when carrying out its investigations, the creation of Anti-Fraud Coordination Services (hereinafter AFCOS) has proven to be a clear improvement with regard to the exchange of information and the strengthening of ties between OLAF and the Member States.⁴² However, while Member States are obliged by Regulation 883/2013 to establish an AFCOS,⁴³ the regulation is silent on the structure, powers, and functioning of these AFCOS. The diversity of the services across Member States results in an uneven level of support, which can, in turn, inhibit cooperation and the exchange of information between OLAF and AFCOS.⁴⁴

With regard to the exchange of information between OLAF and other administrative and judicial authorities, the evaluation points to more serious shortcomings in the current investigative framework. While administrative and judicial authorities are under an obligation to exchange information with OLAF, they only have to do so within the limits provided for by national law.⁴⁵ These references to national law, like the investigative powers and tools touched on above, result in a fragmented landscape in which there are great divergences between Member States that can impede the exchange of information and the effective conduct of investigations.⁴⁶

III.  Input on Further Efforts: Results and Recommendations of the Hercule III Studies

Is there a need to recalibrate and improve the OLAF legal framework for the (i) gathering and (ii) exchange of information related to suspicions of irregularities or fraud affecting the EU’s financial interests? This question is the subject of analysis in two Hercule III projects (being) carried out by an international group of researchers under the lead of Utrecht University.⁴⁷ In response to this question, the two projects compare the OLAF framework with the frameworks of three other European law enforcement authorities – Directorate-General for Competition (DG COMP), the European Central Bank (ECB), and the European Securities and Markets Authority (ESMA) – and their respective modes of interaction with six national legal orders. The studies are premised on the problematic position of OLAF in the gathering and exchange of information due to the jurisdictionally fragmented framework of OLAF investigations.⁴⁸ The findings of the evaluation of Regulation 883/2013 (see section II above) mirror the truth of this premise.

The studies show that, due to their design, all four authorities are integrated in – and to a certain extent dependent on – national legal systems. At the same time, however, European law enforcement authorities are, as a result of their Union-wide mandate, required to ensure a level European playing field. Divergent national laws can (and most likely will) thereby impede the effectiveness of EU-authorities’ operations. Where an EU authority can act autonomously, i.e., where it can perform acts by itself based on Union law, that authority has the advantage of operating on a level European playing field, but only if the authority has been endowed with truly European powers. Autonomous action necessitates a great degree of both procedural and substantive harmonisation. A good example of an authority that can act autonomously is DG COMP under Regulation 1/2003. Article 20 of Regulation 1/2003, for instance, grants the Commission the power to conduct all necessary inspections of undertakings and associations of undertakings.⁴⁹ ESMA and ECB also have powers granted to them by EU law, which allows them to carry out inspections. A uniform and European legal framework defines these powers and their enforceability. While it also remains true that these authorities do not have coercive powers at their disposal to enforce their competences, they can impose fines in case of non-cooperation and/or ensure that national authorities are obliged to provide assistance in the enforcement of their powers.⁵⁰

The situation is radically different for OLAF. While OLAF is also vested with the power to conduct on-the-spot inspections, it is completely dependent on national law for both the scope and enforceability of this competence. For instance, in the Netherlands, no use can be made of criminal law powers to carry out on-the-spot inspections for administrative investigations which OLAF does. The sealing off of premises falls outside the scope of an on-the-spot inspection, and private dwellings may not be entered and/or searched.⁵¹ In contrast, the Italian means of cooperation with OLAF do allow the use of criminal powers; premises may be sealed off and private dwellings may be entered and searched under certain conditions.⁵² Therefore, while OLAF’s powers have formally been drawn up in the guise of an EU regulation, the instruments OLAF uses do not work autonomously and uniformly. The regulations indicate only that the information listed therein should in the end be made available to OLAF via powers laid down in national law.⁵³ For this reason, OLAF’s legal framework is significantly different from those of other EU law enforcement authorities. The result can be “nothing other than a conflict between its mandate and the instruments necessary to execute it.”⁵⁴

The first study, on investigatory powers and safeguards, answers the question as to whether OLAF’s legal framework requires recalibration in the affirmative. It concludes that there are possible strategies to enhance OLAF’s legal framework for conducting investigations. One such strategy would be to define, in a regulation, a clear set of autonomous EU-level investigative powers, without thereby referring to national law. This would allow OLAF to conduct autonomous investigations in the territories of all the Member States without the drawback of jurisdictional fragmentation. To enforce its power, OLAF could, like DG COMP, be granted the competence to impose fines in case of non-cooperation in order to ensure the effectiveness of inspections and, ultimately, provide for better and equivalent protection of the Union’s financial interests.⁵⁵

References to national law are not only problematic when it comes to OLAF’s powers and their enforceability. OLAF’s framework for the exchange of information is plagued by similar troubles. Here we also find that OLAF is dependent on national law to obtain a strong information position. The research currently being conducted under the direction of Utrecht University aims to discover whether there is also a need to recalibrate OLAF’s framework for the exchange of information. Whether this leads to the same conclusions remains to be seen.

IV.  Conclusion

Regulation 883/2013 was adopted to step up the fight against fraud, corruption, and any other illegal activity affecting the financial interests of the Union.⁵⁶ The Regulation intended to do so by correcting a number of shortcomings in its older legal framework, which stemmed from the Office’s inception in 1999. In particular, it aimed to make OLAF more effective by facilitating the exchange of information between OLAF and the Member States and by consolidating and extending OLAF’s investigative powers. An evaluation by the Commission intended to assess whether the shortcoming identified had been resolved by Regulation 883/2013. The evaluation concluded that the changes introduced by Regulation 883/2013 allowed OLAF to deliver concrete results in the protection of the Union’s financial interests. With regard to external investigations, however, the evaluation confirmed the well documented⁵⁷ effectiveness problems that emerge from the framework’s various references to national law, particularly in relation to the performance of investigations and the exchange of information: OLAF’s dependence on national law results in jurisdictional fragmentation of its investigations. These problems are not new to Regulation 883/2013 but date primarily back to OLAF’s creation in 1999. Should an overhaul of OLAF’s investigatory framework be considered in 2018, the academic studies conducted or currently (being) conducted under the umbrella of the Hercule III programme, which emphasise the need for a common Union-wide framework for external investigations, will surely provide useful points of reflection.