I. Introduction

Established by Decision 1999/352 (EC, ECSC, Euratom) of the European Commission in order to strengthen the means of fraud prevention, the European Anti-Fraud Office (OLAF) has been given the responsibility of conducting administrative anti-fraud investigations. The purpose of investigations is to collect the evidence needed to identify the facts so as to verify whether an irregularity, fraud, corruption or serious misconduct detrimental to the EU's financial interests has occurred. The aim of this essay is to offer an overview of the OLAF mechanism of collecting evidences and forwarding them to the prosecuting and investigative authorities of Member States in the current legal framework.

II. The Collection of Evidence by OLAF and their Probative Value

Members of OLAF undertake a variety of specific activities in order to collect evidence: inspections of premises (internal investigations), forensic examinations of computers, interviews, on-the–spot checks under Regulation 2185/96¹, controls under sectorial legislation,² fact-finding missions and written requests for information.

It is necessary for OLAF to always have the proper legal basis for opening a case. That legal basis, empowers the Office to conduct the administrative investigations. What should be remembered is that OLAF cannot act as a criminal investigative service because it is neither a police service nor a public prosecution office. Therefore the evidence may not be admissible in the national criminal proceeding, if gathered illegally by the OLAF investigator. It may also deprive the national judicial authorities of the opportunity to gather the evidence in a proper way, and therefore harm the possibility of establishing the facts. The opposing situation between the original nature of OLAF's investigations and their judicial destination may cause some difficulties. These problems pose three basic questions: (1) what should be reported to judicial authorities; (2) when should the information be reported to them; and (3) how should the information gathered by OLAF investigators be transmitted to the competent national authorities? These matters involve problems in regard to priorities, prescription, and also liaising with national and community services organised under different legal provisions; the secrecy of the criminal investigations; the need to use coercive means reserved to judicial authorities like interception of communications; the relations with disciplinary proceedings and cases before the Court of First Instance of the European Union, etc.

The inspection report should be taken into account in the final investigation report drawn up in accordance with Article 9(1), (2) and (3) of Regulation No. 1073/1999.³ Article 9(2) of Regulation 1073/99 deals with the preparation of on-the-spot checks reports. It lays down a general obligation for Commission inspectors to act in accordance with national procedural requirements: "Commission inspectors shall ensure that in drawing up their reports account is taken of the procedural requirements laid down in the national law of the Member State concerned".

The legal nature of the conclusions and recommendations of the OLAF investigations should be clarified. In the Tillack case, the European Court of First Instance ruled that OLAF’s final reports are not definitive acts with legal effects and therefore national authorities are free to decide what action is to be taken upon receipt of OLAF’s investigative findings. The duty of the Member States to cooperate in good faith implies that OLAF forwards them the information pursuant to Article 10 (2) of Regulation No. 1073/1999. National judicial authorities have to examine carefully the information and on that basis take appropriate action, if necessary by initiating legal proceedings. Such a duty does not, however, imply that the forwarded information has binding effect.⁴

This means that OLAF and the national authorities are relatively independent from each other. The final report, drawn up by OLAF following an investigation and sent to the competent judiciary in the Member States contains only recommendations. Whether a criminal investigation should be opened remains a decision to be taken by the national authorities. They are the only authorities with the power to adopt decisions affecting the legal position of those persons in relation to the recommendations of the report. In such circumstances it remains unclear whether an OLAF final case report, for example, can constitute a criminal charge. This is a matter that should be analysed under the national relevant legal provisions.

OLAF (together with national or international authorities) conducts the external investigations and forwards the information collected to a national authority for prosecution or recovery of sums misappropriated. OLAF also carries out investigations inside the EC institutions, as a result of which information may be transmitted to a disciplinary authority or to national judicial authorities for prosecution. Unlike DG COMP, OLAF does not impose sanctions but its investigations may lead to criminal proceedings in national courts.

Due to the above fact the analysis of the OLAF work depends on a variety of legal and judicial perspectives originating in the different cultures in the EU countries. This situation between OLAF and the numerous national judicial authorities may often lead to different solutions for similar cases. Whether or not this is compatible with such legal principles as the equality of treatment inside the European Union, remains uncertain.

In order to remedy this situation the creation of a European judicial authority competent for dealing with OLAF cases and for controlling the OLAF investigative work has been proposed. In this respect, and on the basis of some precedents, the European Commission drafted the Green Paper on criminal-law protection of the financial interests of the Community, which was published in December 2001.⁵ A broad discussion on the establishment of a European Prosecutor was then launched. One purpose of establishing the European Public Prosecutor for protecting the Community’s financial interests is also to remedy the weakness in the current mechanism that has been stressed several times by the European Parliament and the OLAF Supervisory Committee: the absence of a legal guarantee as regards OLAF’s investigation measures. Such a guarantee can only exist if the investigation is carried out under the control of a judicial authority.

As the debates on the feasibility of this ambitious proposal are still ongoing and the envisaged OLAF reform process is still pending, the current rules concerning the collection of evidence and its transmission to the national judicial authority must be strictly observed. It is OLAF’s duty to try to remedy, within the existing limits, the weaknesses detected. For that the day-to-day work in liaison with national judicial authorities is essential. In this respect the organisation of an informal Network of European Fraud Prosecutors has been a major achievement. As far as the ambitious scenario of the creation of the European Public Prosecutor is still not in place, the role of the Judicial and Legal Advice Unit within OLAF remains extremely useful as regards the judicial outcome of the OLAF investigations.

III. The transmission of information to national judicial authorities

An essential aspect of OLAF's work is that despite its administrative nature, investigations may concern matters liable to result in criminal proceedings. This original aspect was taken into account when OLAF was created. In order to reflect this intention, Article 2 (6) of the Commission Decision establishing the OLAF institutes the link between OLAF’s investigative function and criminal proceedings in the following terms: “The Office shall be in contact with the police and judiciary authorities”.⁶

OLAF transmits information to the competent judicial authority of the Member State when it becomes apparent that a criminal offence may have been committed. Article 10 (2) of Regulation 1073/1999 sets out the rules on compulsory forwarding of information obtained during an internal investigation to the Member State concerned. It requires that the judicial authorities of the Member States concerned be informed of matters liable to result in criminal proceedings, and that subject to the requirements of the investigation, the Member State concerned shall be informed simultaneously.⁷

Article 10 (1) of Regulation 1073/1999 establishes the rules on the discretionary forwarding of information obtained in the course of external investigations. It provides that such information may be sent to the Member States’ authorities concerned.⁸ It should be noted that whereas in case of internal investigations, OLAF has a duty to forward information to national judicial authorities, in case of external investigations the Office may do it when the conditions justify such a transmission. The Judicial and Legal Advice Unit takes the responsibility inside OLAF to advise whether or not Article 10 of the Regulation 1073/1999 should be applied.

Information gathered by OLAF during an investigation may be transmitted to national judicial authorities either during the course of an investigation - when it becomes apparent that a criminal offence has been committed - or when the investigation is completed if the investigation establishes that a criminal offence may have been committed.

Another peculiarity of OLAF’s investigative work is that Article 11 (7) of Regulation 1073/1999 requires that the Director of OLAF informs the OLAF Supervisory Committee of cases requiring information to be forwarded to the judicial authorities of a Member State. Recently, the Court of First Instance in its ruling of 8 July 2008 – Franchet and Byk v. Commission – has examined the legality of the way OLAF informed the Supervisory Committee regarding information to be forwarded to judicial authorities of the Member States. The Court held that OLAF violated the provision of Article 11 para. 7 of Regulation 1073/1999 by informing the Supervisory Committee only after it had forwarded the information to the judicial authorities, since the provision requires OLAF to inform the Committee before the transmission of information to the judicial authorities of a Member State.⁹

The Court presented the following reasons: first, it cites Article 2 of the former Rules of Procedure of the OLAF Supervisory Committee:¹⁰ “the committee shall ensure that OLAF activities are conducted in full compliance with the human rights and fundamental freedoms and in accordance with the Treaties and secondary legislation, including the Protocol on the Privileges and Immunities of the European Communities and the Staff Regulation of officials”. Furthermore, the Court considers that the Supervisory Committee should protect the rights of those who are subject to OLAF investigations and that the rule obliging OLAF to consult the Committee before it transfers information to judicial authorities has the objective of conferring rights on the persons concerned. As a consequence, the Court concludes that OLAF has violated a rule of law which confers rights to individuals.

It should be noted that the former Rules of Procedure of the OLAF Supervisory Committee have been repealed by the new rules of procedure adopted in 2006¹¹ and no provision similar to Article 2 can be found in the new text. However, in the justification of the Court, Article 2 of the Rules of Procedure of the former OLAF Supervisory Committee is not the legal basis but rather a supportive or illustrative argument. The interpretation by the Court regarding the role of the Supervisory Committee in the protection of individual freedoms derives from the Committee’s general monitoring task regarding the investigation function and is to be considered as a corollary to the independent status of OLAF. OLAF and its Supervisory Committee are now facing the challenge of introducing modifications to the current procedure applied by OLAF to inform the Committee of cases transferred to the judicial authorities of Member States.

When the transmission concerns internal investigations, the person concerned must normally be given the opportunity to present his views on all the facts which concern him, unless it is necessary to maintain absolute secrecy for the purposes of the investigation. It is necessary first to obtain the agreement of the Secretary-General of the Community organ concerned. In cases where the person concerned has been interviewed, the Secretary-General of the Community body or agency involved (or, when a Community member is personally involved, the president of the institution) will usually be informed by a note, to be sent at the time of the transmission of information to the judicial authority.

IV. The Transmission of Information Subject to Professional Secrecy in Response to Requests from National Judicial Authorities

In the course of treating a matter concerning Community law, a national court may request for OLAF to provide it with operational information or documents, subjected to professional secrecy. In the case Zwartveld and others the European Court of Justice observed that relations between Member States and the Community are governed – in accordance with Article 10 of the EC Treaty – by the principle of sincere cooperation which imposes mutual duties in this regard.¹² The Court specified that “this duty of sincere cooperation imposed on Community institutions is of particular importance vis-à-vis the judicial authorities of the Member States, who are responsible for ensuring that Community law is applied and respected in the national legal system”. It maintained that “it is incumbent upon every Community institution to give its active assistance to national legal proceedings on the infringement of Community rules by producing documents to the national court and authorizing its officials to give evidence in the national proceedings”. The only exception to the obligation to produce documents requested by a national court under such circumstances is the existence of “imperative reasons relating to the need to avoid any interference with the functioning and independence of the Community justifying its refusal to do so.” In a subsequent decision¹³ on the same matter, the Court further clarified that a refusal to produce documents may be justified on grounds connected with the protection of human rights of third parties. Accordingly, when a national court requests documents or information subject to professional secrecy in the course of national proceedings to enforce Community law, they must be provided, unless there are imperative reasons relating to the need to avoid any interference with the functioning and independence of the Communities or to the protection of rights of the third parties.

V. Conclusions

It should be noted that there is an opposing situation between the administrative nature of OLAF’s investigative work and national criminal proceedings.

The fact that there is a European investigative body, OLAF, on the one hand and numerous national judicial authorities who are competent to deal with OLAF work, on the other hand poses another difficulty. It has been repeatedly argued that the execution of these functions in the fight against fraud against the Community budget is extensively fragmented.

OLAF should limit the impact of these difficulties. However the Office cannot remedy all of them.

A possible answer to the denounced difficulties is the creation of a European Public Prosecutor.

As long as this solution is not in place, the role of the Judicial and Legal Advice Unit within OLAF remains extremely useful as regards the judicial outcome of the Office’s investigations.