- “Uh, what what are they so reliable? Databases would help. If you now have more information on the beneficiaries. And having the clear procedures is also one of the one of the preventive factors. Then, uh, I mentioned the flaws in the control system and the that is related to the low levels of detection and reporting of of potential, wrongdoings under the RF. The reporting in the IMS so in the irregularities management system was voluntary. So that means that that's why we didn't also see and receive all the possible cases. I can give an example. We have learned from Italy, for example, that at the national level, Guardia di Finanza was looking 275 cases relating to the RF possible wrongdoings under RF. Uh, we had received from Italy five cases reported. So there's a huge difference. And that was because, uh, in the RF and that is the legislative choice on that moment that there was no, uh, obligatory reporting on the irregularities, on the wrongdoings in general. But that is something that then hampers our work in analyzing the risks, analyzing the trends. When I talked about the lessons learned. So since there is the development and that development is the MFF proposal from the last July, and when we have looked at, we have contributed on the on the formulation and when we have looked at now the proposal, uh, that we can see or we can state that presents already more robust framework in the protection of financial interests of the EU in the, in the fighting, the fraud and irregularities.”
Transparency requirements of EU institutions · Discharge of EU institutions and agencies · Accounting and auditing of EU budget
- “Thank you to the question addressed to Olaf, relating on which type of the information we are using in the in our investigations. You rightly say that the Olaf is that way. Operational investigations. It is an administrative invocation. Our our measures are not so coercive than in the criminal investigations. But naturally our, uh, the in the course of the investigations, also elements of criminal offence may come and that we are then we are then um, uh, announcing those to the European Public prosecutor's office or the National National Prosecutor's offices as regards what type of the data we are using, information we are using, we are collecting facts and evidence. So that way the facts and evidence can be, uh, any type of data mostly based properly on the. With access to the administrative data. Its collecting of those as our mandates. Uh, core mandate links to the protection of Union budget. So it is all that type of the data that links to that, uh, this area and these are both, uh, the union institutions, or it can be held also in the member states. As I mentioned, the example, for example, on the customs data, uh, where we where we can get it also from the, uh, member states. Uh, we are then, uh, if we are then looking also at that part of the mandate where we, uh, carry out investigations on the serious allegations of the fraud, corruption, illegal activities on the on the EU staff members and members of the institutions. Uh, there we aim we are able then to also in the other ones, we are able also to make them on the spot checks, for example, and we are able to get the information, uh, from, uh, the persons concerned so that, as I said, we are not fully coercive like in the criminal investigation, but we do have certain powers to go and collect also data on the spot where we do then the forensic analysis on that basis. So it is the various sources of the data that we aim to get to collect these facts and evidence that we used in of making the final report on our recommendations. Thank you.”
Transparency requirements of EU institutions · Discharge of EU institutions and agencies · Accounting and auditing of EU budget
- “In practice it means mostly the RF, the recovery and reform funds. So we have gained direct experience. As I said, we have the possibility to carry out investigations, administrative investigations on all types of instruments. Member states have still, until the end of next year to finalise projects that were implement, and that influences the payment cycle. So I just mentioning it because it's relevant also on the number of cases. So we are there when the projects are also still to come. The total number of the investigations so far was 62 cases. By Bye bye bye anti-fraud office. Of these, 42 are still ongoing. So we have experienced over 20 closed cases and on 11 of those we gave the recommendations. As I mentioned, it can be financial recommendations, administrative recommendations, uh, in which those are, I think, most most relevant in these, uh, this uh, away. 17 member states are concerned. So it's not only 1 or 2. There are 17 on on where we have, uh, got detected, uh, sufficient reason to investigate. But these numbers are all moving target. As I said, it depends also on the financing cycle, how many cases there would be if we look at which types of the allegations there has been and as we have now, then some closed cases. This also shows, uh, about the, the, the certain nature of the findings. These findings are very similar to the other, other funding instruments that we are researching on the spending spending side.”
Discharge of EU institutions and agencies · Accounting and auditing of EU budget · Conditions to access EU budget
- “And that is one way of mitigating. And that's where the that's where the, the the the proposal, uh, MFA proposal comes there was questioned that is that the different and how much that's different for example with the cohesion funds and agricultural funds. Uh, I would say that both have the risk of fraud, but it requires, I think, and they're already in the cohesion funds. For example, the member state carried out a big responsibility, but I would say it's even even bigger here. So we have to really work on that level. When we look at then the underlying costs, when at the at the projects, it's then the national authorities who have to carry out the management verification. So they should find out on those verifications that the projects comply with the law. And there it's specifically mentioned that they have to detect nationally the, the, the the irregularities, including fraud, corruption, conflict of interest, double funding. And it mentions also that they need to ensure the compliance of the underlying operations with the applicable law. So it brings it there to the level to, to back there where, where they are the underlying, uh, operations. Uh. This is part of this, uh, management verification. It should be part of the systemic verifications. And it is indeed for the Commission, for the EU to look at this systemic level that they that they exist.”
Cohesion and rural funding · Agricultural funding · Conditions to access EU budget
- “Uh, and it is there where the mitigation, uh, is, is, uh, needed. What what we then require is the reporting of it to have information on that one, because otherwise we do not know. And currently I would say that we do not have the full picture, but in the that's why it's the important to have the reporting then on all the cases, I think that was it came on the in the question that how do we then know about the beneficiaries. Well that is one element that it should be now obligatory to report and to obligatory to build. The, uh, also the digital system databases that covers the final beneficiary. So we will have more information and I'm fully I'm on the same those lines that when we talk about the digitalization, it requires European level harmonized, uh, harmonized uh systems and software. It's about interoperability that we need. So I agree with this one. And we can improve, uh, that uh, partly naturally we have to then part obey also that for digitalization. Uh, that's an example in the European anti-fraud program where it's mentioned the digitalization, where we can support also the member states on, on that area. So uh. Starting there that it's a national controls. We need them reporting. And then we can actually then also check it starts from the systemic, uh, systemic level. Uh, but at the end, uh, when the when it's really implemented, Indeed. We will then need that if Olaf needs and when we are using our investigative powers.”
Interoperability requirements for digital platforms · Accounting and auditing of EU budget · Digitalization of public governance & administration
- “Thank you. Thank you for all these questions and comments, which indeed are really demonstrates the interest on this, um, formulation of the new programs. And I think that is the main basis that we should indeed take into account lessons what we know so far before we go to the go to the future. And it is in this sense that I do understand, uh, those uh, I, there were questions about the Olaf resources. First, I thank for the kind words concerning the work of the European Anti-Fraud office. Uh, I will come I will come to to that uh, maybe not as a first point, but I will I will start on these, uh, actually, what was raised by several that, uh, what is the, uh, what is the risk, uh, Related to this are our possibilities of to look on the underlying costs. So how is the link to the cost? I think that came in the many of the many of the comments. Uh. Yes, I think at one from the investigative experience, one can say indeed that if this link is looser of the disbursement of the of the of the targets and link closer to actual costs, there may be risks. That is something that we have said and we have said on the basis of our experience on the RF. Uh, the what, I would say that the risks can be mitigated. I mean, we know the we understand the simplification benefits behind the behind the performance based logic in general.”
Size of EU budget · Conditions to access EU budget
- “We are opinion that this kind of commitment to investigate and aid also the national authorities to prosecute even when needed, brings the general assurances to the public that the European Union is dedicated to defend their interests, their money in accordance with the rule of law and in accordance with the with the democratic principles. My last point. Fourth point is the element of external, uh, interference on finances. Uh, also, all of our powers, our mandate concerns the administrative investigations. These administrative investigations can be the basic work that can lead. Also on on on the path part of the organized or after the organized criminal groups that often operate from the third countries and make illicit money from the illicit traffics. Even these organized criminal groups, they are committing administrative violations, and our analytical work can, in cooperation specifically with the customs, Customs Administration of the Member States, bring us after the after the illicit trafficking on both the, for example, tobacco and a counterfeit measures and ill organized crime. If they are getting through with this kind of the work, they are actually making gains of amounts that are invested in other criminal activities, including terrorism, distorting the EU and national politics, and exercising undue influence. Thank you.”
Environmental crimes and justice · Foreign interference in Europe · Anti-money laundering regulation
- “So that's why we have to deal with the risks also in that kind of the system. And there are elements that, uh, that uh, we take into account uh, and actually and what I said, we will put quite much on this, uh, checking in the advanced level, in the ex-ante checking of the national plans, uh, and about the member states, uh, management, control and audit systems. Uh, what I, what I mentioned there, uh, first that indeed, the commission can then propose the adoption of the national, uh, plans. It's for council to decide, uh, but all the measures for the efficient control and audit systems have to be in place, uh, and have to be corrected before any payment will be made. So it is the systemic approach to check that the system in every member state, there is a sound financial management system that takes into account the cost efficiency before any payments are done. So it is first level. It is a preventive level. Uh, what what should be done. Part of this that the member States, they have to submit a cost assessments in line with the cost efficiency and and the expected economic and social impacts. So that is also there in advance. And the third mechanism to recover irregularities in the countries, they have to be placed again in advance. So this is the this is the level. That's why we say that we are putting more, uh, more, uh, expectations and obligations to member states in the first place before it comes even then to the costs.”
Size of EU budget · Discharge of EU institutions and agencies · Conditions to access EU budget
- “Uh, also that is then also then the performance based instruments. What are the advantages here in the MFF? Well, we do not have this pandemic rush this time. One can look also then all the details. And we had these lessons, the experience of the RF to build, to build in. So that way, these are the why. That's why. Uh, the proposal addresses already then concerns that I have just mentioned in the, in the previous exercise and this is indeed perceived, uh, how we could, uh, estimate in advance from the perspective of the investigative work, uh, first, uh, one in the MFF proposal, our European Anti-Fraud office, our mandate, it remains comprehensive. So our mandate covers all EU funds and programmes, whatever is the financial instrument. So also the MFF, uh, is covered. Uh, we will be able to conduct, uh, administrative investigations on the spot checks, inspections. So just to make this, make this, make us this, uh, really on the table. So whether any type of wrongdoings, fraud, corruption and any other illegal activity that would be harming union interests. So we continue. Once done, we would continue looking at it. Secondly, there's an there's a cooperation, uh uh, requirement. Everyone should, uh, work and fully cooperate in protection of union financial interests. Uh, it's not only with Olaf, but it is also with the European Court of Auditors, with the European public prosecutors in those eppo participating states and with the commission.”
Transparency requirements of EU institutions · Size of EU budget · Discharge of EU institutions and agencies
- “We'll start again. So again. Thank you, Mr. Chair. Honourable members, thank you for this invitation to Olaf. Uh, I think this is the first time for us that we are participating here at the Budget Committee. So this is a good occasion to bring out also our tasks on the prevention, design, development of the anti-fraud policies that belongs also to the European Anti-Fraud office. Besides then the investigative work, the investigative tasks that we have, uh, just a few words to to give the frame the European Anti-Fraud office. First, we are there to protect the union funds. We are after ensuring that the funds are correctly spent. We are not the prosecutors. We do not go after sanctions. We go after recovering the funds when needed. Secondly, we can. We have the mandate to investigate all EU funding instruments, whether inside the EU or outside of the EU. So where EU money goes, there Olaf goes. Thirdly, we are looking at all wrongdoings relating to the EU budget, not only criminal offences but also irregularities and non-compliances. That means that, for example, on the irregularities management system, two thirds of the cases are irregularities. So also that that element is there. And my last point is that Olaf can give recommendations. Uh, we are not there to take the final decisions on the on the spending the money or recovering, that is, for the management authorities and the authorities in charge of those funds. But here it is on this perspective that I am speaking. Let us go then. Here. So I, I base the presentation on our experience on investigating performance based instruments.”
Transparency requirements of EU institutions · Discharge of EU institutions and agencies · Accounting and auditing of EU budget
- “Thank you. And thank you to the members of the comments and questions, which mainly focused on the side of the criminal actions. From that perspective, I would raise the issue of the cooperation. I think it was already on the on the previous also, uh, panel mentioned, uh, for example, currently the EU member states have all each of them has information on their customs, uh, customs data, but they are so far not a joint access, a possibility to analyse the cross-border elements of the basis of the customs data. And this is then, uh, one point that the Olaf, the European Anti-Fraud office, is currently bringing to the states. So basically it is the administrative data. But with this one we can follow. Where for example the the individual containers are moving around in the Europe. And that is something that we can give over and cooperate within the national also law enforcement and the authorities and customs authorities that are in the countries also in that element. And in that way, we can actually then through this administrative analytical work, we make the basis for the law enforcement in cooperation to react that this is the this is the way of cooperation that we have worked from all also on the sanctions area. So how to, to, uh, help on the, uh, prohibiting the circumvention on the sanctions against Russia, for example, last year with Operation Burqa, where we aided Spanish authorities investigation of the chemical substances, which would have then actually gone to Russia but were on the list of the prohibited elements, can can apply to any of this, that type of area. So I come back to the element of the more cooperation which would allow then and which require also access to the access to the information that is there in the Member States. But that can be brought together in the European level. And I think this is the one of our added value, similarly to the Europol, which can do precisely the cross-border, the big type of the cases and help on those.”
EU-Russia relations (from March 2022) · Anti-money laundering regulation · EU law enforcement cooperation in criminal matters
- “We invest we are independent in the investigations. And that is that is not the best practice. That is a compulsory element of any, any governance to protect public budgets from the fraud we investigate thus without fear or favour. We look all the complaints that are coming to us. We issue recommendations that can be financial, disciplinary, administrative or judicial, and specifically these administrative recommendations. They allow us to address the loopholes in the administrative systems, managing the EU funds. And that is crucial that all the public administrations are fully compliant with the recommendations. It's not only the Olaf at the level of the union institutions which is working. We have a cooperation Operation network of the National Anti-Fraud Coordination Services, so-called. Offcourse that is also needed to make the basic work at the Member States level. Since much of the EU budget is run also through the shared management, my third point is to have the mandate on the possible misconduct on politicians and public figures. All our investigations, we do not make any distinction, whether it's an internal within the EU institutions or external. So there's no impunity for anyone. All allegations are investigated, even when it concerns elected politicians, political organizations and officials within the institutions. And this is again crucial to sustain the trust in public administration. There have been indeed some very high profile cases that attest the commitment of the European Anti-Fraud office in pursuing all attempts to private gain through fraud and commitment.”
Transparency requirements of EU institutions · Discharge of EU institutions and agencies · Transparency requirements for interest groups
- “For example, we are actively forward proofing all the new EU instruments before they come into effect. We are also active in shaping the anti-fraud policies. We develop the policies and the legislation, and I want to refer also to the importance of the national anti-fraud strategies that we should have when the auditing and control functions are going much to the national level in the new financing instruments. In Olaf, we do the analysis to identify the threats and vulnerabilities. So it's about the analytical capacity to To assess the situation and to identify the trends and the threats in order then to prevent them. And we are also then recommending, uh, the both the anti-fraud and prevention measures to the member states and to the EU bodies. Uh, it is continuous awareness raising via seminars, conference trainings. This sound very administrative, but it's very important for the practical functioning of the anti-fraud actors. Uh, last year alone, we provided more than 50 training sessions to the commission services agencies, external partners. We can also support our partners through the Union Anti-Fraud program, which is a comprehensive program for the measures and even equipments, uh, to combat fraud effectively. I go to the next point, which is this using our investigative mandate to ensure trust on the public administration. And, uh, since despite of the prevention. The fraud happens. And that way the investigations remain a largest core operation of our office.”
Anti-money laundering regulation · Discharge of EU institutions and agencies · Accounting and auditing of EU budget
- “And that way, this may have also influenced to the procedural issues. For example, what, uh, what I was mentioning, uh. This but naturally, one can also say that this tight timelines after the Covid, Covid, they were influencing all type of the funding instruments, not only of the performance based. So that was also the general element on this tight timing. Whatever type of the funds you are actually then using. Uh, here we would say that the key risk factor in the performance based instruments is the lack of the project cost related audit trail. So that that is something uh, and when we look at this, uh, I come then to these various elements of the irregularities where the important deficiencies also for the SRF, uh, where, where seen I would, uh, these are the issues encountered by our investigators. Uh, these are not issues that are that are exclusive to the investigations on the performance based instruments, but I would say that they are more pronounced specifically than on these short in, in the case of urgency and the tight timelines. First point is there the lack of consolidated consolidated national databases on the information on EU funded projects. So this is a general issue that contributes to the following of the other points it hampers of getting the overview on the cases and it may hamper the investigational work.”
Discharge of EU institutions and agencies · Accounting and auditing of EU budget · Conditions to access EU budget
- “So this is also something that we can, uh, say on based on our findings. So the fact of the that way reducing and harmonizing, uh, what that would imply actually the improving, uh, improving the, the, the errors there, uh, there was also a question about the conflict of interest. Who is checking? As I said, member state authorities are carrying a big responsibility as they are there. But then it is the investigative bodies. So anti-fraud or anti-fraud coordination bodies in the in the member states who are there also also to support. And it is on the guidance when I mentioned about the implementation that that is the challenges. It means that we require still a lot of implementing acts guidance and the and the the procedures manuals for procedures to build, actually the more harmonised way of implementation. And that would also then reduce the error rates caused by the by the different actually than, than practices. Uh, or for the question of Mr. Fronczak about the Polish case, I cannot comment. So that way we have in Olaf we give the uh Any investigative issues on substance are confidential. It is about the integrity of the cases. And we cannot we cannot then disclose what is going on. So I am that one is something that I cannot comment. It's part of the investigative integrity of the Olaf. Thank you.”
Transparency requirements of EU institutions · Discharge of EU institutions and agencies · Transparency requirements for interest groups
- “So that cooperation is there. We need to build that on then on the better access to data, availability of the data. As I mentioned there, we had some issues. Now, uh, we will have then the, uh, access to the data and that is then it reinforces the transparency that is required to look. Also, the investigative tasks member States will namely collect and publish more meaningful data on the financial beneficiary final beneficiaries. That was the that was the the element that will be even then public, published by the Commission on the public website in the single gateway. So that is how it correctly or concretely would come then. Uh, I mentioned this reporting, uh, lack of reporting that was there in the MFF proposal. All cases of the of the wrongdoings must be reported to the Commission's regulatory management system. So that will help us to have to make best use of the of this information. We will have a better overview and we can identify, analyse the trends. We can analyze the modus operandi and high risk areas for the prevention. So that way the obligatory reporting is an important element. The. Next point is the national control and audit systems. They exist now. But they are even more important for the future because it's for the national authorities to carry out the management verifications that I mentioned here. I draw attention to the comprehensive national anti-fraud strategies that existed, but are now a key requirement under the MFF proposal. So that way that has been strengthened.”
Transparency requirements of EU institutions · Transparency requirements for interest groups · Accounting and auditing of EU budget
- “I said that we can investigate. The issue of the recovery is something that also has to take place in practice that we cannot see before. Actually, that is happening there. I would say that there was a question about the indeed difference with the shared management, the existing ones. The recovery still is issue also with the existing instruments, so we have to improve it also with the current ones. So there is not so much. Uh, so, so that's not the major main, uh, distinctive uh matter. Then there was question about the error rates, uh, and the, the how is that something that would, uh, would be dealt with? Uh, our analysis was that part of the error rates was that there were new authorities dealing with the error. So it was a different authorities that were used to deal with the shared management. So in the future, if we are getting more the same body's member states are setting the same bodies. In our perspective, it would look that they would do less errors. So that way. So and that is naturally part of the simplification. Uh, what we also know from the research is that if there are too many union programs which have different rules, because we have in all, we have to actually know the rules of each and every program in order to compare that if the things are eligible, if there are too many programs which have all different rules, there are more errors, there are more.”
Size of EU budget · Cohesion and rural funding
- “Thank you, Madam Chair. Honourable members. I also thank you from the side of Olaf of the opportunity to speak in this hearing. Uh, our approach is here. The protection of the public budget, protection of the EU budget, namely, the misappropriation of the public finances, lead easily to the decreasing of the trust on the public Administration, and this erodes the foundations on democracy. So I will, I will. From the point of view, Olaf, I will speak about the four points. Uh, first, naturally, our general work is that to ensure that the EU funds are not misappropriated. So I will talk something about the prevention and our best practices to do so. Then I will go over to our tasks on the investigations as element or ensuring then the trust to the public administration. Thirdly, uh, on the investigative mandate, on the possible misconduct of politicians and public figures. And I'll finish with some words with external elements of interference on finances. So on this first point, we strongly believe that the prevention is better than the cure. And we play a role, a strong role in the development of the anti-fraud policies at the EU level. That way, we want to protect the EU's financial interests against the fraud and corruption and irregularities. We can support the EU institutions furthering a sound legal framework that would offer that type of protection to the EU budget and to the taxpayers money.”
Anti-money laundering regulation · Accounting and auditing of EU budget · Conditions to access EU budget