European Commission issues its annual report on the protection of the Community’s financial interests and the fight against fraud, July 2002

The European Commission issued its third annual report on the protection of the Communities' financial interests and the fight against fraud on 2 July 2002.

The report is based on the work of the EU Anti Fraud Office (OLAF) which is responsible for combating fraud against the European Union budget. It was established in June 1999 in the wake of the fall of the Santer Commission and the annual report is based on Article 280 of the EC treaty, which makes the Community and the Member States jointly responsible for the fight against fraud and any other illegal activities which could harm the Community's financial interests.

The report, for the year 2001, deals with three aspects of the European Commission's fight against fraud:

• The Community's legislative and regulatory activity in 2001 (Title 1)

• Legislative measures taken by the Member States to implement article 280 of the Treaty and measures regarding the co-ordination of the Member States' services in charge of the fight against fraud (Title 2)

• Statistical overview of the results of activities undertaken by the Member States and by the European Commission in 2001 to protect the EC financial interests and to combat fraud (Title 3)

The report notes that there has been considerable progress in the field of legislation in 2001 such as the publication of the European Commission's Green Paper on a European Public Prosecutor, which would be responsible for co-ordinating investigations and prosecution of offences against EU financial interests, and a proposal by the European Commission for two Regulations related to combating the counterfeiting of the euro and a Directive. The Directive on the prevention of the use of the financial system for the purposes of money laundering was also adopted in 2001 and the Financial Regulation, which was adopted on 25 June 2002, includes specific anti-fraud provisions.

The European Commission also developed its internal measures used for combating fraud in 2001 with the establishment of a new 'Intelligent Directorate' designed to help define priorities and strategy in the fight against fraud. A 'Magistrates Unit' was also set up to incorporate the administrative and judicial dimensions of investigations.

In terms of the efforts made by Member States in the fight against fraud the report cites three examples of where the European Commission has worked with the Member States to combat fraud such as the possible abuse of the system of milk quotas in Spain. The report also mentions the work of the European Anti Fraud Office (OLAF) to prepare for enlargement. For example, OLAF, in conjunction with Poland established a PHARE project to establish an inter-ministerial anti fraud structure. The project began in January 2001 and due to its success similar projects are planned for other candidate countries.

The statistical overview suggests that the levels of fraud and other irregularities reported by the Member States decreased in 2001. However the number of cases of suspected fraud as investigated by OLAF rose in 2001 with a total of 318 new cases. Over the same period, OLAF closed 663 investigations for which the total impact was €42.5 million. Many of these cases concerned the fight against corruption and internal policies since these were the priorities of OLAF in 2001.

Presenting the report, Michaele Schreyer, European Commissioner for the Budget, said:

'We are making progress in implementing our action plan for the protection of the EU's financial interests. Cooperation between OLAF and the Member States has allowed us to achieve real impact on the ground on a high number of important measures. However, there is clearly still large scope for improving the tools at our disposal, both in terms of common definitions of fraud and irregularities, the legal instruments to use in the fight against fraud and the concrete cooperation mechanisms'.

Links:

European Commission:

• 02.07.02: Fighting against fraud: The Commission reports on achievements in 2001 by the Commission and the Member States [IP/02/986]
• 11.12.01: Green Paper on the establishment of a European Public Prosecutor for the criminal-law protection of the Community's financial interests [IP/01/1794]

European Anti Fraud Office (OLAF):

• Protection of the Financial Interests of the Communities and the Fight Against Fraud - Annual Report 2001
• Green Book on a European Public Prosecutor

European Sources Online: In Focus

• Commission streamlines anti-fraud policy, 29 June 2000

European Sources Online: Topic Guide:

• The budget of the European Union

Helen Bower
Compiled: Wednesday, 3 July 2002

The European Commission issued its third annual report on the protection of the Communities' financial interests and the fight against fraud on 2 July 2002.