OLAF, the European Anti-Fraud Office, published yesterday its Annual Report. This report shows that during 2011, OLAF handled 463 investigations and cases into suspected crimes against different sectors of the EU budget, including 122 related to EU staff, 89 to the agricultural sector, 67 to external aid, 64 to structural funds, 57 customs fraud and 28 tobacco smuggling and counterfeit goods.
Olaf receives information related to fraud, corruption and criminal activities from public sector sources including EU institutions and Member States and from private sources including citizens and private sector. According to OLAF’s Director-General Giovanni Kessler “During 2011, the number of incoming information items originating from private sources continued to increase” however “there was a decrease in the information coming from public sector sources.” Olaf is particularly worried about "This decrease in information from public authorities". In fact, from the 1046 information items received by Olaf in 2011 only 54 came from member states. According to the Euobserver “Kessler noted public sources are becoming more reluctant to denounce fraud because of an inherit fear of being labelled corrupt at the EU-level.”
OLAF’s investigations resulted in €691.4 million, from the misuse of EU funds, recovered to EU budget in 2011. This represent a substantial increase compared to 2010 where €67.9 million was recovered. According to Giovanni Kessler “This was an exceptional amount due to particular circumstances during the year.” Whilst in 2010 the total amount recovered from structural funds was €32.9 million in 2011 such amount increases to €524.7 million. This includes an amount of EUR 389 million related to a single fraud case in southern Italy under programmes for the financing of roadworks. There were also high recoveries in agricultural funds, which increase from €11.4 in 2010 to €34 million and customs fraud that increased from €7.6 million recovered in 2010 to €113.7 million.
It is important to recall that the European Court of Auditors (ECA) for the 17th year in a row has not signed the EU accounts. The Court has been unable, year after year, to grant a positive unqualified statement of assurance on the EU budget as a whole. The EU spending continues to be affected by “material error.” According to ECA the EU’s Cohesion Policy, which represents almost a third of the budget, continues to be the area most affected by errors, in fact 49% of payments to projects were affected by error. According to the EUObserver, Giovanni Kessler said, referring to structural funds, “The mechanism of control on how the money is spent is the weakest and where we see most of the problems”.
Olaf also handled cases of serious professional misconduct in the EU institutions, bodies and agencies. Olaf recovered €100,000 of funds from EU staff but in 2011 this amount increase to €600,000. The report contains a sample of cases studies including a case concerning an EU official employed as a project manager in a European Commission delegation of accepting bribes from contractors.
The Olaf’s recommendations have resulted in legal action in Member States. The report noted that “Member State courts issued a cumulative 511 years of prison sentences in 2011, acting upon conclusions and recommendations from OLAF investigations” and imposed financial penalties amounting €154.7 million. However, following “analysis of judicial actions taken by the Member States following OLAF investigations in the period 2006-11”, Olaf noted “that the number of cases in which no judicial decision has yet been taken is relatively high, at 54 %.” Moreover, “More than half of the 471 actions considered by the judicial authorities were dismissed before trial, 42 % of the actions resulted in a conviction and 7% resulted in acquittals.”
