Margarete Hofmann, Director of Policy at the European Anti-Fraud Office:
The EU Prosecutor's office and OLAF need close ties
While the EPPO and the Member States will share competence, our Office will retain its full mandate for both fraudulent and non-fraudulent irregularities
5 May, 2017
Close-up: Margarete Hofmann started her legal career in the Bavarian judiciary before taking assignments in the German Federal Ministry of Justice in Bonn, Brussels (Justice Counsellor at the German Permanent Representation to the EU) and later in Berlin. Margarete moved to Brussels in 1999 to work in the Cabinet of Commissioner Schreyer, responsible for EU budget, budget discharge, audit and anti-fraud. She joined the European Anti-Fraud Office (OLAF) in late 2004. Since July 2012, she is Policy Director, responsible for Policy Development, Fraud Prevention, Reporting & Analysis, Inter-Institutional and External Relations, Customs & Tobacco Anti-Fraud Policy, the Hercule programme and the Anti-Fraud Information System (AFIS).
- Ms Hofmann, two weeks ago 16 Member States notified the Council, Commission and the European Parliament of their intention to launch an enhanced cooperation to establish a European Public Prosecutor's Office (EPPO). What does it mean for the European Anti-Fraud Office?
- At the moment, judicial cooperation in Europe is still very much fragmented along national borders. This slows down and sometimes even hinders investigations, particularly into transnational cases of fraud.
As a single office across the Union, the European Public Prosecutor's Office (EPPO) would address shortcomings in the current enforcement system as regards cooperation of prosecution services and other authorities and the ability to investigate across borders. Setting up an EPPO is, in our view, necessary and it is what we have been working towards for years.
At the same time, the EPPO will now be established by means of enhanced cooperation, meaning fewer Member States than initially foreseen will participate. Although the exact number of participating Member States is not fully clear yet, a maximum number should participate for the EPPO to deliver its expected added value.
OLAF will continue to conduct its investigations in non-participating Member States, and send judicial recommendations to the Member States where offences related to the protection of the European Union's financial interests are detected, as well as in the participating Member States in situations where the EPPO does not open an investigation.
With the EPPO in place, OLAF and the EPPO will need to develop a close relationship of cooperation and complementarity, involving the exchange of information on potential cases as well as the support of OLAF to the EPPO in its investigations.
- If established, the European Public Prosecutor’s Office will have the exclusive competence for investigating, prosecuting and bringing to judgment crimes against the EU budget, and OLAF will no longer carry out investigations into EU fraud or other crimes affecting the financial interests of the EU. What will remain in OLAF’s portfolio then?
- What you describe was the case in the initial European Commission proposal, but is no longer the case in the text that the Member States are working on. The EPPO will no longer have exclusive competence for offences affecting the EU's financial interests. Rather, the EPPO and the Member States will share competence for these offences. Many of these cases will therefore remain with the national prosecution services.
As a result of this change in the EPPO model, the mandate of OLAF will no longer exclude in the future suspected cases of fraud. OLAF will retain its full mandate for both fraudulent and non-fraudulent irregularities. However, OLAF will not start investigations in cases where there is already an EPPO investigation, as it is the case today when national criminal investigations are on-going. Additionally and to avoid duplication of work, if OLAF were to have a suspicion of such fraud or crimes, it will report this to the EPPO at the earliest possible stage. OLAF will also provide assistance to the EPPO on request, as it already does today to national prosecutors. This will facilitate a speedier investigation process and help to avoid duplications of administrative and criminal investigations into the same facts, thereby increasing the chances of a successful prosecution.
In cases where the EPPO does not act on a given case under its competence, because of restrictions to the exercise of its competence or as a result of its shared competence with Member States, OLAF will continue conducting its investigations as it does today.
Certain areas of OLAF's current activity will not be affected by the EPPO. These include non-fraudulent irregularities affecting the EU's financial interests, and serious misconduct or crimes committed by EU staff without a financial impact, as well as our work coordinating investigations carried out by national authorities.
In short, OLAF's mandate will not change and we do not expect a significant change to our caseload either. The cooperation with the EPPO should, however, allow both OLAF and the EPPO to increase their added value and to increase the rate of indictments after an OLAF investigation.
- Just to be clear, will OLAF keep its previous functions partly, just for the countries that don’t like the idea of an EU prosecutor?
- As I have mentioned before, OLAF will retain its full mandate both in participating and non-participating Member States. In an EPPO established via enhanced cooperation, OLAF will remain the only EU body with an investigative mandate for protecting the EU's financial interests in the Member States not participating in the EPPO.
Also, in cross-border cases involving both participating and non-participating Member States, OLAF will be the only body capable of conducting an investigation involving all Member States concerned.
Therefore, OLAF will play a prominent role to ensure an equivalent level of protection in EPPO participating and non-participating Member States.
- Almost every month, with the active participation of OLAF, millions of “cheap white” and counterfeit cigarettes are stopped from entering the black market across Europe. As this illicit trade in tobacco products is becoming such a huge problem, how does OLAF intend to deal with this challenge further?
- Indeed, it is estimated that cigarette smuggling costs national and EU budgets more than €10bn annually in lost public revenue. OLAF addresses this problem both from an operational point of view under its investigative mandate, and from a policy-making one.
On the operational side, OLAF carries out investigations into tobacco smuggling and coordinates actions of national authorities. In 2015, for example, 619 million cigarettes were seized with the help of OLAF around Europe. In December 2016, OLAF helped Spanish customs uncover 9 million cheap whites hidden under a load of wheelchairs at the Barcelona harbour. We also coordinate Joint Customs Operations. These are targeted actions by the customs authorities of several EU countries to combat smuggling either in risky areas or on trade routes identified as problematic.
OLAF's operational expertise also feeds into its policy work, as OLAF supports the European Commission in developing EU tobacco anti-fraud policies. For example, by adopting the EU Tobacco Products Directive and the international Protocol to Eliminate Illicit Trade in Tobacco Products (FCTC Protocol), the EU has strengthened its legislative framework to fight the illicit trade in tobacco products.
- Five years ago OLAF transformed its structure and doubled its capacity. What is the reason for this impressive outcome?
- A major reorganisation of OLAF took place in 2012, initiated by our Director-General, Giovanni Kessler. The reorganisation aimed to improve the overall efficiency of our investigative activity and prompt the Office to use resources optimally. We wanted to serve European citizens better, contributing to an increased protection of the EU’s financial interests.
Four years later, we believe we have a lot to show for it. OLAF has increased the number of concluded investigations by 93%, while also delivering 83% more recommendations than in the period before its reorganisation. The more efficient processing of incoming information of potential investigative interest - the selection process - has also led to the opening of 86% more investigations than before 2012.
- Concerning the information OLAF receives by Member States on fraud cases, isn’t it strange that some national authorities send less warnings than the private sources?
- The amount of information on possible fraud cases sent to OLAF, especially by national authorities, certainly gives an indication of the level of commitment of Member States. Whilst OLAF encourages countries to send allegations of possible fraud with a European dimension in particular, some national authorities still forward very little information of investigative interest to OLAF. There are reasons which may explain the discrepancy across the EU, the level and nature of EU expenditure in certain Member States for example.
- And also, how does OLAF treat the anonymous signals for frauds?
- OLAF receives fraud reports via its online fraud notification system (https://fns.olaf.europa. eu/). Fraud reports can also be submitted anonymously, and we urge all persons who witness what they believe are cases of fraud with EU funds to let us know! OLAF analyses the incoming information of potential investigative interest according to standard procedures. Our experts evaluate this information according to certain criteria, in particular to find out whether it falls within OLAF's competence to act, and whether there is sufficient suspicion of fraud, corruption or any illegal activity affecting the EU's financial interests for OLAF to open a case.
- How is OLAF office reacting to the issues raised by the Panama papers and the Bahamas leaks revelations about the use of tax havens by some politicians and business people in Europe?
- OLAF has been active on this issue, and we were able to use our forensic and analytical capabilities which are some of the best in Europe. We checked the Panama Papers public database in order to uncover any fraud against the EU budget or serious misconduct of EU staff and members of EU institutions, and also to identify any systemic vulnerability in European Commission programmes, with a view to correcting it.
The initial analytical exercise undertaken by OLAF resulted in 17 real matches. Our analysis, together with information also related to the Panama Papers but obtained from other sources, led to OLAF opening six investigations.
- In its last annual report, OLAF recommends that the €888m of EU funds inappropriately spent by Member States be recovered to the EU budget. Do you think that this year the amounts will be similar?
- I would rather not make any assumptions. The amount recommended by OLAF for recovery each year relates to the particular investigations concluded by OLAF during that year. It does not mean fraud in the EU has gone up or down that year. Some OLAF cases are larger in scale, concerning higher value projects, with a higher financial impact. In such cases, the recommendations for financial recovery made by OLAF may also be higher. In other years, OLAF may conclude investigations of a smaller scale, leading to lower financial recommendations.
I would also point out that OLAF also issues recommendations for judicial, disciplinary or administrative follow-up, and not just financial recommendations.