EU anti‐fraud enforcement: overcoming obstacles

Publication Date05 Jan 2010
DOIhttps://doi.org/10.1108/13590791011009383
Pages81-99
AuthorSimone White
SubjectAccounting & finance
SECTION II. FOCUS ON ENFORCEMENT
EU anti-fraud enforcement:
overcoming obstacles
Simone White
OLAF, European Commission, Bruxelles, Belgium and
Institute of Advanced Legal Studies, London, UK
Abstract
Purpose – The purpose of this paper is to analyse the extent to which the (changing) European Union
(EU) constitutional context impacts on the investigation of fraud affecting the EU budget, with a focus
on fraud affecting expenditure.
Design/methodology/approach – The paper is based on legal issues perceived by a European law
specialist working within OLAF. The legal framework and several cases are used to illustrate various
difficulties in operational work. First of all, the paper argues that cooperation between EU bodies such
as Europol, Eurojust, the European Judicial Network and European Anti-Fraud Office (OLAF) is not
yet optimal. Nor is the legal framework for OLAF’s work. Internal blockages exist. This is illustrated
in relation to a number of operational issues.
Findings – The paper argues that much has been achieved through secondary legislation in the
criminal law sphere under the Treaty of Nice but real difficulties continue at the operational level. As
far as operational cooperation, effectiveness and defence rights are concerned, some of the legal
problems and internal blockages identified here can be removed regardless of the eventual situation in
relation to the establishment of a European Public Prosecutor.
Research limitations/implications – The paper focuses on legal problems and blockages
experienced by OLAF investigators in the present legal framework.
Practical implications – The paper should be of interest to anyone engaging in the study of
anti-fraud enforcement and to investigators and prosecutors.
Originality/value – The paper provides an insight into European Commission anti-fraud
enforcement.
Keywords Fraud, EuropeanUnion, Law, Whistleblowing, Expenditure
Paper type Research paper
A focus on practicalities
The European Union’s (EU’s) Treaty of Nice frames its anti-fraud activities. Article 280
European Commission (EC) lays down the general conditions for the protection of the
financial interests of the community. Both the commission and the Member States have
roles to play – close and regular cooperation is envisaged:
1. The Community and the Member States shall counter fraud and any other illegal activities
affecting the financial interests of the Community through measures to be taken in
accordance with this Article, which shall act as a deterrent and be such as to afford effective
protection in the Member States. 2. Member states shall take the same measures to counter
fraud affecting the financial interests of the community as they take to counter fraud affecting
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
The author works in OLAF but the views expressed are her own and do not represent those of
the EC, her employer.
EU anti-fraud
enforcement
81
Journal of Financial Crime
Vol. 17 No. 1, 2010
pp. 81-99
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590791011009383
their own financial interests. 3. Without prejudice to other provisions of this Treaty, the
Member States shall coordinate their action aimed at protecting the financial interests of the
Community against fraud. To this end they shall organise together the Commission, close and
regular cooperation between the competent authorities [...]
Anti-fraud activities are the joint responsibility of the commission and of the EU
Member States. Effective cooperation is a key factor in the investigation and
prosecution of related offences.
One characteristic of the legal space concerning the fight against fraud is that a large
number of related criminal law instruments[1] have been adopted at EU level, which
place new obligations on the Member States. These instruments were adopted by
unanimity – so adoption has tended to take several years. The European Arrest
Warrant[2] and the European Evidence Warrant[3] form part of this group. The use of
the European Arrest Warrant has been closely monitored but there is little evidence of
use in cases of fraud or corruption to the detriment of the EU budget (Council of the
European Union, 2009a, b; Davidson, 2009). However, the clear division between first
(EC) and third pillar (EU) has, however, started to erode and the European Court of
Justice ruled that criminal law measures could be adopted under the first pillar (White,
2006). This was a strong signal that perhaps it was high time to review the legal
framework and to “do away” with the division between third pillar EU matters and first
pillar EC matters (White, 2008), as envisaged in the Lisbon Treaty. That treaty also
envisages a European Public Prosecutor (EPP) (to be discussed at end of this paper).
Some practical issues are now highlighted, which illustrate lacunae in the legal
framework, lack of cooperation or blockages. It is a moot point whether any of the
problems identified here could be resolved by the creation of new EU bodies only. The
EU will need to ensure that discussions about new bodies do not divert attention away
from the reforms needed to make existing bodies work (separately and together) better.
Thus, regardless of the eventual situation regarding an EPP, the following operational
issues need to be addressed.
Some problems frustrating investigations
Europol, Eurojust, EJN and OLAF: data protection asymmetry
Bodies like Europol and Eurojust, set-up under the third pillar, have an important role
to play in creating a climate of cooperation, making cross-border investigation and
prosecution possible. Europol[4], based in The Hague, has been processing Member
States’ data on crimes, which include crimes to the detriment of the EU budget, like
fraud or corruption. Eurojust[5], also based in The Hague, has been coordinating
Members States’ judicial authorities in the investigation and prosecution of similar
crimes.
Article 31 EU includes in its list of common action on judicial cooperation in
criminal matters the following:
[...] promoting support by Eurojust for criminal investigations in cases of serious
cross-border crime, particularly in the case of organised crime, taking into account, in
particular, of analyses carried out by Europol.
In 2008, Eurojust (2009, p. 41) recorded some progress in both operational and strategic
cooperation with Europol, after the installation of a secure information link between
the two agencies. The European Judicial Network (EJN)[6], with magistrates based in
JFC
17,1
82

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