OLAF – A balancing act between different systems of control

By Tessa, Sophie, Martina & Desislava

Complex multi-level structures governed by different jurisdictions require sophisticated systems of control. The Office Européen de Lutte Antifraude (OLAF) is a prime example of such a structure, especially if we consider the plethora of regulations, decisions and national legislation that set its boundaries during its investigations of fraud related to EU expenditures, EU revenues and EU staff. OLAF can carry out interviews, production orders and on-the spot checks, either at EU institutions or bodies’ premises or at business premises. These are intrusive powers of investigations of OLAF, which interfere with individuals’ fundamental rights (e.g. right to privacy, right to liberty), and demand the existence of various mechanisms to ensure control. Fundamental rights’ standards need to be guaranteed to individuals, while also legal protection through judicial control is to be afforded. This becomes even more important when considering that conclusive reports of OLAF’s inspections serve then as the basis for follow-up action either at the EU or Member States’ level.

Nevertheless, it is important to keep in mind that providing for control in any possible way may also hinder independence and effectiveness. We believe that in the end it all comes down to ensuring a balance of different control mechanisms which can remedy each other’s shortcomings. The case of OLAF will show that, for example, de facto control may compensate for a lack of de jure control, while new safeguards on procedural and fundamental rights even have the potential to counterbalance for missing judicial accountability. However, finding the right balance of control mechanisms remains a walk on the tightrope.

OLAF’s legal framework – An incomplete attempt to control the complexity of powers

OLAF exercises its investigative powers with full independence from the Commission or any other EU institution, operating based on EU law. For external investigations, however, working in close collaboration with national authorities, OLAF still needs to rely greatly on powers granted to it by national laws.

As OLAF’s investigative powers interfere with individuals’ fundamental rights, they necessitate the existence of various mechanisms to ensure control, including political accountability, judicial protection and procedural guarantees to name a few. These systems of control are governed by Regulation (EU, Euratom) 883/2013, amended in 2016, and recently in 2020, to address, inter alia, some concerns and issues regarding OLAF’s system of controls, as well as to provide more clarity on applicable safeguards and rights of individuals concerned.

Below an overview of the existing framework on OLAF’s system of control is provided.

Mastering a ridge walk of control mechanisms

Ensuring a balance between control mechanisms is essential to prevent gaps in the control system and ensure they can compensate for each other’s limits. Below we will explore OLAF’s balance of controls, applying Scholten et al’s identification of connections between different mechanisms namely: ex ante/ex post, internal/external, de jure/de facto. This will be done both in consideration of each “category” of control mechanism and regards the relationship between them.

Judicial accountability. As OLAF investigative acts are more of a preparatory nature, they cannot be directly challenged in front of the CJEU, there is therefore no direct ex post de jure control over them. However, there exists a form of non-judicial de facto control facing the fact that EU bodies and institutions, or the competent national authorities, are not obliged to act upon them, meaning that they can reject OLAF’s findings when considering them mistaken. Furthermore, remedies can be claimed for final decisions taken by EU institutions and national authorities acting upon OLAF reports, arguably creating a form of indirect de jure control.

Political accountability. The framework is strongly grounded in transparency and the exchange of views. The main concern in this case is that the mechanism depends on OLAF sharing information with external controllers (outlined in table above), and the latter’s differing visions on appropriate safeguards.  Moreover, another issue is the lack of ability on part of the EU institutions to impose sanctions. OLAF’s supervisory committee could be said to, at least partly, provide an internal control mechanism. It is evident from the Committee’s reports that it observes the office’s work and issues recommendations, which although not binding de jure, appear to be responded to and taken into account by OLAF, thus providing a form of de facto internal control. Furthermore, it could be argued that the lack of sanctioning power is compensated for by the institutions’ role in shaping OLAF’s legislative framework (hence powers) and budget, potentially amounting to a form of ex ante de facto control.

Procedural safeguards and protection of fundamental rights. Some of the most significant criticism of OLAF prior to Regulation 2020/2223 has been in this area. Regulation 2020/2223 actually provides for a new internal mechanism in order to address those, with both ex ante and ex post controls. While we will have to see how this new Controller works in practice, at least in theory a previous gap in the controls framework seems to have been filled. What remains an unaddressed concern, however, is how a sufficient level of protection is secured, considering various national legislation affecting OLAF’s investigatory powers.

Connections Between Categories.  We could argue that the improved framework related to procedural safeguards and fundamental rights protection, can provide a type of ex ante control, and compensate for gaps in relation to judicial accountability if it proves to guarantee effective protection in practice. Regarding the various standards brought about by national legislation impacting individuals’ rights, the de facto control at the national and EU level (as outlined in relation to judicial accountability above) could help ensure that the system remains flexible despite the lack of harmonization.