Trends in Anti-Fraud Investigations in Europe

The European Anti-Fraud Office (OLAF) is the body responsible for protecting the EU’s financial interests. It has two main focuses: to investigate fraud involving EU expenditure, and to investigate corruption involving the staff of EU institutions. Its jurisdiction spans the entirety of the EU and it closely collaborates with EU institutions and the national authorities and law enforcement agencies of each member state to fight cross-border fraud.

OLAF recently published its eighteenth annual report on its activity through 2017. These reports not only provide an overview of OLAF’s performance over the previous year, they also highlight trends and developments in the types of serious fraud being committed in the EU.

In this blog post, I take a look at the work of OLAF and the trends in cross-border fraud covered in its 2017 report. If you or your company are facing investigation or prosecution, and you are in need of guidance and representation from an expert, please contact me as soon as possible – the earlier you get the right legal advice, the better the outcome is likely to be.

Fraud trends in Europe

OLAF's 2017 report demonstrates the scope of its operations. In that year alone, it opened 215 investigations, concluded 197 and recommended the recovery of over €3 billion. The top ten countries attracting investigations were Romania, Hungary, Poland, Greece, Bulgaria, Italy, Czech Republic, Slovakia, France and Portugal.

Broadly, most OLAF cases cover allegations of cross-border procurement fraud or corruption, double funding, subsidy fraud and customs fraud. Regarding fraud trends, OLAF noted that its increased focus on more complex, trans-European cases has given it particular insight into the changing nature of fraud across the EU. Of particular note in 2017 were:

  • Increased collusion between the winner of a tender and either a consultant or beneficiary of the funding
  • Conspiracies to win tenders in niche markets by gaining access to confidential tender information and rewriting the specifications
  • The use of financial instruments, such as risk capital funds, to circumvent EU funding eligibility criteria
  • Embezzlement of research funding, via the false secondment of researchers, false declarations or documentation, or via fictitious or artificial increases in project costs

The report also provides an overview of its investigations relating to organised crime groups, including the exploitation of humanitarian aid and agricultural funds, and the evasion of customs and VAT duties by declaring falsely low values on imported products or misdeclaring the country of origin.

OLAF’s powers

OLAF does not have the power to prosecute, rather its role is administrative in that it carries out investigations into serious fraud, corruption and other offences relating to EU funds (i.e. revenues, customs duties, expenditures, funds, aid and assets covered by the EU's budget) and the discharge of professional duties by EU officials. When conducting an investigation, it has the power to carry out on-the-spot checks and inspections in EU member states, countries outside the EU and on the premises of international organisations, as well as on economic operators in some circumstances (i.e. if the investigation concerns a grant agreement, decision or contract concerning EU funding).

OLAF also coordinates action and information sharing between member states and EU institutions aimed at protecting the financial interests of the EU against fraud. This includes designing and developing methods of preventing and combating fraud and corruption to promote best practices among member states, and supporting the anti-fraud investigations of national authorities. Its reach is therefore extensive and involves cooperation with many different bodies, agencies and institutions in many different countries both within and outside the EU.

Although OLAF cannot bring criminal proceedings, it shares information that can lead to prosecutions by national prosecuting authorities and law enforcement bodies. This means people involved in OLAF investigations are granted a set of procedural rights and guarantees that the Office must respect when carrying out its functions. These include: the presumption of innocence; the right to avoid self-incrimination; the right to representation during an interview and to choose the representative; and, to be given an opportunity to comment on certain facts before investigation conclusions are drawn up.

A potential game-changer

“The EPPO and OLAF will work closely together, to ensure that all available means are used to protect the EU budget. The EPPO will be able to rely on the support of OLAF, benefitting from OLAF's experience in the fight against fraud affecting EU funds.”

Although OLAF looks to protect the EU's financial interests primarily via administrative recovery and measures, it will, in the not too distant future, start working closely with the newly established European Public Prosecutor's Office (EPPO). Expected to commence operations from late 2020 in participating countries (so far 20 member states have signed up, including Belgium, Croatia, France, Germany, Italy, Luxembourg, Spain and Slovenia), the EPPO will carry out the specific task of conducting criminal investigations and prosecuting large-scale and/or cross-border offences affecting EU finances. This will likely extend the reach and impact of OLAF operations and investigations even further as they become a key part in this new structure for criminal prosecution in the EU.

Serious fraud corruption defence

If alleged misconduct has an international element, it is highly likely foreign investigative and enforcement bodies, such as OLAF, will be working closely with the UK’s agencies to help them successfully prosecute serious and complex offences.

The seriousness of bribery, and the strong public interest in tackling it, means agencies and prosecuting authorities are encouraged to pursue investigations and cases with rigour. This means investigative teams are often made up of experts who have vast resources at their disposal, helping them to detect and uncover criminality, particularly wrong-doing by ‘professional enablers’, such as accountants and solicitors.

Mark Kelly Complex and Serious Fraud Defence Barrister London, UK

My clients benefit from representation by a trusted professional and highly experienced barrister who is known for his strategic thinking, transparency and unwavering attention to detail. A member of the Criminal Bar Association, Bar European Group, European Lawyers Bar Association and Proceeds of Crime Lawyers Association, I have vast experience successfully defending both individuals and businesses accused of serious fraud, bribery and corruption. With this expertise and experience, and a reputation and track record that's second to none, you can be sure you are in safe hands.

I regularly assist clients in Manchester, Birmingham, Leeds, London, Bristol and the rest of the UK. If you have any queries about issues raised in this blog, or if you want to discuss how they impact you or your business, please do not hesitate to get in touch with me directly on 020 8108 7186, or fill out the contact form and I will get back to you as soon as possible.

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