Strasbourg, 31 January 2006

Dear Mr B,

Dear Mr B,

On 10 November 2004, you made a complaint to the European Ombudsman against the European Anti-Fraud Office (OLAF) concerning OLAF’s investigation into the Blue Dragon case.

On 15 December 2004, I forwarded your complaint to the Director of OLAF. OLAF sent its opinion on 21 March 2005. I forwarded that opinion to you with an invitation to make observations, which you sent on 15 June 2005.

You contacted my services to obtain information on progress made in the inquiry on 15 September 2005.

On 15 November 2005, I wrote to inform you that, in view of the complexity of the case, it might not be possible for me to make a decision on your complaint before the end of January 2006.

I am writing now to let you know the results of the inquiries that have been made.

THE COMPLAINT(1)

The background to the complaint is as follows:

Complaint 1769/2002/(IJH)ELB

On 9 October 2002, the complainants lodged a complaint with the European Ombudsman against the European Commission and OLAF concerning alleged fraudulent diversion of LEADER II funds that were intended to benefit a company, Blue Dragon 2000, of which they were the directors. This Community programme was managed by the Catalonian regional authorities and by the private-sector Local Action Group. In autumn 2000, the complainants informed OLAF and the regional authorities of their suspicions. The complainants lodged a complaint against Spain with the European Commission.

In their complaint to the European Ombudsman, the complainants considered that the Commission and OLAF had failed to deal properly with their allegations of fraud and that the system of distribution of LEADER II funds through private-sector bodies, as well as inadequate checks by the Commission, had facilitated the fraud. The complainants claimed public exoneration, restitution of what had been stolen from them and compensation for economic and non-material losses they had suffered.

The Ombudsman’s inquiry concerning the Commission

The Commission considered that it was not necessary to register the complainants’ letter as a complaint because of the nature of the problems and because the financial interests of the Communities had been protected.

The Ombudsman considered that the Commission should have registered the letter as a complaint. He addressed a draft recommendation to the Commission requesting it to re-examine the complainants’ letter and deal with it in accordance with the Commission Communication to the European Parliament and the European Ombudsman on relations with the complainant in respect of infringements of Community law(2).

The Commission accepted the draft recommendation and, on 12 March 2004, the European Ombudsman closed his inquiry concerning the Commission.

The Ombudsman’s inquiry concerning OLAF

OLAF opened an investigation into the complainants’ allegations in February 2001. An on-the-spot inspection conducted by OLAF was suspended after the Spanish Ministry of Agriculture had indicated that the regional authorities were already planning to check all activities of the Local Action Group. OLAF received the reports of the Spanish authorities in July 2001, considered that there was no reason to question their findings and therefore decided not to carry out an additional inspection. OLAF’s Management Board approved the final report in December 2002. According to this report, the findings of the Spanish authorities did not enable them to confirm the allegations of irregularities by the Local Action Group, but irregularities had been found in the Blue Dragon project. The report recommended the case be closed with a financial follow-up in order to recover the funds allocated to the Blue Dragon project.

The Ombudsman considered that principles of good administration required administrative investigations by OLAF to be carried out carefully, impartially and objectively. The examination of the evidence available found a number of points which gave rise to concern about the adequacy of the OLAF investigation. The Ombudsman detailed these points in the draft recommendation which he addressed to OLAF in February 2004 and in which he asked OLAF to examine whether it should re-open its investigation or open a new investigation.

OLAF responded to all the points set out in the draft recommendation and concluded that there were no grounds for re-opening the investigation or opening a new investigation. In examining OLAF’s detailed opinion, the Ombudsman took into account the fact that the Commission’s investigation into the complainants’ allegations of an infringement of Community law by Spain was on-going. The Ombudsman considered that, at the stage reached by the Commission’s investigations, OLAF’s conclusion that there was no ground to re-open its own investigation or to open a new investigation appeared reasonable. However, the Ombudsman addressed a further remark to OLAF on the procedure to be followed where there is a change in the official signature.

On 22 July 2004, the European Ombudsman closed his inquiry concerning OLAF.

Complaint 2848/2004/ELB

On 16 September 2004, the complainants lodged a new complaint with the European Ombudsman against OLAF.

On the same date, the complainants sent a series of 11 questions to the Director General of OLAF concerning the same subject as their new complaint.

The Ombudsman declared the complaint inadmissible because the complainants had not completed their administrative approaches to OLAF on the matter.

The present complaint: 3436/2004/ELB

Having received OLAF’s reply of 6 October 2004 to their letter of 16 September 2004, the complainants made a new complaint to the European Ombudsman against OLAF.

The complainants enclosed with their complaint, dated 10 November 2004, a copy of OLAF’s reply of 6 October 2004, in which OLAF states that there is no new evidence in the complainants’ letter that requires the investigation to be re-opened and that their allegations are covered by the European Ombudsman’s decision on complaint 1769/2002/(IJH)ELB.

In their complaint to the Ombudsman, the complainants consider that OLAF’s reply of 6 October 2004 constitutes a refusal to provide information and, as such, an instance of maladministration. In their view, the information available shows that OLAF’s investigation into the Blue Dragon case was not carried out carefully, impartially and objectively. They point out the problems that they indicated in OLAF’s investigation. The complainants also state that, if OLAF bases its findings on checks carried out by national authorities and does not examine information provided by citizens, those citizens have limited opportunities to refer their case to the Commission to the extent that the Member State is both judge and a party in the matter. They also state that one of the OLAF investigators was responsible for internal investigations but had opened an external investigation in their case.

The complainants alleged that:

1. OLAF failed to carry out its investigation into the Blue Dragon case carefully, impartially and objectively;
2. OLAF failed to reply to the questions they had raised concerning its investigation in their letter of 16 September 2004.

In letters of 15 December 2004 sent to the complainants and to the Director of OLAF, the European Ombudsman informed them that, after examining complaint 3436/2004/ELB, he did not consider that there were grounds to conduct an inquiry as to the complainants’ first allegation in accordance with Article 195 of the Treaty establishing the European Community. He considered that this issue had been dealt with in connection with complaint 1769/2002/(IJH)ELB and that no new evidence had been submitted by the complainants. However, he decided to open an inquiry into the second allegation, which is that OLAF failed to answer the questions raised by the complainants in their letter of 16 September 2004.

THE INQUIRY

The Ombudsman forwarded the complaint to OLAF. OLAF’s opinion pointed out that the issues raised in the complainants’ letter of 16 September 2004 relate to the same events and the same time period as those covered in complaint 1769/2002/(IJH)ELB and that OLAF’s submissions to the Ombudsman in the context of that complaint had already provided extensive information with regard to those issues. OLAF also pointed out that the specific issues raised in the complainants’ letter of 16 September 2004 have also been the subject of scrutiny by the European Parliament’s Committee on Budgetary Control (COCOBU), to which OLAF provided detailed written information on: 23 December 2003, 3 March 2004 and 17 March 2004. OLAF also provided detailed oral information to COCOBU at a hearing on 19 February 2004 and during a briefing on 19 October 2004.

OLAF expressed the view that to provide detailed answers again on the same issues would constitute an undue administrative burden. It explained that it would therefore limit its opinion on the present complaint to indicating where answers to each of the questions raised by the complainants in their letter of 16 September 2004 had already been given, and providing any supplementary information that might be helpful.

In view of the approach taken by OLAF in its opinion, the Ombudsman considers it useful to structure the following section of this decision by reference to the questions asked by the complainants in their letter of 16 September 2004. As an aid to understanding, the Ombudsman includes, in italics, the relevant parts of the text of each question.

The Ombudsman has carefully examined the references in OLAF’s opinion to the answers that it has already given to each of the questions. The Ombudsman also includes, in italics, the text of the answer to which the Ombudsman understands OLAF to refer. Supplementary information provided by OLAF in its opinion is included in ordinary font.

The European Anti-Fraud Office’s opinion
Question 1

"In your most recent reply to the European Ombudsman you state that you found it necessary to change your signature in order to make it more legible, which explains the differences in your signature in the papers relating to us. Can you clarify the following:

1. On what precise date did you change your signature?
2. On which internal OLAF and Commission identification document is that change based?
3. Whether that change is entered in the ADONIS database or the OLAF Registry and on the basis of which keying document?"

OLAF’s reply to Question 1

- OLAF’s detailed opinion on the draft recommendation by the European Ombudsman in complaint 1769/2002/(IJH)ELB: the Director of OLAF "can state with complete certainty that the signature on the decision is mine (…) To the extent that this signature differs from other signatures of mine, this can be explained simply by the fact that, at a certain point in time, I adapted my signature in order to make it more legible".

- Letter to COCOBU of 23 December 2003: the Director of OLAF "verified the contested document (...). I can confirm that that signature was indeed mine."

- Letter to COCOBU of 3 March 2004: "As regards the signature on the decision to open the investigation, the existing paraph corresponds to the one used at that time by the Director General of the Office, as can be observed in many documents dating from the same period."

- Letter to COCOBU of 17 March 2004: "It has been confirmed on several occasions that the signature on the decision to open the investigation corresponds to that of the Director General of the Office. The same graphology can be found at the foot of the page in many documents dating from the same period. It is true that the signature used by the Director of OLAF at that time differs from the one used today. However, this does not necessarily imply anything untoward. The difference between the signatures can be explained by the fact that the Director of OLAF adapted his signature in order to make it more recognisable as his name."

Question 2

"If we look at the form for the closure of the investigation of 20 December 2002, it can be seen that someone signed on your behalf by order. Reading the case closure note of 12 December 2002 it is apparent that the “by order” signature of 20 December 2002 is that of (…) the Director of Operations for OLAF.

Analysing the note of 27 February 2003 (No 02829) drafted by [the Director of Operations for OLAF], it is apparent that the signature, which is not “by order”, does not correspond to the signatures of 20 December 2002 and 12 December 2002 which have already been referred to as belonging to [the Director of Operations for OLAF].

On the basis of this information:

1. If the Director General of OLAF is responsible for taking the decision to open the Office’s investigations, it would seem that it is also for him to take the decision to close them. Is it normal in that case for the Director who has supervised the investigation to close it with a signature “by order”?
2. It seems that [the Director of Operations for OLAF] followed your example by changing his signature while he held a position of responsibility. On what date did he change his signature and on which official joint OLAF and Commission document is this change based?
3. If this change of signature has in fact been formalised, is it entered in the ADONIS database or the OLAF Registry?
4. If this signature was changed in order to make it more “legible”, looking at the changes in [the Director of Operations for OLAF]’s signature, do you think that the signature actually becomes more legible?"

OLAF’s reply to Question 2

- Section 3.1.1 of the OLAF manual: The Director General is responsible for taking decisions on the matters before the Board. For practical purposes, this responsibility is delegated to Director B(3), under the supervision of the Director General, though in some cases the Director General himself takes the decision(4).

- The person concerned confirms that the two signatures belong to him. Any future changes would follow the Ombudsman’s recommendation regarding signatures(5).

Question 3

"Can you confirm:

1. the precise date the ADONIS database was deployed in your unit (OLAF)?
2. the precise date digital data registration was deployed in the OLAF Registry?
3. if there exists or has existed a procedure for retroactive registration of documents in ADONIS and, if so, who had responsibility for this operation?
4. if there exists or has existed a procedure for retroactive registration of documents in the digital data registration system at the OLAF Registry and, if so, who had responsibility for this operation?"

OLAF’s reply to Question 3

- Letter to COCOBU of 23 December 2003(6).

- Letter to COCOBU of 3 March 2004: "Any document in a case file is sent to the archives for registration. The document is then scanned in order to be integrated in the electronic case file in the CMS database and the original is sent to the Registry to be archived there. [The decision to open the investigation, the proposal to open the investigation and the file note] were registered in the ADONIS database, from which it is possible to consult the history of all incoming and outgoing documents registered."

- Letter to COCOBU of 17 March 2004: "the note of 3 October 2000 has always been regarded as a “supporting document”. It served as the basis for the drafting of the proposal to open the investigation (...). It was therefore an “internal document”. As such, it was not numbered, but it was entered in the ADONIS (Administration Documents On Normalised Information System) database, the European Commission’s own document registration system (...). The ADONIS system gives each document a unique number and bar code which cannot subsequently be changed."

- The first version of ADONIS was deployed in the Commission in 1990 and was installed in UCLAF(7) in March 1991. Thus ADONIS was utilised by OLAF since its creation in 1999.

Question 4

1. "(…) The final case report is dated by hand, it does not have a registration number and, what is more, it has not been signed (…).
2. On 8 January 2002 OLAF suggested to DG AGRI and the Spanish authorities that the procedure under Article 24 of Regulation (EC) No 2082/93 be initiated (recovery of aid granted to the officials of Blue Dragon, page 9 para. 1.11).
3. Following OLAF’s communication on 8 January 2002, the Spanish Ministry of Agriculture gave its agreement and adopted a “resolución” on 6 February 2002 demanding the recovery of the aid granted to Blue Dragon.

On the basis of these comments:

1. In your view, does creating an unreferenced, hand-dated and unsigned final case report to serve as a supporting document for the closure of an investigation comply with the principle of good administration?
2. How do you explain that the final case report was produced on 5 December 2002, the case closure note was produced on 12 December 2002, and on 8 January 2002, eleven months earlier, your staff suggested that the funds granted be recovered, when their investigation had not been completed?
3. Do you consider that issuing a recommendation before the investigation by your staff has been completed is consistent with good administration?"

OLAF’s reply to Question 4

The final case report is dated 12 December 2001(8), registered and signed. It bears the same date as the case closure note. Both documents are annexed. An unregistered version of the final case report was inadvertently submitted to the Ombudsman as an annex to OLAF’s detailed opinion on complaint 1769/2002/(IJH)ELB. However, its content is identical to that of the registered report.

When a national authority establishes the existence of an irregularity in relation to the financing of structural policies, the Member State concerned has the obligation to communicate this to the Commission (OLAF) pursuant to Article 3 of Regulation (EC) No 1681/94. The Member State must take all appropriate measures to recover the unduly paid amounts and it must inform the Commission (OLAF) in application of Article 5 of the same regulation of all judicial and administrative procedures instituted with a view to recovering sums wrongly paid and to imposing sanctions. This is an entirely separate matter from the OLAF investigation, and thus it is not necessary to wait for the closure of the OLAF investigation. If OLAF also has an open investigation on the same matter, it invites the national authority (or the responsible DG of the Commission) to take the necessary measures to ensure that the financial interests of the European Union are protected. This is, in fact, what occurred in this case.

Question 5

"The European Ombudsman informed us on 28 October 2002 that he had agreed to open an inquiry into our complaint against the European Commission and OLAF. He informed us on the same date that he had already asked you, and the President of the Commission, to respond to our allegations before 31 January 2003.

1. Do you think it is normal that on 8 January 2002 your staff made a “suggestion” to DG AGRI and to the Spanish authorities to recover the aid granted to Blue Dragon and that they produced an unsigned, unreferenced and hand-dated case closure note on 5 December 2002, 38 days after the European Ombudsman had informed you of his decision to open an inquiry into our complaint and more than 331 days after the “suggestion” on 8 January 2002?
2. Don’t you think it is even more unusual that, unlike the final case report, the case closure note is referenced, dated and signed, even though there were only seven days between them?"

OLAF’s reply to Question 5

See the reply to Question 4.

Question 6

"(…) If we count the number of people from OLAF who have dealt with the Blue Dragon case, the result is 10.

In your view:

1. Even though there has been some turnover in the Office’s staff over this period, do you not think that a very large number of people have been involved in this case, which is paradoxical in so far as OLAF has not moved and it made a recommendation on 8 January 2002 to DG AGRI and to the Spanish authorities even before its investigation had been completed?
2. Do you not find it unusual that the only people with whom we have not been in contact are those who drafted the final case report and the case closure note?
3. How can these people discuss our allegations without ever having met us or summoned us, or even having informed us that they had inherited our case?
4. How do you explain that the only people at OLAF who have never been identified to us over the course of the investigation are those who made the summary and closed the investigation?
5. Is it common within OLAF to open an investigation and never to take a formal statement from the complainants (signed by them)?"

OLAF’s reply to Question 6

• Supplementary information provided by OLAF: "The investigation (...) was managed by three different investigators because of successive moves to other directorates-general:
• The first investigator, assisted by the coordinator for Structural Funds (…) was responsible for the file from 1 February 2001 until 12 October 2001. This first investigator was also the designated person for evaluating the first information received by OLAF.
• When this investigator left OLAF, the above-mentioned coordinator took over the file from 9 November 2001 until 24 June 2002 and was assisted by a third investigator, as an associate investigator.
• Finally, when this second investigator left OLAF, the above-mentioned third investigator took over as the investigator in charge from 24 June 2002 until 12 December 2002, when all operational activity was closed.

The changes in responsible investigators were only the logical and normal consequence of the departure of the previous responsible investigators and the need to assign their active cases to other colleagues who, as far as is possible, already had some knowledge of the matter."

- OLAF’s detailed opinion on the draft recommendation by the European Ombudsman: "OLAF is not obliged to provide the public with information about an ongoing investigation. OLAF’s policy with respect to informing an individual who may have an interest in the outcome of an investigation and who has provided OLAF with information is specified in OLAF’s manual (...) there was a gap between the departure of the first investigator in charge (12 October 2001) and the appointment of the second investigator in charge (9 November 2001). Since I became Director General of OLAF in 2000, almost all of OLAF’s operational staff has changed. Given the level of staff turnover, it was not always possible to have an investigator assigned full time to all investigations that had been open. Even if for less than one month there was no investigator formally assigned to the case, the coordinator with respect to Structural Funds cases at the time was responsible for the case."

- Letter to COCOBU of 3 March 2004: "According to the information that appears in the electronic database for the Blue Dragon case:

• the first investigator (...) was responsible for the case from 1 February 2001 to 12 October 2001. This investigator was appointed to conduct the initial evaluation,
• the second investigator (...) from 9 November 2001 to 24 June 2001(9),
• a third investigator (...) from 24 June 2001 11 to the case closure on 12 December 2002. (...)

[The Structural Funds Head of Unit] was in charge of the unit that managed the Blue Dragon case for only three months. (...) The communications sent to the complainants were signed by these three persons in their capacity as advisers in Pool 1 of Directorate B at the Office."

- Whenever OLAF investigators are assigned to take over responsibility for an investigation, they have access to the entire case file, which they rely upon in carrying out their responsibilities concerning the case. It would be unreasonable and wasteful of resources if they were to repeat all of the investigation activities that had already been completed by their predecessors. Moreover, in this case, the complainants had submitted numerous repetitive letters setting forth their arguments and signed by them, which were part of the case file.

Question 7

"We are submitting a copy of the e-mail sent on Tuesday 28 January 2003 by [OLAF’s spokesman], to [a journalist] at the Centre-Presse newspaper ( Poitiers - France).

It can be observed that:

1. The OLAF investigation started in September 2000.
2. Most of the reply by [OLAF’s spokesman] is based on the content of the final case report.

Considering we had requested that our complaint to the European Ombudsman be kept confidential until 8 April 2003 and that we would not have access to the documents in your reply (case closure note, final case report, opening of investigation etc.) to the European Ombudsman until 12 February 2003, when it was sent to us:

1. How do you explain that OLAF’s spokesman gave a journalist, on 29 January 2003, information to which we did not yet have access, at a time when our complaint against OLAF and the Commission was still confidential in the procedure before the European Ombudsman?
2. How do you explain that in the batch of specific information provided in that document, it is asserted that the investigation was started in September 2000, whereas according to the document initialled by you, you established that it was not opened until 1 February 2001?"

OLAF’s reply to Question 7

By letter of 20 December 2002, the complainants were informed of the closure of the investigation. At that time, they could have requested access to the final case report pursuant to Regulation (EC) No 1049/2001, and they would have received it.

At the time this investigation was opened, OLAF did not have a manual of procedures, and there was no requirement to notify an informant that an investigation had been opened or closed. By the time the case was closed on 12 December 2002, the first OLAF manual (adopted on 15 February 2001) was in existence, which provided in section 6.5.4 that the informant should receive notice of the closure of the investigation. The current manual, adopted on 25 February 2005, also provides for this obligation.

Concerning the error in the OLAF press release as to the date of the decision to open the investigation:

- Letter to COCOBU of 23 December 2003: "Following the telephone call received by the Office on 18 September 2000, the investigator who had dealt with the call had discussions with Blue Dragon’s co-directors at OLAF’s premises on 19 September 2000. (...) Further to the information received, the Office instituted the initial evaluation procedure. That evaluation led to the submission of a “Note for the attention of the Director General”, dated 1 February 2001, containing a proposal to open an investigation at the Office, based on the initial information received. In the light of this proposal, I decided, on 1 February 2001, to open an external investigation under Article 5 of Regulation (EC) No 1073/99 (...)."

- Letter to COCOBU of 3 March 2004: "(...) we arrive at the actual date when the Blue Dragon investigation was opened of 1 February 2001."

Question 8

"From September 2000 to January 2001 the only OLAF internal note that you identify in your replies to the European Ombudsman was (…) apparently drafted (…) on 3 October 2000.

It can be observed that:

1. The note of 3 October 2000 is dated by hand, not referenced by an internal number and not signed.
2. In that note reference is made to conflicts and confusions of interest on the part of the Local Action Group (etc.)
3. In that note reference is made to a partisan political context in connection with the implementation of the LEADER projects through the Local Action Groups, without any indications regarding the complainant firm.

On the basis of these statements:

1. Is it normal for a supporting document used for the opening of an investigation not to be dated (except by hand), referenced or signed by its representative?
2. How is it possible for the investigator in charge of the case to talk about conflicts and confusions of interest at this stage? Your staff recorded having received the constitution of the Salines Bassegoda Local Action Group from us on 13 August 2001, 10 months after that note. (For information, in full sight of this document there are actually serious conflicts of interest)
3. Since on 3 October 2000 the investigator in charge of the case stressed the influence of a partisan political context preventing information on our case being obtained, do you find it reasonable to allow four months to pass before deciding to open an investigation?
4. If the Office cannot gain access to information because of “external problems”, can you clarify the nature of the partisan political context preventing DG AGRI and OLAF from having access to basic information such as the recovery of a LEADER file, the only documentary evidence for the grant of European payments, which is a public document?
5. Not being able to access the information at the Commission, why did your staff not ask the Spanish authorities, from October 2003(10), to communicate the Blue Dragon LEADER file?
6. Do you accept the fact that we are described in that OLAF note of 3 October 2000 as the “complainant firm” and not as simple informants?
7. If you accept this fact, how can you explain that in your reply registered by the European Ombudsman on 29 March 2003 you change this term to informant?"

OLAF’s reply to Question 8

- Letter to COCOBU of 23 December 2003: "Following receipt of the information, a “file note” was drafted on 3 October 2000 (...) setting out the complainants’ concerns and their allegations, namely the selection of projects on the basis of non-professional criteria and the composition of the Local Action Group which is involved directly in the development of the approved projects. The file note also reports conflicts and confusions of interest relating to mandatory links with banks required by the Local Action Group, contrary to the requirements of Spanish legislation. Further to the information received, the Office instituted the initial evaluation procedure. That evaluation led to the submission of a “Note for the attention of the Director General”, dated 1 February 2001, containing a proposal to open an investigation at the Office, based on the initial information received. In the light of this proposal, I decided, on 1 February 2001, to open an external investigation under Article 5 of Regulation (EC) No 1073/99 (...). (...) OLAF first contacted the Spanish authorities on 28 February 2001 to inform them of an on-the-spot inspection planned for end of March, beginning of April. The Spanish Ministry of Agriculture informed OLAF that it had already carried out an inspection of the Blue Dragon project in December 2000 and that the Department of Economy and Finances of the Regional Government of Catalonia was planning to check all activities of the LAG Salines-Bassegoda."

- Letter to COCOBU of 3 March 2004: "It is worth stating that before opening any investigation at the Office, the information received by OLAF must be subject to an evaluation and analysis process. The length of this period depends on the quality of the information provided. In the Blue Dragon case, (...) the complainants had promised to supply additional documents. These were not received by OLAF until 15 December 2000. If we consider the time spent on analysing the documentation received, the stoppage of work due to the end-of-year holidays and the time needed for the proposal to open the investigation, we arrive at the actual date when the Blue Dragon investigation was opened of 1 February 2001.(...)

The file note of 3 October 2000 is regarded as a supporting document (...) and takes note of the initial information received by OLAF. It is true that the file note is not numbered. At the time, none of the supporting documents forming part of the case file were archived for registration. (...) The note of 3 October 2000 describes the allegations reported by the complainants at their first appearance at OLAF. There is no analysis of the information supplied."

- Letter to COCOBU of 17 March 2004: "(...) the initial allegations made by the complainants concerning probable fraud were based on a conflict of interest between the Local Action Group’s administrators and commercial entities involved in setting up the Blue Dragon project."

- Neither the OLAF legal framework nor the OLAF manual makes any distinction between an official “complainant” and an “informant”. OLAF has no duty to provide them, as informants, with any information about the findings of the case(11).

Question 9

"In the replies sent to the European Ombudsman in February 2003 (…) it is stated that the 309-page report in the LEADER file was submitted to OLAF by the people at Blue Dragon on 15 December 2000.

If we take this 309-page file and look at page 1, it is easy to see that it corresponds to the acknowledgement of delivery of this LEADER file to the people at Blue Dragon, by the Generalitat of Catalonia, on 2 April 2001.

In your subsequent comments to the European Ombudsman you stated that OLAF actually had an archiving problem but that the most important thing was that the file had been present in the investigation.

On the basis of these statements:

1. How do you explain that the internal note of 3 October 2000 (…) and the internal note of 1 February 2001 (…) allude to information contained in the LEADER file which we did not submit until 4 May 2001 (seven months later) and of which we were not aware before 2 April 2001, and to the constitution of the members of the Salines Bassegoda Local Action Group, for which your staff acknowledged receipt on 13 August 2001 (ten months later)?
2. How do you explain that your decision to open the investigation (1 February 2001) could be based on these two notes which include information from a time after they were produced?"

OLAF’s reply to Question 9

- Supplementary information provided by OLAF in response to a request by the European Ombudsman: "(...) there are two acknowledgements of receipt that make reference to two submissions of documentation: one on 15 December 2000 and the other on 4 May 2001. Neither of these documents specifies the number of pages submitted on these two occasions. The investigator responsible for the final evaluation had interpreted 15 December 2000 as the actual date of submission of the file containing 309 pages. (...) Whilst, however, in the present case OLAF cannot confirm the precise date of the submission of the 309-page LEADER file cited by the complainants, it should be added (...). Nevertheless, the difference in the dates called into question by the complainants does not have any bearing on the conduct of the investigation as such. All documentation made available to the Office, both the 309-page document to which the complainants allude and the many faxes received, was taken into consideration in the final analysis before the case was closed. Thus, whether the document was received at an earlier date (15 December 2000) or a later date (4 May 2001), it was nevertheless in the file before the case was closed in December 2002. It was therefore taken into consideration by the Director of OLAF before he decided to close the case."

- OLAF’s detailed opinion on the draft recommendation by the European Ombudsman in complaint 1769/2002/(IJH)ELB: "(...) the date that the LEADER file was provided has no bearing on the allegation of the complainants that OLAF did not have this document on 3 October 2000, the date on the file note which they claim is false. More importantly, the LEADER file was part of the dossier when a final decision was taken on the case."

- Letter to COCOBU of 23 December 2003: "Following receipt of the information, a "file note" was drafted on 3 October 2000 (...) setting out the complainants’ concerns and their allegations, namely the selection of projects on the basis of non-professional criteria and the composition of the Local Action Group which is involved directly in the development of the approved projects. The file note also reports conflicts and confusions of interest relating to mandatory links with banks required by the Local Action Group, contrary to the requirements of Spanish legislation."

- Letter to COCOBU of 3 March 2004: "The note of 3 October 2000 describes the allegations reported by the complainants at their first appearance at OLAF. There is no analysis of the information supplied. The composition of the Local Action Groups is laid down in the Community legislation. The Local Action Groups are defined as a combination of public partners (including local authorities) and private partners (companies, entities and associations with different purposes) with the sole objective of setting up innovative actions to promote rural development. It should be added that the Local Action Group had been formed as a limited liability company in 1996; its composition and its statutes are public and they are entered in the trade register for Gerona."

- Letter to COCOBU of 17 March 2004: "All Local Action Groups are formed in the same way. Their composition and their statutes may be consulted at any time in the ad hoc Trade Register."

Question 10

"In your reply registered on 29 March 2004 by the European Ombudsman, you say (…) that there is no inconsistency between the fact that on 14 November 2001 OLAF told the complainants that it had asked the Spanish authorities to conduct all the necessary checks for the Blue Dragon case and the fact that OLAF had opened an investigation on 1 February 2001 and that it had decided not to conduct an on-the-spot inspection, since it discovered that the Spanish authorities had already opened one.

On this basis:

1. Do you find it consistent that OLAF never formally notified the complainants (in writing) that an investigation had been opened? Why then write to them on 14 November 2001 for something less important than the opening of an investigation?
2. Do you find it consistent that the Spanish authorities never audited and interviewed the complainants in connection with their investigation, even though you asked them to conduct a thorough investigation?"

OLAF’s reply to Question 10

See reply to Question 7. In addition, the second audit report presented by the Spanish authorities states that the complainants attended the on-the-spot check that was performed regarding their project.

Question 11

"In the notes of 3 October 2000 (…) and of 1 February 2001 (…) the grounds cited for opening an investigation are:

1. A selection method for projects based on non-professional criteria.
2. A sophisticated system used by the Salines Bassegoda Local Action Group linking groups of elected municipal representatives, political groups, trade unions and banks, in order to control the entire chain of a system.
3. Conflicts and confusions of interest etc.
4. The practice of overbilling and submitting false invoices.
5. The terms of payment for an advance of 10 million pesetas etc.

The LEADER file we provided to your staff contains the pages produced by the Salines Bassegoda Local Action Group classifying us as adventure tourism (we were deemed to manufacture accessories for industrial pumps ...) and invoices for a building for an amount more than 200% higher than the architect’s quotation. The invoice for the most important criterion (the machinery), which represents more than 66% of the budget under the subsidy paid, is also missing.

In the pages of the Local Action Group’s constitution it becomes apparent that all the suppliers of Blue Dragon (assessor, builder, renter) with the exception of Banco de Sabadell are all also personally and professionally employed by and/or founder members of, the Salines Bassegoda Local Action Group.

On the basis of these facts:

1. Do you find it consistent that none of the elements of the Spanish investigation responds to the legitimate questions raised by OLAF when it opened the investigation, whilst limiting the results of the investigation to simple administrative issues?
2. Do you find it consistent that the last group of people responsible for our case within OLAF (…) did not take up the replies to the questions raised by the decision to open the investigation, when they had the information (LEADER file, Local Action Group constitution) without having to travel?
3. Do you find it consistent that these three OLAF investigators state in the final case report that no new evidence has come to light to question the findings of the Spanish investigation, when, with the LEADER file and the Local Action Group constitution, they have answers to the questions initially raised by OLAF, which by their nature call into question the results of the Spanish investigation?"

OLAF’s reply to Question 11

- Letter to COCOBU of 23 December 2003: "(...) the report by the Ministry of Agriculture emphasised the following aspects: the absence of a signature in the aid document, the absence of the signature of the manager of the Local Action Group on the document relating to the technical/economic report, the absence of a signature on the contract drawn up between the two parties involved, and the absence of adequate documentary evidence concerning the payment of the first aid granted. After analysing all the 72 projects assigned to the Local Action Group, the report by the Generalitat de Catalunya concluded that, as far as the treatment of the different projects was concerned, the different stages had been followed and respected satisfactorily. (...) The in situ check of 50% of the projects revealed good implementation and efficient realisation of those 72 projects, with the sole exception of Blue Dragon. OLAF analysed the two reports (...). OLAF therefore decided not to conduct the proposed on-the-spot check. (...) [the OLAF final case] report concludes that, on the basis of the two reports by the Spanish authorities, the allegations of irregularities on the part of the Local Action Group had not been confirmed, unlike the Blue Dragon project, in which irregularities had been established."

- Letter to COCOBU of 3 March 2004: "(...) on the basis of the information provided by the Spanish authorities (...), OLAF decided (...) to suspend the proposed operation and wait for the results of the checks that had been announced. (...)

Following the receipt of the inspection reports sent by the Spanish authorities and after making enquiries about the nature of the (administrative and financial) irregularities detected, the Office sought to exploit the judicial aspect of the case. To that end, and in the light of the actions brought by the complainants in French and Spanish courts, the Office’s Magistrates Unit became involved in the case. As a result of enquiries made to the examining judge at Figueres (the only prosecutor’s office with jurisdiction to hear the facts), the Office’s Magistrates Unit [was] informed that no further action had been taken in the most recent action brought, since the complainants failed to appear to confirm their initial statements. (...)

The note of 3 October 2000 describes the allegations reported by the complainants at their first appearance at OLAF. There is no analysis of the information supplied."

- Letter to COCOBU of 17 March 2004: "(...) the checks made had been conducted by two different authorities. The recommendations and conclusions adopted were along similar lines. Furthermore, the audits of the Local Action Group’s accounts for 1997, 1998 and 1999, carried out by independent bodies, had always arrived at a favourable opinion.

As regards the judicial aspect, OLAF’s Magistrates Unit had obtained its information from the examining judge at Figueres, in Spain, and had been informed that no further action would be taken in the ongoing legal proceedings because the complainants had failed to appear in order to confirm their allegations to the judge in charge of the case."

- The points quoted in the note of 3 October 2000 are merely a report of the allegations which had been presented by the complainants.

Concluding its opinion, OLAF makes the following remark: "In light of the above, I submit that OLAF handled this matter in an entirely appropriate manner, which fully respects all legal requirements. For these reasons, I believe that the present inquiry should be closed with a finding that no maladministration has been committed by OLAF."

The complainants’ observations

The complainants’ observations may be summarised as follows.

OLAF’s opinion is essentially based on three letters sent to COCOBU on dates prior to 16 September 2004. They wonder why those replies were not sent to them directly, as early as September 2004. They believe that they have been discriminated against. They also consider that, in its opinion, OLAF shows disrespect for the complainants and for the procedure initiated with the Ombudsman. They do not understand why it is necessary for the Ombudsman to become involved to obtain a response from OLAF. The complainants consider that OLAF fails to answer any of the questions. Lastly, in their view, there are many contradictions in OLAF’s replies, which are evidence of mismanagement of the Blue Dragon case.

Question 1

The complainants note that OLAF does not indicate the date on which the Director changed his signature and on the basis of which keying document that change was registered in ADONIS or the OLAF Registry. The absence of an answer to these questions leads the complainants to wonder whether the official opening of OLAF’s investigation was created retroactively after the Ombudsman opened the inquiry into complaint 1769/2002/(IJH)ELB.

Question 2

The complainants are not satisfied with the reply. In their view, the fact that OLAF complies with its manual is not evidence of good administration. They are surprised by the repeated occurrence of the change of signature within OLAF and consider that this reveals administrative irregularities within OLAF and highlights once again the retroactive creation of an investigation that was never opened.

Question 3

The complainants are not satisfied with the reply claiming that it is impossible to register data in ADONIS retroactively. They consider that, as administrator of the computer system, the Director of OLAF is able to make changes to that system. In their view, this confirms the fact that the notes of 3 October 2000 and 1 February 2001 were not drafted on those dates. No reply was given as regards the OLAF Registry.

Question 4

The complainants consider that OLAF demonstrates a lack of reliability in so far as it sent an unregistered document to the Ombudsman when a registered document existed. They are surprised to note that the case closure note had an earlier reference than the final report. They consider that registration was retroactive and that the final report sent to the Ombudsman was the only document that existed at the time.

The complainants consider that OLAF should have acted as early as July 2001, when the reports from the Spanish authorities were received, in order to protect the financial interests of the Communities, and state that the measures taken by the Spanish authorities for the repayment of the funds granted have not been followed up.

Question 5

The complainants consider that OLAF has not answered the question.

Question 6

The complainants are not satisfied with the reply and consider that no answer has been given on the last point.

Question 7

The complainants consider that OLAF fails to answer the question. In their view, OLAF did not respect the confidentiality of their complaint and communicated information to a journalist, a person not directly involved in this case, when that information was not yet known to the complainants.

Question 8

The complainants point out that they have shown that it was possible to register documents in ADONIS retroactively and consider that OLAF should have provided the routing slip. OLAF contradicts itself in its explanations of the content of the note of 3 October 2000. As far as the other questions are concerned, OLAF fails to answer.

Question 9

According to the complainants, OLAF fails to answer the questions asked. They consider that OLAF contradicts itself since it refers to a deficient archiving system whose inviolability it has previously guaranteed.

Question 10

The complainants state that in March 2001 someone visited their factory in the company of the chairman and the manager of the Local Action Group, but they did not know that this was an audit conducted as part of the Spanish investigation. They note that the obligation to inform the complainants that the investigation had been opened is laid down in the manual adopted on 15 February 2001, shortly before the investigation into the Blue Dragon project was opened. They do not understand why they were not informed until November 2001 that the investigation had been transferred to the Spanish authorities. In their view, OLAF fails to answer their specific questions.

Question 11

The complainants consider that OLAF fails to answer their question.

In conclusion, the complainants consider that there are many instances of maladministration on the part of OLAF in the course of its investigation into the Blue Dragon project.

THE DECISION

1 Preliminary remark

1.1 The complainants are directors of a company whose project was selected to receive Community funds granted under the Community LEADER II initiative. Suspecting that the funds applied for on behalf of their company had been subject to fraud, they contacted OLAF. At the end of its investigation, OLAF concluded that the Community funds paid should be recovered.

1.2 The Ombudsman notes that, in their observations on OLAF’s opinion, the complainants consider that there are many instances of maladministration on the part of OLAF in the course of its investigation into the Blue Dragon project.

1.3 The Ombudsman recalls that, as he pointed out in his letter of 15 December 2004 to the complainants, the present inquiry relates only to the allegation that OLAF has failed to reply to the questions set out in the complainants’ letter of 16 September 2004. The complainants’ allegation that OLAF failed to carry out its investigation on Blue Dragon carefully, objectively and impa rtially was dealt with in complaint 1769/2002/(IJH)ELB, which was closed on 22 July 2004.

2 Alleged failure to reply to the complainants’ questions

2.1 The complainants allege that OLAF failed to reply to the questions which they addressed to it on 16 September 2004 concerning its investigation into the Blue Dragon project.

2.2 In its opinion, OLAF notes that the issues raised in the complainants’ letter of 16 September 2004 relate to the same events and the same time period as those covered in complaint 1769/2002/(IJH)ELB. OLAF provided extensive information with regard to the issues raised in its submissions in the context of that complaint dated 2 October 2003 and 16 August 2004. It would be inappropriate to revisit the issues that were decided in that case. Moreover, this matter, and the specific issues raised in the complainants’ letter of 16 September 2004 has also been the subject of scrutiny by the European Parliament’s Committee on Budgetary Control (COCOBU), to which OLAF provided detailed written information on this matter on three separate occasions, 23 December 2003, 3 March 2004 and 17 March 2004. OLAF also provided detailed oral information to COCOBU at a hearing and during a briefing. Requiring OLAF to again provide detailed answers on the same issues would constitute an undue administrative burden. OLAF concludes that it therefore limited its submissions to indicating where answers to each of the questions raised by the complainants in their letter have already been provided, and provided any supplementary information that may be helpful.

2.3 In their observations, the complainants argue that OLAF’s opinion is essentially based on three letters that OLAF sent to COCOBU and ask why those replies were not sent to them directly. The complainants also consider that OLAF has failed to answer any of the questions in their letter of 16 September 2004.

The Ombudsman’s analysis of the relevant principles

2.4 The Ombudsman first recalls that, under the European Code of Good Administrative Behaviour, "[t]he official shall, when he has responsibility for the matter concerned, provide members of the public with the information that they request. (...) The official shall take care that the information communicated is clear and understandable".

2.5 The Ombudsman considers that, as alleged victims of fraud, who made a complaint to OLAF, the complainants are entitled to expect OLAF to pay special attention to their interest in obtaining information on the relevant inquiries carried out by OLAF.

2.6 The Ombudsman also considers, however, that there are limits to the European institutions’ duty to respond to requests for information under the European Code of Good Administrative Behaviour. In particular, the interests of good administration require that duty to be subject to the principle of proportionality, in order to avoid an unreasonable administrative burden(12).

The approach adopted by the Ombudsman in the present case

2.7 The Ombudsman notes that the complainants wrote to OLAF on 16 September 2004 and that OLAF’s reply, dated 6 October 2004, merely referred to the Ombudsman’s decision on complaint 1769/2002/(IJH)ELB.

2.8 The Ombudsman also notes, however, that OLAF’s opinion on the present complaint provides information additional to that contained in its letter to the complainants of 6 October 2004 and that the most significant such information had already been provided by OLAF to the European Parliament’s Committee on Budgetary Control (COCOBU).

2.9 In circumstances such as those of the present case, where OLAF has already responded to inquiries by the Ombudsman and by the COCOBU, the Ombudsman considers that OLAF could reasonably respond to the complainants’ letter of 16 September 2004 by indicating where answers to each of the questions raised by the complainants had already been provided.

2.10 Moreover, the Ombudsman considers that it is appropriate to focus his inquiry on the information provided in OLAF’s opinion to the Ombudsman, rather than in its letter to the complainants of 6 October 2004. Although the Ombudsman agrees with the complainants that it should not be necessary for citizens to turn to the Ombudsman in order to obtain information from Community institutions and bodies, the Ombudsman also notes that, at the date of the present complaint, the complainants were already aware of the COCOBU’s interest in the Blue Dragon affair and of at least some of the answers given by OLAF to COCOBU, since the complainants themselves had forwarded to the Ombudsman copies of the relevant letters. In these circumstances, the Ombudsman considers that no useful purpose would be served by focusing his inquiry on the adequacy of OLAF’s answers to the complainants in the letter of 6 October 2004.

2.11 In the section of the present decision headed “THE INQUIRY”, the Ombudsman has set out the relevant parts of the complainant’s questions and his understanding of OLAF’s answers, based on the references given in OLAF’s opinion and the supplementary information that OLAF provided. The Ombudsman recognises that the complainants are not satisfied with the content of those answers. However, after careful examination of the questions and answers, the Ombudsman considers that the complainants' allegation that OLAF has failed to answer cannot be sustained. Points that require further comment by the Ombudsman are detailed below.

Questions 1 and 2

2.12 The Ombudsman notes that OLAF does not state the date on which its Director and one of his colleagues changed their signatures, whether those changes of signature were recorded in a document and whether that document was registered.

2.13 The Ombudsman also notes that OLAF explains that the person who changed his signature confirms that the two signatures belong to him and that any future changes would follow the Ombudsman’s recommendation regarding signatures.

2.14 The Ombudsman recalls that, in his inquiry into complaint 1769/2002/(IJH)ELB, he addressed the following further remark to OLAF:

'The Ombudsman considers that it would have been in accordance with the principles of good administration for OLAF to have established, when the change in the signature of the Director General of OLAF took place, an official document attesting to this change. The availability of such a document would have helped quickly to remove any possible doubt about the authenticity of the decision opening the inquiry."

The Ombudsman therefore welcomes the fact that OLAF has taken this further remark into account and taken the necessary action.

Question 3

2.15 The Ombudsman notes that OLAF does not state the date on which registration of data at the OLAF Registry started.

2.16 The Ombudsman observes that the answer to the complainants’ question can be found in the Court of Auditors’ Special Report No 1/2005 concerning the management of the European Anti-Fraud Office (OLAF)(13). In response to the Court of Auditors, the OLAF Supervisory Committee states that: "In response to a recommendation made by the Court of Auditors, a comprehensive file registration system, a " case management system", which is constantly being improved, and a registry (greffe) have been in place since the first half of 2001."

Questions 4 and 7

2.17 The Ombudsman notes that OLAF’s answer to Question 4 acknowledges that an unregistered version of the final case report was inadvertently submitted to the Ombudsman as an annex to OLAF’s detailed opinion on complaint 1769/20002/(IJH)ELB and states that its content is identical to that of the registered report.

Furthermore, as regards Question 7, the Ombudsman notes that OLAF recognises that there was an error in its press release as to the date of the decision to open the investigation.

2.18 The Ombudsman considers that it is regrettable that such errors were made by OLAF, as they led to confusion on the part of the complainants. However, OLAF has recognised its errors in its reply in the present case and has therefore complied with the duty to provide information.

Question 7

2.19 As regards the confidentiality of the complaint to the Ombudsman, the Ombudsman recalls that any complainant has the right to request that his complaint be treated confidentially. Such a request means that there is no public access to the complaint. In complaint 1769/2002/(IJH)ELB the complainants had requested confidential treatment when they lodged their complaint; however, on 8 April 2003 they requested that confidentiality in respect of their complaint be lifted. The Ombudsman notes that the OLAF press release dated 28 January 2003 is limited to a summary of the OLAF investigation and that there is no reference to the complaint lodged with the European Ombudsman.

2.20 As far as OLAF’s provision of information to the complainants is concerned, the Ombudsman notes that OLAF has acknowledged that, in the absence of a manual of procedure, it did not provide information to complainants at the relevant time. The Ombudsman welcomes that fact that OLAF has subsequently adopted a manual of procedure.

Question 9

2.21 As regards the LEADER file concerning Blue Dragon, the Ombudsman recalls that, in the framework of his inquiry into complaint 1769/2002/(IJH)ELB, OLAF has already recognised that it is unable to confirm the date at which this file was received. The Ombudsman notes that OLAF has confirmed its answer on this point in the framework of the present inquiry. The Ombudsman understands OLAF to mean that it does not possess and cannot obtain accurate information as to the date when it received the file. The Ombudsman is not aware of any evidence to suggest that OLAF either possesses or could obtain such information.

2.22 In his decision on complaint 1769/2002/(IJH)ELB (point 2.5 (c)), the Ombudsman stated the following:

“The Ombudsman notes that OLAF has recognised that it did not have an adequate system for registration of incoming documents at the time when the Blue Dragon case began. The Ombudsman considers that such a weakness is especially regrettable in view of OLAF's specific duties and responsibilities, which make it important for OLAF to win and maintain the trust of persons concerned by inquiries, of European and national institutions and of the citizens of the Union. The Ombudsman notes, however, that OLAF has already taken steps to deal with the problem by putting in place an effective and reliable system of registration. In the Ombudsman’s view the operation of this system should help avoid, in the future, doubts about the reliability of OLAF's files.

Moreover, the Ombudsman notes that there is a conflict between OLAF and the complainants about certain facts, (…) According to the complainants, if OLAF had acknowledged the date when it actually received the LEADER file, it would have recognised that the opening date of the inquiry was false.

The Ombudsman considers that the above conflict could only be resolved by a court of competent jurisdiction, which would have the possibility to assess conflicting evidence about the facts. He recalls that the complainants have the possibility to begin proceedings that would allow them to submit the matter to a court. The Ombudsman therefore takes the view that no further inquiries are justified as regards this aspect of the complaint.”

2.23 As regards the present complaint, the Ombudsman points out that, in answering citizens’ questions, an institution or body cannot provide information which it does not possess and which it cannot obtain. The Ombudsman does not, therefore, consider that OLAF’s inability to specify when it received the LEADER file constitutes a failure to answer for purposes of the present inquiry.

3 Conclusion

For the reasons set out above, the European Ombudsman concludes that there has been no maladministration as regards the complainants’ allegation that OLAF has failed to reply to the questions which they addressed to it on 16 September 2004 concerning its investigation.

The Ombudsman therefore closes the case.

The Director of OLAF will also be informed of this decision.

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

---

(1) All footnotes are notes made by the European Ombudsman.

(2) OJ C 244, 10.10.2005.

(3) The Ombudsman understands that the letter “B” corresponds to the designation of one of OLAF’s directorates.

(4) The original language of the quotation is English.

(5) The Ombudsman recalls that in complaint 1769/2002/(IJH)ELB he made the following further remark to OLAF:

"The Ombudsman considers that it would have been in accordance with the principles of good administration for OLAF to have established, when the change in the signature of the Director General of OLAF took place, an official document attesting to this change. The availability of such a document would have helped quickly to remove any possible doubt about the authenticity of the decision opening the inquiry."

(6) OLAF refers to point 2 of this letter. However, the Ombudsman has not been able to identify the relevant passage.

(7) UCLAF is the French acronym for the Unit for the Coordination of Fraud Prevention. UCLAF was created in 1988 and replaced in 1999 by OLAF, which took over most of its functions.

(8) The Ombudsman notes that the final report, a copy of which is included in the file, is dated 12 December 2002 and that the date given by OLAF in its answer therefore seems to show the wrong year.

(9) The Ombudsman understands that OLAF is in fact referring to 24 June 2002.

(10) The Ombudsman understands that the complainants refer to October 2000.

(11) In its reply to Question 8, OLAF refers to its reply to Question 7. The Ombudsman understands that these two sentences, which were part of OLAF's reply to Question 7, are relevant to Question 8.

(12) See, by analogy, Case C-353/99 P Council of the European Union v Heidi Hautala [2001] ECR I-09565, paragraphs 30-31.

(13) OJ C 202, 18.08.2005.