# Decision in case 1239/2014/JAS on the European Anti-Fraud Office’s handling of a “coordination case”
- Author: European Ombudsman
- Date: 2018-02-08T10:00+01:00[Europe/Paris]
- [URL](https://www.ombudsman.europa.eu/en/decision/en/89422)
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> In 2010, a public prosecutor in Germany asked the European Anti-Fraud Office (OLAF) to assist in the investigation of suspected fraud related to the award of EU funds. On the basis of information gathered during the investigation in Germany, OLAF drew up a final report and recommended to the European Commission that it recover EU funds paid to the two companies involved. These companies then complained to the Ombudsman that OLAF, among other things, should have "heard" them before recommending the recovery of funds.
> 
> OLAF argued that this had been a "coordination case", in which OLAF had merely assisted the German authorities. It thus considered that there had been no need to "hear" the complainants, which would be done at the national level.
> 
> The Ombudsman found that OLAF had not merely assisted a Member State authority in carrying out an investigation, but that it had also drawn its own conclusions and made its own recommendations to the Commission. The Ombudsman found that OLAF had no right to do so without having conducted its own investigation. The Ombudsman thus found that OLAF had committed maladministration and she recommended that OLAF clarify to the Commission that its "final report" had not been based on its own investigation. She also recommended that OLAF ensure that, in the future, it draws conclusions or issues recommendations only in cases where it conducts an investigation.
> 
> In its response, OLAF effectively rejected the Ombudsman's recommendations. It said that the most appropriate way to protect the EU's financial interests had been to inform the Commission in the form of conclusions and recommendations. In any event, it was for the Commission to decide on the appropriate measures to be taken. On the second recommendation, OLAF said that its governing legislation was in the process of being evaluated and that it would bear in mind the Ombudsman's recommendation in its follow-up to that evaluation.
> 
> The Ombudsman maintains her view that OLAF can draw its own conclusions and make its own recommendations only after having carried out its own investigation. The Ombudsman thus confirms her finding of maladministration on which her recommendations were based.
> 
Background to the complaint
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**1.**The complainants are two companies that constructed a yacht port and a hotel in Germany with the help of EU grants awarded by the European Commission. In October 2010, a public prosecutor in Germany requested the European Anti-Fraud Office (OLAF) to assist it in its criminal investigation of suspected subsidy fraud related to the project. In December 2010, OLAF opened what it refers to as a "coordination case".

**2.** In May 2013, OLAF closed that "coordination case". OLAF then forwarded a document called "*final report* " to the Commission. That report stated that the results of the investigation carried out by the national public prosecutor had proven that there were "serious irregularities to the detriment of the EU budget" (the report also noted that court proceedings concerning the subsidy fraud were still pending before a national court[\[1\]](#_ftn1){#_ftnref1}). On the basis of the report, OLAF recommended that the Commission recover the monies paid to the complainants.

**3.**In August 2013, the complainants asked OLAF to reply to several questions, including why the persons involved had not been "heard"---in the sense of being offered the opportunity to defend its position---before OLAF's final report. OLAF replied that the matter had been dealt with as a "coordination case", which meant that OLAF had merely supported the national authorities in a national investigation. Since "coordination cases" are not "investigations" carried out by OLAF, it argued that it had not infringed any of the complainants' rights. In late June 2014, the two companies concerned complained to the Ombudsman, mainly about OLAF allegedly not having respected certain procedural guarantees.

**4.** The Ombudsman opened an inquiry into the complaint. In the course of the inquiry, the Ombudsman received OLAF's replies on the complaint and the comments of the complainants. The Ombudsman's inquiry team also met with OLAF twice to inspect a number of documents and to discuss the matters complained about. On the basis of her inquiry, the Ombudsman found that OLAF had committed maladministration and made two recommendations[\[2\]](#_ftn2){#_ftnref2}.

### The Ombudsman's recommendations

**5.**The principal question in the inquiry was whether OLAF had, in addition to assisting the Member State authority, carried out its own investigation. If yes, certain procedural guarantees, such as the right not to incriminate oneself or the right to be heard, might apply.

**6.**The Ombudsman concluded that, in this case, all activities carried out by OLAF in the context of the "coordination case" could reasonably be understood to fall within the scope of "assistance" to a Member State authority carrying out a Member State investigation. OLAF's report clearly indicated that the information had been provided to it by the national public prosecutor. The Ombudsman also agreed that OLAF could, in the context of assisting a Member State authority, inform the Commission of the status and outcome of the national investigations.

**7.**However, the Ombudsman noted that, in addition to keeping the Commission informed, OLAF had also classified the actions of the complainants as constituting "serious irregularities to the detriment of the EU budget". This conclusion was not a conclusion of the national public prosecutor. OLAF had also made its own "recommendations" to the Commission based on that conclusion, for example that the Commission should recover the monies paid to the complainants.

**8.** The Ombudsman was of the view that OLAF, which insisted that it had not "investigate\[d\]" the complainants, had had no right to draw conclusions relating to the actions of the complainants, nor had it had the right to make recommendations to the Commission regarding the complainants. The rules gave OLAF the right to make "*recommendations* \[...\] *on the action that should be taken* "[^^\[3\]^^](#_ftn3){#_ftnref3} only when OLAF had carried out its own "investigation". OLAF thus at the very least created the impression that it had carried out an investigation. It was also arguable that OLAF had gone beyond the powers available to it.

**9.**As a result, the Ombudsman found that OLAF had committed maladministration and made the following two recommendations:

**OLAF should send a clarificatory note to the European Commission explaining that it had merely supported the national authorities in the case at hand and that its "final report" was not based on an OLAF investigation. The clarificatory note should state that the OLAF report was based on the findings of a national prosecutor. The note should also give an update as regards the status of the national court proceedings. The clarificatory note should also expressly state that OLAF withdraws its "recommendations" to the Commission. It should also note, however, that the Commission is free to evaluate itself the information set out in the report, to draw its own conclusions thereon and to take whatever action it deems appropriate.**

**OLAF should ensure that, for the future, it draws conclusions or issues "recommendations" only in cases where OLAF has itself conducted an investigation.**

**10.**In its opinion on the Ombudsman's recommendations, OLAF welcomed the Ombudsman's findings outlined in paragraph 6 above.

**11.** OLAF said that its role was to protect the EU's financial interests against fraud and other illegal activities. While OLAF does not conduct investigative acts on its own in "coordination cases", the purpose of such cases remains to protect the EU's financial interests. This means that OLAF is obliged to assess information obtained in the context of a "coordination case" and to take appropriate action to fulfil its role. In the absence of a detailed procedural framework in the Regulation governing OLAF's work[\[4\]](#_ftn4){#_ftnref4}, OLAF bases itself on internal rules and practices to ensure the efficient and effective handling of such matters. In the present case, after having assessed the information available to it, OLAF considered that the most appropriate way to protect EU's financial interests was to inform the Commission in the form of a final report with recommendations.

**12.**OLAF stated that it had neither misled the complainants nor the Commission concerning the nature and scope of its involvement in the case, its role and the origin of the information acquired and later transferred. Indeed, OLAF's report clearly stated that OLAF had, in the context of a coordination case, merely supported the national authorities.

**13.**Against this background, OLAF did not consider it necessary or appropriate to send a "clarificatory note" to the Commission, or to withdraw the recommendations made in its report.

**14.** OLAF also stated that its internal rules and practices in relation to "coordination cases" have evolved over time and that the Regulation governing OLAF's work[\[5\]](#_ftn5){#_ftnref5} is currently under evaluation[\[6\]](#_ftn6){#_ftnref6}. The Commission's evaluation report acknowledges the uncertainty of the procedures applicable to "coordination cases"[\[7\]](#_ftn7){#_ftnref7}. OLAF stated that it will take the Ombudsman's second recommendation, that OLAF issues "recommendations" only in cases where it conducts its own investigation, into consideration in the follow-up to the evaluation of the Regulation.

**15.**The complainants welcomed the Ombudsman's recommendations and expressed their disappointment with OLAF's refusal to send a "clarificatory note" to the Commission.

### The Ombudsman's assessment after the recommendation

**16.**The Ombudsman notes that OLAF has, in effect, rejected her first recommendation and made just a vague and general commitment in the case of her second recommendation. The Ombudsman finds it very regrettable that OLAF should adopt this position. The Ombudsman notes that the OLAF Regulation is being reviewed at present and hopes that any revised Regulation will help ensure that, in the future, OLAF will respect the procedural rights of parties with whom it engages in the course of its work.

Conclusion
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Based on the inquiry, the Ombudsman closes this case with the following finding:

**The Ombudsman maintains her finding that OLAF committed maladministration.**

The complainant and OLAF will be informed of this decision**.**

Emily O'Reilly

European Ombudsman

Strasbourg, 06/02/2018

[\[1\]](#_ftnref1){#_ftn1} At the time of this decision, the criminal proceedings in the matter are still pending before the national courts.

[\[2\]](#_ftnref2){#_ftn2} For further information on the background to the complaint, the parties' arguments and the Ombudsman's inquiry, please refer to the full text of the Ombudsman's recommendation available at: [https://www.ombudsman.europa.eu/en/cases/recommendation.faces/en/81841/html.bookmark](/en/cases/recommendation.faces/en/81841/html.bookmark)

[\[3\]](#_ftnref3){#_ftn3} See Article 9(1) of Regulation 1074/1999 (Council Regulation (Euratom) No 1074/1999 of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OCAF), OJ 1999 L 136, p. 8, available at: <http://eur-lex.europa.eu/eli/reg/1999/1074/oj>) and Article 11 of Regulation 883/2013 (Regulation (EU, Euratom ) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999, OJ 2013 L 248, p. 1, consolidated version available at: <http://eur-lex.europa.eu/eli/reg/2013/883/2017-01-01>).

[\[4\]](#_ftnref4){#_ftn4} Regulation 1074/1999 and, later, Regulation 883/2013.

[\[5\]](#_ftnref5){#_ftn5} Regulation 883/2013.

[\[6\]](#_ftnref6){#_ftn6} More information available at: <https://ec.europa.eu/anti-fraud/policy/olaf-regulation-evaluation_en>

[\[7\]](#_ftnref7){#_ftn7} Report from the Commission to the European Parliament and the Council, Evaluation of the application of Regulation (EU, EURATOM) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999, COM/2017/0589 final, Page 4, available at : <http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2017:589:FIN>