What can OLAF investigate?
OLAF's mandate covers all EU expenditure. The main spending categories are: structural funds, agricultural policy & rural development, direct expenditure and external aid.
The European Structural and Investment Funds (ESIF) provide funding for thousands of programmes and projects all over Europe. Their main objective is to improve competitiveness and growth potential at local, regional and national level.
For the current programming period (2014 -2020), 5 Structural and Investment Funds exist:
- European Regional Development Fund (ERDF)
- European Social Fund (ESF)
- Cohesion Fund (CF)
- European Agricultural Fund for Rural Development (EAFRD)
- European Maritime and Fisheries Fund (EMFF).
The funds are managed jointly by the EU and authorities in EU countries. Fraud investigations are usually initiated by national authorities.
Common agricultural policy, and rural development programmes for countries preparing to join the EU
Together these constitute the second largest block of expenditure in the EU budget.
The common agricultural policy consists of 2 funds for the Member States:
- the European Agricultural Guarantee Fund (EAGF);
- European Agricultural Fund for Rural Development (EAFRD) – see also ESIF.
The management of these funds is the responsibility of EU countries. Fraud investigations are usually initiated by national authorities.
The Instrument for Pre-Accession Aid II (IPA II) provides funding for countries seeking to join the EU during the 2014 to 2020 programming period. The rural development component (IPA-RD II) provides additional assistance in this sector. IPA II replaced similar funds available to this sector during the most recent enlargements of the EU (IPARD and SAPARD).
Accounting for 14% of the EU budget, this is expenditure allocated and directly managed by EU institutions, bodies, agencies alone (not jointly with national authorities, as with the structural funds). Beneficiaries are generally located in EU countries.
It includes expenditure in, among others, the following areas :
- research and innovation (e.g. Horizon Europe programme)
- education, training and mobility of young people (e.g. ERASMUS+ programme)
- supporting the competitiveness of industry and in particular of micro, small and medium-sized enterprises (e.g. Single Market programme)
- environment and climate action (LIFE programme)
- improving the capacity of the EU to face security threats (Internal Security Fund)
- European public administration.
As a rule, national authorities are not involved in investigating fraud affecting direct expenditure.
External aid – for beneficiaries outside the EU – accounts for 2% of the EU budget.
Fraud can relate to:
- funding for NGOs, national development agencies or international organisations
- funds to support national budgets of non-EU countries or big infrastructure projects in the neighbourhood countries
- and humanitarian aid
OLAF cooperates with national law enforcement authorities, international organisations and other international donors’ investigative teams in order to carry out its tasks.
What constitutes EU-expenditure fraud?
- Use or presentation of incorrect or incomplete statements or documents leading to wrongful payment of funds from the EU budget or budgets managed by, or on behalf of, the EU
- nondisclosure of required information with the same effect
- misuse of funds for purposes other than those for which they were originally granted.
What is OLAF's role ?
- carries out investigations (e.g. on-the-spot inspections and witness interviews) into EU-funded projects in the country concerned to check that expenditure has been used correctly
- cooperates with national authorities (information exchange, on-the-spot checks, cross-check on suppliers and related businesses, coordination of forensic audits etc.
As well as working with departments within the Commission, OLAF cooperates with managing authorities in EU countries.
The success of investigations outside the EU often depends on the existence of international agreements. Cooperation with national authorities and operational partners in international organisations is very important. They often have major control responsibilities in projects financed by the EU; OLAF may not have sufficiently effective investigative powers of its own.