Investigations related to EU expenditure

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.

Structural actions

Structural funds 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.

From 2000 to 2006 there were four structural funds: European Regional Development Fund (ERDF), European Social Fund (ESF), European Agricultural Guidance and Guarantee Fund (EAGGF), EAGGF Guidance Section and Financial Instrument for Fisheries Guidance (FIFG). During the programming period 2007-2013, the number of structural funds was reduced to three:

• European Social Fund (ESF)
• European Regional Development Fund (ERDF) and
• Cohesion Fund.

The funds are managed jointly by the EU and authorities in EU countries. Fraud investigations are usually initiated by national authorities.
More on structural funds

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 management of these funds is the responsibility of EU countries. Fraud investigations are usually initiated by national authorities.

• More on funding under the common agricultural policyAll available translations.
• More on SAPARD – accession programme for agriculture & rural developmentAll available translations.
• More on IPARD – agricultural & rural development assistance to countries preparing to join the EUAll available translations.
• More on IPA - Instrument for pre-accession assistanceAll available translations.

Direct expenditure

Accounting for 14% of the EU budget, this is expenditure allocated and directly managed by EU institutions alone (not jointly with national authorities, as with the structural funds). Beneficiaries are generally located in EU countries.

Fraud can affect grants, contracts, administrative arrangements, external experts, staff recruitment, Commission research, education and culture programmes (e.g. ErasmusAll available translations.), funds for research and advanced technology, environmental funding, training projects, joint ventures etc.

As a rule, national authorities are not involved in investigating fraud affecting direct expenditure.

External aid

External aid – for beneficiaries outside the EU – accounts for 2% of the EU budget.
Fraud can relate to funding for NGOs, funds to support national budgets and humanitarian aid.
In general EU national authorities are not involved in investigating fraud affecting external aid.

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 ?

OLAF:

• 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.