European Court of Auditors: EPPO-OLAF relationship - weak link in recovering EU money

The European Union's fight against fraud affecting the common budget is seriously weakened by structural deficiencies in cooperation and communication between the European Public Prosecutor's Office (EPPO) and the European Anti-Fraud Office (OLAF), two essential institutions of the European anti-fraud architecture which, although they have clear and complementary legal mandates, operate in practice on parallel, poorly connected and often inefficient paths, according to an audit report published yesterday evening by the European Court of Auditors. The cited document states that the limited and fragmented exchange of information between the EPPO and OLAF directly affects the Union's ability to detect, investigate and sanction fraud, but also to effectively recover lost money.

The scale of the problem is highlighted by the figures in the report. Between 2022 and 2024, the EPPO and OLAF received approximately 27,000 allegations of fraud, but only a third of these were considered relevant enough to be investigated: 40% (5,573 out of 14,052 referrals) in the case of EPPO and 26% (3,317 out of 12,959 referrals) in the case of OLAF. The current reporting system, based on different obligations depending on the entity that discovers the suspicion, generates double reporting, excessive consumption of resources and significant delays, without guaranteeing that all allegations with criminal potential end up being assessed by the EPPO. On the contrary, the Court finds that the current mechanism does not ensure that all suspicions of fraud are examined criminally, and the procedures for transferring cases from OLAF to the EPPO are slow, bureaucratic and uneven.

The European Court of Auditors reports that OLAF considered 162 allegations to involve an alleged criminal offence and transferred them to the EPPO. On average, OLAF took 68 days to complete its assessment of the cases, half of which took more than the maximum two-month period set out in the regulation. In 19 cases, it took more than 100 days to assess whether criminal conduct had occurred, with the longest assessment lasting almost nine months (256 days). OLAF also forwarded 143 criminal reports to the EPPO. Sending criminal reports to the EPPO added 17 days to the duration of the process on average. For the longest case, the duration was extended by 55 days.

• 40 cases sent by OLAF to the EPPO did not reach the European prosecutors

A critical point is the exchange of information during investigations. Although OLAF is obliged to notify the EPPO when it identifies indications of a crime, the EPPO transmits to OLAF very limited information on ongoing criminal investigations, closed cases or cases referred to court. This asymmetry drastically reduces the possibility for OLAF to conduct complementary administrative investigations that could lead to swift measures to protect the EU budget. In practice, such complementary investigations are rare and the potential for coordinated action remains untapped.

The audit report shows that 2,314 allegations were assessed by OLAF as lacking sufficient evidence to open an investigation, which led to the case being dismissed. This assessment took an average of 57 days, well below the maximum two-month limit set in the regulation. Although OLAF assessed the allegations as cases to be dismissed, it still carried out 62 "hit/miss' checks with the EPPO. For 22 cases, the EPPO replied that it had also received the allegation in question. For the remaining 40 cases, of which the EPPO was not aware, OLAF did not submit an offence report to the EPPO, as it considered that there was no suspicion of criminal conduct. The EPPO therefore had no visibility into these allegations. According to the European Court of Auditors, the diversity of reporting requirements for allegations of fraud results in a complex system that does not guarantee that all allegations reach the EPPO. Excluding the 62 cases for which the "hit/miss' procedure was applied, OLAF dismissed 2,252 allegations, in accordance with its legal framework. The Court notes that only the EPPO has the final authority to assess whether an allegation involves criminal conduct. In the present case, it is not possible to establish whether the EPPO received the files in question, in part or in full, as the case management systems used by the two European bodies are not interconnected, the European Court of Auditors report states.

The imbalance is accentuated by the fact that EU bodies report around three times as many allegations of fraud to OLAF as to the EPPO, even though the latter is the only structure with criminal prosecution powers at European level. In addition, there are major variations between Member States in the number of cases reported, discrepancies that are not analysed by the European Commission and that may indicate systemic problems in detection or reporting. The Court of Auditors explicitly stresses that these variations should be investigated in order to understand why, in certain countries or institutions, the level of fraud reporting is significantly lower.

• European Commission, insufficient follow-up of damages recovery

The concrete impact of these dysfunctions is visible in the recovery of funds. Following investigations carried out during the period under review, OLAF recommended reimbursements to the EU budget totalling EUR 615 million, but by the end of 2024 only EUR 23 million had actually been recovered. In the same period, the EPPO froze assets worth around EUR 3 billion, and in 2024 national courts ordered the recovery of EUR 232 million following criminal investigations. However, the European Commission does not have a mechanism to monitor whether these recoveries have actually been implemented and whether the entire amount owed to the EU budget has been recovered, which leaves a major oversight gap between the judicial decision and the concrete financial outcome.

The gravity of the situation is summarised in the official statement in the European Court of Auditors' press release, which leaves no room for interpretation. "Effective cooperation between all entities involved in the fight against fraud, from EU investigators to national police and judicial authorities, is vital to keep fraudsters at bay. The ongoing review of the EU's anti-fraud architecture provides an excellent opportunity to address the system's shortcomings in terms of information exchange and supervision,” says Katarína Kaszasova, who is responsible for drafting the report presented by the Court of Auditors yesterday.

Against this background, the European Court of Auditors makes strong recommendations, which implicitly outline the failure of the current cooperation between the EPPO and OLAF. The auditors call for the establishment of an interoperable anti-fraud system that centralises all allegations of fraud in a single register, clarify where suspicions should be reported and allow for a rapid and efficient exchange of information between the EPPO, OLAF and the Commission, while respecting the confidentiality of criminal investigations. The Court also calls for allegations of fraud with criminal elements identified by OLAF to be forwarded to the EPPO without undue delay and, where the EPPO considers that an allegation is not criminal in nature, for essential information to be communicated to the administrative bodies, in order to allow for measures to protect the EU budget. In parallel, the auditors call on the European Commission to analyse the significant variations in the levels of fraud reported at EU level and to investigate the causes of low reporting in certain Member States or institutions. Last but not least, the Court recommends improving the supervision of actions taken following fraud investigations, by developing a methodology that would allow for the measurement of the overall financial impact of EPPO and OLAF investigations and the real monitoring of the recovery of amounts owed to the Union budget.

The European Court of Auditors' report thus paints a picture of an anti-fraud architecture in which EPPO and OLAF are not in conflict, but neither do they operate as an integrated system. The mandates are clear, but the lack of a real exchange of information, the fragmentation of procedures and the absence of effective supervision transform these institutions into isolated links in the same chain. In this grey area between criminal and administrative investigation, time, money and decisive opportunities to protect the EU budget are lost, and fraud remains, paradoxically, better connected than the institutions called upon to combat it.