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EU: The Hague Programme—Justice and Home Affairs (EUC Report)

My Lords, on 31 October 1994, I had the privilege of making my maiden speech in this House. It was on a European Committee report about financial control and fraud in the EU. The theme of the debate was that much had to be done to improve the situation. And here we are again—we have another report on how to strengthen the work of OLAF, concluding that much remains to be done. I want to address my remarks to the House on that subject. In the days when the Community was first established, the European budget was of modest size and its disposals were similarly modest. It has also to be said that modest, too, were the provisions for financial control. Today, however, as the report states, the European Union has at its disposal—and disposes of—very large sums of money. Obviously, the financial rules have had to change and over the years they have done so. Doubtless, they must continue to do so. I have to say from my own limited experience as an MEP that once a system is established, it is not always easy to get it changed, with all the different interests that are always involved. It took me nearly two years substantially to revise the original financial regulations. Although I inserted a clause in it stipulating that it should be revised every three years, I am not sure that it has greatly changed since then. As the report states, with the movement of cash increasing within the European Union, it was inevitable that those funds should attract the attention of fraudsters and be vulnerable to fraud and corruption. All the more so, as large sums are now being spent outside the EU. So in 1988, UCLAF was set up as the first anti-fraud unit and that has now been replaced by OLAF. OLAF, at the moment, is dependent on the European Commission, but not accountable to it. I agree with the committee’s conclusion that OLAF’s connection with the Commission should be severed completely. The problem arises as to how that can best be done. I have particularly taken note of the excellent evidence given in the report, first, by Mr Raymond Kendall, chairman of the OLAF supervisory committee; and, secondly, by M. René André, a lawyer and a deputé at the French National Assembly. It seems to me that the way forward lies in one of three ways. First, the supervisory committee and OLAF should be independent, with ultimate control with the Court of Auditors. As a very much retired chartered accountant, I confess to a sympathy for that course. Alternatively, if a European Public Prosecutor is ever established, some form of control could be established with him. However, there remains a good deal of controversy about what will happen in that regard. Finally, there is the view put forward by Mr   Kendall that satisfactory independence can be achieved by tightening up the present arrangements. Perhaps I may first deal with Mr Kendall’s evidence. When the chairman asked Mr Kendall:"““So far as reforms to the structure or the way in which OLAF works are concerned, are there any particular changes that you, from your perspective, would recommend with a view to further safeguarding the independence of OLAF?””." Mr Kendall replied:"““The short answer is probably no. The reason I say that is because although over the years we have identified clearly a certain number of difficulties, in our view many of those difficulties, if not most of them, could probably be settled within the structure of OLAF, if we were sure that it was working as it should be. As I said to you before, we are not convinced that one year after these structures are in place, that is a sufficient time to be able to make a judgment as to whether there is anything wrong with the present system””." More than a year has passed since he stated that view. Things have moved on and I wonder whether he now feels better able to make that judgment. On the other hand, M. André, in his powerful evidence, believes that the only way to stop what he called,"““games that parliamentarians all over the world play””—" I must say that I enjoy that phrase—would be completely to separate OLAF from the Commission and not have it dependent on the Commission any more. It is interesting to note that the Government, in their response to the committee, disagree with that view and support the view taken by Mr Kendall. The Government’s reply even suggests that,"““such a move might constrain OLAF’s access to and understanding of internal processes and information””." To my mind, the implication of that statement must be that as long as the present arrangements continue, OLAF will continue to be allowed greater access because the Commission will continue to have an influence over it. That is just what we should be trying to get rid of. There was, however, one change that Mr Kendall supported for immediate action. He pointed out that his supervisory committee personnel are actually provided by the OLAF people and, administratively and from a budgetary point of view, they come under OLAF as well. He tells us:"““Both the Parliament and even the Commission said that was not a good situation to be in, and so they thought that the Court of Auditors might be an appropriate place for it to be””." I am bound to say that I agree. Finally, I note the conclusion set out by the committee in Chapter 4, paragraph 109 of its report:"““OLAF, Europol and Eurojust have been created in a piecemeal way. There appears to have been an absence of co-ordination in the policy establishing these bodies””." That is a statement of fact, but I note that there is no comment or recommendation for action. The truth must be that with the enlarged Community and with its greatly extended boundaries, the opportunities for fraud are growing enormously. The need must be for a co-ordinated organisation that can satisfactorily deal with this growing danger. At the same time, that organisation must be established if it is to do its work properly, free from the influences of what M. André has called the ““games that parliamentarians all over the world play””—in other words, free from the undue influences of other European Union institutions, the political parties and the national interests.