Explanatory Memorandum to COM(2011)914 - Hercule III programme to promote activities in the field of the protection of the EU's financial interests - Main contents
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| dossier | COM(2011)914 - Hercule III programme to promote activities in the field of the protection of the EU's financial interests. |
|---|---|
| source | COM(2011)914  |
| date | 19-12-2011 |
The Hercule I programme was based on Decision 804/2004/EC i which essentially put on a proper footing and expanded a number of activities in the field of the protection of the financial interests which had developed over time.
Decision 878/2007/EC i extended this programme over the period 2007 to 2013, as Hercule II. This 2007 decision placed specific emphasis on the fight against cigarette smuggling and counterfeiting to reflect the legal obligations of the Commission stemming from the Anti-Contraband and Anti-Counterfeiting Agreement with Philip Morris International signed in 2004. The latter was the first of the agreements signed with international cigarette manufacturers under which, in recognition of more than US$ 2 billion to be paid by them into national and the Union Budgets over periods of up to 20 years, the Commission and Member States agreed that European efforts to suppress the illegal traffic in tobacco products would be enhanced. The annual provision for Hercule was duly increased from 2007.
As the legal base for Hercule II will expire at the end of 2013, its replacement should ensure the continuity of European support for the activities carried out by the Commission and the Member States with the purpose of providing better information, carrying out studies and providing training or technical and scientific assistance in the fight against fraud.
The Treaty on the Functioning of the European Union (TFEU) reflects public concern about the protection of Union financial interests by providing for the principle of effective and equivalent protection across the Member States and the Union's Institutions, bodies, offices and agencies (Article 325 TFEU, former Article 280 TEC). The importance of gaining and maintaining public trust in the Union's capacity to protect taxpayers' money from fraudsters cannot be overstated, particularly in the present context of budgetary stringency and the negotiation of the Multiannual Financial Framework for 2014-2020 (MFF).
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- 3.1. Protection of the European Union's financial interests
- 3.2. Simplification
- 3.3. Respect of the principles of subsidiarity, and proportionality and the added value of the Programme
- 3.4. Legal basis
2.1. The Hercule II programme comprises a heterogeneous group of actions involving stakeholders who are all important to the fight against fraud, corruption and any other illegal activities affecting the financial interests of the Union but whose contribution takes different forms.
In 2011, the European Anti-Fraud Office (OLAF) has carried out an informal consultation of the following stakeholders, in part on the basis of questionnaires:
- OLAF's Task Group Cigarettes partners (specialist services in Member Stated concerned in particular with the agreements with the tobacco manufacturers);
- Member State services which use OLAF's Information Support Office - ISO;
- the Associations for European Criminal Law and for the Protection of the EU Financial Interests (European Lawyers Associations – ELAs).
These stakeholders were asked to evaluate the implementation of the Hercule II programme and to provide ideas for future objectives.
The Task Group Cigarettes identified a need for continuous and even reinforced support at Union level. Some concrete suggestions were made, covering possible future useful activities, technical matters and simplification. The Commission proposal takes these suggestions into account to a significant extent.
As regards the acquisition by the Commission/OLAF of commercially available data sources of value to operational services in Member States and to OLAF itself, the use of the same data sources facilitates a common approach to risk analysis in Member States. OLAF monitors database usage monthly, promoting effective usage by Member States, allowing for the creation of shared pools where necessary and reacting when usage increases. Such flexibility, added to the Commission's purchasing power when acting on behalf of all Member States, allows significant savings compared to the costs which Member States would incur if they procured the data individually and in practice ensures that some Member States have access to data which they could not otherwise afford. A user survey on external databases in the summer of 2011 confirmed that the Member States recognise the added value of this service in the fight against fraud. The Commission proposal takes full account of the results of this survey.
Training activities allow for a wide dissemination of anti-fraud and anti-corruption measures to better protect the financial interests of the Union. Close and regular cooperation between the competent national authorities and between these authorities and OLAF is a prerequisite to effectively implement the objectives of the treaty, and comply with the principles enshrined in article 325 paragraph 3 TFEU.
Finally, as regards the actions targeting legal professionals, both practitioners and academics, with an interest in developing the legal framework relevant to the protection of the Union's financial interests, the goal is to work towards an academic consensus, which would be supportive to strategic and legislative work related to the protection of Union financial interests. Feedback from ELAs has been positive. Some ELAs advocate simpler procedures for application and final reporting and the Commission proposal takes this into account to a great extent. Some very detailed suggestions for future topics of study or discussion were made. More generally, there was pressure to place more emphasis on national legal systems and their individual problems in the field of the protection of Union financial interests, although the Commission has favoured supporting projects with a clear added value at Union level and should continue to do so.
Regarding other activities financed under Hercule II, there is a continuous dialogue between OLAF and stakeholders, in particular in the sensitive sector of technical assistance where OLAF has received positive feedback over the years and has been able to adjust the details of the actions to reflect this feedback.
2.2. An impact assessment that has been carried out by the Commission. Four options have been considered, also taking account of the impact on the budgetary envelope:
Option 1: to continue the programme with the same level of funding (baseline scenario);
Option 2: to renew the Hercule programme with improved objectives and a better methodology, including in particular a higher maximum rate of co-financing for the activities of technical support such as the procurement of equipment;
Option 3: to significantly alter the distribution between the different spending objectives and put much greater support on operational and law enforcement activities;
Option 4: discontinue the Hercule programme, with the possibility to continue some actions under other Union co-financing programmes and/or to leave other actions to the Member States.
In view of the past experience, which is closely linked to operational activities of both the Member States and OLAF to protect Union financial interests as well as the expected impact for the future, including through developing actions, the option to renew the programme with improved objectives and a better methodology is the preferred option (option 2) with a budgetary envelope in real prices which remains similar to the current envelope (approximately 15 million EUR per year). In contrast, the option to significantly change the distribution between different spending objectives would result in an imbalance to the detriment of specific support for actions of prevention and detection of fraud and it might lead to confusion with regard to the attribution of responsibilities between Member States and the European Union. Member States are with their national authorities and budgets primarily responsible for the fight against fraud by means of justice and law enforcement. Discontinuing the programme would reduce expenditure at Union level, without however creating real economies and offsetting resources at national level or in the framework of another Union programme and therefore put at risk the effective and equivalent protection across the Member States and the Union Institutions, bodies, offices and agencies as enshrined in Article 325 TFEU.
Under articles 310 and 325 TFEU, the protection of the Union's financial interests against fraud, corruption and any other illegal activities affecting the financial interests of the Union is a shared responsibility between the Commission and Member States.
The Hercule III programme concerns this specific sphere of activity of the European Commission and its cooperation with both Member States competent authorities, as well as with the other European institutions and bodies, more particularly through OLAF.
It is essential that there should continue to be an instrument specifically dedicated to fighting fraud, corruption and any other illegal activities affecting the financial interests of the Union. Support from programmes designed for a wider impact would be less effective in addressing such a specific issue and in political terms, the Union institutions should demonstrate that they share a real determination to deal with this very sensitive subject and to put into practice the principles set out in the Treaty. Accordingly, the Hercule III programme would:
- target exclusively the protection of the financial interests of the Union, in the context of a long term vision which is coherent with other Union objectives, on the basis of the priorities defined each year for this specific field of expertise;
- allow the implementation of other Union programmes to focus on priorities other than the protection of the financial interests;
- fully take into account the results of the actions already co-financed in the past in this field, including in terms of targeted beneficiaries and geographical balance;
- aim to have direct impact on not only some Member States investigations, but also on OLAF investigations.
A priority for the Commission and for this programme, as in other programmes under the Multiannual Financial framework (MFF), is to simplify the regulatory environment and to facilitate to the greatest possible extent the access to this programme of the competent national authorities, non-profit organisations and other types of stakeholders in the Member States, candidate and acceding countries, as well as EFTA/EEA countries and partner countries of the European Neighbourhood Policy.
Coherence with the Financial Regulation:
The programme proposal is fully coherent with the Financial Regulation and its implementing provisions. Grants and procurement are the main financial instruments used to implement the programme. The simplification measures proposed in the Commission proposal for the revision of the Financial Regulation, notably the recourse to lump sums, flat rates and unit costs will already limit the administrative burden. In view of the importance of the processing of subsistence and travel costs paid under the programme, the programme will introduce simplification measures offered by the new Financial Regulation and its Implementation Rules in this area. For grants under EUR 50 000 lighter management procedures should be foreseen. In particular, the Commission may authorize reduced requirements in terms of breakdown of costs and estimates, the use of simplified requirements for application as well as for reporting of outcomes.
Another measure of simplification envisaged concerns the direct information and consultation of the Member States' and acceding countries' representatives through the increased use of working groups and experts committees, such as the COCOLAF (Advisory Committee for the Coordination of Fraud Prevention) at different stages of the implementation of the Programme. Thus, improvements in the implementation and the procedures may be brought to the Annual Working Programmes based on the feed-back received from the representatives participating to this Committee.
3.3. Respect of the principles of subsidiarity, and proportionality and the added value of the Programme
The Hercule programme relates in part to activities of the European Commission and more particularly OLAF, and cooperation with the other European Institutions and bodies, as well as with Member States. Therefore, by definition, the key objectives of the proposal cannot be attained by action at the national level alone. This programme aims at ensuring equivalent protection in the Member States and in all Union's institutions, bodies, offices and agencies. The programme has a cross-border dimension, reinforcing cooperation between stakeholders in different Member States and with third countries.
The 2011 consultation of the main stakeholders concerned by the implementation of the Hercule II programme has also pointed out that the principles of subsidiarity and proportionality are fully respected; the measures envisaged under the programme do not go beyond those necessary to achieve the objectives of the programme.
The European Commission initiates the Union's annual and multiannual programming (Article 17 TEU). The Union may support the efforts of Member States to improve their administrative capacity to implement Union law. Such action may include facilitating the exchange of information and of civil servants as well as supporting training schemes (Article 197 TFEU). Expenditure at Union level on the protection of Union financial interests is therefore justified in terms of subsidiarity where it facilitates cooperation between the Union and Member States or between Member States, without impinging on Member States’ responsibilities.
The added-value of the Hercule III programme is demonstrated by the savings that will derive from the collective procurement of specialised equipment and databases to be used by the stakeholders and the savings derived from the collective specialised training. An increased effectiveness of the cross-border operations is expected on the basis of common technical standards and joint training.
In addition, the objectives have been renewed with a specific attention paid to the specific, measurable, achievable, relevant, and timed criteria (SMART). This will also help to ensure a proper implementation and monitoring.
The legal basis for the proposal is Article 325 TFEU; the opinion of the Court of Auditors is requested.
The programme will cover the period 2014-2020, and the overall budgetary envelope is EUR 110 000 000 in current prices. This amount is in line with the Commission's Communication on the next Multi-Annual financial framework for the period 2014-2020: A Budget for Europe 2020''.[3]
The legislative financial statement attached to this proposal for a Regulation sets out the budgetary implications and the human and administrative resources needed.