OLAF in 2021: Detection and prevention of fraud

In 2021 the European Anti-Fraud Office (OLAF) Recommended the recovery of more than half a billion euros in favor of the EU budget. Despite the ongoing challenges posed by the pandemic, OLAF continued to protect the EU budget by identifying and conducting investigations into increasingly the prevention of fraud against the multibillion-euro EU recovery and resilience mechanism.

OLAF’s 2021 report released yesterday highlights emerging fraud trends across a wide range of issues, and presents research and business focusing on both environmental fraud mechanisms – from a forestry project that never happened to a pipeline collapsed drinking water – as well as major customs and waste smuggling scams.

Commenting on the publication of its annual report for 2021, OLAF Director General Ville Itälä said: euros lost due to fraud and irregularities.

Prevention is the most effective tool in our hands and is at the heart of the work of OLAF and the EU institutions. In addition to its research, in 2021 OLAF helped develop safeguards against fraud that could target the resilience mechanism. and recovery, for which more than € 720 billion is projected to be invested in ensuring Europe’s green and digital transition. Human health and safety as well as the environment are the areas that are receiving more and more collateral damage from fraudulent systems. As the OLAF report points out, this is becoming even more serious in the light of the increase in EU funding available for the green transition.

The fraudsters continued their efforts to take advantage of COVID-19. When all eyes were on vaccines, we exposed the fraudulent attempts of swindlers as they tried to reach out to the national authorities with false vaccine bids worth more than € 16 billion.

Also, 2021 was an important year for OLAF because we worked hard to prepare the detailed information that we will send to the European Public Prosecutor’s Office (EPPO). These tracing operations are significant for the European Public Prosecutor’s Office, which has initiated at least 85 cases following information received from OLAF. All of the above have kept OLAF staff extremely busy. “I’m proud of OLAF’s service to Europeans.”

OLAF’s performance in investigating cases in 2021:

• OLAF completed 212 investigations, issuing 294 recommendations to the relevant national and EU authorities.
• OLAF recommended the recovery of € 527.4 million in favor of the EU budget.
• OLAF initiated 234 new investigations, following 1,110 reports received and analyzed by its experts.

Scammers continued to take advantage of the pandemic and became even more sophisticated and resilient. The most worrying phenomenon in terms of spending has been the infiltration of organized crime groups through various forms of administrative irregularities, such as double funding, conflict of interest and the manipulation of bids.

OLAF has continued to investigate cases of misconduct and non-compliance by members and staff of the EU institutions and bodies, thus helping to promote higher standards of public administration in the EU.

In terms of revenue, fraudsters have faced increasing difficulties in transporting large quantities of goods, splitting shipments of goods into smaller consignments. The complex forms of fictitious companies, established in many jurisdictions, including outside the EU, have been used to cover fraud under the declaration of lower customs value as well as fraud on origin. New fraud schemes have emerged in relation to COVID-19, green transition and waste management.

Fraud against green projects and digitization

At least 37% of the EU’s recovery and resilience mechanism will be used to facilitate the EU’s green transition. In 2021, OLAF identified and investigated cases that show how fraudsters also targeted green projects funding for digitization, another pillar of NextGenerationEU funding. These assumptions and mechanisms feed into OLAF’s analysis and future research, which will help protect the EU’s recovery and resilience mechanism in the future. Examples in the OLAF 2021 report are cases of fraud against the financing of software projects, alternatives to pesticides, forests, and more environmentally friendly aircraft. Cross-border smuggling can also negatively affect Europe’s green ambitions: the report shows that OLAF is working against waste trafficking, illegal refrigerant smuggling, and illegal pesticides.

Fraud prevention and protection of funds for EU recovery

Preventing revenue losses and preventing expenditure fraud is the most effective way to ensure that every euro is spent properly. Over the past year, OLAF has continued to focus on prevention. One of the hypotheses presented in the OLAF 2021 report shows how OLAF investigators uncovered a possible misuse of at least € 330 million – and recommended suppressing it before it even took place. OLAF fraud prevention experts also worked on the 2021 recovery and resilience mechanism. approving the national recovery and resilience plans of the 27 EU Member States.

False offers of COVID-19 vaccines

In February 2021, OLAF issued a clear public warning of possible vaccine-related fraud against COVID-19. OLAF had received information from government sources in EU Member States about bids from alleged intermediaries for the sale of large quantities of vaccines, mainly those approved for use in the EU. authorities to pay large advances to secure the sale and disappear with the money. All of these different fraud attempts accounted for almost 1.2 billion doses of vaccine for a total of more than 16.4 billion euros. OLAF’s intervention helped expose these bogus offers, preventing huge losses to public finances and protecting the availability of vaccines.

Tobacco smuggling

Many of the smuggled or counterfeit products targeted by OLAF each year are tobacco products. 2021 was no different: OLAF and its partners prevented a total of 437 million illicit cigarettes from being smuggled into the EU market. This amounts to 93 million cigarettes smuggled into the EU; and 91 million cigarettes smuggled into plants across the EU. OLAF also helped national authorities seize a total of 372 tonnes of raw tobacco. These actions are estimated to save the Member States of the EU € 90 million in lost revenue.

To read the full text of the report, click here.

OLAF fulfills its mission with:

• – conducting independent investigations into fraud and corruption cases to the detriment of EU funds, to ensure that all EU taxpayers’ money ends up in projects that can create jobs and growth in Europe,
• – its contribution to boosting citizens’ trust in the EU institutions by investigating serious misconduct committed by EU officials and members of the EU institutions,
• – the development of a sound EU anti – fraud policy.

As part of its independent investigation role, OLAF may investigate issues related to fraud, corruption and other offenses affecting the EU’s financial interests in terms of:

• – all EU expenditure: the main categories of expenditure are the Structural Funds, the Agricultural Policy and Rural Development Funds, direct expenditure and external assistance,
• – certain sources of EU revenue, in particular customs duties,
• – suspicions of serious misconduct committed by EU officials and members of the EU institutions.

Once OLAF has completed an investigation, it is up to the relevant EU authorities and national authorities to consider and decide on the follow-up to OLAF’s recommendations. All those involved are presumed innocent until proved guilty according to law in a national or EU court.

Lena Flytzani