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11. Points out, however, by way of warning, that the conclusion of tripartite contracts and agreements cannot in any way be allowed to jeopardise the binding nature or uniform application of Community law; 12. Considers that there is an urgent need to ensure that in cases where tripartite contracts and agreements are concluded the political responsibility remains clearly recognisable to citizens; 13. Requests the Commission to embark on its pilot programme with a sense of urgency and to keep the Parliament informed about progress; 14. Approves of the Commission’s intention to extend this experimental strategy to other policy areas too, after successful conclusion of the pilot phase; 15. Stresses that tripartite contracts are not intended to amend existing Community legislation or be an appropriate instrument for transposing directives into national law; considers that, as they involve Member States as key partners, they will not conflict with the constitutional systems of the Member States and will not change the competences of public authorities; 16. Recommends to the Commission that tripartite contracts and agreements should, save where national constitutional law provides otherwise, be developed on the footing that responsibility for implementing Community law ultimately lies with the Member States and that the latter may under no circumstances deflect responsibility for failure to comply with such law onto the regional or local authorities; 17. Considers that agreements and contracts should set clear targets, be of fixed duration and specify the results to be achieved by the end of the period laid down; 18. Considers that, because they are not based on binding Community law and have therefore not been the subject of a legislative procedure involving Parliament and the Council, tripartite agreements should be restricted to matters concerning improved implementation of Community law; considers that, furthermore, it should be informed of the signing of such agreements through its competent committees; 19. Approves of the Commission’s plan to restrict itself, in the first instance, to launching pilot tripartite agreements and requests that, once it has assessed them and drawn relevant conclusions, the Commission should submit a report to Parliament assessing their functioning and the way in which they have helped to improve the implementation and transparency of Community policies; 20. Instructs the President to forward this resolution to the Commission, the Council, the Court of Justice, the Ombudsman and the parliaments of the Member States, requesting the latter to further disseminate the resolution to the regions concerned.

P5_TA(2003)0551

Assessment of OLAF
European Parliament resolution on the Commission report on the evaluation of the activities of the European Anti-Fraud Office (OLAF) (COM(2003) 154 2002/2237(INI)) The European Parliament, having regard to the Commission’s report (COM(2003) 154), having regard to Opinion 2/03 of the OLAF Supervisory Committee on the Commission report (1),
(1) OLAF Supervisory Committee, Opinion 2/03 on the Commission report, evaluation of the activities of the European Anti-Fraud Office (OLAF), Luxembourg 18.6.2003.

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having regard to the activity reports of OLAF and of the OLAF Supervisory Committee, having regard to Article 280 of the EC Treaty, having regard to Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) (1), having regard to Rule 47(2) and Rule 163 of its Rules of Procedure, having regard to the report of the Committee on Budgetary Control (A5-0393/2003),

A. whereas the EC Treaty requires the Community and the Member States to counter fraud and any other illegal activities affecting the financial interests of the Community through measures which shall act as a deterrent and be such as to afford effective protection, B. whereas Article 1 of Regulation (EC) No 1073/1999 defined three areas of activity for OLAF: first, investigations carried out in order to step up the fight against fraud, corruption and any other illegal activity affecting the financial interests of the European Community, second, giving assistance to competent authorities in the Member States in order to coordinate their activities, third, designing and developing methods of fighting fraud, C. whereas it is clear from the structure and content of the Regulation that the legislator placed the emphasis on the Office’s investigative activities, D. whereas the objective of OLAF’s investigations is to uncover personal responsibility, to verify the extent of financial losses or of false payment claims or customs declarations and to furnish evidence that will stand up in court or can be used in disciplinary proceedings, E. F. whereas by this token OLAF may not act as either an audit service or an information service, whereas Regulation (EC) No 1073/1999, which was adopted in May 1999, contained some provisional elements pending an amendment of the legal framework which would permit better checks on the legality of investigations, and pending an amendment to the Staff Regulations with a view to clarifying the duties and protecting the rights of officials and other staff,

G. whereas when it took office the Commission committed itself in public statements to a ‘zero tolerance’ policy with regard to fraud and irregularities, but whereas to date it has largely failed in putting this claim into practice and a vigorous and credible change of course is therefore needed, H. whereas Article 15 of Regulation (EC) No 1073/1999 requires the Commission to transmit to the European Parliament and the Council, during the third year following the entry into force of the Regulation, a progress report on the Office’s activities, accompanied by the Supervisory Committee’s opinion, together, where appropriate, with proposals to modify or extend the Office’s tasks, I. J. whereas OLAF must be judged by the extent to which it has mastered the tasks allocated to it, whereas the current Director of OLAF took office in March 2000 and since then has had more than three and a half years in which to set up the Office, and whereas any support he may have required from Parliament with improving the Office’s investigative activities was available,

(1) OJ L 136, 31.5.1999, p. 1.

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K. whereas the Eurostat case has laid bare a number of weaknesses in the Office’s investigative activities: The investigation of the claims, although they have been known to the Office since 2000, has in some cases gone on for years. This testifies to an initial misjudgment of the incidents at senior management level and possibly even to sabotaging of the investigations by OLAF officials. The strict rules governing internal investigations (protection of the rights of the parties concerned by the investigation) were in some cases circumvented or ignored. The Office made serious mistakes in the allocation of its resources: the number of investigators employed on internal cases such as this currently fewer than 20 is totally insufficient to achieve solid, usable results, L. whereas the shortcomings of OLAF in no way excuse the mistakes and communication problems within the Commission; the Commission’s services have been in possession of all relevant information in the Eurostat case since 1999/2000,

M. whereas since its foundation OLAF has by its own account dealt with more than 3 000 cases, of which 1 426 were taken over from its predecessor UCLAF; whereas, however, only a very small number of these were the subject of genuine administrative investigations within the meaning of OLAF Regulation (EC) No 1073/1999, N. whereas in 2002 alone some EUR 2 billion were lost to the Community as a result of irregularities and fraud and in addition to this one must assume a considerable number of undetected cases,

1. Strongly criticises the Commission for not officially transmitting the progress report required under Article 15 of the OLAF Regulation to the European Parliament and the Council until 31 July 2003, more than a year late; notes that the report has already been overtaken by events, because it provides no answers to serious problems in the Office’s investigative activities which had long been discernible and have now become obvious as a result of the Eurostat case; regards this as further proof that it was a mistake to concentrate the competences for drawing up the budget and keeping accounts and for combating fraud in the hands of one Member of the Commission, because this inevitably creates a conflict of interest; insists that this conflict of interest be avoided in future; 2. Notes the announcement by Commission President Prodi on the 2004 legislative and work programme to the effect that the Commission will make legislative proposals aimed at making progress on the idea of a European Public Prosecutor and giving OLAF fully independent status; 3. Welcomes the announcement made by Romano Prodi, President of the Commission, on 18 November 2003 that the Commission will make legislative proposals that can still be adopted by Parliament and the Council before the European elections, thus contributing to restoring public confidence; supports in this connection the proposals made by the President of the Commission to accord greater priority to OLAF’s core tasks, to maintain OLAF’s competence in respect of internal investigations, to improve the flow of information between OLAF and the institutions, to do more to safeguard the rights of defence of persons under investigation and to enhance the role of the Supervisory Committee; expects the Commission to make such proposals at its meeting in December 2003 at the latest; calls on the Commission, in so doing, to adopt and implement the recommendations made in this resolution;

Scope of the Commission report 4. Finds it incomprehensible that the Commission did not address problems and difficulties (inefficiency of investigations, insufficient protection of the rights of those concerned) in its report, although they were already clearly set out in earlier reports, opinions and minutes of the OLAF Supervisory Committee;

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5. Emphasises that so far the Commission has failed to recognise its political responsibility for the work of OLAF; points out that although the Commission is not permitted to influence the course of investigations, which are carried out under the sole responsibility of the Director of OLAF, it has to exercise disciplinary power under Article 12(4) of the OLAF Regulation, after consulting the Supervisory Committee, if irregularities occur; 6. Calls on the Commission to propose solutions in this framework of a kind that will also solve the problems experienced to date by all the institutions and agencies, which can be summarised as follows: inadequate application of the rules intended to ensure respect for the fundamental rights of those concerned; absence of control mechanisms to enforce these rules for the protection of the parties concerned; unnecessary overlap between OLAF’s remit and the remits of other Commission bodies (in the area of auditing and of monitoring proper application of Community law), which prevents OLAF from concentrating on its investigative tasks; inconsistencies in the communication policy practised by OLAF, which demands silence on the part of the institutions concerned but itself gives information about its investigations to the media; 7. Considers that OLAF should not be regarded as a continuation of the earlier Commission anti-fraud unit (UCLAF), but as an investigatory authority which works with Europol, Eurojust and the European Judicial Network, and which may work in the future with the European financial prosecution service;

Findings of the OLAF Supervisory Committee 8. Notes with deep concern the findings of the OLAF Supervisory Committee to the effect that, four years after the creation of OLAF and more than 3 years after the appointment of its director, some crucial conditions for the success of the Office have still not yet been met; 9. Agrees with the OLAF Supervisory Committee that the objectives set by Parliament and the Council can only be realised under the following conditions: OLAF needs a strong leadership, OLAF must set priorities for its work, OLAF must define a clear investigation policy in the context of its programme of activities which does justice to these priorities; 10. Shares the view of the Supervisory Committee that it ‘is not a Commission committee but is independent and reports to all the institutions’ (Section IV.5 of the opinion); specifically welcomes the fact that the Supervisory Committee works in complete transparency and makes not only its reports and opinions but also the detailed minutes of its deliberations available to all the institutions; regards this as a valuable support in its work; 11. Emphasises how valuable it has been to appoint to the OLAF Supervisory Committee external, independent people who in their own countries meet the requirements for fulfilling high-ranking tasks in connection with the Office’s activities; further emphasises that this principle is inviolable and remains an indispensable condition for effective and credible work by the Supervisory Committee; 12. Regards the opinion of the OLAF Supervisory Committee as confirming its suspicion that a large number of serious problems have arisen as a result of the incorrect implementation of Regulation (EC) No 1073/1999; 13. Refers in this connection to Article 11(7) of the Regulation, which states that the Director shall inform the OLAF Supervisory Committee of cases requiring information to be forwarded to the judicial authorities of a Member State; notes that OLAF is evading this provision by always informing the Supervisory Committee after the information has already been forwarded to the judicial authorities;

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Priorities for the next six months 14. Expects the Commission to make legislative proposals on the basis of Article 280 of the EC Treaty in time for its plenary meeting in December 2003 with a view to making the following improvements to the OLAF Regulation: (a) The OLAF Supervisory Committee should in future not only ensure that the investigative activities of the Office are carried out independently, but also be given explicit powers to ensure that the fundamental freedoms and rights of those affected by the investigations are protected; this applies particularly to the right of the parties concerned to adopt a position on the facts in question and to the principle that the conclusions of an investigation may only be based on conclusive evidence; (b) The Director of OLAF should be compelled to draw up clear, binding rules governing the Office’s investigative activities and the provision of information on these investigative activities to the institutions and the public, and, following a favourable opinion from the Supervisory Committee, to adopt them; (c) The right of the Director of OLAF to carry out the Office’s administrative investigations with complete independence must not be touched. Nevertheless, it should be stressed that the Director has an obligation to inform the OLAF Supervisory Committee: before OLAF transmits information to the judicial authorities of a Member State; on all cases in which internal investigations take longer than nine months; on all cases in which complaints have been submitted against measures in the context of internal investigations. (d) In order to reinforce the independence of the Supervisory Committee and to highlight its interinstitutional role, the secretariat of the Supervisory Committee should no longer be provided by OLAF, but instead should, in administrative terms, be part of the European Parliament’s secretariat. Rules should be drawn up to govern this, based as far as possible on the rules governing the secretariat of the European Ombudsman; (e) The provisions incorporating the new rules on disciplinary procedures forming part of the reform of the Staff Regulations must be brought into line with the OLAF Regulation. 15. Welcomes opinion 3/03 by the OLAF Supervisory Committee on strengthening its role; welcomes in particular its proposal to establish a lawyer for individual rights, who would assist the Committee in carrying out its additional tasks and be charged with drawing up the Committee’s opinions on complaints submitted to the Director of OLAF pursuant to Article 14 of the OLAF Regulation; 16. Draws attention to Article 10 of the OLAF Regulation, under which the Director of OLAF is expressly required to forward to the judicial authorities information on matters liable to result in criminal proceedings; emphasises that the Regulation does not leave the Director any discretionary powers in this regard, nor does it allow for the possibility of passing on any information to third parties; 17. Is very concerned at the finding of the Supervisory Committee that the absence of precise rules of procedure ‘entails a fairly significant risk for the protection of the fundamental rights of persons under investigation’(Section V of the opinion); calls on the Director of OLAF to draw up clear, precise rules of procedure and, following a favourable opinion from the Supervisory Committee, to bring them into force without delay; 18. Expects OLAF to take clear account of the three areas of activity laid down in the OLAF Regulation (administrative investigations with the aim of furnishing evidence of irregularities; providing support for agencies in the Member States; planning and developing methods for combating fraud) and to bear in mind that the legislator placed the emphasis on the Office’s investigative activity. In organising the Office and establishing its programme of activities for 2004, the following points should therefore be borne in mind: (a) Priority must be given to investigations in those areas where the national authorities have no particular interest or no powers, that is to say investigations within the institutions and agencies and in connection with activities administered directly by the Commission,

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(b) Investigations in the areas mentioned in a) should always be conducted strictly in accordance with the rules for internal investigations, because in these cases possible involvement or negligence on the part of EU employees has to be investigated, (c) At least 140 posts should be available in the establishment plan for investigations, (d) Support and coordination activities in cooperation with the Member States and information-gathering tasks should be clearly separated in organisational terms from investigations, (e) The Office should consider which tasks it could hand over to Commission departments; 19. Expects the Commission also to submit legislative proposals without delay aimed at remedying the weak points in the new Financial Regulation which can already be seen and which presently increase the risk of fraud; calls in particular in this connection for the rules to be amended so that firms can be excluded from the award of contracts if they refuse to disclose their ownership; 20. Calls also for the Financial Regulation to provide for more effective controls of the Directors-General in their capacity as authorising officers, in order to prevent misuse of power; suggests in this connection that the Commission’s accountant should verify the information supplied to him/her by the authorising officers, at least by carrying out spot-checks; also suggests that the ‘internal audit capacities’ in the Directorates-General should no longer answer to the Directors-General but to the internal auditor; considers that the posts of accountant and internal auditor should be filled after an open invitation to tender; 21. Calls on the Commission to submit the necessary legislative proposals for amending the Financial Regulation and its implementing provisions before the end of the year.

Priorities for the work of the Office and for combating fraud 22. Calls on the Commission to submit to the European Parliament by April 2004 a communication informing it what measures the candidate countries have taken to protect the financial interests of the Community and whether it regards these as sufficient; reminds the Commission and OLAF that the European Parliament has repeatedly called for OLAF offices to be established in the candidate countries (1); 23. Fails to understand, in this connection, why the post of chief adviser to coordinate anti-fraud activities in the candidate countries has not yet been filled, although it has been provided for in the budget since 2000; 24. Calls on Italy, Luxembourg and Austria to ratify without delay the Second Protocol on the Agreement on the protection of the Community’s financial interests; 25. Urges the Council to adopt the directive on the protection of the Community’s financial interests (2);

26. Calls on all bodies, institutions and offices, if they have not already done so, to accede without delay to the Interinstitutional Agreement signed on 25 May 1999 by the European Parliament, the Council and the Commission (3); insists that internal decisions must follow the wording of the standard decision in the annex to the Interinstitutional Agreement; insists that any employee must be able to address OLAF directly, without informing their hierarchical superior; calls on the Commission to present a report by 31 December 2003 on the ways in which this Agreement must be adapted in the light of Court of Justice case-law, the decisions of the Ombudsman and the reform of the Staff Regulations; 27. Notes that the European Court of Justice, in its findings of 10 July 2003 (4) against the European Investment Bank and the European Central Bank, established that the investigative powers conferred on OLAF by Regulation (EC) No 1073/1999 were legal and compatible with the rule of law;
(1) (2) (3) (4) P5_TA(2003)0099, 13.3.2003, paragraph 43. OJ C 71 E, 25.3.2003, p. 1. OJ L 136, 31.5.1999, p. 15. C-11/00 and C-15/00 (OJ C 213, 6.9.2003, p. 1).

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28. Insists that an audit be carried out at OLAF as of January 2004 to assess the effectiveness and efficiency of its investigative activities; notes that it is in the nature of things that an audit of this kind must be carried out only under the direct control of the OLAF Supervisory Committee; 29. Calls on the judicial authorities of the Member States to inform OLAF of the outcome of any criminal proceedings initiated on the basis of OLAF investigations; 30. Calls on OLAF to submit to the European Parliament by May 2004 a communication showing how cooperation with Interpol, Europol, Eurojust and third countries is regulated; 31. Supports the Commission in its concern to have provisions on combating counterfeiting included in cooperation, association and pre-accession negotiations;

Investigations 32. Hopes that OLAF will be able to conclude by the end of 2003 the cases taken over from UCLAF from before 1999, of which 150 are still pending, and to submit a final report to the European Parliament by May 2004; 33. Insists that the OLAF investigation reports be drawn up in such a way that they can be used by the national prosecuting authorities or the disciplinary offices of the European institutions, taking into account that different investigation methods and legal bases may apply to OLAF investigations and disciplinary procedures; 34. Further calls for the OLAF final report to recommend, in cases where inadequate administrative structures could have facilitated fraud, that a thoroughgoing investigation of these structures be carried out by the relevant agencies; such an investigation, however, cannot be a task for OLAF; 35. Notes that of the 3 000 or more cases pending at OLAF, more than 2 300 fell within the areas of structural funds, trade, customs, external aid, agriculture and direct expenditure; notes, in addition, that investigations in these areas often take two years to carry out; asks OLAF to carry out a detailed analysis of specificities and developments in the various sectors with a view to devising the most appropriate strategies to put a stop to the fraud in each specific area;

Internal investigations 36. Calls for OLAF and the European Parliament to be notified, in confidence, of the outcome in cases where a European institution opens disciplinary proceedings on the basis of OLAF investigations; 37. Fails to understand why in a number of cases OLAF has been unable to conclude its investigations within the allotted nine-month time limit; notes, for example, that two Eurostat cases have been pending since October 2000, and that in the case of the Vienna Commission office the investigations, which were opened on 7 August 2001, have still not been concluded two years later; 38. Comes to the following conclusions on the basis of the internal investigations carried out in the European Parliament: in the past, internal investigations lasted one to two years; this is too long; calls for OLAF to inform the European Parliament if an investigation takes more than nine months; calls on OLAF likewise to contact the European Parliament at any time if parliamentary measures seem necessary to protect the rights of the parties concerned, the financial interests of the institution, or the investigation, final reports which are forwarded to the European Parliament should also take account of which information needs to be available to whom, the European Parliament should establish rules in collaboration with OLAF as to how final reports on internal investigations should be handled in the European Parliament;

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39. Notes that, during the reporting period from June 2001 to June 2002, only 63 of 552 cases (11 %) related to internal investigations, and that OLAF took follow-up measures in only two (1 %) out of 241 cases;

External investigations 40. Urges that the checking of regulations, directives and decisions with a view to fraud-proofing should be left in principle to the Commission; where necessary the Commission may ask OLAF’s Policy, Legislation and Legal Affairs division for support; 41. Notes that various legal instruments are used for external investigations; calls, therefore, on the Commission to submit by May 2004 a communication stating how these legal instruments can be given a common framework, particularly in the areas where Member States have no specific powers, such as direct expenditure and internal investigations; 42. Stresses the importance of OLAF’s acting when the Member States have no opportunity to intervene or do not want to take action, e.g. in the case of direct expenditure; 43. Calls on OLAF to clarify by May 2004 how its cooperation with the Member States operates and how it could be improved (e.g. by a service platform); in particular, national authorities should take on a greater role in investigations of fraud and other illegal activities (e.g. by on-site checks), in accordance with the subsidiarity principle; urges Member States that have not yet done so to identify which national authorities should assist OLAF with on-site checks for each sector of expenditure; 44. Calls for checks on the extent to which cooperation agreements on the one hand between OLAF and the Commission offices, particularly the managing departments, and on the other hand between OLAF and the European Court of Auditors, could improve OLAF’s operational work;

Transmission of information between OLAF and European institutions 45. Insists that the notification of OLAF pursuant to Article 2 of the standard decision (1) should be enshrined in the Staff Regulations, and that whistle-blowers should not suffer any personal or professional disadvantages; is concerned that the current draft on the reform of the Staff Regulations does not adequately determine the rights and duties of officials and other staff in this respect; 46. Calls in this connection on the Commission and OLAF to check whether it would be worthwhile to create the post of a legal officer (impartial third party), thus guaranteeing the complete anonymity of an informant; 47. Draws attention to Article 4 of Regulation (EC) No 1073/1999, which sets out the conditions and practical arrangements for an internal investigation; 48. Notes the Commission’s draft code of conduct (2) which is intended to regulate the exchange of information between OLAF and the Commission in the context of internal investigations; 49. Rejects the current draft, since it makes such extensive changes to the Regulation in force, and thus to OLAF’s competences, that it might be necessary to redraft the provisions on the transmission of information in the regulation itself; insists that the Director of OLAF must determine the content of the information; he must be guided by the protection of the rights of the affected party, by the need to carry out an effective and efficient investigation, and by the duty to prevent any financial damage (including future damage) to the European institutions; the European institutions must decide on their own responsibility how they deal with information they have received from OLAF;
(1) Annexed to abovementioned Interinstitutional Agreement of 25 May 1999. (2) SEC(2003) 871 consolidated, 14.8.2003.

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OLAF administration 50. Is convinced that the work of OLAF makes it necessary for the Office to enjoy the greatest possible degree of independence in its staff management; in doing so, it must comply with the requirements set out in the Staff Regulations, but also with the instructions and restrictions imposed by the budgetary authority, particularly in its use of temporary posts; 51. Insists that the Director of OLAF should submit his budget direct to the budgetary authority and that OLAF should be given a separate heading in the 2004 budget, in the same way as the Ombudsman; 52. Looks to the Supervisory Committee to take a more prominent role in future;

53. Notes that the Supervisory Committee must be enabled, by increasing the staffing of its secretariat, to issue opinions: before OLAF transmits information to the judicial authorities of a Member State (Article 11(7) of the Regulation), on all cases in which internal investigations take longer than nine months (Article 11(7) of the Regulation), on all cases in which complaints have been submitted against measures in the context of internal investigations (Article 14 of the Regulation); 54. Calls for the independence and freedom of action of the OLAF Supervisory Committee to be strengthened by having its secretariat administratively separated from the Commission and allocated for organisational and budgetary purposes to the European Parliament; 55. Recalls that the procedures to appoint a Director took a very long time; recalls that the current Director’s appointment will come to an end in March 2005; calls on the Commissions to advertise the post of Director in the Official Journal in spring 2004, so that Parliament’s relevant committee can hear the suitable candidates in autumn 2004 on the basis of a proposal from the Supervisory Committee; expressly warns the Council and Commission as of now against publicly declaring a preference for certain candidates before these hearings in Parliament have taken place; 56. Recalls that the procedure to reappoint the Supervisory Committee took a very long time and was marked by great difficulty in reaching agreement in the Council; calls on the Commission to submit a proposal for the nomination procedure of the members of the OLAF Supervisory Committee;

Prospects: OLAF as part of a more comprehensive structure to fight crime 57. Is firmly convinced that OLAF’s current hybrid status part of the Commission for administrative purposes, independent in its investigations is untenable in the long term; in future OLAF must be part of a more comprehensive structure to fight crime; 58. Calls on OLAF to discuss the measures it wishes to take, in the light of the administrative and management audit, with the OLAF Supervisory Committee and the European Parliament; 59. Calls for the activities of OLAF to be examined again in 2007, in which connection the provisions of Article 15 of Regulation (EC) No 1073/1999 should be applied; * * *

60. Instructs its President to forward this resolution to the Council and Commission, the OLAF Supervisory Committee and OLAF.

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