Leaked OLAF report on Dalli case flawed and inconclusive

Dubious role of former Legal Service DG Michel Petite

On Sunday 28 April 2013, OLAF’s investigation report on the Dalli case was published on the website of the newspaper Malta Today. After a first reading of the report (of which two pages appear to be missing), below are Corporate Europe Observatory's first observations.

  • The report documents what looks like scandalous attempts by Silvio Zammit to secure millions of euros from tobacco company Swedish Match and smokeless tobacco lobby group ESTOC1 in exchange for lifting the EU-wide ban on snus. However, the report presents no direct evidence that Commissioner Dalli was being aware of these attempts.

  • In the cover letter to Maltese Attorney general Peter Grech, OLAF claims that “a number of unambiguous and converging circumstantial evidences” indicates that Commissioner Dalli “was actually aware” of Mr Zammit’s machinations. But the ‘evidence’ presented in the report does not back up this claim.

  • After having read the report we can only conclude that OLAF’s investigation was seriously flawed and that its conclusions are unconvincing, if not biased.

  • It looks as if OLAF has selectively compiled arguments to support that Dalli had behaved inappropriately, without considering the credibility of the witnesses.

  • OLAF has not assessed the possibility that there is an element of entrapment by the tobacco industry. Several elements in the investigation report point to this being a real possibility and therefore failing to properly assess this scenario is a serious failure.

  • The report confirms that tobacco company Swedish Match – after having failed to achieve its lobbying goals via the normal channels in Brussels – was aggressively seeking for ways to get access to Commissioner Dalli via people in his personal sphere on Malta.

  • OLAF’s conclusions make a big deal of Dalli having violated the transparency rules for contacts with tobacco lobbyists of the World Health Organisation2. While this might be the case, it has also become clear that the top level of the European Commission, including Barroso’s own cabinet, ignored these rules. The Commission should urgently start taking the implementation of these rules seriously. Using the WHO rules as a justification for Dalli’s resignation is not convincing, as on the basis of this logic, several other top Commission officials would have to resign as well.

  • In the report OLAF refers to the Code of Conduct for Commissioners, but the actual wording of the code is far too weak to serve as justification for Dalli’s resignation. Transparency campaigners have long argued for the need to tighten the Commission’s ethics rules, to clarify what can be considered appropriate relations between Commissioners and lobbyists.

  • The report reveals a shocking new fact: when preparing the complaint to the European Commission, Swedish Match was assisted by former Commission Legal Service head Michel Petite, who established the contact with Catherine Day, Secretary General of the European Commission.3 Petite went through the revolving door to work at lobbying-law firm Clifford Chance, whose clients include tobacco giant Philip Morris. Petite is also a member of the European Commission's ad-hoc ethical committee, tasked with advising on conflicts of interests when Commissioners go through the revolving door, re-appointed for a second three year term in December 2012. Corporate Europe Observatory will urge the Commission to remove Michel Petite from the ad-hoc ethical committee to end this outrageous conflict of interest.

  • The OLAF report raises further questions and concerns, including about the Commission’s and OLAF’s handling of the case. It is imperative that the European Parliament sets up an investigative committee to establish the facts and to hold accountable those responsible for mistakes.

Later today we will publish additional observations, as the burning questions for OLAF head Kessler and Commission President Barroso start to erupt.

  • 1. Swedish Match is a prominent member of ESTOC
  • 2. UN WHO Framework Convention on Tobacco Control (FCTC), Article 5.3, and accompanying guidelines.
  • 3. According to the leaked OLAF report, Fredrik Peyron, Senior Vice-President of Swedish Match, told OLAF that Swedish Match, after having taped a conversation with Zammit, “started planning for how to report this matter to the relevant EU authorities and contacted Mr. Michel Petite at Clifford Chance to receive advice. At our request he contacted Ms. Catherine Day and we submitted a written report of the matter”