By Maria Giovanna VEROUX (FREE-Group Trainee)
According to the European Commission every year several hundred million euros are lost due to fraud. Data collected and analysed during the period 2007-2013 identify “suspected fraud” averaging about €500 million every year, but, it is more than likely that the real amount of fraud is significantly higher [I] .
These data clearly demonstrate that the Union’s financial interests are still not adequately protected and that a low level of protection corresponds, on the other hand, to a high level of fraud.
Currently, only national authorities can investigate and prosecute EU fraud. While the role of the existing EU bodies involved in actions to fight offences against the EU’s financial interests, even if this has increased over the years, still mainly focuses on coordination, cooperation, exchange of information and administrative investigations.
OLAF – the European Anti-Fraud Office established in 1999 – can only conduct administrative anti-fraud investigations and refer the results of its to the competent national authorities which then decide independently whether or not to initiate criminal proceedings (statistics shows that only 1 in 5 cases transferred by OLAF to the national prosecution authorities leads to a conviction).
Eurojust – the European Agency for criminal justice cooperation, established in 2001 – plays an important role in cross-border cases involving the financial interests of the EU, stimulating and improving the coordination of investigations and cooperation between the competent authorities in the Member States. However, like OLAF, does not have yet the power to start criminal investigations or prosecutions in the Member States.
2. The EPPO Commission proposal [II].
In order to:
– contribute to the strengthening of the protection of the Union’s financial interests and further development of an area of justice, and to enhance the trust of EU businesses and citizens in the Union’s institutions, while respecting all fundamental rights enshrined in the Charter.
– establish a coherent European system for investigation and prosecution of offences affecting the EU’s financial interests.
– ensure a more efficient and effective investigation and prosecution of offences affecting the EU’s financial interests.
– enhance deterrence of committing offences affecting the EU’s financial interests.
– increase the number of prosecutions, leading to more convictions and recovery of fraudulently obtained Union funds.
– ensure close cooperation and effective information exchange between the European and national competent authorities[III];
In July 2013 the Commission adopted its Proposal for a Regulation on the establishment of the European Public Prosecutor’s Office (EPPO) in order to create a single strong and independent Office that is able to investigate, prosecute and bring to court the perpetrators of criminal offences affecting the Union’s financial interest.
The proposal is the result of a long consultation process that started with the Corpus Juris [IV] elaborated and presented by an expert group in 1997 and 2000 (subsequent follow-up study), followed by the Green Paper on criminal-law protection of the financial interests of the Community [V] presented by the Commission in 2001 and the unratified Treaty establishing the Constitution for Europe in 2004 [VI].
Finally Article 86 of the Treaty on the Functioning of the European Union (TFEU) [VII] contains the legal basis for the establishment of the EPPO providing for a special legislative procedure requiring unanimity in the Council and European Parliament approbation.
With unanimity being a difficult condition to meet it is worth recalling that an enhanced cooperation would also be possible if supported by at least nine Member States.
It also foresees – with the unanimity of the Council, the consent of the European Parliament and the consultation of the Commission – the possible extension of competences and powers of the EPPO to serious crime having a cross-border dimension.
Two months after the Commission’s proposal, fourteen national parliamentary chambers[VIII] in 11 member states asked the commission to review its proposal and achieved enough votes to launch the so-called “yellow card” procedure.
This possibility is foreseen in Protocol 2 (art. 6 and 7) [IX] annexed to the Treaties on the application of the principles of subsidiarity and proportionality.
From the date of transmission of a draft legislative act, national Parliaments have eight weeks to consider whether it is compatible or not with the principle of subsidiarity.
In the case where reasoned opinions represent at least one third of all the votes allocated to the National Parliaments, the draft must be reviewed.
On the basis of that review, the Commission decides whether to maintain, amend or withdraw the proposal, and it must give reasons for its decision.
The Commission, after having re-examined the text, decided to maintain it concluding that it complies with the principle of subsidiarity enshrined in Article 5 TUE and that a withdrawal or an amendment of the proposal was not opportune[X].
On the basis of the proposal submitted by the European Commission, the EPPO Regulation has since been discussed in the Council of the European Union.
3. The redrafted text of the Council Greek Presidency – From a simple and original vertical structure to a complex and traditional horizontal one
The Council Greek Presidency (January-June 2014), who followed the Lithuanian one, tried to take into consideration the opinion expressed by the national parliaments, particularly focusing his attention on the structure of the future EPPO, replacing the original “vertical/hierarchical model” with an “horizontal/collegial” one.
According to the Commission proposal the EPPO, established as a new decentralised Union body with legal personality, shall have a simple and efficient structure which should allow quick and efficient decision-making in the conduct of criminal investigations and prosecutions.
It shall comprise:
– a European Public Prosecutor with his/her Deputies, considered the head of the Office who shall direct its activities and organise its work;
– European Delegated Prosecutors located in each Member States.
As a rule, the investigations and prosecutions of the EPPO – that shall have exclusive competence to investigate and prosecute criminal offences against the Union’s financial interests – should be carried out by European Delegated Prosecutor in the Member States under the direction and supervision of the European Public Prosecutor, generally applying national law (they will also continue to exercise their functions as national prosecutors – “double hat” approach, advocated ever since the Corpus Juris) [XI].
In cases involving several Members States or cases which are of particular complexity, in order to ensure a consistent approach throughout the Union, the European Public Prosecutor will lead the investigation himself or may reallocate the case to another European Delegated Prosecutor.
The main purpose of the Commission’s proposal was to create an Office not dealing with horizontal judicial cooperation between national judicial authorities, as Eurojust already does. The challenging idea was that this investigative and prosecutorial Office should act, through a vertical simple structure, in the territory of the Union’s Member States, considered, for the purpose of investigations and prosecutions conducted by the EPPO, as a single legal area in which the EPPO may exercise its competence.
The revision by the Greek Presidency foresees a different structure of the EPPO, which undermines the simplicity, innovation and, probably, the efficiency of the mentioned/above one. In fact the “hierarchic/vertical model” (centralised European Public Prosecutor and decentralised European Delegated Prosecutors) is replaced by an unnecessary complex collegial/horizontal structure which provides, in addition to the European Public Prosecutor (now: “Chief” European Public Prosecutor), his/her Deputies and the European Delegated Prosecutors :
– a College of European Prosecutors (composed of the European Chief Prosecutor and one Member per MS) who shall be responsible for monitoring the activities of the Office and for taking decisions on strategic matters and general issues;
– several Permanent Chambers (composed of the European Chief Prosecutor, the Deputies and one or more Members of the College) with the task of directing and monitoring the investigations and prosecutions conducted in the MS.
This raises significant doubts in relation to the division of powers and competences between different actors/levels, the expenditure of resources, slowing operations and the possible lack of efficiency of the Office.
Furthermore the “exclusive” competence of the EPPO in respect of criminal offences affecting the financial interests of the Union (as defined in Article 14 of the Commission Proposal) becomes “concurrent” with the National Authorities under the Italian Presidency and “priority” under the Latvian one.
4. The redrafted text of the Council Italian Presidency – From a “single legal area” to a “single office”
The remaining parts of the text were less considered and remained “open” during the transition to the Council’s Italian Presidency which had to manage a rather disorganised and “imbalanced” text [XII].
The Italian Presidency (July-December 2014) made a great effort in order to go ahead with the proposal. The main issues – structure and allocation of competences within the Office, investigative measures, initiation, conduct and dismissal of investigations, admissibility of evidence, procedural guaranties of suspects and judicial review – were discussed during 12 meeting days at expert group level, in addition to four meeting of CATS. The proposal has been debated also at ministerial level at informal in July followed by the formal JHA Council in October.
As results of these discussions, a redrafted text of the first 37 articles of the proposal has been informally agreed [XIII] .
Particular attention was given to the independence of the decision-making in the Office in relation to the appointment and dismissal of the Members of the EPPO (see artt. 13-15 of the proposal as redrafted by the Italian Presidency).
The Italian Presidency considered that the mechanisms for nomination and appointment of the members of the EPPO, being de facto too “national” (Members States → European Prosecutors → Chief Prosecutor), risked to undermine the independence of the Office, which is surely a key aspect for its future functioning and success.
Therefore a “more transparent and objective” redraft was proposed in which it is the Council who selects:
– one European Prosecutor per country (out of 3, chosen by Member states);
– and, together with the European Parliament, the Chief Prosecutor from a list of College’s members and non, suggesting for an open call for candidates to be published in the Official Journal of the European Union [XIV].
Apart from this effort to make the decision making process of the Office more independent, the Italian Presidency, unfortunately, confirmed the main changes in the structure of the EPPO introduced by the previous one, foreseeing, in addition, the abandonment of the concept of a single legal (European) area which was one of the most significant step towards the creation of a common judicial area of freedom, security and justice.
In fact art 25 of the Commission proposal affirmed that for the purpose of investigations and prosecutions conducted by the EPPO, the territory of the Union’s Member States shall be considered a single legal area (as initially suggested by art.18 of the Corpus Juris Study) in which the Office may exercise its competence. The Italian Presidency’s redraft of art. 25 completely delete this paragraph, merely stating, in art. 7, that the EPPO shall be a Union body operating as one single Office with a decentralised structure.
The idea of a single legal area, strictly connected with the concept of “european territoriality”, meant in particular that the European Prosecutors would be competent throughout the Member States and that judgments relating to the offences for which the EPPO was competent would be mutually recognised[XV].
The reference to a single office, completely changes the meaning/sense of that expression cutting every reference to an european legal area or an european territoriality depreciating the innovative value of that expression.
5. Council Latvian Presidency – Still a long way to go…
The Latvian Presidency (January-June 2015), in its Programme[XVI], underlined his intention to make further progress on the draft regulation, hoping to finalise within its mandate the first five chapters of the Regulation.
Following COPEN of 26-27 February 2015 and the discussions of Ministers in Council on 13 March 2015, the Latvian Council Presidency proposes a redraft of the first 29 Articles of the Regulation which seems to confirm the main changes of the previous Presidencies.
The redraft does not include the new draft Article 7-12 (“Status and Structure of the European Public Prosecutor’s Office”), since, according to the Presidency, “these provisions will be examined in another context”.
The main relevant topics debated (and still under discussion), are the following:
5.1 – The set up and composition of the Chambers [XVII] (see art. 8 of the Italian redrafted text) [XVIII]
According to art. 8, the College, on a proposal by the European Chief Prosecutor and in accordance with the Internal Rules of Procedure, shall set up Permanent Chambers to direct and monitor the casework of the EPPO.
They shall have, among others, the power to initiate an investigation, reallocate a case, determine the MS in which the prosecution shall be brought and dismiss a case[XIX].
Some delegation have requested detailed criteria for their composition to be set out in the Regulation, arguing in favour of specialised chambers or advocating a system where there is always one Chamber on duty. It has also been suggested that the European Prosecutors could be distributed between different Chambers with account taken of the size of the Member States and the expected number of cases.
Whichever system is chosen for the composition, closely related issue (not yet defined) are the allocation of cases (random allocation or pre-determined criteria?) and the formally set up of them (Chief Prosecutor or the College?).
5.2 – The investigation measures [XX] (see artt. 25-26)
The investigation measures are perhaps the issue that has been discussed most often in the Working Party. The Delegations in fact have expressed many diverging views. Some have argued for a partly harmonised European system of investigation measures providing for a list of investigation measures available to the EPPO in all Member States, while others would prefer if national law is applied in this regard.
The current draft represents a “balanced compromise” between these positions.
In fact the European Delegated Prosecutor handling the case shall be entitled to order the same types of investigative measures which are available according to national law in similar national cases, whereas an harmonisation is provided where the offence subject to the investigation would cause a damage of 100.000€ or more (the criteria used, therefore, considers the gravity of the crime in relation to its financial incisiveness for the EU budget).
5.3 – The role and competence of different actors within the Office [XXI] (see art. 11)
The current draft states that the European Prosecutors shall supervise investigations and prosecutions assigned to them, monitor the implementation of the tasks of the Office in their respective Member States, function as liaisons and channels of information between the Permanent Chambers and the EDP, ensuring that all relevant information from the Central Office is provided to European Delegated Prosecutors and vice versa.
The European Delegated Prosecutors, representing the EPPO in the Member States, shall be responsible for the investigations and prosecutions which they have initiated or which have been allocated to them.
The Permanent Chambers shall direct and monitor the investigations and prosecutions conducted in the Members States, ensure the coordination of them in cross-border cases and the implementation of decisions taken by the College.
Whenever necessary for the efficient handling of the investigations and prosecutions they may give instructions to the European Delegated Prosecutors.
In relation to this skill distribution, some Delegations have asked for the roles of each actor to be further clarified in order to avoid conflicts of competence within the Office. Others argued that too detailed rules are not appropriate, as the EPPO shall operate “as one single Office”.
The Presidency is asking Delegations if they are in favour of including more detailed provisions on the role of each actor and the precise definition of the term “whenever necessary”.
In relation to the decisions taken by the Permanent Chambers, a number of delegations have questioned whether any important operational decisions (such as the dismissal or reallocation of cases) always need to be taken by a Permanent Chamber. The risk is that such a system would not be able to ensure efficient and speedy proceedings.
Therefore they argued that the European Delegated Prosecutors must be given a broad competence to take some key decisions themselves.
On the other hand, the Commission has argued that important decisions should be taken at Chamber level, in order to ensure full independence of the decision-making of the Office.
5.4 – The issue of Transaction [XXII] (see art. 29)
The purpose of this provision is to provide for a fast and effective way to close certain cases without an indictment, in the interest of the proper administration of justice (recital 32 of the Commission proposal).
In fact it permits to the suspect to pay a lump-sum fine which, once paid, entails the final dismissal of the case.
During negotiations a considerable number of various views have been put forward. A majority of delegations have expressed support for the idea of a common European system for transaction, while other are against of such a system mainly since it is not known in national law. Many delegations have noted that a transaction should only be possible under certain conditions or that such a system would need to be submitted to judicial control.
The Italian Presidency first and the Latvian one propose a new version of article 29, to take account of request for a clarification of the conditions under which a transaction can be proposed. The new text requires:
– the approval of the competent Permanent Chamber;
– a set of cumulative criteria to be satisfied;
– the proportionality of the fine to the damage caused;
– the strengthening of the procedural safeguards of the suspect.
There are still many issues which will need further discussion; others, not yet even mentioned by the new Presidency – as, for example, the cross border investigations, the judicial review, the admissibility of evidence, the procedural safeguards, the ancillary competence of the Office – will surely need much more time.
The step by step approach, which has characterized the European Integration since the beginning, risks to be compromised if these steps are too small and too slow, compared with the huge ones of criminals; mainly, if these steps are backwards!
[II] Commission’s proposal for a Regulation on the establishment of the EPPO: full text available here
[III] Impact Assessment accompanying the Proposal for a Council Regulation on the establishment of the European Public Prosecutor’s Office: SWD(2013) 274 final
[IV] The ‘Corpus Juris’
[V] The Green Paper on criminal-law protection of the financial interests of the Community
[VI] Unratified Treaty establishing the Constitution for Europe in 2004
[VII] Article 86 of the Treaty on the Functioning of the European Union (TFEU)
[VIII] These opinions were issues by the Dutch Senate, Czech Senate, Dutch House of Representatives, Cyprus House of Representatives, UK House of Commons, Hungarian Parliament, Swedish Parliament, Irish Parliament, Romanian Chamber of Deputies, Slovenian Parliament, French Senate, Maltese Parliament and the UK House of Lords (Council of the European Union, Bruxelles, 28.11.2013, doc. 16624/13
[IX] Protocol 2 (art. 6 and 7) annexed to the Treaty on the Functioning of the European Union (TFEU)
[X] Communication from the Commission to the European Parliament, the Council and the National Parliaments on the review of the proposal for a council regulation on the establishment of the European Public Prosecutor’s office with regard to the principle of subsidiarity, in accordance with protocol no 2. → COM (2013) 851 – 27.11.2013
[XI] From a constitutional point of view, howeer, it raised concerns as to the independence of the EPPO. In fact this choice is confronted with the dilemma of serving “two masters” simultaneously. It seems that Members States abandone the “double hat” approach in favor of a “single hat” one).
[XII] Lorenzo Salazar, Diario (breve) del semestre di Presidenza Italiana 2014 nel settore della giustizia penale. Full article available here
XIII] Council of the European Union, Bruxelles, 28.11.2014, doc.15862/1/14
[XIV] The original Corpus Juris proposed to have the Delegated Prosecutors appointed by the European Parliament.
[XV] Further reading: M.Delmas-Marty and J.A.E. Vervaele, La mise en oeuvre du corpus juris dans les états members.
[XVI] The programme of the Latvian Presidency of the Council of the European Union (1 January–30 June 2015).
[XVII] Council of the European Union, Bruxelles, 14.01.2015, doc.5236/15
[XVIII] Draft Council Regulation on the establishment of the European Public Prosecutor’s Office, 18.12.1014, doc. 16993/14
[XIX] ART 9(3): “The Permanent Chambers shall take the following decisions in accordance with the conditions and procedures set out by this Regulation:
- a) to initiate an investigation where no investigations has been initiated by an European Delegated Prosecutor;
- b) to refer to the College strategic matters or issues of general application arising from individual cases;
- c) to reallocate a case;
- d) to determine the Member State in which the prosecution shall be brought;
- e) to bring a prosecution to Court;
- f) to dismiss a case;
- g) […]”
[XX] Council of the European Union, Bruxelles, 27.01.2015, doc.5630/15
[XXI] Council of the European Union, Bruxelles, 29.01.2015, doc.5632/15
[XXII] Council of the European Union, Bruxelles, 02.03.2015, doc.6318/1/15