New EU prosecutors will crack down on cross-border fraud
The European Commission wants a new legal weapon against cross-border criminal activity.
A new European public prosecutors’ office with powers to investigate fraud against EU funds and VAT cheats will get the approval of member countries this week and could be in operation by 2018, according to officials in Brussels.
The European Public Prosecutors’ Office (EPPO) will be able to prosecute the misuse of EU funds, which cost the bloc an estimated €638 million last year, and take action against VAT fraud, which currently costs EU governments at least €50 billion a year in lost revenues.
Negotiations have been going on for three years but should be completed in the coming “three decisive months,” said Europe’s Justice Commissioner Věra Jourová.
The idea of a common prosecutors’ office to investigate, prosecute and bring to trial offenses against the EU’s financial interests came out of the 2007 Lisbon Treaty and the European Commission put forward its first proposals in 2013. However, national governments were reluctant to cede control of criminal justice, one of the most jealously guarded policy areas.
The original draft went too far for many EU capitals as it envisaged a centralized agency almost completed detached from national criminal justice systems. Instead, ministers have opted for an elaborate system of national “delegated prosecutors” who would work under the auspices of the European Public Prosecutor’s Office.
“The legal systems and cultures of the member states still vary to a considerable degree,” said Ivan Korčok, the ambassador for Slovakia which holds the presidency of the Council of Ministers, in a debate in Strasbourg last week. “It is clear that only a prosecutor with his or her background in a given legal system will be able to know exactly what actions are most appropriate and efficient in that given state.”
The Commission needs the backing of all EU governments — except the U.K., Ireland and Denmark, which have opted out — to take the 136-page proposal further. Failing that, a group of at least nine countries can proceed via so-called “enhanced cooperation” procedure. The actual remit of the EU prosecutors — such as definitions of the crimes involved and sentencing guidelines — will need the approval of MEPs and governments before it becomes law.
Governments and MEPs had disagreed over the European Parliament’s demands for VAT fraud to be included in the remit, until Jourová secured the decisive backing of German Finance Minister Wolfgang Schäuble by pointing out that VAT fraud has become increasingly cross-border in nature.
A breakthrough on the VAT issue is “within reach,” Jourová said ahead of meetings with EU finance and justice ministers this week, where she will push for their support. “Now it’s time to come from words to action.”
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OLAF, the EU’s anti-fraud agency, is eager to see the EPPO established soon. “Fraudsters who steal European funds aren’t amateurs stopping at national borders,” said Giovanni Kessler, OLAF’s director general. “We cannot continue relying on archaic cooperation tools if we want to catch them fast and bring them to justice.”
Only 40 percent of fraud cases investigated by OLAF are ever taken up by national prosecutors, who are often not equipped to deal with cross-border criminal activity, said one Commission official. The hope is that the EPPO can act faster on such crimes by having specific expertise and being able to bypass national criminal justice systems.
Jourová hopes it will also free up Eurojust, the agency coordinating between national judicial systems, to focus less on financial crime and more on working with Europol in the fight against terrorism and drug trafficking.
However, some MEPs remain skeptical about how effective the new agency will be.
“The collegial structure of the European Prosecutor’s office is, in my view, completely exaggerated,” said MEP Axel Voss, a member of the center-right EPP group. “We should not create something that creates additional or unnecessary bureaucracy.”
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