09 Dec 2013

EU Needs Public Prosecutor to Fight Fraud

Vice-President and European Commissioner for Justice, Viviane Reding has championed the establishment of the EPPO. Photograph: Christophe Karaba/EPA
Vice-President and European Commissioner for Justice, Viviane Reding has championed the establishment of the EPPO.
Photograph: Christophe Karaba/EPA

On the occasion of International Anti-Corruption Day, Hertie School of Governance Professor Alina Mungiu-Pippidi, ERCAS director and initiator of an anti-corruption coalition in many countries, urges that more should be done to reduce corruption risks related to EU fraud. The European Commission estimates the value of money lost due to fraud at €500 million, but the real figure could be in the billions. Reviewing recent research published by ERCAS and its collaborators in the EU FP7 project ANTICORRP which highlights a lack of EU funding oversight as a key anti-corruption problem, Professor Mungiu-Pippidi says that the establishment of the European Public Prosecutor’s Office is fully justified.

In an ongoing effort to protect EU funds from fraud, the establishment of a European Public Prosecutor’s Office (EPPO) was proposed in July 2013. The EPPO would be able to organize and prosecute its own EU-wide investigations in collaboration with member state authorities against suspected fraudsters. Though 11 states filed a formal complaint against the proposal on grounds that the current anti-fraud agency (OLAF) and Eurojust (the EU’s joint judicial authority) are sufficient for prosecuting fraud, none of those opposed submitted a counter proposal in time for an October deadline, giving their tacit approval. The European Public Prosecutor’s Office is currently set to launch in January 2015.

The first ANTICORRP policy report, “Controlling Corruption in Europe,” released in September of this year, offered timely and relevant recommendations on controlling corruption in the spending of EU funds. The report not only advised that auditory mechanisms for EU funds be refined and linked to an impact evaluation of funds, but also called for increased involvement by national civil society in monitoring governance and controlling corruption with particular application to EU cohesion and assistance funds. Establishing the EPPO, would be a big step toward fulfilling those recommendations, states Mungiu-Pippdi.

Speaking at the one year review of the ANTICORRP project at the Maastricht School of Governance on 2 December 2013, Professor Mungiu-Pippidi said project researchers have uncovered that EU funds are increasing corruption risk for Central and Eastern European countries by at least a third and that the current audit mechanisms are blind to the real nature of fraud and corruption in many countries. Since the current audit system is not geared towards prevention, but operates by retroactive corrections, it has a devastating impact on budget deficits, as countries advance funds that are not reimbursed by Brussels afterwards. In 2013, Romania, which has been struggling with a budget deficit, received a €1 billion correction for irregularities in EU funds management in 2007- 2009, which left the government struggling to balance its books and forced the introduction of an unpopular gas tax.

“The countries opposing the establishment of the European Prosecutor are of two kinds,” she asserts. “Either we are dealing with countries which regret their earlier generosity and would like to recall the cohesion funds altogether, like Germany, or with countries where authorities really have a hand in who gains from EU funds and believe for good reason that a prosecutor under EU oversight will be more independent than one subordinated to national authorities. The former’s lack of cooperation is a serious blow, as the project will be based on voluntary participation. Nothing dramatic if Germany stays out, but post-communist countries should be in.” She concluded by saying that nobody has to fear the new European Prosecutor except those who steal from European funds.

Under current legal arrangements, the EPPO will be realized through “enhanced cooperation,” a specific EU approach where a minimum of nine member states are allowed to integrate closely within existing EU legal structures, but without the involvement of other member states.  What this means in terms of the power of the EPPO, is that it would be able to launch investigations and prosecute suspected people in any member state which signs up to the proposal.