(CN) — In a major, first-of-its-kind move, the European Union is setting up a European-wide prosecutor’s office that will have power to investigate and charge people for financial crimes committed against the EU.
The European Public Prosecutor’s Office is expected to come into force next year or early in 2021. Akin to federal prosecutors in the United States, the new agency will consist of a central office in Luxembourg and satellite prosecutors’ offices in individual EU countries.
Since the EU’s birth, the economic and political union has not had an EU-level agency invested with prosecutorial powers. Today, if someone commits fraud against the EU they are taken to court by national prosecutors, but experts say that system has proven ineffective.
“Crimes involving EU funds are not a priority for national authorities, and that’s a problem,” said Carl Dolan, director of Transparency International EU, an anti-corruption Berlin-based watchdog group, in a telephone interview with Courthouse News. “There is a general perception that this is not anybody’s money, it comes from Brussels and therefore it doesn’t really matter what they do with the money.”
Though the EU prosecutors’ powers will be limited to going after financial crimes involving the EU’s financial interests, experts said this will be an improvement over assigning cases to national prosecutors.
“National public prosecutors may not be very committed to prosecuting crimes of EU funds; they may not have enough resources, not enough expertise to do it,” said Fabio Giuffrida, a European criminal law researcher at Queen Mary University of London and the University of Luxembourg. “Studies report that national prosecutors tend to have crimes against the EU budget at the bottom of the pile.”
Corruption, customs cheating and fraud involving EU funds are a major problem. The EU has an annual budget of about $161 billion and officials estimate more than 2 percent of it — $3.4 billion a year — may be used fraudulently.
And this is likely only the tip of iceberg when it comes to fraud and illegal money transactions in Europe, where mafia-like criminal groups and white-collar crimes, such as money laundering, are legendary.
For example, a 2016 study by RAND Europe, a think tank, estimated corruption and financial crimes of all kinds cost Europe’s gross domestic product from $205 billion to $1.1 trillion a year.
To tackle the full spectrum of crimes, many legal experts say the EU prosecutor’s office should be given even greater powers. To that end, the European Commission, the EU’s executive arm, has proposed expanding the reach of the EU prosecutors to handle cases involving terrorism.
Ester Herlin-Karnell, an EU constitutional law professor at the VU University of Amsterdam, and Carlos Gómez-Jara Díez, a criminal law professor at the Universidad Autónoma de Madrid, wrote in a recent essay that the powers of the EU prosecutors likely will broaden, just as they did for US attorneys.
Before the Civil War, they pointed out, US attorneys were permitted to prosecute only crimes mentioned in the Constitution — such as piracy, counterfeiting and treason — and crimes against the federal government. Today, US attorneys handle a much greater portfolio.
“Over the years, however, their powers have expanded,” they wrote about US attorneys, “a situation that probably will also take place in the EU.”
But enlarging the powers of EU prosecutors will require the approval of Europe’s national leaders, and that will not be easy. Indeed, Europeans spent two decades debating whether the EU prosecutor’s office should be created at all.
“With few exceptions, member states were never happy to relinquish criminal law powers,” Giuffrida said in a telephone interview. He said countries were “very reluctant to give up their sovereign powers.”
Even today, six EU states have chosen not to participate in the EU prosecutor’s office. They are Hungary, Poland, Denmark, Ireland, the United Kingdom and Sweden. The new prosecutors, therefore, will not be able to investigate or litigate in those countries.
Experts are particularly concerned about Hungary and Poland opting out. Both countries receive a lot of EU money to help them modernize, and their governments are under fire for creeping authoritarianism and corruption.
“That’s a huge gap,” said Nienke Palstra, a money laundering expert with Global Witness, a London-based anticorruption watchdog. “It will be difficult to hold them to account.”
The EU has another agency that investigates fraud against the EU budget, the European Anti-Fraud Office. But that agency does administrative investigations and can only recommend cases to prosecutors. About half of the cases it sends to national authorities are not prosecuted.
“About 50 percent simply don’t go anywhere,” Dolan said. “It’s a dead end.”
The hope is that the new European prosecutor’s office — also known as EPPO and pronounced Ep-poh — will do a much better job.
“With EPPO coming onto the scene that ability by national prosecutors to ignore corruption will become limited,” Dolan said.
Still, there are concerns about how effective the EU prosecutors will be. One concern is that tensions may arise from its complicated, multilayered decision-making process, whereby national-level EU prosecutors and multinational chambers will debate whether to pursue cases.
Another potential concern is that the EU prosecutors will rely on national police forces and law enforcement agencies to gather evidence. Also, the EPPO will bring its cases through national courts.
“This is very much about coordination and having the support of national legal authorities,” said Eva Lindström, a member of the European Court of Auditors, which scrutinizes the EU’s finances and operations. “The major risk is that EPPO will not have enough legal expertise in national criminal law and procedures.”
More broadly, the new office is another step in Europe’s increasing integration in the field of criminal justice.
That momentum picked up in recent years after multiple terrorist attacks in Europe; in response, the sharing of information on criminals and suspected terrorists has deepened. This cross-border policing is fostered by Europol and Eurojust, two EU agencies that facilitate cooperation.
Still, experts say Europe’s criminal justice system largely remains a patchwork of national laws and court systems. For example, there is no European-wide criminal court nor criminal law system. There are, however, EU-wide legally binding directives for some crimes, such as terrorism, sexual exploitation, money laundering and environmental offenses.
The EU prosecutors, then, will begin their work in a legally convoluted world.
“You have a supranational, even federal in a way, prosecutor in Europe but you don’t have federal courts and police,” Giuffrida said. “In my view, it is a weakness.”
To get an idea of this legal labyrinth, imagine an EPPO investigation that starts with police and prosecutors looking at a criminal group in Italy, where bribes have been paid to build an EU-funded highway project.
Then, under this hypothetical case, as the probe unfolds, investigators discover the Italian crime group is also bribing officials in Brussels with funds from a prostitution ring in Bulgaria.
Under this scenario, evidence is gathered by different law enforcement agencies in different countries. This poses a problem: The standards for gathering evidence in Belgium, Italy and Bulgaria are likely different. Thus, it’s possible evidence gathered in one country may not be admissible in a trial in a country where the evidence was not collected.
Nonetheless, Giuffrida sees the strength of the new European prosecutors will be in tackling these kinds of transnational cases.
“It should be in a position to coordinate investigations, and it should be more effective” than national prosecutors, he said.
Besides taking on transnational cases, Giuffrida said the EU-level prosecutors may be the ones called upon to handle politically sensitive cases.
One such example is an ongoing scandal involving French far-right politician Marine Le Pen and other members of her party, the National Rally. She and other party members have been accused of misusing large amounts of European Parliament funds meant to pay for parliamentary assistants.
Giuffrida said the EU prosecutors also pose potential problems for the rights of those accused. For example, in cases that span two or more countries, a European prosecutor could move a defendant’s case from one country to another to gain a legal advantage.
“The defense strategy is made harder; there are not enough guarantees for the defense,” Giuffrida said.
Politically and symbolically, the EU prosecutors are part of a push to make Europeans more trusting of the EU as a whole. The EU bureaucracy and institutions are often the subject of scorn and criticized as a gigantic waste of money. The EU’s budget is made up in large part with hefty contributions from member states.
“This is very much about building trust within the EU,” Lindström said. “It really is about protecting the taxpayers’ money in dealing with the EU budget.”
Despite potential flaws with how the EU prosecutor’s office will function, Lindström was optimistic.
“We think this is a step in the right direction,” she said. “This could be a game changer.”
She hopes the new prosecutors will conduct swifter investigations than the EU’s anti-fraud office does now. Today, anti-fraud investigators spend 16 to 17 months on a case, she said.
“Time is really crucial,” she said. “Fraudulent people and companies can disappear.”
(Courthouse News reporter Cain Burdeau is based in the European Union.)