Select Committee on European Scrutiny Nineteenth Report


ESTABLISHMENT OF A EUROPEAN PUBLIC PROSECUTOR


(22999)

COM(01) 715


Green Paper on criminal law protection of the financial interests of the Community and the establishment of a European Prosecutor.

Legal base:
Document originated:11 December 2001
Deposited in Parliament:17 December 2001
Department:Home Office
Basis of consideration:EM of 16 January 2002
Previous Committee Report:None
To be discussed in Council:Justice and Home Affairs 28 February/1 March
Committee's assessment:Legally and politically important
Committee's decision:Not cleared; further information requested


Background

  5.1  The proposal to establish a European Public Prosecutor aims to improve the protection of the Community's financial interests through effective enforcement. The Commission presented an outline of its proposal, which draws on the work of Corpus Juris,[11] at the Nice Intergovernmental Conference in 2000[12], but the Commission also notes that this contribution was not then taken up by the European Council. The European Council at Laeken in 2001 asked the Council to examine the present Green Paper "taking account of the diversity of legal systems and traditions" of Member States.

  5.2  The Green Paper states that, in 1999, the scale of fraud detected by the Member States and by the European Anti-Fraud Office (OLAF) was estimated to amount to a total of _413 million. The Green Paper argues that there is a need for specific response to the specific form of crime involved where the Community's financial interests are affected, and refers to Article 280 EC as requiring protection of the Community's financial interests to be effective, dissuasive and equivalent in all the Member States.

The Green Paper proposals

  5.3  The Commission introduces the discussion of its proposals by referring to the "cumbersome and inappropriate traditional methods of judicial cooperation between Member States" and makes the somewhat sweeping statement that "none of the instruments currently in force or at proposal or negotiation stage gives an adequate response to the specific question of criminal proceedings for acts to the detriment of the Community's financial interests".[13] Referring to the "barriers" created by the different rules of Member States governing criminal prosecutions in the Member States, the Commission comments that:

"The integration of the investigation and prosecution functions that the European Public Prosecutor would achieve would iron out these difficulties".[14]

  5.4  The Commission acknowledges that there is as yet no proper legal basis for the establishment of a European Public Prosecutor[15]. Accordingly, the Commission proposes an amendment to the Treaty by inserting a new Article 280a, which would provide for the adoption by the Council (acting by qualified majority and in co-decision with the European Parliament) of general rules applicable to the European Public Prosecutor[16]. The suggested Treaty amendment would also extend to rules on the definition of fraud, on the admissibility of evidence, criminal procedure and on judicial review of measures taken by the European Public Prosecutor.

  5.5  The Green Paper proposals may be summarised as follows.

— Role and status of the European Public Prosecutor

  5.6  At the core of the proposal is the establishment of an independent European Prosecution Service (as a Community authority) headed by a European Public Prosecutor. The jurisdiction of the European Public Prosecutor would be confined to the protection of the Community's financial interests within the meaning of Article 280 of the EC Treaty. "Financial interests" in this context concerns, not only the management of budget appropriations, but extends to all measures affecting or liable to affect the Community's assets.[17] The Commission proposes that the Prosecutor's jurisdiction should also extend to revenue from the application of a uniform rate to the Member States' VAT bases, especially in transnational cases.

  5.7  The European Public Prosecutor would perform the dual function of investigator and prosecutor in relation to financial offences; specifically, he would be responsible for "detecting, prosecuting and bringing to judgment the perpetrators of offences prejudicial to the Community's financial interests and their accomplices and for exercising the functions of prosecutor in the national courts of the Member States in relation to such offences".[18]

  5.8  The Commission proposes that the European Public Prosecutor would be appointed by the Council acting by qualified majority vote and with the assent of the European Parliament. The Commission suggests that such a mode of appointment "would ensure the total legitimacy of the European Public Prosecutor". The Commission also suggests that the Prosecutor be appointed for a non-renewable six year term and that he should be removable from office only on the grounds of serious misconduct and then only by application to the Court of Justice of the European Communities.[19]

— Structure and organisation of a European prosecution service

  5.9  As the head of the European Prosecution Service, the European Public Prosecutor would "act in a common investigation and prosecution area, since his acts would have the same value in all the Member States". The Commission also proposes that "at the preparatory stage and trial stages acts done by the European Public Prosecutor would be valid throughout that area. But the trial stage would remain entirely in national hands".[20] The Prosecutor would "gather all the evidence for and against the accused"[21] and would direct and coordinate prosecutions. The Prosecutor would have specialised jurisdiction, "prevailing over the jurisdiction of national enforcement authorities but meshing with them to avoid duplication". It also appears that the Prosecutor would have a power to direct investigations by national police authorities.

  5.10  Any action taken by the Prosecutor which could impinge on individual freedoms and basic rights would be subject to review by a national judge performing the office of "judge of freedoms". The review by this judge "would be recognised throughout the Community, to allow the execution of authorised acts and the admissibility of evidence gathered in any Member State".

  5.11  The Commission proposes that the Deputy European Prosecutors be integrated into the national justice systems on the basis of one of three models. First, the Deputy could be excluded from holding any other office, thereby remaining a specialist European prosecutor. Secondly, the Deputy could perform a dual role as national prosecutor who also specialised in European prosecutions. The third model would leave Member States free to choose between the first and second. Although each Deputy would be based within one Member State, they would be under a duty to co-operate with one another and could be authorised by the European Public Prosecutor to take action in any other Member State[22].

— Offences and penalties

  5.12  The Commission states that a common definition of financial offences and common penalties are essential to the effective operation of the European Public Prosecutor. The proposed directive on the criminal law protection of the Community's financial interests, which defines the offences of, and penalties for, fraud, corruption and money-laundering, is used as a starting point.[23]

  5.13  The Commission proposes that a unified definition of fraud should be adopted, along the lines of Article 1 of the Corpus Juris, which also extends to grossly negligent conduct. Article 1 of the Corpus Juris extends fraud to both reckless and grossly negligent conduct.[24] In addition, the Commission suggests that the successful outcome of the fraudulent act should not be precondition for prosecution of the offence; the Community should be able to prosecute fraudulent conduct which merely endangers the Community's financial interests.

  5.14  In addition to dealing with corruption and money-laundering, the Commission proposes that the European Public Prosecutor should have jurisdiction to prosecute other offences connected with the protection of the Community's financial interests, such as "market-rigging", conspiracy, "abuse of office" and "disclosure of secret's pertaining to one's office". There is no definition of these additional offences in the Green Paper, beyond a reference to acting intentionally, or to disclosing information, to the detriment of the Community's financial interests.

  5.15  The Commission proposes that the maximum penalties for offences against the Community's financial interests should be determined by Community legislation. It also proposes the creation of additional Community penalties, such as exclusion from the European public service, from access to grants or from access to public contracts if Community financing is applied for. Specific definitions of penalties are not set out in the Green Paper.

  5.16  The Commission also suggests that the present diversity of limitation periods in Member States could give rise to unequal treatment. It accordingly proposes that a common limitation period should apply to those offences that fall within the jurisdiction of the European Public Prosecutor. The Commission suggests that specific rules relating to the "interruption" or extension of limitation periods could be left to Member States, subject to the principle of mutual recognition between Member States. It is unclear as to how this would work in practice.[25]

— Procedure

  5.17  A common set of European rules of procedure is described as a further essential condition for the establishment of the European Public Prosecutor, although the Commission concedes that some degree of approximation between national procedures may be sufficient "if all the European Public Prosecutor really needs is equivalence between Member States".

  5.18  The common set of procedural rules would include rules on information, so that any person should be able to pass information to the European Public Prosecutor, whilst Community authorities, their staff and national authorities should be under an obligation to refer cases to the Prosecutor. The rules would also provide for the mandatory referral of cases involving both Community and national offences to the European Public Prosecutor. The European Public Prosecutor would then decide, in appropriate cases, to refer back to the national authorities offences which affect principally national interests. The Commission proposes that a definition of "principally" could be laid down in Community legislation, although it recognises that any attempt at definition is likely to be contentious.

  5.19  The Commission proposes that the European Public Prosecutor should have recourse to coercive investigation measures available in national law (i.e., powers of search and seizure, arrest, freezing of assets, interception of communications, covert investigations etc), subject to review by a national "judge of freedoms".

  5.20  In relation to cooperation with national criminal justice agencies, the Commission proposes three possible options. First, the European Public Prosecutor could have direct powers of investigation for the purpose of discharging his functions in relation to national investigation authorities. Secondly, national agencies could be placed under an obligation to assist the European Public Prosecutor, where required. Thirdly, the powers of the European Public Prosecutor could be tailored to the relationship that exists at national level between the investigation and prosecution agencies. Where a national prosecution authority has power to direct an investigation, the European Public Prosecutor would have a corresponding power. Where a national prosecution agency has no power to direct an investigation, the European Public Prosecutor could only make suggestions to the investigation authorities. If the third option were adopted, the powers of Deputy Prosecutors would differ from Member State to Member State. For example, the Deputy Prosecutor based in Scotland would have significantly more power than the Deputy Prosecutor based in England and Wales.[26]

  5.21  In relation to Eurojust, the Commission remarks that "in all logic, the establishment of the European Public Prosecutor would enable Eurojust's powers in relation to financial crime to be preserved"[27].

  5.22  In relation to the decision to prosecute, the Commission expresses a preference for a mandatory prosecution in all cases where exceptions did not apply[28]. Under the Commission's proposals the European Public Prosecutor would have the power to commit for trial[29] and to determine the Member State in which the trial is to be held[30]. The Commission also proposes that the European Public Prosecutor should have a discretion to discontinue a prosecution. The Commission also suggests that evidence lawfully gathered in one Member State should be admissible in any other Member State.

  5.23  The Commission proposes that decisions and acts of the European Public Prosecutor should be subject to review by national courts. At the preparatory stage, this would be undertaken by the national "judge of freedoms". On committal to trial, a review would be conducted by the relevant national court. The Commission remarks that the European Public Prosecutor should, in principle, be able to appeal against any acquittal decision[31]. Whilst not recommending any jurisdiction of the Court of Justice to hear appeals on the substantive merits, the Commission suggests that the Court might have a role in determining conflicts of jurisdiction.

The Government's view

  5.24  In his Explanatory Memorandum of 16 January, the Parliamentary Under-Secretary of State for the Home Department (Mr Bob Ainsworth) reviews the Commission's proposals, and assesses their policy implications as follows:

"As it made clear in response to the earlier Corpus Juris study, the Government is unconvinced of the need for an EPP. There are difficulties of principle and practice with both the earlier study and the ideas in the Green Paper. Corpus Juris would involve major changes in laws and procedures. It seeks to intertwine the inquisitorial and adversarial/written and oral traditions in Member States. The result would be more akin to the Continental European than the Anglo­Saxon model. There would need to be significant added value to justify changes of such magnitude. Specific problems mentioned in the Home Office's evidence to the House of Lords Select Committee in 1999 were: that the EPP would be accountable to the EC, but not to our Law Enforcement Officers or to Parliament; that practical difficulties could arise from the sharing of information between the EPP and national authorities; and that tension could arise for national prosecutors acting for the EPP, between their domestic role and their role as agents of an EU institution. These problems remain with the Green Paper and moreover it does not provide a coherent approach to situations where fraud against the EU budget involves non­EU as well as EU jurisdictions.

"Creating a EPP on a first pillar legal base such as Article 280 would be a significant departure from the current treaty arrangements which are based on the principle that the application of national criminal law and the national administration of justice are not matters for the European Community, but co­operation between Member States in relation to the criminal law should take place inter­governmentally on the basis of Title VI TEU.

"The Government is strongly committed to ensuring that fraud against the Community budget is addressed robustly, and that those who commit fraud are prosecuted. It is open to examining ways of improving judicial co­operation between Member States, but it is important that this is done on the basis of concrete evidence highlighting any weakness in the current arrangements. The agreement last month on the establishment of Eurojust provided that Eurojust would have competence in relation to fraud and corruption and any criminal offence affecting the European Communities' financial interests. Priority should now be given to supporting the rapid establishment of Eurojust proper so that it can make a significant contribution to the fight against fraud through a close working relationship with the EC's anti­fraud office, OLAF. Additionally, all Member States should be pressed to ratify the fraud convention.

"As noted at paragraph 12 above, the Government is just beginning a wide ranging consultation exercise in response to the Green Paper. The Government will send a copy of its response to both Scrutiny Committees once it has been prepared."

Conclusion

  5.25  We agree with the Government's assessment that no sufficient case has been made out for the creation of a European Public Prosecutor. We are concerned to see that so much effort appears to have been expended on the details of this impractical proposal, when this might have been better directed towards the prevention of fraud affecting the Community's financial interests. We also agree that the establishment of Eurojust makes the present proposals unnecessary.

  5.26  We consider that the proposal raises more problems than it solves and we note with particular concern its effect of putting the prosecution function beyond the reach of democratic accountability, either to national parliaments or elsewhere. We also note with concern the ready assumption that a prosecution function can properly be combined with that of investigation.

  5.27  We are aware that prosecution functions are organised differently in the various parts of the United Kingdom, a situation which has prevailed for many years without giving rise to the practical problems suggested by the Commission in its Green Paper. We note that the Minister intends to consult widely and we invite him to have particular regard to these differences and to canvass views from Scotland and Northern Ireland on the Commission's Green Paper.

  5.28  We ask the Minister to send us a copy of his proposed response to the Green Paper in sufficient time to allow us to contribute further comments and to consider whether the matter should be debated. In the meantime, we shall hold the document under scrutiny.


11   Corpus Juris is a research report prepared by a group of academic lawyers from different Member States and published in 1997. See the Ninth Report of the House of Lords Select Committee on European Communities: Prosecuting fraud on the Communities' finances - the Corpus Juris (1998-1999), HL 62.  Back

12   COM(2000) 608 (see also COM(2000) 34). Back

13  Apart from questioning the soundness of this view, one may also ask the Commission why it is that none of its proposals gives the desired adequate response. Back

14  The statement seems to take no account of the fact that in a number of Member States, including the United Kingdom, the separation of the investigation function of the police from that of prosecution is regarded as an essential safeguard of individual liberty. Back

15  Article 280(4) EC specifically precludes the adoption of measures concerning the application of national criminal law or the national administration of justice. Back

16  The effect of this would be to move elements of the substantive law of Member States from the third (i.e. EU Treaty) to the first (EC) pillar. Back

17  Second recital of Regulations Nos 1073/99 and 1074/99. Back

18  The suggested role has some similarity with that of the Procurator Fiscal in Scotland, but is quite unlike that of a Crown Prosecutor in England and Wales, who has no role in the investigation of an offence.  Back

19  It is striking that there is no mention of any accountability by the Prosecutor to national parliaments or to the European Parliament for the exercise of his functions. Back

20  It is not explained how such matters as (in England and Wales) pre-trial review, or witness orders would be dealt with. Back

21  It is not clear from this whether there is any implication that any other evidence would become inadmissible. Neither is it clear how national rules on disclosure of unused prosecution material would continue to operate. Back

22  This would seem to involve the Deputy assuming in another the powers available to prosecutors in that country. Back

23  COM (2001) 272. Back

24  Witnesses criticised this aspect of Article 1 of the Corpus Juris during the inquiry by the Select Committee on European Communities (1998-1999), HL 62. It would seem to extend the scope of fraud in English law by removing the requirement to show a dishonest intent. Back

25  Such limitation rules would, at least in English law, have the effect of excusing criminal behaviour and would introduce a dual standard of criminal liability in relation to such matters as fraud, depending on whether or not the Community's financial interests were affected. Back

26  The powers of the Crown Prosecution Service may be strengthened in response to Sir Robin Auld's recommendations in his Report on the Review of Criminal Courts (October 2001). Back

27  With equal logic, it could be remarked that the creation of Eurojust, the remit of which extends to crimes affecting the Community's financial interests, makes unnecessary the creation of a European Public Prosecutor.  Back

28  In the United Kingdom, the decision to prosecute is not mandatory but discretionary cf. Code for Crown Prosecutors (England and Wales). Back

29  In the United Kingdom, this power is exercised by the court. Back

30  This assumes that the courts of more than one Member State would have concurrent jurisdiction. The Prosecutor's decision would affect such matters as mode of trial (e.g. whether the trial would be before a jury or not). Back

31  Such a general right of appeal by the prosecution would be an innovation in the law of the United Kingdom. Back


 
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