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Lord Tordoff: My Lords, I thank the noble Lord for giving way. Is not that precisely what the report is about; namely, drawing attention to this Parliament and the Government so that those fears can be assuaged? While I am on my feet, perhaps I may say that if the noble Lord is to quote someone, he should tell us who it is, in this privileged place. To produce evidence and no names is unconvincing.
Lord Pearson of Rannoch: My Lords, of course. I was merely trying not to ruin the career of the poor young MEP in question. However, if the Chairman of your Lordships' Committee requests me to do so, it is Daniel Hannan, who I believe is MEP for the south-east of England. I welcome the noble Lord's intervention. It brings me to the question I was about to raise.
I do not believe that this project will go away. Even the noble and learned Lord, Lord Hope, indicated as much. I absolutely welcome the way forward which the Government are pursuing. However, on reading paragraphs 115 to 118 of this excellent report, my question to the Government is that there seems to be some doubt about the treaty basis of this project. Does Corpus Juris lack a proper treaty base? Are the Government absolutely sure that at the end of the day, as this project develops, if it does, the United Kingdom could veto it, if it comes to that?
Lord Goodhart: My Lords, like other speakers in the debate who were members of the committee, I pay tribute to the noble and learned Lord, Lord Hope of Craighead, for the admirable way in which he chaired our meetings and oversaw the production of the report.
I first became aware of the existence of the Corpus Juris just over a year ago. That is when I was invited to attend an inter-parliamentary conference on the fight against fraud on the European Union budget. That conference was attended by Members of the European Parliament and of national parliaments. The UK was represented by a Conservative MP, Mr Humfrey Malins, myself and a number of MEPs. There were representatives present from all but two of the member states of the EU.
One of the main subjects of debate at that conference was the Corpus Juris. As the noble and learned Lord, Lord Hope of Craighead, said, the Corpus Juris was drafted by a team of academic lawyers, including Professor John Spencer of Cambridge University, and published as a discussion paper, not as a proposal for action. The reception given to the Corpus Juris by the inter-parliamentary conference was mixed. It certainly received a fair amount of support. However, there were also widespread criticisms of it, especially from
Nothing since has made me change my mind on that. I have to say that a few days later I read an article in the Daily Telegraph. I cannot remember whether it was an article by, or an interview, with Mr Malins. It was only then that I realised that he and I appeared to have attended different conferences. The conference which I attended consisted of a serious discussion of an interesting set of proposals for dealing with the undoubted problem of fraud on the European Union's budget. Those proposals were widely seen in that conference as over-ambitious and unrealistic.
The conference attended by Mr Malins was an attempt, masterminded by the faceless bureaucrats of Brussels, to destroy habeas corpus, put an end to jury trials, and subject us to the unspeakable horrors of continental legal systems. In the eyes of Euro-paranoiacs, the Corpus Juris has become evidence of a sinister plot to undermine and destroy our legal system. I have to say that belief in such a plot is no more justified than belief in the authenticity of the protocols of the elders of Zion.
Nobody can doubt that the fraud problem is extremely serious. I believe that there is a strong case for harmonising the substantive laws on fraud on community finances. Speaking for myself, I would broadly welcome Part I of the Corpus Juris which seeks to establish a common set of offences covering fraud on the European Communities wherever those offences are committed. The proposal certainly goes too far in some respects, particularly in making the head of a business criminally liable for the dishonest acts of his subordinate, where the head of the business has merely failed to exercise proper supervision and has not acted dishonestly.
It is the procedural rules in the Corpus Juris which are much more controversial. It is neither practicable nor appropriate to have a European public prosecutor's office in each member state operating in the national courts, but operating under its own laws and procedures yet not being accountable to the government of the state in which it is operating. It is not acceptable to remove the right to jury trial for Community fraud cases so long as juries are retained for other sorts of case. It is not acceptable to provide for remand in custody without charge for a period of six months, extendable for a further three.
Jury trials could probably be put back into the Corpus Juris, and remand without charge taken out of it. They are not essential to the project. But the centrepiece of the system--the European public prosecutor--working through separate but parallel systems in the same courts is unlikely to prove workable, and without that the Corpus Juris would have to be completely rewritten.
One issue that should be considered outside the Corpus Juris is the modification of the highly technical English rules of admissibility of evidence. They create unnecessary barriers to the introduction of evidence taken in other member states for use in English trials. We were told in evidence that at least one major prosecution had collapsed because vital evidence was ruled inadmissible on technical grounds.
I should like also to draw attention to a subject mentioned in the report but not touched on in this debate; that is, the question of Eurobail. In some countries, foreigners find it extremely difficult to get bail because of the risk of their not appearing at trial if they are allowed to return to their home countries elsewhere in the European Union. Under a Eurobail system, which would not be limited to charges of Community fraud, defendants on bail who were residents of another member state would be automatically arrested and returned by the authorities of their state of residence to the state of prosecution if they failed to turn up for their trial. That would make the judicial authorities much more willing to grant bail to residents of other member states of the European Union.
This is a useful and important report. I hope that those noble Lords present this evening who were not members of the committee--that is perhaps rather fewer than those who were--come to the same view.
Lord Cope of Berkeley: My Lords, I too am grateful to the noble and learned Lord, Lord Hope of Craighead, and his colleagues on the committee. As my noble friend Lord Norton of Louth said, I thought I would be exclusive in being the only speaker who was not a member of the committee. However, I had the support of my noble friend Lord Pearson so that did not materialise. However, I am sure I speak for the whole House in thanking the committee for the extremely detailed work it did in producing this report and for the measured way it sets out both what the Corpus Juris is about and its conclusions on it.
I was particularly pleased this afternoon to hear support for the jury system from all sides of the Chamber, which is a matter to which we will return in another context. But on the main question before us, no one can doubt that there are extremely serious problems which lie behind this proposal. The noble Lord, Lord Wigoder, referred to the Court of Auditors' report for 1998 which was published a few days ago. That makes serious reading. I was an auditor at one point and they are as much concerned with fraud as with inefficiency.
Speaking as a chartered accountant, though I have not practised for a long time, I can say that auditors are necessary. However, their existence does not eliminate fraud, though hopefully it helps to minimise it. Fraud is not something which can be eliminated. It can be and should be fought and minimised, but it is a continuing battle. Every time one loophole is closed then expert and clever fraudsters look for the next one.
The fact that a serious problem exists, as every speaker in the debate recognised, does not mean that any solution is therefore acceptable or that it will work. The Corpus Juris idea seems to stem from the proposition that it is no use trying to work through different legal systems and getting them to work together, across boundaries within the Union, when those boundaries for other purposes are ceasing to exist; and that instead one should impose a new, though not completely new, and extensive system on top. I believe that idea to be fallacious.
First, the United Kingdom demonstrates that different legal systems--we have three, as the noble and learned Lord said--can co-exist and that fraud, and other offences, can be successfully prosecuted within those systems. We have had distinguished lawyers from at least two of the jurisdictions speaking in this brief debate and I believe the noble and learned Lord is also distinguished in the Northern Ireland field.
Secondly, if the Corpus Juris were to be adopted in this form or something like it, it would impose two systems on each member state--the Corpus Juris itself pursuing one lot of fraud and national laws pursuing other types of fraud. And fraud cannot be compartmentalised quite that neatly. Of course, some frauds are solely devoted to defrauding the Community and others are devoted to defrauding other people or other institutions, but there is a considerable overlap at the margin. Quite often one crime involves others. Also, the idea does not get away from the fact that two systems would still be involved.
Thirdly, the system ignores the fact that organised international crime is not confined to the European Union. That comes out in parts of the report. It is not necessary to go over the report in detail; it was expertly summarised for us by the noble and learned Lord in opening the debate and it is there for all to read. But I agree that it is valuable because of its expert, though moderate language. It does not fall into the hysterical category mentioned by the noble Lord, Lord Wigoder, and is all the more forceful because of that. It would be nice to think that this Select Committee report will kill off the idea as it now exists. I think it certainly ought to be studied in Brussels.
As the noble Lord, Lord Wigoder, pointed out most effectively, the fact that it is unofficial at this stage means that this is the moment when we should draw attention to the unacceptability of this set of proposals. I hope that United Kingdom MEPs will draw the report to the attention of their colleagues in the European Parliament, so that they realise the position.
I hope that the Minister will be able to tell us that in the Government's view no further time should be wasted down what seems to be a blind alley. It is not just a question of not wasting time; the difficulty is that studying the Corpus Juris, with it unacceptable characteristics, especially the prosecutor--here I agree with the noble Lord, Lord Goodhart--and pursuing such proposals distracts people from paying attention to what should really be done.
I do not wholly subscribe to the views expressed from the Liberal Democrat Benches about the question of a "plot" to start with the Corpus Juris and open it up. As pointed out by my noble friend Lord Pearson of Rannoch, there are those who see this as the beginning of a much wider affair. If the authors of the report did not wish it to be perceived that way, they should not have given it such a grandiose name. As the noble and learned Lord said, that refers back to a much wider system. I am not a lawyer but, as I understand it, that refers back to a much wider system of law covering many more matters. To choose that name for this proposal is to open it up to misunderstanding. Therefore, to a considerable degree, it is their fault that it is seen in this way by many people.
If the Corpus Juris is not acceptable as it is, what else should be done? I do not want to take the time of the House for too long on the matter. After all, Commissioner Kinnock is working on the problem and will report before long. No doubt we shall all have the benefit of more views and then be able to take the matter further. Some of us think that it is a little like a member of the poachers' union advising on the working instructions for the new gamekeepers. But, still, we shall wait and see what is said.
It seems to me that an anti-fraud office in Brussels should be independent of the Commission. In this country we accept without question the operational independence of the police, and the situation that we are now discussing is similar. Therefore, I do not believe that that proposition will attract much opposition in this country. I also think that the European Parliament needs to strengthen the Budgetary Control Committee. The lines developed in another place with the Public Accounts Committee over many years would provide a suitable basis.
I had some involvement with the European budget when I held responsibility for it for a while in the Treasury. I negotiated with the European committees during our European presidency. That was some years ago, but I do not think that they have improved much since then. I also had some experience of international anti-fraud operations as part of the responsibilities which I held for a while for Customs & Excise. Customs co-operation agreements were developed with all sorts of countries around the world, which certainly improved the situation in the fight against fraud. However, they did not solve international fraud--indeed, as I have said, that is not a possibility--but they went much further than the European Union. Of course, in particular
The point about fraud being larger than the European Union itself is an important one. It is one of the difficulties of the Corpus Juris that it is intended to be limited to the EU. It is noteworthy that one of the basic agreements in this field is the European convention on mutual assistance in criminal matters of 1959, which is not an EU convention; it is a Council of Europe convention. After all, there are now 40 countries in the Council, although I am not sure that they have all signed up to the convention. I believe that the way forward in combating fraud both within the EU and wider is mutual recognition and co-operation between the national authorities.
I hope that this excellent Select Committee report will help to avoid further distraction in the direction of the Corpus Juris. When I say "hope", I am aware that one does need a good deal of hope if one is thinking that that is exactly what will happen. Nevertheless, that is what I believe should happen. We are all extremely grateful to the Select Committee for this report.
Lord Bach: My Lords, I understand that it is customary to congratulate all the members of the Select Committee who drew up the report under debate upon their skill, hard work and general all-round perspicacity. But I hope that your Lordships will forgive me if I do not indulge in this general paean today. As your Lordships know, I was fortunate enough to be a member of Sub-Committee E as it heard evidence, reached conclusions and completed the report. Therefore, it would look suspiciously like self-congratulation if I were to go into raptures about the general quality of the whole committee. Although self-congratulation is not entirely unknown in your Lordships' House, it should perhaps be rather more subtle and under-stated that such a declaration would be.
More seriously, I can tell noble Lords that it was a real privilege to serve under the chairmanship of the noble and learned Lord, Lord Hope of Craighead, and to be in the company of, and work with, such distinguished Members of your Lordships' House, both lawyers and non-lawyers, as those who made up the sub-committee. I am delighted as well as perhaps a little personally relieved to be able to say that Her Majesty's Government agree for the most part with the conclusions of the sub-committee. Perhaps I may add what has already been said by several members; namely, that the sub-committee was extremely fortunate in the quality of the assistance that it received from its staff, especially from Dr. Kerse.
The problem of fraud and corruption involving the institutions or finances of the European Community is a very serious one which damages public confidence in the integrity of the Community as well as causing the loss of large amounts of taxpayers' money. The Government want to see strong and effective action
The question is whether the package of proposals known as Corpus Juris would be a useful and feasible way of fighting fraud. We have had explained to us in extremely clear terms the background to the production of the report in 1997. It has been described as a "very green paper", which is perhaps the best description of it; indeed, that point was made by the noble Lord, Lord Wigoder. The Corpus Juris proposals envisage far-reaching changes to judicial co-operation with the EU. The key proposals that we have already heard about are the creation of what would amount to a European penal code for fraud offences affecting EC finances; a common procedure for investigating and prosecuting these offences; and, perhaps most significantly, a European public prosecutor to oversee investigation, prosecution and the enforcement of penalties.
A number of the proposals would obviously conflict with the legal traditions of many member states, including the United Kingdom. As has already been said, the European Commission has asked its experts to carry out a further study to assess the extent to which the Corpus Juris recommendations are feasible and necessary. As I understand it--I wish that I could be more exact about this--the report is likely to be published shortly. I understand that it is to be submitted shortly to the European Parliament and to the Council of Ministers. I understand that it will offer a revised version of the proposals which takes account of some of the concerns expressed in member states.
I add here, in regard to remarks made by the noble Lord, Lord Cope, and other noble Lords, that, as I understand it, our report has been read by the European Commission, which may well pay regard to what we say when it considers the future of the Corpus Juris. Of course the Commission and the Council of Ministers will decide whether and how to pursue this concept.
But what is the Government's position on the document as it stands? The Government fully agree with the objective of the Corpus Juris paper, which, in trying to provide more effective judicial remedies against fraud, is commendable and worthy. However, we do not agree that this objective should be achieved by "unifying" the laws and procedures of all member states, or by creating a European public prosecutor with the powers proposed in the report. We have a number of concerns which relate mainly to the proposals on criminal procedure (part two) rather than criminal offences (part one). I deal with these briefly because they have been covered in a remarkable spirit of unanimity by all who have spoken tonight.
First, in seeking to unify the laws and procedures of member states in cases of Community fraud, Corpus Juris would effectively create a separate criminal jurisdiction within each member state. The noble Lord, Lord Cope of Berkeley, made that point. Secondly, it would insert inquisitorial procedures into what is a largely adversarial system, especially in England and Wales, raising fundamental issues for procedure in criminal trials.
Thirdly, Corpus Juris would change key provisions of the European Union fraud and corruption conventions. We would not wish to support proposals to amend these provisions before they have been brought into force and given a proper chance to have an impact. Fourthly, as the need for it cannot be clearly demonstrated, it is the Government's view that Corpus Juris conflicts with the principle of subsidiarity.
Fifthly, a European public prosecutor would have power to direct investigations and prosecutions, to request a person's detention without charge for up to nine months and to oversee the execution of sentences, and yet would have little, if any, domestic accountability either to Parliament or to United Kingdom judicial authorities. That point was well made by my noble friend Lady Goudie. That would represent a departure from the position which was agreed in the Amsterdam Treaty, according to which the application of criminal law remains within the competence of member states.
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