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IP/11/644

Brussels, 26 May 2011

European Commission seeks tougher rules to protect taxpayers' money from fraud

In a policy paper adopted today, the European Commission set out a series of measures enabling prosecutors and judges across the EU to fight fraud against the European Union’s financial interests more effectively. The Commission plans to strengthen substantive criminal law by clarifying definitions of crime such as embezzlement or abuse of power and reinforce the capacities of the European Anti-Fraud Office (OLAF) and Eurojust (the EU's judicial cooperation body). The EU will also consider how a specialised European Public Prosecutor's Office could apply common rules on fraud and other offenses involving EU funds. The Lisbon Treaty, which reinforced the EU's capacity to combat fraud by giving it the competence to legislate in the area of criminal law, will make these measures possible. Protecting taxpayers’ money is a priority for the Commission. Taxpayers must have the confidence and trust that European Union funds are only used for carrying out policies approved by EU lawmakers. Currently, the tools available for detecting and preventing the misuse of EU funds are sometimes inadequate and insufficient. Member State authorities still face many obstacles that hamper the effective protection of EU money against crime. This happens because there are different rules covering procedures, criminal acts and penalties, harming cross-border anti-fraud investigations and prosecutions.

Vice-President Viviane Reding, the EU’s Justice Commissioner, said: “In 2009 alone, there was €280 million in suspected fraud cases involving EU funds, representing less than 0.2% of the EU’s total budget. In times of economic austerity, every euro cent of the EU’s budget counts. The EU will not tolerate that any taxpayer money is misspent. Crimes that rob the EU's public purse are crimes against the EU taxpayers. Thanks to the Lisbon Treaty, we have strengthened the legal tools to tackle cross-border fraud.”

EU Commissioner Algirdas Šemeta, responsible for Anti-Fraud, said: “Criminals do not stop at borders. Criminals even take advantage of borders to avoid prosecution. This is not acceptable in the European Union. We have to ensure that the suspected fraud is not only investigated by OLAF and national authorities but also prosecuted. The best investigation cannot protect taxpayers' money if it is not followed up coherently by national prosecutors and courts of the Member States."

New tools to fight crime against EU financial interests

The EU now has the legal toolbox required to take on this challenge. EU Treaties include useful possibilities to protect the EU's financial interests, such as the establishment of minimum criminal law rules (article 83 TFEU) or new investigative powers for Eurojust, the EU's judicial cooperation body (article 85 TFEU) and the possibility of establishing a European Public Prosecutor's Office to combat crimes affecting the EU’s financial interests (article 86 TFEU).

The Commission's Communication foresees several areas where criminal law could be further improved to protect the EU's financial interests:

  • Stronger procedures: the Commission will make it easier for prosecutors and judges across the EU to fight fraudsters by extending exchanges of information between different actors, including police, customs, tax authorities, judiciary authorities and other competent authorities; a new proposal on mutual administrative assistance for the protection of EU's financial interest is planned.

  • Strengthening substantive criminal law. The Commission considers that the current definitions of relevant criminal offences such as embezzlement or abuse of power vary widely across the EU and should be clarified by means of initiatives on the protection of the financial interests by criminal law.

  • Strengthening the role of bodies at European level: Both OLAF, which is currently being reformed (IP/11/321 and MEMO/11/176), and Eurojust need to be further reinforced to carry out their investigations more effectively (SPEECH/11/201).

  • The EU will consider how a specialised European Public Prosecutor's Office could apply common rules on fraud and other offenses against the EU’s financial interests (SPEECH/10/89).

Insufficient legal Action

The wide variety of legal systems in Europe makes protecting the EU’s financial interests a particular challenge. Fraud and corruption involving EU funds at the national level can come in many forms. Criminals can illegally obtain EU funds for agricultural, research, education or infrastructure projects. They also could try to influence public officials with bribes.

Police, prosecutors and judges in the EU Member States decide on the basis of their own national rules how to intervene to protect EU finances – if at all. As a result, the conviction rate in cases involving crimes against the EU budget varies considerably across the EU, ranging from 14% to 80%.

Together with OLAF and Eurojust, national investigators, prosecutors and judges are already working to fight such crime. However, they are facing some serious legal and practical obstacles.

These include restrictions in their competence to cases arising within their own country, legal issues in the use of evidence from abroad and uneven rules on the fight against fraud and related crime. This leads to cases being closed by national authorities without ever being brought to court, even when OLAF already investigated and deemed the case sufficiently serious.

For example, in one case involving several Member States and non-EU countries, the suspicion of a large-scale customs evasion – worth more than €1.5 million – was not prosecuted by any of the national authorities of the Member States involved.

From 2000, 93 out of a total of 647 OLAF cases were dismissed by national prosecutors for no specific reason and 178 cases due to discretionary reasons.

For more information:

Homepage of Vice-President Viviane Reding, EU Justice Commissioner:

http://ec.europa.eu/commission_2010-2014/reding/

Homepage of Algirdas Šemeta, EU Taxation and Customs Union, Audit and Anti-fraud Commissioner:

http://ec.europa.eu/commission_2010-2014/semeta/index_en.htm


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