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European Commission

Viviane Reding

Vice-President of the European Commission, EU Justice Commissioner

Protecting the EU's financial interests through criminal law

Reding – Šemeta press conference/Brussels

11 July 2012

Today I am here with my colleague Algirdas, the EU’s anti-fraud Commissioner, to present the new EU rules that the Commission has just adopted to better equip us to fight against fraud damaging the EU budget.

Let me start by stressing that when we talk about the EU budget, we are talking about taxpayers' money.

More than 90% of the EU's budget is managed by national authorities, for example when they award public procurement grants financed through the EU budget. Unfortunately today, we still witness far too many illegal activities that lead to losses to the EU budget.

Criminals deliberately provide false information to receive EU funding in fields such as agriculture or regional development. Or national officials accept money in return for awarding a public contract, in breach of procurement rules.

These types of criminal behaviour are a cost to the EU budget and to European taxpayers. In 2010 alone Member States reported cases of fraud totalling €600 million. We cannot tolerate that one Euro of taxpayers' money ends up in the pockets of criminals – especially not during these economically challenging times.

That is why we are proposing today EU-wide rules that do two things: first, set common definitions of fraud throughout the EU, making sure that fraud against the EU budget is considered a crime everywhere in the EU and second, set a minimum level of sanctions, including imprisonment, in order to deter fraudsters.

The logic is simple: If you have a "federal budget" – with money coming from the 27 EU Member States – then you also need federal laws to protect this budget. Let's be clear: if we, the EU, don't protect our federal budget, nobody will do it for us – this is different from crimes that are prosecuted normally at national level (take the simple example of being caught when driving drunk).

Just look at the history of the US as a precedent: the first case of cross-border crime that the police could prosecute across the borders of the federal states was the evasion of federal taxes. Al Capone was in the end not arrested because he was the boss of the mafia – he was put behind bars for crimes against the US federal budget, evading customs and other taxes.

Today's Directive for the protection of the EU's financial interests creates a harmonised EU framework for prosecuting and punishing crimes involving the EU budget. With these new rules, criminals will no longer be able to exploit today's large differences between national legal systems. They will have no hiding place.

Here are the main benefits that our proposal brings:

First, the Directive provides common definitions of offences against the EU budget as fraud or the misuse of public procurement procedures. It also covers corruption and money laundering in relation to fraud. The definition of fraud and fraud-related offences is clearly spelled out in order to ensure a common criminal law defence of the financial interests at European level. Whereas today we are faced with the problem of Member States' laws defining for example the misuse of procurement proceedings as a type of fraud, while others don't.

Second, Member States will be obliged to foresee for the first time ever minimum penalties of six months imprisonment (up to a maximum of five years) for the most serious offences against the Union's financial interests. That is for damage beyond 100.000 EUR (for fraud) and 30.000 EUR (for money laundering or corruption) – whereas today some Member States do not provide any minimum sentences for such fraud. These minimum sanctions will be a strong deterrent for fraudsters who want to make a profit at the expense of taxpayers' money.

Third, Member States will be obliged to provide certain common rules on time limitation for criminal proceedings - that is the period after which you cannot prosecute any more. Today these are often too short, preventing law enforcement authorities from being as efficient as they could be.

And fourth, the proposal will make it easier to recover lost funds.

My colleague Algirdas will explain more about these last two points in a second.

In sum, what we have adopted today is a policy of zero tolerance on fraud committed against the EU budget. Criminals will think twice before engaging in illegal business at the expense of taxpayers' money.


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