Explanatory Memorandum to COM(2013)534 - Establishment of the European Public Prosecutor's Office - EU monitor

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Explanatory Memorandum to COM(2013)534 - Establishment of the European Public Prosecutor's Office

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1. CONTEXT OF THE PROPOSAL

Prosecuting offences against the EU budget is currently within the exclusive competence of Member States and no Union authority exists in this area. While their potential damage is very significant, these offences are not always investigated and prosecuted by the relevant national authorities, as law enforcement resources are limited. As a result, national law enforcement efforts remain often fragmented in this area and the cross-border dimension of these offences usually escapes the attention of the authorities.

Whereas tackling cross-border fraud cases would require closely coordinated and effective investigations and prosecutions at European level, the current levels of information exchange and coordination are not sufficient to achieve this, despite the intensified efforts of Union bodies, such as Eurojust, Europol and the European Anti-Fraud Office (OLAF). Coordination, cooperation and information exchange face numerous problems and limitations owing to a split of responsibilities between authorities belonging to diverse territorial and functional jurisdictions. Gaps in the judicial action to fight fraud occur daily at different levels and between different authorities and are a major impediment to the effective investigation and prosecution of offences affecting the Union’s financial interests.

Eurojust and Europol have a general mandate to facilitate exchange of information and coordinate national criminal investigations and prosecutions, but lack the power to carry out acts of investigation or prosecution themselves. The European Anti-Fraud Office (OLAF) has a mandate to investigate fraud and illegal activities affecting the EU, but its powers are limited to administrative investigations. Action by national judicial authorities remains often slow, prosecution rates on the average low and results obtained in the different Member States over the Union as a whole unequal. Based on this track record the judicial action undertaken by Member States against fraud may currently not be considered as effective, equivalent and deterrent as required under the Treaty.

As Member States' criminal investigation and prosecution authorities are currently unable to achieve an equivalent level of protection and enforcement, the Union not only has the competence but also the obligation to act. Article 325 of the Treaty so requires from a legal perspective, but taking into account the specific Union rules which apply in this field the Union is also best placed to protect its own financial interests, including via the prosecution of offences against these interests. Article 86 of the Treaty provides the necessary legal basis for such a new Union-level prosecution system, the purpose of which is to correct the deficiencies of the current enforcement regime exclusively based on national efforts and add consistency and coordination to these efforts.

The current proposal seeks to set up the European Public Prosecutor’s Office and define its competences and procedures. It complements an earlier legislative proposal which defines the criminal offences as well as the applicable sanctions.

This proposal is part of a legislative package as it will be accompanied by a proposal concerning the reform of Eurojust.

1.

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS



In order to prepare this Regulation, the Commission has consulted widely with stakeholders, on a number of occasions, also building on earlier discussions related to the European Public Prosecutor's Office, which have been going on for more than a decade.[2] Preparatory consultations in view of the present proposal have covered the main issues addressed in this Regulation, including various options with regard to the institutional, legal, organisational and operational set-up of a European system for the investigation and prosecution of the relevant offences.

Early in 2012, two questionnaires were published and distributed on-line, one to justice professionals and another to the general public, respectively. In general, the replies were positive towards taking new actions to strengthen the material and procedural framework to counter offences affecting the EU’s financial interests, and most also expressed support for the idea to set up a European Public Prosecutor’s Office. A number of more detailed suggestions, concerns and questions were also voiced, in particular on the relationship between such the European Public Prosecutor’s Office and national prosecution authorities, the competence of the European Public Prosecutor’s Office to direct and coordinate investigations at national level, or the possible difficulties with any harmonised European rules of procedure in the European Public Prosecutor’s Office's proceedings. In parallel, field research has been conducted in a number of Member States, as part of the external study in support of this report. In addition, throughout 2012 and at the beginning of 2013, a number of discussions or meetings took place at European level:

· The network of Public Prosecutors or equivalent institutions at the Supreme Judicial Courts of the Member States, Budapest, 25-26 May 2012.

· Conference: A Blueprint for the European Public Prosecutor's Office? Luxembourg, 13-15 June 2012. The conference gathered experts and high level representatives from academia, EU institutions and Member States.

· Vice-President Reding's consultation meeting with Prosecutors General and Directors of Public Prosecution from Member States, Brussels, 26 June 2012. The meeting permitted an open discussion on specific issues regarding the protection of the Union's financial interests.

· On 18 October 2012, the Commission organised a consultation meeting on issues relating to a possible reform of Eurojust, in which questions related to the setting up of a European Public Prosecutor’s Office were also discussed with representatives of Member States. The meeting generally supported establishing a close link between Eurojust and the European Public Prosecutor’s Office.

· The 10th OLAF Conference of Fraud Prosecutors, Berlin, 8-9 November 2012, was an opportunity to explore the ways in which national prosecutors would interact with the European Public Prosecutor’s Office, if set up.

· The informal consultation held on 26 November 2012 with defence lawyers (CCBE and ECBA) looked at procedural safeguards for suspects and made useful recommendations in that regard.

· ERA seminar "Towards the European Public Prosecutor's Office (EPPO)", 17 and 18 January 2013.

· Meeting of the Commission Expert Group on European Criminal Policy, Brussels, 23 January 2013.

· Further consultation meeting with ECBA and CCBE, Brussels, 9 April 2013.

Also, numerous bilateral consultation meetings with Member States’ authorities have taken place over the second half of 2012 and the beginning of 2013.

The Commission conducted an Impact Assessment of policy alternatives taking account inter alia an external study (Specific contract No. JUST/2011/JPEN/FW/0030.A4) which has considered various options involving the establishment of a European Public Prosecutor’s Office. According to the analysis of the Impact Assessment, setting up the European Public Prosecutor’s Office as a decentralised integrated office of the Union, which relies on national judicial systems, offers the most benefits and generates the lowest costs.

2.

LEGAL ELEMENTS OF THE PROPOSAL



4.

3.1. The legal basis


The legal basis of the proposal is Article 86 of the Treaty. According to the first paragraph of that provision, “[i]n order to combat crimes affecting the financial interests of the Union, the Council, by means of regulations adopted in accordance with a special legislative procedure, may establish a European Public Prosecutor's Office from Eurojust. The Council shall act unanimously after obtaining the consent of the European Parliament”. The second paragraph of that provision defines the responsibility of the European Public Prosecutor’s Office as follows: “[t]he European Public Prosecutor's Office shall be responsible for investigating, prosecuting and bringing to judgment, where appropriate in liaison with Europol, the perpetrators of, and accomplices in, offences against the Union's financial interests, as determined by the regulation provided for in paragraph 1. It shall exercise the functions of prosecutor in the competent courts of the Member States in relation to such offences”. Finally, the third paragraph of Article 86 of the Treaty defines the substantive scope of the regulations to be adopted pursuant to it: “[t]he regulations referred to in paragraph 1 shall determine the general rules applicable to the European Public Prosecutor's Office, the conditions governing the performance of its functions, the rules of procedure applicable to its activities, as well as those governing the admissibility of evidence, and the rules applicable to the judicial review of procedural measures taken by it in the performance of its functions”.

5.

3.2. Subsidiarity and proportionality


There is a need for the Union to act because the foreseen action has an intrinsic Union dimension. It implies Union-level steering and coordination of investigations and prosecutions of criminal offences affecting its own financial interests, the protection of which is required both from the Union and the Member States by Articles 310 (6) and 325 TFEU. In accordance with the subsidiarity principle, this objective can only be achieved at Union level by reason of its scale and effects. As stated above, the present situation, in which the prosecution of offences against the Union’s financial interests is exclusively in the hands of the authorities of the Member States is not satisfactory and does not sufficiently achieve the objective of fighting effectively against offences affecting the Union budget.

In accordance with the principle of proportionality, this Regulation does not go beyond what is necessary to achieve this objective. Throughout the proposed text, the options chosen are those that are least intrusive for the legal orders and the institutional structures of the Member States. Key features of the proposal, such as the choice of the law that applies to investigative measures, the figure of Delegated Prosecutors, the decentralised character of the European Public Prosecutor’s Office and the system of judicial review, were designed in order not to go beyond what was necessary to achieve the main objectives of the proposal.

The Union's competence to counter fraud and other offences affecting its financial interests is unambiguously stipulated by Articles 86 and 325 of the Treaty. As this Union competence is not accessory to that of Member States and exercising it has become necessary to achieve a more effective protection of the Union’s financial interests, the proposed package complies with the requirement of subsidiarity.

6.

3.3. Explanation of the proposal by chapters


The main objectives of the proposal are:

· To contribute to the strengthening of the protection of the Union's financial interests and further development of an area of justice, and to enhance the trust of EU businesses and citizens in the Union’s institutions, while respecting all fundamental rights enshrined in the Charter of Fundamental Rights of the European Union.

· To establish a coherent European system for the investigation and prosecution of offences affecting the Union’s financial interests.

· To ensure a more efficient and effective investigation and prosecution of offences affecting the EU’s financial interests.

· To increase the number of prosecutions, leading to more convictions and recovery of fraudulently obtained Union funds.

· To ensure close cooperation and effective information exchange between the European and national competent authorities.

· To enhance deterrence of committing offences affecting the Union’s financial interests.

7.

3.3.1. Chapter I: Subject matter and definitions


This Chapter sets out the subject matter of the Regulation, which is the setting up of the European Public Prosecutor’s Office. In addition, it defines a certain number of terms used in the text, such as the “financial interests of the Union”.

8.

3.3.2. Chapter II: General rules


This Chapter regulates the fundamental features of the European Public Prosecutor’s Office, its status and structure as a new Union office with investigation and prosecution functions. In doing so, it provides specific rules on the appointment and dismissal of the European Public Prosecutor and his/her delegates. It also sets out the basic principles of its functioning.

Section 1 (Status, organisation and structure of the European Public Prosecutor’s Office) clarifies how the European Public Prosecutor’s Office is set up and what functions will be entrusted to it. The text provides for its establishment as a new Union body with legal personality and sets out its relationship with Eurojust. Among the key features of the European Public Prosecutor’s Office, the text refers to independence and accountability, which should guarantee that it is able to exercise its functions and use its powers in a way that makes it immune from any improper influence. The main characteristics of the structure of the European Public Prosecutor’s Office are also described in the text.

Section 2 (Appointment and dismissal of the members of the European Public Prosecutor’s Office) provides the rules applicable to the appointment and dismissal procedure of the European Public Prosecutor, his/her Deputies and staff. The appointment procedure for the European Public Prosecutor is designed in a way that guarantees his independence and accountability towards Union institutions, whereas his/her dismissal procedure rests with the Court of Justice of the European Union. For the European Delegated Prosecutors, who will be appointed and dismissed by the European Public Prosecutor, the procedure ensures their integration into national prosecution systems.

Section 3 (Basic principles) describes the main legal principles that will govern the activities of the European Public Prosecutor’s Office, including conformity with the Charter of Fundamental Rights of the European Union, proportionality, national law being applicable to implement the Regulation, procedural neutrality, legality and celerity of investigations, Member States’ duty to assist the investigations and prosecutions of the European Public Prosecutor’s Office.

Section 4 (Competence of the European Public Prosecutor’s Office) clarifies the criminal offences which fall within the material competence of the European Public Prosecutor’s Office. These offences are to be defined by reference to national law implementing Union law (Directive 2013/xx/EU). The text distinguishes between two categories of offences, the first of which falls automatically within the competence of the European Public Prosecutor’s Office (Article 12) and the second (Article 13) which requires to establish its competence where there are certain connecting links with offences of the first category. The Section also describes how the European Public Prosecutor’s Office will exercise its competence over these offences.

9.

3.3.3. Chapter III: Rules of procedure on investigations, prosecutions and trial proceedings


This Chapter covers the essential features of the investigations and prosecutions of the European Public Prosecutor’s Office, including provisions on how they should be controlled by national courts, what decisions the European Public Prosecutor’s Office could take once the investigation is completed, how it would exercise its prosecution functions and how the evidence collected would be used in trial courts.

Section 1 (Conduct of the investigation) provides the general rules that apply to the investigations of the European Public Prosecutor’s Office, including the sources of information used, how investigations are initiated and conducted and how the European Public Prosecutor’s Office may obtain further information from databases or data collected at its request.

Section 2 (Processing of information) explains the functioning of the Case Management System.

Section 3 (Investigation measures) sets out the types and conditions of the individual investigation measures which the European Public Prosecutor’s Office will be able to use. The text does not regulate in detail each of these measures but requires the application of national law.

Section 4 (Termination of the investigation and powers of prosecution) stipulates the different types of decisions which the European Public Prosecutor’s Office may take at the end of the investigation, including indictments and dismissals.

Section 5 (Admissibility of evidence) regulates the admissibility of evidence collected and presented by the European Public Prosecutor’s Office in trial courts.

Section 6 (Confiscation) regulates the disposition of the assets confiscated by national courts as a result of the prosecution conducted by the European Public Prosecutor’s Office.

10.

3.3.4. Chapter IV: Procedural safeguards


The rules of this Chapter provide safeguards for suspects and other persons involved in the proceedings of the European Public Prosecutor’s Office, which will need to comply with the relevant standards, in particular the Charter of Fundamental Rights of the European Union. The rules refer to Union legislation (Directives on various procedural rights in criminal proceedings) with regard to certain rights but also define autonomously other rights which have not yet been regulated in Union legislation. As such, these rules provide an additional layer of protection compared to national law so that suspects and other persons may benefit directly from a Union-level protection.

11.

3.3.5. Chapter V: Judicial review


Article 86(3) of the Treaty prescribes the Union legislator to determine the rules applicable to the judicial review of procedural measures taken by the European Public Prosecutor’s Office in the performance of its functions. This possibility reflects the specific nature of the European Public Prosecutor’s Office, which is different from that of all other Union bodies and agencies and requires special rules regarding judicial review.

Article 86 of the Treaty requires that the European Public Prosecutor’s Office exercise its functions of prosecutor in the competent courts of the Member States. The acts of investigation of the European Public Prosecutor’s Office are also closely related to an eventual prosecution and will mainly deploy their effects in the legal orders of the Member States. In most cases they will also be carried out by national law enforcement authorities acting under the instructions of the European Public Prosecutor’s Office, and sometimes also after having obtained the authorisation of a national court. The European Public Prosecutor’s Office is therefore a Union body whose action will mainly be relevant in the national legal orders. It is therefore appropriate to consider the European Public Prosecutor’s Office as a national authority for the purpose of the judicial review of its acts of investigation and prosecution. As a result, national courts should be entrusted with the judicial review of all the challengeable acts of investigation and prosecution of the European Public Prosecutor’s Office, and the Union courts should not be directly competent with regard to those acts pursuant to Articles 263, 265 and 268 of the Treaty, since such acts should not be considered as acts of an office of the Union for the purpose of judicial review.

In accordance with Article 267 of the Treaty, national courts are able or, in certain circumstances, bound to refer to the Court of Justice questions for preliminary rulings on the interpretation or the validity of provisions of Union law which are relevant for the judicial review of acts of investigation and prosecution of the European Public Prosecutor’s Office. This may include questions on the interpretation of this Regulation. Since the European Public Prosecutor’s Office will be considered a national authority for the purpose of judicial review, national courts will only be able to refer questions on interpretation to the Court of Justice regarding its acts. The preliminary rulings procedure will thus ensure that this Regulation is applied uniformly throughout the Union, whereas the validity of the acts of the European Public Prosecutor’s Office may be challenged before national courts in accordance with national law.

12.

3.3.6. Chapter VI: Data protection


This Chapter provides for rules governing the data protection regime which in the specific context of the European Public Prosecutor’s Office particularise and complement the Union legislation applicable to processing of personal data by EU bodies (in particular Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data). The supervision of all personal data processing in the context of the activities of the European Public Prosecutor’s Office has been entrusted to the European Data Protection Supervisor (EDPS).

13.

3.3.7. Chapter VII: Financial and staff provisions


The rules of this Chapter regulate how the European Public Prosecutor’s Office shall handle its budget and staff. They are based on the applicable Union legislation, i.e. for budget matters on Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002, and for staff matters on Regulation 31 (EEC), as amended.

3.3.8. Chapter VIII: Provisions on the relations of the European Public Prosecutor’s Office

This Chapter regulates the relationship of the European Public Prosecutor’s Office with Union institutions or other bodies as well as actors outside the Union. Special rules apply to the relationship of the European Public Prosecutor’s Office with Eurojust, given the special links that tie them together in the area of operational activities, administration and management.

14.

3.3.9. Chapter IX: General provisions


These provisions address institutional matters which arise with the setting up of any new Union office or agency. They are largely inspired by the “Common Approach on decentralised agencies” but take into account the specific (judicial) nature of the European Public Prosecutor’s Office. The provisions covers matters such as legal status and operating conditions, language arrangements, transparency requirements, rules on the prevention of fraud, handling classified information, administrative enquiries and liability rules.

15.

3.3.10. Chapter X: Final provisions


These provisions deal with the implementation of the Regulation and provide for the adoption of implementing provisions, transitional provisions, administrative rules and entry into force.

3.

BUDGETARY IMPLICATION



The proposal seeks to be cost-efficient for the EU budget: part of OLAF's current resources will be used for setting up the central headquarters of the European Public Prosecutor’s Office, which in turn will rely on the administrative support of Eurojust.

Limited additional costs will arise in relation to the position of the European Delegated Prosecutors who will be located in the Member States and will be an integral part of the European Public Prosecutor's Office. Given their dual status as both Union and national prosecutors, they will receive remuneration from the EU budget and will be covered by the Staff Regulations.

As the set-up phase of the European Public Prosecutor’s Office will probably take several years, staff members will be gradually transferred from OLAF to the European Public Prosecutor’s Office. The equivalent number of the staff transferred and the corresponding credits to finance this staff will be reduced in the establishment plan and budget of OLAF. The European Public Prosecutor's Office will reach cruising speed once the full staff levels are achieved. The full staff level will be achieved in 2023 with 235 staff, of which 180 establishment plan posts and 55 external staff. The estimated cost for 2023 with this staff level is approximately 35 million EUR.