For some time, the European Union has grappled with how best to combat financial crime directed at its budget. As part of that effort, it has been making use of existing government bodies such as Europol (the EU’s law enforcement agency), Eurojust (the EU’s agency for criminal justice cooperation), and the European Anti-Fraud Office (OLAF) (the EU entity that investigates fraud against the EU budget, corruption, and serious misconduct within the European institutions and develops anti-fraud policy for the European Commission).
To date, however, the combined efforts of those agencies have not been making sufficient headway in combating crimes against the EU budget. In 2019, the European Court of Auditors (ECA) issued a report that was highly critical of the European Commission’s (EC’s) existing approach to EU budget fraud. Among other concerns, it found that between 2002 and 2016, frauds had taken at least €8.8 billion from the EU budget, and that OLAF’s administrative investigations had led to prosecution in fewer than half of its cases and resulted in recovery of less than one-third of the funds.
The ECA, however, also called attention to the creation of the European Public Prosecutor’s Office (EPPO), a new EU entity established in 2017 with powers to investigate and prosecute crimes against the EU’s financial interests. The ECA called the EPPO’s establishment “a step in the right direction”, and noted that it would begin operations in 2020.
Although the setup of the EPPO took longer than initially expected, on June 1 the EPPO formally launched its operations at its offices in Luxembourg. The EPPO’s mandate is “to investigate, prosecute and bring to judgment crimes against the EU budget, such as fraud, corruption or serious cross-border VAT fraud.” As currently organized, the EPPO’s Chief Prosecutor is Laura Codruța Kövesi, the former chief prosecutor of Romania’s National Anticorruption Directorate and former Romanian Prosecutor General. The remaining EPPO staff consists of two Chief Deputies and other prosecutors drawn from the 22 EU countries participating in the EPPO. (Denmark, Ireland, Hungary, Poland and Sweden are not participating in the EPPO, although Sweden reportedly plans to join the EPPO in 2022.)
The EPPO already faces a considerable body of work, with some 3,000 cases already submitted to it. According to Kövesi, the first new reports of alleged fraud against the EU budget, submitted from Germany and Italy, came in within hours of the EPPO’s online reporting system going “live.”
At the outset, Kövesi is evidently focusing on the use of EU funds for purposes other than their original intended purpose, corruption, and money laundering. At the same time, she will need to manage public expectations about the EPPO’s progress and accomplishments with some care. In a recent media interview, she acknowledged that the EPPO has no authority to pursue offenses committed in non-EU countries unless the alleged fraud has a clear connection with one of the 22 EPPO country participants. As she put it, “We can look to see if there is a link with the member state… (but otherwise) it will depend on the national prosecutor and the European Anti-Fraud Office (OLAF). They will continue to be investigated by the national prosecutor.” Some fairly early successes would certainly be helpful to the EPPO’s cause, but the complexity of the cases it will be pursuing makes quick successes unlikely.