July 17, 2013 7:04 pm

Brussels calls for an EU public prosecutor to tackle fraud

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EU commissioner Viviane Reding©Getty

EU commissioner Viviane Reding

The European Commission’s senior justice official has proposed the creation of an EU public prosecutor to investigate the estimated €500m in EU funds lost every year through fraud.

Viviane Reding, the commissioner for justice, said a new prosecutor’s office would be small and decentralised, and comprised of only a handful of officials in Brussels, working with specially designated personnel in national justice ministries.

Ms Reding said the new office would for the first time allow the EU to compel national prosecutors to bring criminal cases against those suspected of misusing EU funds.

“Let’s be clear,” she said. “If we, the EU, don’t protect our federal budget, nobody will do it for us.”

But the proposal, co-authored by Algirdas Semeta, the EU tax commissioner, faced difficulty even before it was unveiled on Wednesday, with both Britain and Denmark saying they would not participate in the plan. Ireland was also said to be considering whether to opt out.

A Danish government official said Copenhagen’s decision was based on its opt-out of EU justice and home affairs measures, but declined to specify what the Danish government found objectionable in the plan. A spokesman for the British government pointed to recent remarks by Theresa May, UK home secretary, who said Britain did not want to cede any such sovereignty to Brussels.

Under EU rules, if a unanimous decision cannot be reached, a group of at least nine countries can participate in a programme through “enhanced co-operation”; Ms Reding said she was expecting 25 countries to support the plan.

Under the commission’s proposal, the prosecutor’s office would be independent of EU and national authorities’ oversight, and would be funded by and prepare annual reports for the European Parliament.

The prosecutor, with the assistance of four deputies in Brussels and delegate prosecutors in each member state, would exercise jurisdiction over cases that involve criminal mishandling of the EU’s massive spending on areas as diverse and complex as agriculture, education and foreign aid.

A Financial Times investigation in 2010 found that billions in EU development funding to poorer regions – which accounts for about a third of all EU spending – had been paid out in error and that a decentralised and weak oversight system rarely punished fraud and misuse.

The FT found that fraud cases were often not followed up, since they bounced between member countries’ capitals and Brussels’ existing anti-fraud agency, Olaf, which only has the power to issue reports and is not a judicial body.

Millions of euros continued to be siphoned off by organised crime syndicates despite repeated warnings, the FT found. EU officials said national prosecutors were also reluctant to bring EU budget fraud cases because they frequently involved multiple national jurisdictions.

The new public prosecutor is partly designed to fix this gap. “The existing system cannot do the job,” said Ms Reding.

Under the plan, most of the personnel staffing the prosecutor’s office would come from Olaf. Although the new prosecutor would have the power to coerce national authorities to bring investigations, all cases would be prosecuted in national courts under local laws.

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