Cause and Effect in European Politics and Law

Member States Disagreed on EPPO Financing As Well

Adelina Marini, April 6, 2016

Despite all differences between member states another presidency in a row is working hard on finding a compromise on one of the most difficult European dossiers – the common European Public Prosecutor’s Office (EPPO) for dealing with European funds fraud. The Dutch Presidency of the Council picked up the baton from Luxembourg and organised in the beginning of March a new string of debates on the subject, but again, on the new subjects as well member states turned out to be diametrically divided. The curious thing now is that, despite being a rotating president, The Netherlands continues to be sceptical on this dossier. Dutch Minister of Security and Justice Ard van der Steur started the public discussion on the financing of the EPPO with the words that the Dutch parliament continues to be critical regarding the transfer of more sovereignty to the Prosecution, criticism covering all articles of the draft regulation. He ensured, however, that The Netherlands will continue to support other members in the effort to find the the best text possible.

Following the established tradition on this dossier, work is going on in sync on several packages of articles and provisions. There is no final agreement on any of them. According to Ard van der Steur, experts are close to a compromise on 27 articles, but there are still some serious reserves. There are Articles left for the June meeting of the Justice and Home Affairs Council, which remain controversial. They have to do with the protection of personal data. The 27 articles, presented by the Presidency, were generally well received. They were not a subject in the discussions. The main issue, discussed by the ministers at their meeting of March 11, was the financing of the European Prosecution, which highlighted the member states’ division into two camps – some, which do not want the Prosecution to be a strong supranational body and the others, who wish precisely that. 

Prosecution expenses are divided into three groups: remuneration for the European Prosecutor, his deputies and the European Delegated Prosecutors, the administrative director, and the rest of the employees; expenses for administration and infrastructure; operating costs. The latter group was the most controversial one, for member states have different visions on what exactly is understood by operating expenses. The most debatable element is who is to cover expenses, made by the European Delegated Prosecutors in the cases when they are acting within the framework of EPPO tasks, but in national investigations. The Presidency believes that this question is extremely important, for it will have a huge impact on the Prosecutor's Office's budget. 

Justice Commissioner Věra Jourová (Czech Republic, ALDE) defended the Commission’s proposal by pointing out that operating costs should mean the expenses linked to the operational functioning of the institution like translation, mission expenses, and trainings at the central level. The measures of investigation, taken up by national authorities on behalf of the Prosecution, should not appear in the definition of “operating costs”, thinks Ms Jourová. “You, member states, have the responsibility to fight fraud both at the national and EU level and this also means bearing the costs for it”, she added. After the EPPO is established, member states must provide Delegated Prosecutors with all the necessary support and equipment. “It is a shared obligation for the Union and the member states to protect Unions budget”, added the commissioner. 

France was first to open up the debate by proposing that a mechanism is discussed, which would allow for mobilising the Prosecution’s budget in exceptional circumstances in order to guarantee that investigations will not be blocked just because of expenses. Most of the “nordic” member states demanded a strict division of expenses – things done by national authorities must be paid for by national budgets. Swedish Justice Minister Morgan Johansson at the same time agreed that when there are extreme circumstances options can be considered, but they should be the common rule. 

Spanish State Secretary for Justice Carmen Sánchez-Cortés Martín, who supports a strong supranational Prosecution, said that the definition of operating expenses should be built on three principles: independence, fairness, and budget balance. She recommended that thought is given to an option for dividing the revenues from retrieved assets. According to the European Court of Auditors’ calculations, the losses generated by VAT fraud are 50 billion euro, and the gap from uncollected VAT is 168 billion euro. According to Spain, there should be a balance established between retrieved European funds and the costs . Wolfgang Brandstetter, minister of justice of Austria, pointed out the need to share confiscated assets and collected fines. 

Germany was categorically opposed to paying for extra employees out of the Prosecution’s budget. If extra employees are required to support national investigations involving Delegated Prosecutors, then these expenses should be met by the respective member state. The German delegation saw in the proposed documents a hint that in some cases expenses should be met by the EPPO. “We don’t think that's terribly feasible in practise”, said German Justice Minister Heiko Maas. According to Portugal, however, attention should be paid to the fact that some member states have difficulties mobilising sufficient resources, in order to deal with large-scale investigations. 

“I know that member states are responsible for the process but I think it's unlikely that an investigation which is carried out by European prosecutors is not going to involve costs which will be unusual in the context of a purely national procedure”, said the Portuguese justice minister Francisca Van Dunem. The ministers of Slovenia, Greece, Lithuania, Poland, The Czech Republic, and Slovakia agreed with her. Croatian Justice Minister Ante Šprlje proposed that a cap is placed on these additional expenses, which was backed by his Bulgarian colleague Ekaterina Zaharieva. According to her, thought should be given to a definition for when expenses are exceptionally high and when they are by order of the EPPO. Placing a limit is an option as well when there are expenses, which are extremely specific, expensive, or linked to a transborder investigation. 

Italian Minister of Justice Andrea Orlando pointed out, in the spirit of his urges for a strong and independent EPPO, that the budget of the future Prosecution must be big enough to grant it independence from member states. He was the only one to ask for expenses on investigations of the Delegated Prosecutors to be considered operating costs and be supported by the European budget. Orlando did say, however, that Italy is going to be constructive. Hungary, on the other hand, announced that it is inappropriate to discuss the financing of the EPPO before there is an agreement on how it should work. “First, we must clarify the operation of the Office and then talk about the budget as well”, said Minister László Trócsányi. 

Great Britain, Ireland, and Denmark will not participate in the EPPO, so the three states pointed out that whatever is done, it should not lead to direct or indirect costs to them. Great Britain asked for an extra clarification of the text, connected with expenses on services which Eurojust provides to the EPPO. “The UK cannot and will not finance the EPPO by the back door”, said Minister of State James Brokenshire. He was supported also by Ireland's Permanent Representative Declan Kelleher. Denmark also required that there is no indirect financing from countries which opt out. The state has a slightly different exception, so it will finance only the administrative expenses of the EPPO. 

“The rule ‘who pays he commands’ should be based in the model of the EPPO as well”, said Commissioner Jourová at the end of the discussion. She recommended that the option where there is too much wasted energy in the justification of expenses and providing evidence for expenses made is avoided. Too complicated administration should be avoided, she said. The presidency continues working on clarifying the texts. The next discussion of this dossier is expected to be in June. 

You can read more on the subject of the EPPO hereherehereherehere, and here