Criminal and Administrative Procedures in Protecting the Financial Interests of the EU

• Date: 07 February 2023
• Year: 2023
• Author: Gianluca Dianese,Dimo Grozdev
• Pages: 61
• DOI: https://doi.org/10.30709/eucrim-2022-019

I. Introduction

Art. 86 of the Treaty on the Functioning of the European Union (TFEU)¹ introduced the possibility to establish a European Public Prosecutor’s Office (EPPO), with the task of investigating, prosecuting, and bringing to judgement “the perpetrators of, and accomplices in, offences against the Union’s financial interests”. Leveraging on this article, 22 Member States notified the European Parliament, the European Council, and the European Commission of their decision to establish the EPPO via enhanced cooperation. As a result, Council Regulation (EU) 2017/1939 on the establishment of the European Public Prosecutor’s Office (“the EPPO”) was adopted and entered into force on 20 November 2017.²

Until that moment, the protection of the EU’s financial interests had been ensured by the vigilance of the judiciary of the EU Member States and on the basis of the investigations of the European Anti-Fraud Office (OLAF). OLAF had the competence to conduct administrative investigations against fraud and any other illegal activity affecting the EU’s financial interests.

The establishment of the EPPO as a single, independent, and transnational prosecution office drastically and effectively changed the jurisdictional landscape with regard to protecting the EU budget. The EPPO gained the material competence³ for investigating criminal offences listed in the so-called PIF Directive,⁴ namely:

• Fraud, including cross-border value added tax (VAT) fraud involving a total damage of at least €10 million;

• Active and passive corruption;

• Money laundering;

• Misappropriation of funds and assets.

II. Mandates and Powers

The introduction of a newly designated transnational judicial body in addition to the administrative body of OLAF resulted in the creation of a twofold system of protection: By applying both criminal law and administrative mechanisms, an even more effective system has been achieved that enables the fight against fraud and against the misappropriation of EU funds.

Despite having a common goal, however, the EPPO and OLAF have separate jurisdictions, with clear boundaries and limitations. Nonetheless, their operations are significantly intertwined, as criminal investigations are often opened by the EPPO on the basis of information obtained during an administrative investigation conducted by OLAF. Moreover, in several instances, the EPPO has sought assistance from OLAF during the course of its criminal investigations in order to execute administrative measures or complimentary administrative investigations. Before taking a closer inspection of the concrete cooperation between the EPPO and OLAF on the basis of their Working Arrangement, the main aspects differentiating the criminal and administrative procedures for handling investigations aimed at protecting the EU’s financial interests will be defined.

1. OLAF’s competence

OLAF has the mandate to investigate fraud and corruption involving EU funds, to investigate serious misconduct within the European institutions, and to develop a sound anti-fraud policy for the European Commission. According to Art. 8(1) of the OLAF Regulation,⁵ the institutions, bodies, offices, and agencies of the Union must “transmit to the Office without delay any information relating to possible cases of fraud, corruption or any other illegal activity affecting the financial interests of the Union”.

OLAF exercises its powers by conducting both internal administrative investigations involving staff of EU institutions and external administrative investigations involving beneficiaries of EU grants, subsidies, and other forms of EU financing. At the conclusion of its investigations, OLAF can issue “recommendations” to competent administrative authorities (either to EU institutions or to authorities in the Member State(s) concerned) for the adoption of disciplinary/administrative/financial measures and/or the opening of judicial proceedings against perpetrators who have violated the rules protecting the EU’s financial interests.⁶ This approach is characterised by the fact that OLAF has no mandate to directly prosecute or impose any sanctions on the investigated persons or legal entities. Therefore, the Office must rely on EU institutions or the national authorities of the Member States to agree with the recommendations and subsequently proceed with the imposition of sanctions or the opening of criminal proceedings.

The recommendations issued by OLAF may include:

• Disciplinary measures, such as a reprimand, demotion, or dismissal;

• Administrative measures, such as amendments to contracts, changes in rules, and improvements to recruitment procedures;

• Financial measures, such as the recovery of disbursed funds, the imposition of financial penalties, and exclusion from procurement procedures;

• Judicial measures, such as a report to administrative judges or the competent national public prosecutor’s office.

2. EPPO’s competence

By contrast, the EPPO has the mandate to undertake investigations independently and carry out prosecutions before the competent national courts of the participating Member States until the case is finally adjudicated. Although the EPPO’s competence is regulated by Council Regulation 2017/1939, which effectively establishes the Office as a transnational judicial body, EPPO’s powers are regulated by the criminal law of the “participating” Member States, because it brings prosecutions before national courts and follows the national criminal procedures.

The...