The Players in the Protection of the EU’s Financial Interests

• Date: 29 November 2022
• Year: 2022
• Author: Mirjana Jurić mag.jur
• Pages: 52
• DOI: https://doi.org/10.30709/eucrim-2022-015

I. Introductory Remarks

Today, when the EU Member States (and the whole world) are faced with the challenges of the COVID-19 pandemic, natural disasters, and war conflicts, an unprecedented amount of money is provided to overcome these crises. This creates opportunities to commit serious irregularities, frauds and corruption. It is therefore, more than ever before, important to clearly define sustainable and efficient control framework and the key players involved in the protection of the EU’s financial interests

On 17 December 2020, following the European Parliament’s consent, the Council adopted the Regulation laying down the EU’s multiannual financial framework (MFF) for 2021-2027.¹ The Regulation provides for a long-term EU budget of €1.074 trillion (in 2018 prices) for the 27 EU Member States.² Together with the NextGenerationEU recovery instrument of €750 billion (in 2018 prices),³ the EU will provide an unprecedented €1.8 trillion of funding over the coming years to support recovery from the COVID-19 pandemic and implementation of the EU’s long-term priorities across different policy areas. For the European Commission, a major priority is to protect the taxpayers’ money and to ensure that every Euro from the EU budget is spent in line with the rules and generates added value. In this sense, the Commission works closely with the Member States and other respective EU institutions towards these objectives.

Against this background, the present article will illustrate which key players (both those that conduct administrative investigations and those that conduct criminal investigations) are involved in the protection of the EU’s financial interests and which control mechanisms are available to protect them, both at the EU and national levels. By way of a preliminary remark, we should bear in mind a number of important aspects: First, the players involved in the protection of the EU’s financial interests handle both EU revenue and expenditure; the protection of the EU’s financial interests is equally ensured within the legal framework for administrative proceedings and that for criminal proceedings. Second, the legal frameworks for conducting investigations, whether administrative or criminal, are significantly different from Member State to Member State, which often affects the efficiency of investigations and cooperation between the states. Third, the legal framework governing the role and competences of individual authorities at the EU level, which prescribes their mandate, the manner of proceedings, and obligations for mutual cooperation, communication, and the exchange of information seems much clearer than the corresponding national legal frameworks of the Member States. This is especially true when it comes to the recognition and understanding of the functioning of the legal framework for administrative proceedings.

II. Setting the Scene I: Cooperation between Authorities Conducting Administrative Investigations and those Conducting Criminal Investigations at the EU Level

At the EU level, several EU bodies are involved in the protection of the EU’s financial interests. This includes the European Anti-Fraud Office (OLAF), the EU Agency for Criminal Justice Cooperation (Eurojust), the EU Agency for Law Enforcement Cooperation (Europol), the European Court of Auditors (ECA), the European Court of Justice (CJEU), and the recently created European Public Prosecutor’s Office (EPPO). Many experts believed that the EPPO was the missing link in strengthening the fight against fraud and corruption in the EU, especially due to OLAF’s limited powers. At the heart of the protection of the EU’s financial interests are obviously OLAF and the EPPO. However, OLAF conducts administrative investigations at the EU level, while the EPPO conducts criminal investigations and prosecutes criminal offences falling under its competence before the national courts. It is important to emphasise that OLAF has maintained its operational independence, even in relation to the EPPO, and its field of operation is larger than that of the EPPO, because its competence extends to the entire EU, whereas the EPPO has only competence within the participating Member States.

The EPPO’s and OLAF’s fields of operation are nonetheless closely linked. The common aim of both bodies is to increase fraud detection at the EU level, to avoid duplication of work, to protect the integrity and efficiency of criminal investigations, and to maximise the recovery of damages to the EU budget. In addition, both bodies are combining their investigative and other capacities to improve the protection of the EU’s financial interests. In this context, Art. 12e(3) of the amended OLAF Regulation⁴ is worthy of mention: it obliges OLAF to observe the applicable procedural safeguards of the EPPO Regulation⁵ if OLAF performs supporting measures requested by the EPPO. This is an important step forward in ensuring the admissibility of evidence as well as fundamental rights and procedural guarantees.

Consequently, the working arrangement between OLAF and the EPPO⁶ is of utmost importance for their relationship. It specifically sets out how the two bodies will cooperate, exchange information, report to each other, transfer potential cases, and support each other in their investigations. It also covers the way in which OLAF will conduct complementary investigations, if needed. Last but not least, it ensures that the two bodies regularly share information on fraud trends, carry out joint training exercises, and carry out staff exchange programmes.

Currently, it seems that the cooperation between OLAF and the EPPO is proceeding smoothly and that all obstacles, if any, are being resolved without major problems. It is evident from OLAF’s activity report for 2021 that OLAF’s investigators provided support to the EPPO by serving as expert witnesses in complex cases, and they provided forensic analysis of and substantial documentation on relevant EU projects and programmes.⁷

In addition, in its first annual report,⁸ the EPPO gives an account of the initial seven months of its operational activity; it contains information on cooperation with other institutions, bodies, offices and agencies of the EU, including OLAF. Accordingly, the EPPO received and processed 2832 reports related to various cases of economic fraud in the EU and opened 576 investigations, 515 of which were still active on the last day of 2021. In these first seven months of the EPPO’s operational activity, OLAF contributed considerably to the opening of criminal investigations conducted by the EPPO: some 85 criminal investigations were opened by the EPPO based on OLAF’s investigative reporting.

In Croatia, the EPPO is currently conducting eight active investigations in which the estimated damage is €30.6 million and €270,000 have been seized so far. During complementary investigations and in close cooperation with the EPPO, OLAF conducted two on-the-spot checks combined with digital forensic operations in Croatia. In November 2021, four suspects were arrested at the request of the EPPO.

III. Setting the Scene II: Cooperation between Authorities Conducting Administrative Investigations and those Conducting Criminal Investigations at the Level of the EU Member States

When it comes to the players involved in the protection of the EU’s financial interests at the level of the Member States, there are some inconsistencies compared to the players at the EU level.

With regard to criminal investigations, the first observation is that the question of which authorities are recognised as conducting criminal investigations at the level of the Member States is clear. The authorities competent for conducting criminal investigations and prosecutions of...