13
Evidence Session No. 1 Heard in Public Questions 1 - 13
Members present
Baroness Corston (Chairman)
Lord Anderson of Swansea
Lord Blair of Broughton
Lord Dykes
Baroness Eccles of Moulton
Viscount Eccles
Lord Elystan-Morgan
Lord Hodgson of Astley Abbotts
Baroness Liddell of Coatdyke
Lord Rowlands
Lord Stoneham of Droxford
Professor Valsamis Mitsilegas, Head of Department of Law and Professor of European Criminal Law, Queen Mary, University of London, and Professor Dr Katalin Ligeti, LLM Professor of Criminal Law, Université du Luxembourg
Q1 The Chairman: Welcome. Thank you for coming to give evidence to the Justice, Institutions and Consumer Protection Sub-Committee of the House of Lords European Union Committee. We are very grateful to you for your time. Perhaps I could just point out, or remind you if you already know, that this is a public session. A webcast of the session goes out live as an audio transmission and is subsequently accessible via the parliamentary website. A verbatim transcript will be taken and put on the parliamentary website. A few days after the session, you will receive a copy of the transcript to check for accuracy. If there are any corrections that you would like to make, we would like to be advised as soon as possible. If you would like to clarify or amplify any points you made during your evidence, you are very welcome to submit supplementary written evidence to us. It might be useful at this point, if you wish, to introduce yourselves to the Committee.
Professor Dr Katalin Ligeti: Good afternoon. Thank you very much for the invitation. I am Katalin Ligeti, Professor of Criminal Law at the University of Luxembourg. I have been in charge of a project elaborating model rules for the procedure of the European Public Prosecutor’s Office. I imagine that was one of the reasons I was invited to this session.
Professor Valsamis Mitsilegas: I am Valsamis Mitsilegas, Professor of European Criminal Law and head of the law department at Queen Mary, University of London. It is an honour to be here and a pleasure to come back to assist this Committee in a different capacity from 2001 to 2005, when I sat where Tim is sitting now, as adviser to the Committee. It is a great pleasure to be here.
The Chairman: Thank you. When we ask questions, if either of you wishes to answer—or both—that is fine. It is up to you. We do not expect both of you to respond to every question if you do not wish to, but we would be happy if you decided to do so.
Perhaps I may start by suggesting that we use “EPPO” as a shorthand for the European Public Prosecutor’s Office. I am sure that will help all of us and probably not hinder people who may be watching. Can you explain how the EPPO would work, as currently proposed by the Commission?
Professor Dr Katalin Ligeti: I think you are all aware of the proposal of the European Commission, which was part of a legislative package. Part of this package deals with establishing a European Public Prosecutor’s Office as a single European office, organised in a hierarchical manner and headed by a European public prosecutor, who will take what I would call central-operative decisions. By this I mean decisions to open an investigation, to initiate a prosecution, to dismiss a case or to enter into out-of-court settlements called “transactions”. The European Public Prosecutor would be the head of this office and could delegate or assign tasks of investigation or prosecution to delegates with double hats in the sense that they would also be part of national prosecution systems, so they could then investigate and prosecute directly or through their national authority. The delegates could instruct the national authorities, and there would be a chain of command and instruction going from the EPP through delegates to national authorities.
I think it is important to understand that, exceptionally, it is foreseen by the proposal that the central office may directly investigate, so it would be conceivable to see the EPP investigating on the territory of the member states. It could apply only non-coercive measures by itself and would need judicial authorisation for coercive measures from a local judge. So the proposal envisages a combination of a central, hierarchical structure with national law enforcement. It is a strongly centralised structure with exclusive competence for offences affecting the financial interests of the European Union. The EPPO would have exclusive competence, meaning that in these cases national authorities would lose their respective competence. It would also have primary competence for the so-called ancillary offences that are inextricably linked to offences affecting the financial interests of the EU. That is the main idea of the current proposal.
Q2 The Chairman: Okay, fine. I gather that the Greek presidency has proposed an alternative, collegiate model. Could you explain it, and give us your view?
Professor Dr Katalin Ligeti: I hope I can explain this proposal. It is important to bear in mind that the proposal was inspired mostly by France and drafted by the Council Secretariat, so it is not yet a consensual proposal coming from the Council. It was discussed all day yesterday in the Council and I think we may expect that the text will change throughout the Council negotiations.
The proposal as it stands differs from the proposal of the Commission in two aspects: the institutional design of the EPPO and its competence. It will retain the idea of a single office, depending on how we understand “single office”. It will have a central structure, but this will be different from the central structure envisaged by the Commission. According to the Greek presidency’s proposal, there will be a central unit and national law enforcement authorities, so the decentralisation will be even stronger than in the Commission’s proposal. The central unit will be composed on the one hand of a college of European prosecutors who are delegated by the member states. There will also be a permanent chamber composed of what will be called the European Chief Public Prosecutor and four designated European prosecutors. The idea of this model is that the central operational decisions are not taken by a single person, as in the Commission’s proposal; it will no longer be the European Chief Public Prosecutor who will take these decisions but the permanent chamber. The Greek presidency’s proposal foresees a group of privileged prosecutors, I would say, and a system of rotation. The group would take the central operative decisions. This is the main difference from the Commission’s proposal.
A second main difference is that the EPPO central unit, as I read the alternative proposal of the Greek presidency, could not investigate directly; it would always be the European-delegated prosecutors who would carry out operational measures in the member states.
I have difficulty in seeing this alternative proposal as a real collegiate model, because, as I mentioned, at the central level there would be on the one hand the college of European public prosecutors delegated by the member states and on the other hand this permanent chamber, but the college would have only management functions; it would have no operational functions. The key actors, according to this alternative proposal, are the European public prosecutors delegated by the member states. So the college as such has very limited capacity in this proposal.
A second difference from the Commission’s proposal is on competence. The competence of the European Public Prosecutor would no longer be exclusive; there would be shared competence with the member states, and this competence would be not a primary but a subsidiary competence. The primary competence to investigate and prosecute offences affecting the financial interest of the European Union would lie with national authorities. The EPPO would have only a shared and subsidiary competence, and the rules on how to allocate competence between national authorities and the EPPO are rather vaguely defined in the alternative proposal.
I think it is too early to formulate an opinion on the alternative proposal, as the negotiations are still ongoing, as I mentioned. What is clear is that there should be less centralisation than what is envisaged in the Commission’s proposal. Of course, the Commission wanted a European Public Prosecutor—a single person—taking operative decisions. In a collegiate model, a college could take these decisions. Obviously, 28 college members deciding on each operative decision is not a workable model, so there would probably have to be a medium way in which the college could take over these capacities. The proposal currently put forward by the Greek presidency is a sort of in-between alternative to the proposal of the Commission on the one hand and the collegiate model with a permanent chamber. There would be a sort of group of some of these European prosecutors, together with the Chief Prosecutor, taking these decisions. So it is somewhere between a real collegiate model and the Commission’s proposal.
Professor Valsamis Mitsilegas: Can I add a number of points to what Katalin said? I tried to count the differences between the proposals. I counted broadly four, and I will not repeat what Katalin said. The first main difference is between the centralised and the college model. Katalin explained this in detail. What is interesting in this context, in my view, is that the reference to a college reminds us always of Eurojust. If the EPPO is a college, more questions arise about the relationship between the EPPO and Eurojust. What is interesting is that the presidency text envisages that the operational decisions on whether to investigate or prosecute will be taken not by the college but by the permanent chamber. Article 9 of the proposal states that the membership of the permanent chamber should be four prosecutors on rotation—so in a sense it will be not 28 but four. But, as with the college, as Katalin mentioned, the decisions should be made on the basis of consensus. This is the Eurojust model. So rather than having a European Public Prosecutor who decides whether to investigate and prosecute within member states, you would have a college that would have to decide on the basis of consensus; this is an important difference.
The presidency version adds another layer of prosecutors, which is very interesting. If you think that the Commission is proposing too much European prosecution, under the presidency proposal you have an EPPO, then at national level a European prosecutor, and then a European-delegated prosecutor. So the college version adds a European level of prosecution at national level. It is not the EPPO and then the national delegated prosecutor but the EPPO, the European prosecutor—who is a national prosecutor—and then the European-delegated prosecutor, who is instructed by the European prosecutor. So you have quite a complex structure trying to address national sovereignty concerns.
The third difference is what Katalin mentioned when she talked about competence: exclusive competence in the Commission proposal and shared competence in the presidency proposal. It means that if the EPPO has not acted in a member state, competence to prosecute fraud stays with the member state; the EU acquires competence to prosecute only once the EPPO has acted and not before.
The final difference also relates to the college model and concerns the method of appointment. The Greek presidency version proposes two options for the appointment of the EPPO and below. One is by the EU institutions, but the other is by the college itself. So the college, again, has quite a few powers under the presidency proposal.
The Chairman: We have two more questions on this subject.
Q3 Lord Anderson of Swansea: These investigations can be extremely complex and labour-intensive. Is it proposed that the central authority should have a large staff able to carry out these investigations? What work has been done on the number of staff needed at each level? Presumably some of the compromise proposals would have many of the investigative staff at national state level, which could be cheaper. How much work has been done on the number of staff and the costs of different models?
Professor Dr Katalin Ligeti: There was an impact assessment study preceding the proposal of the Commission. In terms of costs and resources, the Commission’s idea was to keep the costs of the future European Public Prosecutor’s Office as low as possible. We could almost speak of a zero-sum game. This is what the Commission tried to justify and put forward with the impact assessment study. The idea was that all the knowledge and experienced gained by OLAF should be retained, even with the establishment of the European Public Prosecutor’s Office. As OLAF would probably not need to carry out administrative investigations, the resources—I emphasise resources and not personnel—that are allocated within the Commission to the administrative investigation should then be transferred to the future EPPO. So that would be one resource on which the EPPO could count. On the other hand, it could count on the logistical administrative support of Eurojust. So that simplifies the idea of the Commission’s proposal.
Of course, it has two caveats or one might say it relies on two presuppositions. One is that the EPPO central structure will be relatively lean, as foreseen by the Commission. It is not specified how many staff there would be at the central level.
Lord Anderson of Swansea: Only a little baby?
Professor Dr Katalin Ligeti: A relatively little baby—that was the calculation in the impact assessment. One provision in the proposal states that national authorities should receive additional funding in order to be properly equipped to carry out the necessary investigations and prosecutions in member states.
The second aspect that needs to be borne in mind is that the Commission’s proposal and all its calculations rely on the idea that all member states will participate in establishing the EPPO, and that the costs will be borne by the EU’s budget. If we face a scenario of enhanced co-operation under Article 332 of the Treaty on the Functioning of the European Union, member states participating in the enhanced co-operation will have to bear the costs of the EPPO. Then it is a completely different scenario. Of course, if the central structure grows bigger—and it was highlighted very well by Professor Mitsilegas that the structure is getting more elaborate through the presidency proposal— costs may well increase.
Q4 Lord Rowlands: I would like to go back to a basic question that this Committee addressed—as did both Houses and the parliaments of a number of member states—which was that the original EPPO proposed by the Commission offended the principle of subsidiarity. Do both of you share that view, and is the Commission still challenging us on that point?
Professor Valsamis Mitsilegas: I think there are two separate questions when we talk about subsidiarity in the context of the European Public Prosecutor. The first is one of sovereignty and the second is one of effectiveness. In a number of analyses, subsidiarity is confused with competence. Does the EU have the power to do something? If it does, should it do it? Should it legislate? The European Union has the power to establish a European Public Prosecutor; that is clear in Article 86 of the Lisbon treaty. There is no question that member states may, under the caveats of the treaty, establish such an office. The question is: what is the right level for establishing a European prosecutor, and do we need a European prosecutor? That is where the subsidiarity test comes in. If you accept that the objectives of the European prosecutor can be better achieved at national or regional level, there is no need for EU action.
Here, the key question that it might be useful for the Committee to think about is the parallel with national systems. For example, if you accept that in the United Kingdom it is necessary to establish a specialised body—the Serious Fraud Office—specifically to deal with cases involving fraud at domestic level, you can draw a parallel at European Union level and say that in order effectively to fight fraud against the European budget, which is a European interest and involves all member states, you need a specialised EU body to ensure effectiveness in this context. So in my view the debate on subsidiarity is a debate not so much about sovereignty as about whether the effectiveness of the protection of the Union budget can best be achieved at European Union level.
Lord Rowlands: So in answer to the question, do you believe that we were right on the issue of subsidiarity or that the Commission was right?
Professor Valsamis Mitsilegas: I would say that if you conduct an analysis of the relevant data on the current work of OLAF and Eurojust and conclude that the issue has been dealt with properly at national level, you are right. If the conclusion is to the contrary, the Commission is right.
The Chairman: A very diplomatic answer.
Q5 Lord Dykes: Professor, would you say that there are other aspects of this alternative proposal from the Greek presidency that worry people who want the system to be more centralised?
Professor Valsamis Mitsilegas: The way I read it—again, we are reading drafts that come from Brussels and trying as academics to interpret them—the proposal is an attempt to allow member states to decentralise to the greatest extent possible and to intergovernmentalise. I know that is a horrible word; it means to make the system more intergovernmental and not as top-down and EU-centralised.
Going back in history, this Committee has worked a lot on these issues. I was the adviser when it conducted its first inquiry at national parliament level into Eurojust. In my eyes, Eurojust was the intergovernmental response to proposals in the 1990s for a European Public Prosecutor. The Commission proposed the corpus juris and argued in favour of a European prosecutor. Member states said, “We’re not having this but we’re going to have Eurojust, because it is a college and is consensual”. That is how I see the presidency proposal.
Q6 Lord Elystan-Morgan: On the question of the relationship between Eurojust and the EPP, I have read in the paper more than once that it is intended that expenditure should be a neutral consideration. I find it very difficult to understand that. It seems to me that if the relationship is going to be meaningful, a great deal of investment will have to be put into it. At the moment, Eurojust has been run down. Therefore, how on earth is there any practical possibility of such a financial scheme working? I am sorry to ask so impertinent a question.
Professor Dr Katalin Ligeti: I am not sure I can answer it. Maybe the Commission could best answer how it calculated the financial part of this. Certainly, Eurojust has been arguing over recent years that the more tasks you give to an institution, the bigger the budget that it will eventually need. Personally, I am not convinced that the calculations that have been put forward could live up to all the tasks that will be given to Eurojust in future.
Lord Rowlands: I have asked my question, but I would also like to ask whether you share the same view on subsidiarity.
Professor Dr Katalin Ligeti: I do share it. I might even be a bit more explicit. On subsidiarity, I agree with everything that was explained by Professor Mitsilegas. I think that when we consider the inquiry of this Committee into EU fraud, we see that there was substantial evidence showing that national authorities in the past were not the best protectors of the European Union’s budget. If we look into the statistics in the national follow-up reports coming from OLAF, we see that there is an extreme diversity in the efficiency and willingness of national jurisdictions to take up those reports. So I would say that there is a clear need for a more consistent and coherent prosecution policy in that respect, and I think that it is fair to argue that that can be done best at EU level. So I personally do not see a subsidiarity concern.
Q7 Lord Stoneham of Droxford: The Government’s coalition agreement states that Britain will not participate in creating a European Public Prosecutor’s Office. In the light of the Commission’s proposal, is this a tenable position?
Professor Dr Katalin Ligeti: As a point of departure, we should perhaps remember that Article 86 of the Treaty on the Functioning of the European Union already proclaims the possibility of establishing the EPPO by enhanced co-operation. The idea that there will be member states outside the EPPO is already in the treaty. If we look at the current negotiations, we see the very likely scenario that there will be a group of member states that will participate in the EPPO and another group that will not. Obviously, the United Kingdom will share to some extent the fate of the member states that are outside the EPPO, but in some regards it will have special status because of the opt-out decision of the United Kingdom.
In respect of the general situation of countries that are not participating in the EPPO, we can maintain that even those countries are still under the treaty obligation to protect the financial interests of the European Union. So even if the United Kingdom stays outside the EPPO, under Article 325 of the Treaty on the Functioning of the European Union it still has to protect the financial interests of the EU. The UK is also under an obligation to provide loyal co-operation with the European institutions to achieve this aim. To what extent this applies, and what this loyal co-operation should look like in practice, will have to be seen in the future.
To answer your question in short, I would say that it is a tenable position. The United Kingdom will probably not be the only country outside the EPPO, but its relations will certainly be affected by the opt-out. As I understand it, the opt-out will probably also mean the United Kingdom negotiating on opting back in again. Depending on the scope of the measures that will then be available, of course that will have an impact on the future relationship between the EPPO and the United Kingdom and its authorities. Of course, there will be situations where the EPPO will send a request to the UK authorities. How that request will be dealt with will depend on the opt-out and the opt back in.
Viscount Eccles: You mentioned the uneven performance of member states in respect of defending the financial interests of the Union. Is there a danger that instead of holding member states’ feet to the fire, as under the existing system, you will create a centralised institution that will then become an alibi: Really, it is no longer us who have to do the hard work but them.”?
Professor Dr Katalin Ligeti: I would hope that establishing the European Public Prosecutor’s Office would have the opposite effect to that put forward by your Lordship. In the current negotiations, we see clearly that member states try to keep for themselves the competence to prosecute these offences. They see the EPPO encroaching on it and taking away this competence. I hope, and think it is reasonable to believe, that once the EPPO is established, member states will assert that they are still capable of and competent in investigating these offences, and will do their job better than they do today.
Professor Valsamis Mitsilegas: I would add that we should not forget that in both versions—the Commission and the presidency version—the model is strongly decentralised. Although we talk about the European Public Prosecutor, investigation and prosecution will be done on the ground in the member state by national prosecutors. This will go towards enhancing effectiveness on the ground. It is not going to be a detached organisation. Even under the Commission’s proposal there is a decentralised element, which is very important in this context.
Lord Elystan-Morgan: Perhaps we could go back to the question of a collegiate system. Are there any prospects at all of the Greek presidency’s proposal being considered seriously by a number of states? That is my main question. I will defer the other one for the moment.
Professor Dr Katalin Ligeti: I would certainly say yes. This proposal is currently being considered. As I tried to explain, there is probably agreement among member states that the centralisation proposed by the Commission goes too far. Defining the right level of decentralisation and demonstrating that there is added value in establishing the European Public Prosecutor’s Office is where the opinions of member states differ. The challenge of the current negotiations is to define the right level of decentralisation.
In my opinion, the structure in the Greek presidency’s proposal, with the college and permanent chamber, is not clear enough for an efficient prosecution, where the college has no powers whatsoever in relation to the chamber—not even a supervisory possibility over the operations on which the chamber decides. That is probably too little for an EPPO, but that is my personal view and not that of any member state. There will be negotiations, and I think that the member states will seriously discuss the option of a collegiate model with the demonstrably added value of efficiency in investigations and prosecutions.
Q8 Lord Elystan-Morgan: As to mechanics, if we had opted into the original proposal—and we are not going to do that—it would have meant that we would have to have had, first, a referendum carried and, secondly, legislation. If in fact the alternative of a collegiate system is operated, we would avoid both of those. Or would we?
Professor Valsamis Mitsilegas: I will try to answer this. I think labelling is important, in a sense, and substance is important as well. As Katalin has pointed out, one of the key challenges in negotiating the presidency proposal is not to embark with the European Public Prosecutor, which is really Eurojust, because then you have added value and there is no need for this proposal. If you call it EPPO and it is under Article 86, then the UK does not get around the obstacles that you mentioned, so you still have a referendum and you still have to consider opting in. If you subsume it within Eurojust, then maybe it is a different story.
Lord Hodgson of Astley Abbotts: I am sorry that I was not here for your opening remarks. I just want to go back to what you were saying about the difference between participating states and non-participating states, and OLAF and the EPPO. I think I understood you to say that even if we did not opt in, we would have a requirement to collaborate with the EPPO because of some article in the TFEU. But when we got a letter from the Commission, it said, “Reduced competences of Eurojust and OLAF would not lead to disadvantaged member states that are not participating. OLAF would no longer conduct administrative investigation of the area of the Union for participating countries but would remain competent with respect to non-participating countries”. In other words, if the EPPO existed and we did not opt in, we would say, “Go away EPPO, we only talk to OLAF”. That is what the Commission says.
Professor Valsamis Mitsilegas: Okay, I will go first and we will take it from there. It is true that on paper this is the case. That is the correct legal analysis. In practice, I fear that the situation will be very different. This is a more general point about the United Kingdom’s participation in European criminal law. One of the reasons why the Government, in my view, were persuaded to opt into the directive on European investigation order—the mutual recognition of evidence among member states—is that they listened to the concerns of practitioners who said that if the United Kingdom does not opt into a new measure that will replace all the mutual legal assistance arrangements between the new member states, then the request from the United Kingdom to other member states for co-operation will have zero priority. In practice, if there is a European Public Prosecutor who uses the resources of OLAF, I am not really sure how prioritised the British needs would be with regard to the operation of OLAF. OLAF would obviously have to serve a highly integrated European system and would also, as we discussed before, have to devote resources to the work European Public Prosecutor. This is inevitable. There is a difference between the law in the books and the potential for practical co-operation. The practical co-operation concerns are very real.
Q9 Lord Rowlands: Our report on fraud in European finances concluded that any decision to prosecute should be by national authority. Do you agree with that conclusion?
Professor Valsamis Mitsilegas: I attempted to answer this implicitly before. In my view, sovereignty is not the most important issue in this debate. The most important issue in a debate that involves the protection of the EU budget is effectiveness. I would not view the EPPO as a European agency; I would view it more as a specialised agency. If you feel that you need a specialised agency to back up national prosecutors in order to fight fraud effectively, then I do not see why member states should not trust a European specialised agency in order to work together with their own national authorities. This is a decentralised model.
Lord Rowlands: That does not sound very decentralised to me. The decentralised model is to allow the national authorities to do the prosecuting.
Professor Valsamis Mitsilegas: Yes
Lord Rowlands: You are saying that you want a special agency to do that.
Professor Valsamis Mitsilegas: I am saying that if we accept that there is a need for a specialised agency in order to address something that generalist prosecutors cannot, then we should consider seriously whether this is a European body to address fraud against the European budget.
Q10 Lord Anderson of Swansea: It seems clear that the EPPO proposal will come into effect only through enhanced co-operation, as we know that a number of states will not participate. These include the UK but also Denmark, Ireland, perhaps, and maybe others. That may well cause problems. The fact of some non-participating states is not foreseen in the draft, so what problems do you see arising that need to be addressed as a result of there being a cluster of member states outside the EPPO?
Professor Valsamis Mitsilegas: Thank you for this question. It is a very complex reality. In negotiations, the issue that you just mentioned will need to be addressed for either the Commission or presidency proposal. Reality transcends these legal texts. Crime is cross-border and fraud against the budget may be cross-border. There are different scenarios, some of which I will depict for the Committee. First, you may have cross-border crime, or cases involving money-laundering resulting in fraud against the EU budget. What do you do then with participating and non-participating member states? Do you have the European Public Prosecutor being involved in a case that involves both its members and outsiders?
Then you may have cases involving a simple investigation into parallel offences that are not necessarily linked together. There may be a fraud case, but there may also be a corruption case that is not necessarily linked to that. Again, we have a very complex legal reality.
Lord Anderson of Swansea: The corruption case may be wholly within the jurisdiction of a member state.
Professor Valsamis Mitsilegas: That is not participating in the EPPO, indeed. Of course, linked to that you have the issue of a number of European agencies with different member states. You have the EPPO with enhanced co-operation. You have Eurojust, which has the participation of everybody. You have OLAF, and it is going to be very interesting to see what will happen if the EPPO is established. We have interesting questions not only on non-participating member states but on the relationship between the EPPO and the other European agencies, such as the relationship between the EPPO and Eurojust in a case involving both member and non-member countries.
There is a precedent in European law. The regulations establishing the European border agency FRONTEX, of which the United Kingdom is not a member because it retains its border controls, contain provisions allowing non-participating countries to participate in the management committee as observers and to conduct joint operations with participating countries if there are areas of interest. This may be a model for the EPPO, so if there is a cross-border case involving fraud in which the United Kingdom is involved, I do not see why the United Kingdom cannot be involved in the EPPO operation. In real life it does not make sense to argue otherwise.
Professor Dr Katalin Ligeti: Briefly, the Commission’s proposal does not foresee the scenario for enhanced co-operation. The proposal is based on the idea that all the member states will participate. If we look carefully at Article 57, paragraph 2(f), of the proposal, we see a hint that a sort of mediation role is foreseen for Eurojust in relation to countries that have a national member in Eurojust but which do not participate in the EPPO. Of course, in parentheses, we have to see whether the United Kingdom will remain a national member of Eurojust after the opt-out by opting back in. It is uncertain whether Eurojust will be able to perform this mediation role for the UK, but the idea behind the Commission’s proposal was that Eurojust would take up a role of transmitting requests for mutual assistance between participating and non-participating member states.
Lord Blair of Boughton: The question I was going to ask has been elegantly covered already, but I am very puzzled by something, particularly when Professor Mitsilegas talked about cross-border crime. There has long been an impulse by the Commission to provide pan-European investigative, prosecutorial activity. In terms of EU budget fraud, is that aimed at actual cross-border crime? I do not know how much cross-border EU fraud there is, as opposed to EU fraud in individual countries, or is the aim actually to get the countries that do not do anything about it to step up to the mark? Which one of those lies behind the thinking?
Professor Valsamis Mitsilegas: The two options you describe are not mutually exclusive.
Lord Blair of Boughton: No, they are not.
Professor Valsamis Mitsilegas: The latter is certainly very powerful. It is very strongly aimed at encouraging countries to do better that do not perform as well as they should in the fight against fraud. But this does not exclude, in reality, cases that are more complex and which involve money-laundering, import/export, VAT fraud and so on. These may throw up more complex questions than a purely domestic case of subsidy fraud, but both can come about. The Commission’s argument in this context has traditionally been that because fraud is a European interest, you need a European response. That argument has been around since the 1980s.
Q11 Baroness Eccles of Moulton: My two questions have been wholly or partly answered. I will come back in a minute to the one that was partly answered. You very helpfully gave us one or two scenarios. I was getting the impression that you were talking so much in the abstract that it was quite difficult to think about what fraud in member states really is and what it means. I want to be sure myself that the EPPO will be involved only in fraud—that that is the only crime it will concentrate on—because it is not at all clear from its title that it is the only crime. Am I right in assuming that?
Professor Dr Katalin Ligeti: I am afraid that I disappoint you. Strictly speaking, the EPPO will be responsible not only for fraud but in general for crimes that affect the EU budget. That is indeed a very vague term, but the proposal—it is the same as the proposal of the Greek presidency—foresees a reference to the directive on the protection of the EU’s financial interests that is currently being discussed in the European Parliament. That should contain the definitions of the offences for which the EPPO would be responsible. Of course, if the instrument is adopted, it will be a directive, which means that member states need to implement it into national law, and the national implementing legislation tends not to reflect the text of directives verbatim. In real life and in practice, that may mean that we end up with as many definitions of the substantive competence of the EPPO as there are member states that participate in it. Indeed, I am afraid that the definition of the substantive competence of the EPPO is left rather vague in the proposal. The Commission’s idea is that the directive that is currently being discussed will be sufficient to redress this problem.
Baroness Eccles of Moulton: I suppose the fact that it is applied to the budget is restrictive anyway.
Professor Dr Katalin Ligeti: Yes, it is, but it is not only fraud; it is corruption and offences relating to public procurement. Strictly speaking, it is not just fraud.
Q12 Baroness Eccles of Moulton: The other question, before I get on to what I was meant to ask you, is about exclusive and partial competence. I jotted down a little scenario, which is probably inaccurate, about what exclusive competence would mean for the EPPO. After all the moves of the crime being detected, the accusation being made, the verdict being reached and the conviction taking place, what will happen to the individual who has been convicted by the EPPO and given a prison sentence? Will they go home and serve it in a prison in their own country, having been judged in Brussels?
Professor Dr Katalin Ligeti: They will not be charged in Brussels. As has been mentioned, it is a strongly decentralised system. That means that prosecution and adjudication will take place before national courts. The EPPO will bring an indictment in a national court, the trial will take place in a national court—with a national judge passing down the judgment—and the sentence will be served in a national prison.
Baroness Eccles of Moulton: At which moment, then, does the EPPO give up its exclusive competence and hand it over to the member state? Exclusive competence means that it has taken responsibility for whatever aspect of EU affairs it has competence. There has to be a transition moment when it says, “Right, we’ve done our bit, now it’s over to you”, and it might be that our courts do not particularly like having something that has already been judged somewhere else given to them in that way. I can see a very difficult meeting point between the EPPO and the national state’s own court. Is there not some problem there? Will there be a smooth passage from one to the other?
Professor Dr Katalin Ligeti: Whether it will be smooth in practice we will have to see, but the system, which is only partially centralised, is laid down in Article 86 of the treaty. The treaty allows for the partial verticalisation, if I may call it that way, of the EPPO in the sense that the pre-trial proceedings may be defined by supranational rules. In fact, the Commission’s proposal stayed away from proposing a fully vertical pre-trial system, because the rules that will be applicable to criminal procedures after the EPPO are the national criminal procedure laws of the participating member states.
The procedure from the trial onwards will be conducted in national courts according to national law. The supranational EPPO will dock into the national system through the delegates, who are part of the national administrations of criminal justice. So the delegates of the EPPO in the proposal are foreseen to be part of a single office, but at the same time part of the national administration of justice. This is what we sometimes refer to as a double-hat.
Q13 Baroness Eccles of Moulton: I can think of other problems, but I am not going to raise them here: I have taken up enough time. The question that I was going to ask has very largely been answered. It concerns the consequences of the proposal, first, for Eurojust, secondly, for OLAF, and, thirdly, for the non-participating member states that wish to remain within Eurojust. The question you answered very fully, Professor Ligeti, was about resource implications. I do not know whether there is anything you would like to add on the overall consequences of the proposal for those three groups.
Professor Valsamis Mitsilegas: I think that we have covered this extensively. There are two key issues: what will happen to Eurojust if there is a European Public Prosecutor’s Office—whether eventually Eurojust will be subsumed into the EPPO—and what will happen to OLAF: that is, how will it be used in the context of the operations of the prosecutor? There is not much about that in the legal text, but practice will provide its own lessons.
Lord Rowlands: There is of course a draft directive before us to reform Eurojust. Irrespective of what happens with the EPPO, does that have merit, and, therefore, should this Government opt in to the draft, because they have not at the moment?
Professor Dr Katalin Ligeti: Maybe we can look at it from two angles: from the angle of this legislative package on the one hand and from the angle of practical co-operation in criminal matters in Europe on the other. As far as the legislative package is concerned, it has three parts: one is on the EPPO, one is on Eurojust and one is the explanatory memorandum. It was the Commission’s strategy to bring this legislative package as a package, knowing that there will be implications for Eurojust in establishing the EPPO. We know that the treaty text actually foresees the establishment of the EPPO from Eurojust. Looking at the legislative package, we see that the EPPO will be established next to Eurojust. So the idea of the legislative package is that there should remain one European body that is in charge of traditional intergovernmental horizontal co-operation—Eurojust—and that there should be a supranational body that will be specialised and will tackle only the specific crimes of fraud and other offences against the financial interests of the EU.
Of course, the respective draft regulation will be discussed seriously by the member states, so it follows from the logic of this legislative package that Eurojust has its own merits. In practice, Eurojust is already an existing body of the EU that already has been subject to several reforms since its establishment. Several studies have been conducted on the efficiency of Eurojust and how one could make the traditional intergovernmental co-operation under Eurojust even more effective. The outcome of these studies is what has been partially taken up by this proposal, so there are good reasons to consider the Eurojust proposal.
Lord Rowlands: To opt in to the process of this legislation irrespective of the EPPO?
Professor Dr Katalin Ligeti: Yes, I would say so.
The Chairman: Professor Ligeti and Professor Mitsilegas, thank you very much for coming to give evidence to us today and for helping us understand not only how the EPPO would fit into the European framework but how it would work with other supranational criminal justice authorities, and the effect that it would have on countries such as the United Kingdom that will not be taking part. We are very grateful to you for assisting us today and helping us towards a better understanding of the issues involved.