European Public Prosecutor’s Office (EUC Report)

Baroness O'Loan Excerpts

Thursday 19th March 2015 Lords Chamber

[Baroness O'Loan (CB)]

My Lords, I speak in this debate as a member of European Union Sub-Committee E, which was so ably chaired by the noble Baroness, Lady Corston. This report deals with a subject which has much exercised the committee over the past years as the heart of it goes to how the European Union and the member states thereof seek to control crime, and particularly fraud affecting the EU.

There can be little doubt that co-operation between member states and European institutions and agencies in the fields of justice and home affairs has resulted in significant achievements in the battle against crime. Eurojust, Europol and OLAF—the European anti-fraud office—have all played their role in fighting crime. While there are deficiencies which have been identified, there can be no doubt that co-operation in the processes of investigation et cetera has facilitated effective action. The sub-committee was aware that there is a problem of hitherto unquantified fraud on the EU’s finances and it published a report on this matter.

European Union law obliges both the European Commission and member states to combat fraud on the EU’s finances, but the onus to protect the EU’s financial interests falls mainly on individual member states because they are currently responsible for administering 80% of EU funds. We found that the EU’s anti-fraud system has a number of weaknesses. The Commission cites a figure of fraud worth €404 million per annum, but we felt it offered only a glimpse of the level of fraud perpetrated against the EU’s budget. Based on the evidence we received, we felt that the actual figure is around £5 billion but may be even more. There clearly is a problem and the proposal for the EPPO is one of the initiatives intended to address this issue, but it does not really address the problem. Rather, we found that it had the capacity to create major problems both within participating member states—as the noble Baroness, Lady Corston, said, the UK would not be one at present because we would exercise our right not to participate—but also in other member states because of the capacity of the proposals to interfere with the working of the two institutions which have been really useful in the fight against crime against the EU’s financial interests: Eurojust and OLAF.

An EU body to investigate and prosecute crimes against the EU’s financial interests was provided for in Article 86 of the treaty on the functioning of the EU, which says that any EPPO would be responsible for investigating and prosecuting and bringing to judgment the perpetrators against the EU’s financial interests and that it would be empowered to exercise the functions of prosecutor in competent courts of the member states. The noble Baroness, Lady Corston, has articulated what happened when that proposal came before the sub-committee. We published a report in October 2013 which suggested that the House challenge the EPPO proposal on the very considerable grounds of subsidiarity. The House approved that opinion, and 14 other legislatures reached similar views, causing the EU Commission to review its proposal. However, it was a cursory review, and in December 2013 the Commission indicated that it would proceed with its proposal. We therefore undertook the second stage of the inquiry.

We found many problems with the current proposal for the EPPO, and many potential difficulties for the United Kingdom in the proposed arrangements and the possible UK response to them. First, the potential workload of the EPPO would be absolutely overwhelming, given the range of crimes against the EU’s financial interests. Witness after witness gave evidence to that effect, and even the Home Secretary was clear that it was impossible for anybody to give the correct figure for such crime—a view shared by the British former president of Eurojust, Mike Kennedy. The UK could not legally respond to EPPO requests for assistance, giving rise to the risk that the UK would—as the noble Baroness, Lady Corston, said—become a safe haven for illegally obtained EU funds; there would be problems for non-participating states in that the proposal might affect the capacity of Eurojust to support all member states; the proposals for shared competence between the EPPO and the member states are unclear to the extent that they may be unworkable; robust and capable monitoring of investigations and supporting fast and efficient decision-making would not be possible; and there is no clarity as to the impact of the existence of the EPPO on OLAF.

At a time when the activities and costs of the EU are under significant scrutiny, when organised crime is becoming even more effective despite the massive resources poured into the attempts to control it, and when there is deep scepticism in some quarters about the benefits of EU membership—scepticism which I do not share—the committee has called on the Government to take effective action to ensure that the UK’s interests and indeed the interests of its colleagues of the European Union are not compromised, that very clear steps are taken both here and in the Union to ensure that before any EPPO is established there are very clear rules about how its shared competence will operate, and to provide for the situation in which we do not participate but must be protected against the adverse consequences which may result. In addition, the need to protect OLAF and the assistance currently received by the UK from OLAF and Eurojust is vital.

I therefore commend the recommendations of this report to Government for implementation. I welcome their response to the report, but urge them to accept all the recommendations, notwithstanding the lack of clarity about the proposal for the EPPO’s role and operation.

--- Later in debate ---

[Lord Bates]

These are important constitutional matters. I am looking across to the Benches where we have a distinguished constitutional academic and a distinguished former member of the Supreme Court, who may offer opinion, but I think I will slightly side-step the question.

Help is at hand.

[Baroness O'Loan]

My Lords, the proposal is that prosecutions will occur in British courts under British law. This is not a proposal that European law will be exercised in British courts, so the reservations of the noble Lord are not warranted.

[Lord Bates]

I could not have put that better myself.