European Public Prosecutor’s Office: EUC Report

Lord Dykes Excerpts

Monday 28th October 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I rise to support the noble Lord, Lord Rowlands. He has laid out the case as to why this proposal to establish a European public prosecutor’s office does not comply with the principle of subsidiarity with forensic skill, and I will try to avoid repeating what he has said.

I was a member of Sub-Committee E, both at the time of issuing this subsidiary assessment and of the publication of the report, The Fight Against Fraud on the EU’s Finances. That report found that there appeared to be a significant level of fraud within the EU budget, and that official figures appeared, at least to us, to significantly underestimate the volume and value of that fraud. Therefore, at first blush one has some sympathy with a proposal that appears to have as its objective, the sharpening up of the organisational response to these defects. Further to that, our report found significant weaknesses in the work of the European anti-fraud office, known as OLAF, which included tensions between the supervisory committee and the executive arm of the agency; frequent turnover of representation so that consistent policies were not followed through; an absence of classification of fraud offences, which the noble Lord referred to; a reluctance to name and shame countries where it appeared that fraud was taking place; and last but not least, a lack of will among member states to report and follow up suspected cases of fraud.

To be fair to the commission, it has put in place a number of measures to improve OLAF’s operational efficiency, notably the regulations adopted just six weeks ago on 11 September. However, one of the more depressing features of the Brussels bureaucracy—at least to a Euro-agnostic like me—is the tendency, where an organisation is not operating up to par, not to undertake a serious attempt to improve the efficiency, but instead to pile on top of, or in this case alongside, that organisation yet another body to look after it. It is almost certain that an EPPO operating alongside OLAF and Eurojust will surely only serve to undermine OLAF’s work at this time, when the recent changes just introduced, as I mentioned, should give it a new sense of purpose and direction.

I particularly share the view expressed in the report that the anticipated costs of running the EPPO are woefully understated; a net annual cost of just €6.1 million is surely not credible. The reason for the subsidiarity judgment is that the fight against EU fraud needs to be developed from first principles, and they can be done without the introduction of the EPPO. The Commission needs to improve the clarity of its budgeting system; improve its own systems for overseeing that budget; and work more closely, where appropriate, through OLAF and Eurojust with member states so that they investigate and prosecute fraudulent activity with vigour and purpose.

The noble Lord, Lord Rowlands, quite rightly focused on the impact of this proposal on the national criminal law systems of individual member states. He was right to do so and I support him. However, I believe that even if it were possible to overcome these principle objections—and I, for the record, do not believe this would be possible—establishing the EPPO would, on purely practical grounds, likely offend the principle of subsidiarity and undermine the existing organisations of OLAF and Eurojust at the same time.

My concern on this point was underlined by the Written Statement published in Hansard on 15 October, which states:

“Vice President Reding presented her recent proposals for the creation of a European Public Prosecutor’s Office … There was support, in principle, from a large proportion of Member States … but less agreement on issues of substance, including scope; structure; competence; powers; jurisdiction and governance”.—[Official Report, 15/10/13; col. WS 52.]

In effect, the EU member states could not agree how this thing should be proceeded with on any practical level, and that is why I support this reasoned opinion.

[Lord Dykes (LD)]

Since my noble friend described himself as a Euro-agnostic, I do not think I would offend my friend—not noble friend—on the Labour side if I called him a Euro-realist or sometimes a Euro-hesitator about a number of aspects which he analyses with great precision. I am an unashamed Euro-enthusiast and yet, none the less, I think there is agreement about this particular document and report as was seen in the way in which we couched our recommendations having studied this matter carefully.

The European Union is evolving after the Lisbon treaty in what I hope will be a gradually accelerated fashion. It is inevitably slowed down by the realities of economic austerity and slowed down in the national economies of all the member states, not just the leading ones. That is a reality that we see, as well as the constant difficulty of blending different national cultures in all sorts of areas. Perhaps one of the most difficult areas is the law and the legal sector, because of the noticeable difference of the Anglo-Saxon legal system, mainly in the UK and Ireland, the Roman legal systems of the other member states, mixed with some of the new member states since 2004.

That is just the reality; it is not to be hostile to the evolution of Europe by annunciating those realities that we are facing in all sorts of complicated sectors. This one is particularly complicated, and I think that this is an occasion where the member states expressed a general support for the notion and the concept, but maybe for the future, as the noble Lords, Lord Rowlands and Lord Hodgson, mentioned without going into the details. Subsdiarity must be a real element of the Lisbon treaty in order to provide reassurance to the national publics of each member state, particularly the one in this country, which is particularly fragile in its Euro-hesitation; this disturbs me greatly because I think it is unnecessary, but it is because of the fight between the political parties and the rise of UKIP. It is necessary to balance all those things and not to rule out this concept for the future.

There is every prospect that the EPPO concept itself will gain confidence if it goes slowly forward but the national legal systems demand that the national prosecutorial authorities have the upper hand in the initial stages of that timeframe, which may be quite long, over a number of years, to gain reassurance. We have the co-operative tradition anyway between the forces of law and order in the European cockpit. Europol is proving to be a great success—under a UK executive head, I am glad to say—and is developing apace, and so are the other instruments that were mentioned by the two previous speakers in this debate.

If that is the way to do it, it may be that in future the EPPO will have a pragmatic construct, a special piece of instrumentation by way of a regulation agreed between the Council and the European Parliament that would include the national prosecutorial authorities inside the EPPO system to reassure the public, who will feel that subsdiarity will have therefore been satisfied. Our need for subsidiarity in a number of areas needs to be expressed. People should not be nervous about doing that. This is a classic example. I am very glad to be on the same committee as the noble Lord, Lord Hodgson, and to support enthusiastically this recommendation.

[Baroness Smith of Basildon (Lab)]

My Lords, I thank my noble friend Lord Rowlands for his explanation of the committee’s report. There seems to be a remarkable degree of agreement between us all this evening. I am pretty sure that the Minister is not going to demur from that.

This is a very detailed technical issue and it is quite clear from the speeches we have heard that not only does it deserve detailed scrutiny, it has received that scrutiny. This is not a new proposal. It has been raised on a number of occasions. The negative response from the Government is not new either.

Even before the 2001 Green Paper from the Commission first proposed a European public prosecutor, the idea had been discussed, particularly in discussions on the Nice treaty, when an outline proposal was put forward but then dropped through lack of member state support. In response to the Green Paper, the European Scrutiny Committee in the other place reported in 2002, saying that it was,

“unnecessary, particularly given the existence of Eurojust”.

At that time, the committee identified a number of concerns. Those concerns remain, for example: the combination of prosecution and investigative functions; the power of the EPPO to commit a person for trial and determine the location of the trial; the creation of differing standards of criminal responsibility for fraud depending on whether or not it related to fraud on the community’s financial interests; the lack of democratic accountability for the prosecution function; and, of course, the breach of the subsidiary principle and dilution of member state responsibility for prosecution of fraud.

Since then, the creation of a specialist EU prosecution authority has been raised again but still has not gained the support it would need to proceed. The 2011 European Scrutiny Committee echoed the concerns of the 2002 committee when, in recommending the 2011 communication for debate in the European Committee, it cautioned against the “inappropriate and unacceptable” use of national criminal justice systems in acting against crimes against EU finances.

However, as my noble friend Lord Rowlands made clear, it is fair to say that this proposal has not been thought up in a vacuum. It seeks to address a genuine problem and we recognise the seriousness of that problem, which is that there needs to be greater protection of the EU’s financial interests and we need to see further improvements in how the EU deals with fraud. The level of suspected fraud against the EU budget is obviously and rightly a source of concern. The report refers to the Commission’s estimate that it stands at around €500 million, or £425 million, in each of the last five years. British taxpayers bear part of the cost of that fraud, which is totally unacceptable. We must seek new and better ways of tackling this fraud, preventing it and bringing those responsible to justice.

The question that the European Union Committee was looking at was: is the EPPO the best way of achieving this? We again concur with the committee’s conclusion that it is not. We made our position clear when in government, and that has not changed. Our position remains, as my noble friend Lord Rowlands outlined very clearly, that the proposal for an EPPO breaches the subsidiarity principle. It is clear that the national-level approach, supported by existing EU mechanisms, is more appropriate.

When we signed the Lisbon treaty, we made it clear that although the treaty could allow for such an office, we were strongly against it, as the noble Lord will recall. We insisted on a “double lock” to ensure that it could not be established. Indeed, your Lordships’ House was, as always, very diligent in its scrutiny of this measure and, following debate, supported the position made very clear by my noble friend Lady Ashton of Upholland in 2008, when she said:

“We have secured legally watertight safeguards in the treaty against any move towards a European public prosecutor or subsequently, and just as important, towards extending that prosecutor’s role. It is what we would call a double lock”.—[Official Report, 9/6/08; col. 454.]

We were not just opting out at that point but securing essential safeguards for the future, which we are able to use today.

That double lock meant that, in order to proceed, the UK would first have to opt in and then, even if a future Government decided that they wanted to opt in, there would still need to be unanimity, and that would be retained for any decision to establish a prosecutor or extend the powers of any such prosecutor. Therefore, we concur with the comments made by the noble Lord, Lord Rowlands, on behalf of the EU committee, that the creation of the EPPO was not the appropriate response to tackling fraud.