Irregularities involved more than 3.2 billion euros and suspected fraud amounted to almost 640 million euros of EU funds in 2015. Lacking a European body that may prosecute fraudsters inside and across Member States, it is questionable whether wrongdoers who fraudulently extract European Union’s money will ever be brought to justice. This is a major loophole in the protection of the EU’s financial interests, as prosecuting fraudsters now lies in the hands of Member States, whose reluctance is often obvious. This can only be circumvented if institutional stability and proper legislations ensure anticorruption agencies’ independence, which is the precondition for efficiently combating fraud and corruption. These are the most important conclusions of Transparency International Hungary’s conference entitled “Good practices how to fight corruption effectively in the EU”.
The European Union’s budget exceeds 150 billion euros a year, which, to a large extent, serves to cover funds administered by Member States, such as a Hungary, whose economy received an injection of almost 30 billion euros since the country’s accession to the European Union in 2004. Fraud and corruption, besides undermining the EU’s financial interests and stealing European taxpayers’ money, also reduce financial resources aiming to contribute to Member States’ economic prosperity. In 2015, Member States reported more than 22,000 financial irregularities, involving a total amount of approximately EUR 3.21 billion in EU funds. The number of irregularities reported as fraudulent exceeded 1400 in 2015, the concerned amounts reached almost 640 million euros.
Member States have first-line responsibility for managing about 80 percent of the EU expenditure and for collecting almost all its revenue. This means that the protection of the union’s financial interests lies to an outstanding extent in the hands of Member States, whose determination to live up to these expectations is sometimes questionable. As highlighted in the explanatory memorandum attached to a draft council regulation on the establishment of the European public prosecutor’s office proposed in 2013, action to protect the EU’s financial interests by national judicial authorities remains often slow, indictment rates are on the average low and results obtained greatly differ from one Member States to another. As a consequence, concludes this draft regulation, the judicial action undertaken by Member States against fraud with EU funds may not be considered as effective, equivalent and deterrent.
Though OLAF, the European Union’s Anti-fraud Office has a mandate to investigate fraud and illegal activities affecting the EU budget or serious misconduct of EU staff members, its powers are limited to administrative investigations. In 2015, OLAF recommended the financial recovery of 888 million euros to the relevant EU and national authorities. OLAF, however, is not responsible for the financial recoveries themselves, as it is up to the competent authorities at EU and/or Member State level to recover the money or to prevent it from being unduly spent. Moreover, OLAF is not a prosecution body, so it needs national judicial authorities to take action following its judicial recommendations.
Transparency International Hungary (TI Hungary) organised a conference today in Budapest aimed at presenting the key problems and the good practices in the fight against corruption at both EU level and at national level. The conference focused on the one hand on the establishment of the European Public Prosecutor’s Office (EPPO), which, in TI Hungary’s judgment, may prove effective both in the case of Hungary and at the EU level in addressing challenges of corruption. Participants, however, raised doubts on whether the EPPO, planned to be introduced in the frame of an enhanced cooperation of sixteen Member States will really have the powers to prosecute fraudsters inside and across Member States. Among countries which do not contribute to the establishment of the EPPO as an indivisible Union body that operates as a single office in the entire European Union, one finds some of the EU’s founding members, such as Italy and the Netherlands, in addition to newcomers, like Hungary, and Poland.
In his keynote address, Mr. Giovanni Kessler, Director-General of the European Anti-Fraud Office stressed that OLAF believed
“the EPPO would streamline the process of identifying fraudsters and bringing them to justice more swiftly”.
OLAF’s Director-General added that
“the EPPO would significantly reduce the current fragmentation of national law enforcement efforts to protect the EU budget, thus strengthening the fight against fraud in the European Union”.
On the other hand, the conference focused on Romania’s National Anticorruption Directorate (DNA), which has proven its viability in combating corruption. DNA has brought a vast number of corrupt politicians, decision makers and judges before court and reached an impressively high rate of conviction over the past years, thus ending the impunity of the corrupts in Romania. These convincing results are due to the institutional stability and proper legislations that ensure prosecutors’ independence, a precondition for efficiently combating corruption.
“Corruption represents one of the phenomena for which we need to find a common answer, in order to prove that we are mature enough to assume roles within the regional institutional context”,
stressed Ms. Laura Codruța Kövesi, DNA’s chief prosecutor in her address to the conference. Ms. Codruța Kövesi also emphasised how crucial it was to prevent people who felt threatened by DNA investigations from unduly influencing the judiciary. Romania’s leading anticorruption prosecutor also drew attention to the repeated attempts to limit the efficiency of DNA by amending the anticorruption legislation, by restraining the investigative tools or by denying the waiving of immunity for politicians. Ms. Codruța Kövesi said, these attempts
“have been cancelled due to the reactions of general public and civil society”.
Participants also discussed the potentials of a standalone anticorruption prosecution service in Hungary. Mr. Benedek Jávor, Member of the European Parliament (Dialogue for Hungary Party) said that institutional corruption undermines the rule of law and democracy in Hungary, in addition to diverting taxpayers’ money. Mr. Jávor insisted on more intransigent enforcement of anticorruption laws to break systemic corruption in the EU and in Hungary. To achieve this, Dialogue for Hungary Party proposed the establishment of a separate anticorruption prosecution service in Hungary and suggested the expansion of EPPO’s jurisdiction to all EU Member States. Though not entirely disfavouring the idea of an anticorruption prosecution service, TI Hungary’s head of legal affairs, Mr. Miklós Ligeti stated that
“reinstating checks and balances within Hungary’s existing prosecution service seems more important than the introduction of a new Hungarian government agency to fight wrongdoing”.
In Mr. Ligeti’s opinion, more accountability in the prosecution service would positively contribute to the exclusion of
“inappropriate considerations that may hinder arraignments in high level corruption cases”.
In his opening remark, Mr. Jozsef Peter Martin, TI Hungary’s executive director highlighted shortcomings in the cooperation between Hungarian authorities and OLAF.
“Until 2015, OLAF requested Hungarian authorities’ investigation into 22 cases of suspected fraud, but only one of these procedures resulted in an indictment”
– said the anticorruption watchdog’s executive. Mr. Martin added that this lamentable track record made TI Hungary support EPPO, which they expect to
“significantly contribute to the efficiency of combating corruption in the European Union”.
