The appointment of the first European Chief Prosecutor, a new European institution in the prosecution of financial offenses

Every year, Europe loses thousands of millions of euros on cross-border fraud, including at least €50 billion of Value Added Tax. Availing itself of the opportunity offered by the Treaty on the Functioning of the European Union (“TFUE”) since the adoption of the Lisbon Treaty in 2008, the European Union instituted the European Public Prosecutor’s Office (“EPPO”) on October 12th, 2017.

Every year, Europe loses thousands of millions of euros on cross-border fraud, including at least €50 billion of Value Added Tax.

Table of Contents

Availing itself of the opportunity offered by the Treaty on the Functioning of the European Union (“TFUE”) since the adoption of the Lisbon Treaty in 2008,1[1] the European Union, encouraged mainly by France and Germany2, instituted the European Public Prosecutor’s Office (“EPPO”) on October 12th, 2017, pursuant to EU Regulation 2017/1939 (“EPPO Regulation”).

As a result, on September 19th, 2019, Ms. Laura Codruta Kövesi was appointed as the first European Chief Prosecutor by both the European Parliament and the Council of the European Union for a non-renewable term of seven years.

The EPPO will start operating in 2020 with the participation of 22 EU Member countries (“Participating countries”) 3. The EPPO will not have jurisdiction in Denmark, Poland, Hungary, Ireland, United-Kingdom and Sweden.

This innovative institution has the authority to directly pursue offenses affecting the European Union financial interest within Participating countries. In order to ensure its efficiency, this power of prosecution is protected through a relatively strong principle of independence.

However, concerns have been raised regarding the coordination between the EPPO and the existing national and European authorities, namely national prosecutors and European institutions such as Eurojust and the European Anti-Fraud Office (“OLAF”).

I/ An innovative European Prosecutor dedicated to offenses related to the European Union  budget

The EPPO was established to overcome the inefficiency of the existing European bodies. To ensure its success, this new institution has a decentralized organization with a double level of action and its performance is protected by the principle of independence.

A) A necessary initiative as regards the inefficiency of the existing bodies

Several European institutions have been established over the years in order to protect European financial interest such as Eurojust (2002) and OLAF (1999).

However, these entities are deemed inefficient as they are deprived of the authority to conduct criminal investigations and prosecutions.

Indeed, Eurojust, which is in charge of coordinating investigations and prosecutions between the EU Member States4, has lacked operationality over the years even though its status has been amended several times5.

The recommendations of OLAF, the European authority entitled to conduct administrative investigations on offenses related to European budget recommendations6, are not frequently followed by local prosecutors. As stated by OLAF, only 42% of the cases referred to national judicial authorities have been prosecuted7. Besides, several French courts have argued that the procedural guarantees of OLAF’s actions were insufficient8.

Moreover, OLAF and Eurojust face significant problems of overlapping competence, which have led to rivalry and mistrust.

As a result, a European prosecutor was established in 2017. From 2020 onwards, the EPPO will be tasked with the investigation, the prosecution and the remittal of the offenses related to the European Union budget, including fraud, cross-border VAT fraud, money laundering, misappropriation and corruption9.

B) The EPPO’s efficiency protected by a dual level of organization and the principle of independence

The structure of the EPPO is divided into two levels: central and national level. This divided structure enables the EPPO to ensure compliance with internal rules through the European Delegated Prosecutor while remaining independent of countries’ interference as the decisions are issued by the central level.

This central level consists of the European Chief Prosecutor, the two deputies and the college of prosecutors. It determines the criminal justice policy through the adoption of decisions regarding the strategy and supervises the investigations conducted at the national level.

As regards the decentralized level, a European Delegated Prosecutor in each Participating country carries out the investigation and prosecution on the national territory10. 

In order to ensure its efficiency by avoiding interferences from EU Member States, Participating countries have committed to respect the independence of the EPPO and “do not attempt to influence it in the performance of its assignment” 11.

Reciprocally, the EPPO will not accept instructions from the EU institutions or national authorities. It is only required to report on its activity to the European Parliament, the Parliamentary Council and the Commission. 12

The independence of the EPPO is ensured by several guarantees: a seven-year non-renewable mandate for the European Chief Prosecutor and a six-year non-renewable mandate for European prosecutors. Additionally, only the Court of Justice can dismiss the European Chief Prosecutor in case of serious misconduct or inability to perform its duties. Therefore, the EPPO is sought to be largely irremovable13.

II/ The coordination between the EPPO and current authorities assigned to the protection of financial interests in Europe yet to be defined

According to article 15 of the Directive (EU) 2017/1371 “The Member States, Eurojust, the European Public Prosecutor’s Office and the Commission [OLAF] shall, within their respective competences, cooperate with each other in the fight against the criminal offences”.

A) A required cooperation between existing European bodies and the EPPO to avoid overlap

The scope of jurisdiction of the EPPO, Eurojust and OLAF is identical and refers to “criminal offences affecting the financial interests of the Union” 14.

Thus, the risk of overlaps, such as the duplication of procedures, between the EPPO and European existing bodies may raise concerns.

Nonetheless, the EU Directive 2017/1371 was adopted on July 5th, 2017, with the specific intent to harmonize criminal law of the European Union with respect to offenses affecting the European Union’s financial interests15. This Directive is expressly referred to in the EPPO Regulation16.

Thereby, the similarity of their scope of jurisdiction is deliberate. Their difference lies in their powers.

Indeed, Eurojust’s competence is limited to the coordination of investigations. It has no investigative powers. As to OLAF, it can only make recommendations. Whereas, the EPPO may directly pursue the offense in the Participating countries.

The European Commission has already expressed its will to see the EPPO and the current bodies operate in close coordination17.

In this line, the European Parliament and the Council modified the mandate of Eurojust on November 14th, 2018, specifying that “Eurojust should in any case remain competent for offences affecting the financial interests of the Union whenever the EPPO is not competent or where, although the EPPO is competent, it does not exercise its competence” 18.

Similarly, a proposal to amend OLAF Regulation is currently going through the European Union legislative process in order to specify its mission and to ensure cooperation with the EPPO19. These two similar bodies will cooperate as follows: OLAF will be required to alert and support the EPPO and will have to withdraw if the latter opens an investigation20.

B) A delicate cooperation between Member States and the EPPO

a) Limited the EPPO’s jurisdiction for the sake of countries’ sovereignty

In order to protect Participating countries’ sovereignty, the jurisdiction of the EPPO remains limited21.

For instance, EU Directive 2017/1371 states that only serious VAT frauds are under the EPPO’s jurisdiction22: a VAT fraud is considered serious when connected with the territory of two or more Member States and the damage exceeds or is equal to €10 000 00023. 

Besides, the sovereignty of Member States is protected as they retain the monopoly of coercive power24. and the EPPO’s procedural acts are under the control of national courts25. Similarly, trial remains the nations’ jurisdiction.

Moreover, a person under investigation or prosecution on behalf of the EPPO will see its national law apply when an issue is not regulated by the EPPO Regulation. However, the EPPO Regulation will prevail whenever a matter is governed by both national law and the EPPO Regulation26.

b) A specific cooperation between the EPPO and National Prosecutors

As regards the conflicts of jurisdiction between the EPPO and the national prosecutors, the final decision remains with the national authorities if a disagreement arises, despite the right of the EPPO to invoke its jurisdiction over the national prosecutors27.

With respect to France, the offenses assigned to the EPPO will likely fall under the jurisdiction of the National Financial Prosecutor28.

Moreover, it seems that the central level of the EPPO‘s prerogatives go beyond the French prosecutor’s and as such might require at some point the involvement of the French investigating magistrate or the Liberty and Custody judge (“juge des libertés et de la détention”) in order to duly conduct its investigation.

The cooperation between the French investigating magistrate, the French Prosecutor and the European Delegated Prosecutor that will be appointed in France has yet to be determined.

Overall, the EPPO will have to prove its efficiency in order to convince Eurosceptics and further the international legal world. Surely, the EPPO has the potential of becoming a crucial key to international judicial cooperation29.

Recently, the issue regarding safety within the European Union has been raised, in part because of the terrorist attacks both in major European cities. The need to ensure the security of EU citizens and the fight against terrorism is one of the priorities30.

Therefore, the idea to extend the EPPO jurisdiction over terrorism crimes was considered both by the President of Luxembourg, during his speech regarding the status of the European Union on September 13, 201731,  and by the French President, during his Sorbonne speech on September 26, 201732.

Indeed, article 86.4 of the TFUE provides that “the European Council may, at the same time or subsequently, adopt a decision amending paragraph 1 in order to extend the powers of the European Public Prosecutor’s Office to include serious crime having a cross-border dimension”.

A lot is expected from the EPPO and we might see its jurisdiction grow over the next few years.

Clémentine Duverne
Clémentine Duverne
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Clémentine Duverne, joined Navacelle as Counsel in 2019. A lawyer practicing in New York and Paris, she represents foreign and domestic clients in pre-litigation and litigation criminal [...]

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Julie Zorrilla
Julie Zorrilla
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Before joining Navacelle Julie Zorrilla previously worked as trainee in the Direction of Legal Affairs at the French Ministry of Economic Affairs and Finance in 2012 and was a Law Clerk to the Paris Court of Appeal in 2011. She has worked on complex cross-border financial and criminal [...]

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Princessa Fouda
Princessa Fouda
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Prior to joining Navacelle as an associate in 2019, Princessa Fouda gained experience in white collar crime and compliance matters working as a trainee at Norton Rose Fulbright and Safran Aircraft [...]

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  1. Article 86.1, Treaty on the Functioning of the European Union, (“In order to combat crimes affecting the financial interests of the Union, the Council, by means of regulations adopted in accordance with a special legislative procedure, may establish a European Public Prosecutor’s Office from Eurojust (…)”). 
  2. States were reluctant for reasons of sovereignty; “Genèse du parquet européen”, interview of Jean-François Thony, President of the French Prosecutors Council, AJ Pénal 2018, p.276.
  3. Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Spain, Slovakia and Slovenia.
  4. Article 2, Regulation (Eu) 2018/1727 of the European Parliament and of the Council of 14 November 2018 on the European Union Agency for Criminal Justice Cooperation (Eurojust), and replacing and repealing Council Decision 2002/187/JHA.
  5. Council Decision 2003/659/JHA of 18 June 2003 amending Decision 2002/187/JHA setting up Eurojust with a view to reinforcing the fight against serious crime; Council Decision 2009/426/JHA of 16 December 2008 on the strengthening of Eurojust and amending Decision 2002/187/JHA setting up Eurojust with a view to reinforcing the fight against serious crime.
  6. Article 1, Regulation (Eu, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013.
  7. OLAF’s report 2017, “Eighteenth report of the European Anti-Fraud Office, 1 January to 31 December 2017”, Publications Office of the European Union, 2018, p. 42.
  8. According to the Report of the French Commission of European Affairs, “Coopération judiciaire en matière pénale et mise en œuvre du parquet européen”, p.24, Jacques BIGOT et JOISSAINS, French Senator, dated May 16, 2019, the investigation chamber of the appeal court of Aix-en-Provence of December 17, 2015, stated that OLAF did not respect French criminal procedure.
  9. Article 1 to 4, Directive (Eu) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law.
  10. Frequently Asked Questions on the European Public Prosecutor’s Office, European Commission, dated August 7, 2018, (“European Prosecutors will be tasked with carrying out investigations and prosecutions in their Member States, working closely with national law enforcement authorities and applying national law (…) The central level will supervise investigations and prosecutions at the national level. It will ensure “the coherence and efficiency of procedures in all Participating Member States”).
  11. Art 6.1, Regulation (EU) 2017/1939.
  12. Art 6.2, Regulation (EU) 2017/1939.
  13. Art 14 and 15, Regulation (EU) 2017/1939.
  14. Article 4 of EPPO Regulation; Article 1 of OLAF Regulation (“step up the fight against fraud, corruption and any other illegal activity affecting the financial interests of the European Union (…)”) ; Article 3 of Eurojust Regulation (“competence for crimes affecting the financial interests of the Union”).
  15. Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law.
  16. Introduction (11) of the Regulation (EU) 2017/1939: The Regulation instituting the EPPO defines its jurisdiction as “offences against the Union’s financial interests [described] under Directive (EU) 2017/1371 (…) and offences which are inextricably linked to them”.
  17. “Qu’est-ce que le parquet européen ?”, Information Center about Europe, September 25, 2019.
  18. Regulation (EU) 2018/1727 of the European Parliament and of the Council of 14 November 2018, (“In light of the establishment of the EPPO by means of enhanced cooperation, the division of competences between the EPPO and Eurojust with respect to crimes affecting the financial interests of the Union needs to be clearly established”).
  19. European commission Press release of May 23, 2018, “Commission proposes new rules for OLAF as a close partner of the European Public Prosecutor’s Office”.
  20. “Chronique Droit pénal de l’Union européenne – Une avancée historique dans l’Espace de liberté, de sécurité et de justice : la naissance du Parquet européen”, Pascal Beauvais and Myriam Benlolo-Carabot, p.42, RTD eur. 2019. 225.
  21. States were reluctant for reasons of sovereignty. “Genèse du parquet européen”, interview of Jean-François Thony, President of the French Prosecutors Council” AJ Pénal 2018 p.276.
  22. “Le périmètre d’intervention du parquet européen”, Marc Segonds, AJ pénal 2018, 287.
  23. Article 2 of the Directive (Eu) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law.
  24. “Chronique Droit pénal de l’Union européenne – Une avancée historique dans l’Espace de liberté, de sécurité et de justice : la naissance du Parquet européen”, Pascal Beauvais and Myriam Benlolo-Carabot, RTD eur. 2019. 225.
  25. “Précisions sur le nouveau parquet européen”, Editions Dalloz Actualités, Pauline Dufourq dated June 20, 2017.
  26. Art 5.3 Regulation (EU) 2017/1939.
  27. Art. 25.6, Regulation (EU) 2017/1939.
  28. Art 705 of the French code of criminal procedure.
  29. States were reluctant due to sovereignty concerns. “Genèse du parquet européen”, interview of Jean-François Thony, President of the French Prosecutors Council, AJ Pénal 2018 p.276.
  30. “Fighting Terrorism through the European Public Prosecutor’s Office (EPPO)”, Adam Juszczak and Elisa Sason, dated June 7, 2019.
  31. Report of the French Commission of European Affairs, “Coopération judiciaire en matière pénale et mise en œuvre du parquet européen”, p.24 Jacques BIGOT et JOISSAINS, French Senator, dated May 16, 2019.
  32. https://www.elysee.fr/emmanuel-macron/2017/09/26/initiative-pour-l-europe-discours-d-emmanuel-macron-pour-une-europe-souveraine-unie-democratique.