Who should worry about the European Public Prosecutor’s Office?

Context

In just a few months the European Public Prosecutor’s Office will be operational – the official date is November 2020. This new institution of the European Union has the stated aim of effectively combating crimes against EU financial interests and crimes inextricably linked to them.

A recent report[1] of GRECO (Group of States against Corruption) took over an article written the European Chief Prosecutor, Laura Codruța Kovesi, who stated that the European Public Prosecutor’s Office has the potential to completely change the paradigm in the field of criminal justice, being a results oriented institution .

The European Chief Prosecutor also stated on another occasion that the European Public Prosecutor’s Office will start its activity with 3,000 cases, and that approximately 2,000 new cases will be registered annually[2].

In order to have a complete picture of the impact of the European Public Prosecutor’s Office on natural or legal persons in Romania, it should also be mentioned that Romania is ranked first for fraudulent European funds[3], which will certainly be reflected in an intensified activity of the European Public Prosecutor’s Office in connection with the frauds or acts of corruption associated with EU funds on the Romanian territory.

Activity of the European Public Prosecutor’s Office

Within its competence, the European Public Prosecutor’s Office (EPPO) will investigate and prosecute perpetrators, accomplices or instigators of offenses affecting EU financial interests (provided for in Directive (EU) 2017/1371). To this end, EPPO will conduct investigations and will prosecute before the courts of the Member States until the case is completed.

Under Romanian legislation, the crimes that will be investigated EPPO are mainly those found under Section 41 of Law no. 78/2000 (those regarding the fraud of European funds), under Law no. 241/2005 for preventing and combating tax evasion or corruption offenses regulated under the Criminal Code (such as  bribery, or influence peddling) or misappropriation of funds also incriminated under the Criminal Code.

Without carrying out a technical and exhaustive analysis of the crimes falling within the competence of the European Public Prosecutor’s Office, it is important to note that EPPO will investigate a wide range of crimes, from the classic fraud of EU funds to tax evasion or corruption, while also being competent to investigate any crime inextricably linked to them (a phrase used by the European Public Prosecutor’s Office Regulation, but not yet defined).

Thus, it is expected for many of the crimes that until now were investigated in Romania by the National Anticorruption Directorate (DNA) to be taken over and investigated by the new EU institution of the European Public Prosecutor’s Office.

The investigation by EPPO of these crimes will be slightly different from the classic investigations in Romania carried out so far by DNA. Within the new institution, the European Chief Prosecutor, together with other European prosecutors (forming the Permanent Chambers), will coordinate investigations and make timely decisions on the conduct of each investigation. Moreover, there are situations in which, if the investigated persons allege infringement of rights or a conflict of jurisdiction, the procedure for resolving this dispute may be attributed to the Court of Justice of the European Union based in Luxembourg.

When participating in a conference dedicated to the European Public Prosecutor’s Office, at the end of last year in Germany, we have discussed with other lawyers specialized in European criminal law and magistrates from other Member States about the particularities of investigations conducted by the European Public Prosecutor’s Office and about the need to adapt to an investigation with a pronounced cross-border character[4].

Who is concerned?

Given criminal participation and the range of crimes falling under the competence of the European Public Prosecutor’s Office, any person could be the subject of such an investigation. In particular, any person or company (whether it is a start-up or a multinational company) that manages or wants to obtain financing through European funds can be subject to investigations.

There are many discussions these days about European regional development funds, European social funds, cohesion funds or European agricultural funds for rural development. Regardless of the type of funds intended to be obtained through grants or agreements concluded by the EU institutions, individuals and companies seeking to obtain EU funds must take into account that irregularities in obtaining and managing such will entail the competence of the European Public Prosecutor’s Office.

Grants provide direct support, while other programs based on the provision of European funds are managed by national institutions. Even if the obtained funds are managed by Romanian state institutions, as long as the origin of the funds is from the European Union, all regulations on controls and sanctions for EU funds management will be applicable.

So, whether we are talking about SMEs, NGOs, young people or farmers seeking to obtain European funds to finance their businesses, or legal entities or individuals who manage such funds, everyone should be interested in the European Public Prosecutor’s Office becoming operational in just a few months.

Recommendations

As the European Public Prosecutor’s Office will be operational in a very short time and its aim is to achieve effective results in the shortest possible time, two courses of action are recommended:

1. Prevention

Although there has been quite a bit of discussion in Romania about criminal prevention, with the European Prosecutor’s Office’s investigations carried out at European standards, Romanian companies (SMEs or multinationals or others) will certainly need to acknowledge as soon as possible the importance of preparing  and implementing criminal prevention policies. As part of my daily professional activity, I met a few Romanian companies, subsidiaries of companies from other EU member states or the US, that had implemented the notion of criminal prevention at the level of organizational culture.

We refer here to anti-corruption policies (globally known as the “Anti-Bribery and Corruption Policy”). This type of policy should no longer be an unknown concept for start-ups or any other type of SME seeking EU funding, as the development and implementation of effective anti-corruption policies can prevent the company being held criminally liable and differentiate between the survival of the business and its closure.

2. Reaction

Although specialized legal assistance is always recommended when participating in any legal proceedings, in the case of an investigation by the European Public Prosecutor’s Office, a lawyer specializing in white collar crimes and cross-border investigations should all-the-more be contacted as soon as possible for several reasons.

First of all, the start-up phase of the investigation is the most important in its subsequent development and outcome, so it is necessary to have specialized legal assistance from the outset.

Secondly, the lawyer assisting a person under investigation by the European Public Prosecutor’s Office must know, in addition to national law, the European directives on defence rights or the European Public Prosecutor’s Office’s regulation, criminal procedural law on international judicial cooperation and even legislation of other EU’s Member States.

The lawyer is the one who must know all the rights of the person he represents and their extent, and in the context of an investigation of the European Public Prosecutor’s Office the situation is complex.

I have pointed out on another occasion[5] that there are three layers of protection for persons investigated by the European Public Prosecutor’s Office: rights provided under national law, rights established by the 2010 EU directives and the fundamental rights guaranteed by the Charter of Fundamental Rights and the Council of Europe.

It would be impossible for a person under investigation by the European Public Prosecutor’s Office without professional legal assistance to know all his or her procedural rights and ensure an effective defence.

Moreover, investigations by the European Public Prosecutor’s Office often involve carrying out activities and gathering evidence from the territory of different Member States. In this situation, it is extremely important that persons under investigation have knowledge of the relevant procedural rules applicable in the states where the evidence was collected, in particular the rules for gathering evidence, in order to be able to challenge them before the court and benefit from the right to a fair trial.

However, it is almost impossible for a single person to know in detail the criminal procedure legislation of several Member States of the European Union.

For example, we in the act team have often managed to offer the most effective defence for our clients, since as part of the European network of act legal lawyers, we have instant access to the expertise of our colleagues specialized in white collar crimes in other  EU Member States.

Cooperation between lawyers at the level of different Member States is crucial for being able to respond to the intensified international judicial cooperation between the investigative bodies of the EU Member States.

Therefore, with the start of operation of the European Public Prosecutor’s Office, a new type of criminal investigation will begin at EU level, much more complex than those previously carried out in Romania and with much higher aspirations to obtain effective results. These investigations should interest anyone who is looking to obtain European funds but should not represent a risk for those who implement an effective criminal prevention policy and receive specialist assistance in this area.

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Notes:

[1] Please see GRECO, Anti-corruption trends, challenges and good practices in Europe & the United States of America, May 2020, available at: https://rm.coe.int/

[2] Please see  https://euobserver.com/justice/147386

[3] Please see https://business-review.eu/business/legal/olaf-romania-has-the-most-eu-funds-fraud-cases-172359

[4] Please see A. Șandru, Apărarea în viitoarele proceduri ale Parchetului European

[5] Please see A. Șandru, Drepturile persoanei anchetate de Parchetul European