Nobody Expects the European Prosecutor

By Alexandros Kazimirov

The creation of the European Public Prosecutor’s Office was a thirty-year effort to balance national sovereignty with supranational authority. Yet, just two years after its launch, the agency’s expanded role is an unintended consequence of everything that occurred during its establishment. Specifically, the expansion of the European Union’s budgetary base is set to fundamentally transform the Office’s caseload. But a transformation in scope requires structural reforms as well. This post outlines how a recent surge of investments in defense and energy presents an opportunity to reform the Office into an independent enforcement agency capable of delivering meaningful oversight. It explores the extrinsic and intrinsic forces that led to a flawed structure and concludes with proposed reforms to achieve the goal of a more independent, assertive and efficient prosecutor.

The Office Today

The Office is an independent agency tasked with the mission of protecting EU funds from fraud and misappropriation. Due to concerns over an institution that might encroach on Member State competences, the Office was designed and implemented with a bifurcated model. At the centralized level, the College of EU prosecutors oversees and coordinates investigations. At the decentralized level, delegated prosecutors carry out searches and seizures, and represent the Office in national courts within their Member State jurisdiction. The Office’s mandate is tied to the EU’s financial interests, including its budgetary expenditures.

The Turning Point

During the Office’s formation, the Member States made a historic decision to jointly issue bonds to finance the post-pandemic Recovery and Resilience Facility (RRF), a program running from 2021 to 2026 alongside the EU budget. Consequently, by expanding the budgetary base, the Member States tacitly assigned a greater role to the agency tasked with protecting it. A comparison of enforcement actions shows cases related to RRF funding skyrocketing. Specifically, the Office has launched more than 200 investigations into subsidy fraud, public corruption and money laundering.[1] Simultaneously, the Member States led a joint effort to shore up defense procurement at the national level.

Four years later, the Member States are considering further increasing their expenditures on defense procurement and energy through a new round of joint financing. If these plans materialize at the Union level, the Office’s jurisdiction will expand to include the recipients of these new expenditures: the defense and energy industries. In such an event, investigations related to defense and climate (currently the lowest in number) may follow the RRF pattern. However, unlike most beneficiaries of the RRF or agricultural funding, the targets of these actions may be sophisticated corporate entities, which will lead to lengthier and more complex investigations. Presumably, the Office will need to reassess its capacity to undertake this new role with expanded authority. Hence, the circumstances offer an opportunity to enhance the Office not just formally but substantively.

Even if the uptick in cases is only in quantity and not in complexity, investments will still need to be subject to robust oversight beyond national authorities. Centralized oversight will strengthen deterrence against fraud and reduce the risk of corruption. In turn, a low risk of corruption entails more efficient capital deployment, spurring greater investor and public confidence in the efficacy of the executive administration. It is therefore desirable to have tough enforcement and the role of the Office should be reinforced to deliver it. To this end, structural improvements are required.

The Needed Reforms

While the creation of the Office in its current form was a compromise between centralized and decentralized forces, there are some intrinsic factors which disrupt its function.

1. The bifurcated model leaves the Office’s prosecutors vulnerable to undue influence from national interests. Member States retain the power to nominate prosecutors to the Office, creating an opportunity for governments to misuse their influence to nominate prosecutors who are favorable to the incumbent party and suppress the Office’s work when it is damaging to them. This harms the independence of the Office. To insulate the Office from Member States, nominations and appointments should be centralized and based on fair and objective criteria for all candidates across all Member States.

2. Controversial appointments to the Office risk politicization, causing internal friction and undermining institutional credibility. The circumstances surrounding the appointment of a controversial Chief Prosecutor may result in a predicament where lax enforcement is interpreted as covert conciliation and toughness as biased hostility towards some Member States. This undermines the integrity and impartiality of the Office. Therefore, leadership roles should be reserved for apolitical figures.

3. The current model creates a misalignment of incentives by keeping EU prosecutors out of the courtroom and the delegated prosecutors out of the decision-making process. For example, an EU prosecutor leading a cross-border investigation across France, Greece and Italy has to rely on the delegated prosecutors to represent the Office in their respective Member States. Furthermore, a French delegated prosecutor cannot be admitted to an Italian or Greek court to assist her peers in a related proceeding. In practice, this creates a vertical barrier, preventing EU prosecutors from trying cases in national courts, and a horizontal barrier, denying delegated prosecutors access to the courts of another Member State. Additionally, the delegated prosecutors are left out of the decision making process at the centralized level, leaving them to pursue cases without direct ownership of key decisions.

One solution for this misalignment is a legislative overhaul of the entire structure. Another more modest approach is to encourage national courts to allow admission on a pro hac vice basis. Although this practice has limited use in the civil law tradition, it may be a fitting tool to recognize the concurrent jurisdiction of the Office’s prosecutors for white-collar crimes with a cross-border dimension.[2] Importantly, this opens the door for prosecutors to pursue their cases to completion. And while not all enforcement actions go to trial, this is the appeal of the job. Being in court is not something that can be taught in books; it requires the ability to think on one’s feet and necessitates an ability to convey confidence in the face of adversity. Regardless of whether it is at a centralized or decentralized level, prosecutors within the Office should maintain this authority.

4. The Office is only three years old and still stumbles occasionally. As with any bureaucracy, the process of building expertise and establishing efficient workflow takes time. However, prioritization should focus more on the big fish and less on petty corruption. High-profile cases will attract talent, visibility and attention. As a result, the Office may then demonstrate its track record to make a compelling case for greater budget allocation during this point of inflection.

[1] To combat money laundering, the EU is setting up the Authority for Anti-Money Laundering and Countering the Financing of Terrorism, a new agency based in Frankfurt to commence operations in 2028.

[2] This still does not address the linguistic or procedural barriers that a prosecutor may face under the criminal law system of another Member State.

Alexandros Kazimirov is a Fellow at the American Antitrust Institute and a former Transatlantic Technology Law Forum Fellow at Stanford Law School. He is a graduate of the Universities of Athens, Cyprus and Berkeley Law School.

Image: Publications Office of the European Union, https://data.europa.eu/doi/10.2927/205863