Key points to note from the European Public Prosecutor's Office 2021 Annual Report

What can we learn from the first seven months since the establishment of the European Public Prosecutor’s Office? Director Uriel Goldberg and Manager Marcela Pittelli from FRA’s Paris office highlight key figures from the EPPO’s first annual report and pose questions on the future of this new authority, particularly in the French context.

The European Public Prosecutor’s Office (EPPO) published its first annual report on March 24, 2022. Much anticipated, it offers a more accurate understanding of the momentum given to this new institution by the first European Chief Prosecutor, Laura Kövesi, and the main trends resulting from it.

This report covers the EPPO’s first seven months of activity since its establishment in June 2021 and gives detailed figures for each country participating in this new institution, relating to the number of ongoing investigations, the amount of damages suffered by the EU, the amount of damages resulting specifically from VAT fraud, as well as those relating to seizures made. It also indicates the origin of the reports and complaints received (whether from national authorities, European institutions, private third parties or the Prosecutor’s Office).

By publishing the data on the first year of the EPPO’s activity, Laura Kövesi intended to show that there would be no slow and gradual increase in power of the institution, but rather full deployment, from the beginning, of all the means available to the EPPO.

As of the end of 2021, 2,832 reports have been processed by the EPPO, leading to the initiation of 576 investigations (of which 515 are still active, amounting to an estimated 5.4 billion euros in damages). These investigations – half of which were opened at the initiative of the EPPO – have led to the seizure of a total of 147.3 million euros.

Subsidy fraud, particularly in the agricultural sector, accounts for almost one third of all opened investigations. VAT fraud, in particular via carousel fraud, accounted for 17.6% of all investigations (an estimated loss of 2.5 billion euros). This is followed by customs and anti-dumping fraud (13.4%) and public procurement fraud (11.2%). 4% of the investigations opened concern active or passive corruption of European public officials (in order, for example, to obtain overvalued subsidies).

The report highlights the speed of information exchange between national authorities in the context of investigations led by the EPPO. In comparison, European mutual assistance requests, which have until now been used in investigations conducted by national authorities, have proven to take much longer. As a result, certain procedures that used to take months to organize can now be completed in a matter of weeks.

The report on each participating Member State is naturally of particular interest. Italy and Bulgaria respectively are the subject of 120 investigations (for damages estimated at 1.7 billion euros, including 1.3 billion euros resulting from VAT fraud) and 105 investigations (for damages estimated at 1.3 billion euros). Behind them, the EPPO has also been paying particular attention to Romania (60), Germany (58), Slovakia (45), the Czech Republic (39) and France (31).

In the case of France, in particular, the 31 investigations opened mainly concerned subsidy fraud and customs or anti-dumping fraud. Almost half of the investigations initiated were transnational cases. In addition, half of these investigations were initiated as a result of reporting from the French authorities.

At the end of 2021, only 5 cases had been put forward before national courts and only one of those has resulted in a conviction in Slovakia (i.e. the first conviction in an EPPO case). However, it is of course too early to assess the impact that the EPPO will have in combating fraud within its jurisdiction.

Several questions remain, particularly in France:

• What type of equilibrium will be reached between the investigations conducted by the EPPO and those conducted by the National Financial Prosecutor’s Office (PNF)?
• In practice, how would the negotiation of a French deferred prosecution agreement (CJIP) work in the context of an EPPO investigation?

More generally, the coming years will show whether the trends observed during these first months of activity are taking root, or whether they will evolve significantly, be that in terms of volume of cases, the type of offences prosecuted or the countries concerned.

What is essential for companies, if not already done, is to take into consideration what this new authority means in practice. Key aspects to consider include:

• Internal procedures to put in place in the event of an EPPO investigation, specifically in terms of internal investigations, especially when these are transnational in nature;
• Compliance measures that might need to be adopted and when to report to the EPPO following, for example, an internal investigation resulting from a whistle blower or otherwise.

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