Tag Archives: EPPO

An EU prosecutor’s office would be a heavy blow to Viktor Orbán

I don’t think that anyone familiar with the Hungarian situation can doubt the economic ramifications of the institutionalized corruption of the Orbán regime. It retards growth and competitiveness and distorts the market economy.

A significant source for this institutionalized stealing is the EU’s convergence funds. Across the EU approximately 50 billion euros in funds distributed to member states is lost to fraud. The problem is especially acute in the former Soviet satellite countries: Bulgaria, Romania, and Hungary. The European Commission’s European Anti-Fraud Office (OLAF) gathers evidence of financial misconduct and prepares hundreds of judicial recommendations, but the prosecution rate is only about 30%.

If you think that this rate is pitifully low, you should take a look at the Hungarian situation. In 2015 OLAF investigated 17 suspicious cases, of which 14 were deemed serious enough for the organization to suggest that financial penalties be paid by the Hungarian government. As far as I could ascertain, in no case did the Hungarian prosecutors move a finger.

Yet hardly a day goes by without news of corruption. Ákos Hadházy, co-chair of LMP who has done the most to unearth corruption, asked Péter Polt, the chief prosecutor, to reveal the number of cases prosecuted since 2011. The answer was staggering. In only four cases did prosecutors bring charges. In monetary terms, in comparison to the billions most likely stolen, the sums involved were peanuts. According to their findings, the financial loss to the European Union was only 286 million forints, or 917,030 euros. Even though every day Hungary receives about two billion forints in EU convergence funds. Several notorious cases, like the street lighting business of Prime Minister Viktor Orbán’s son-in-law, were simply dropped.

For the EU, setting up a new organization–the European Public Prosecutor’s Office or EPPO–to investigate the fraudulent misuse of EU funds and inter-state or so-called carousel fraud is becoming an urgent task. In December I devoted a post to the subject, in which I reported first the reluctance and later the refusal of the Hungarian government to accept such a supranational body. We heard the old refrain: “the sovereignty of Hungarian prosecution might be undermined.” Moreover, goes the argument, since the Hungarian chief prosecutor is appointed by parliament, there might also be a constitutional problem. The latter excuse is truly laughable: almost never does the need for an amendment to the constitution cause any problem for the Orbán government.

Knowing the government’s heavy reliance on the good offices of the chief prosecutor in fraud cases, it was inevitable that Hungary would fight tooth and nail against EPPO. In the last couple of days the issue emerged again after an informal meeting of the justice ministers in Malta. Seventeen countries indicated they would participate in so-called “enhanced cooperation,” which is a procedure whereby a minimum of nine EU countries are allowed to establish advanced integration or cooperation within EU structures without the other EU countries being involved. Five countries, among them Hungary and Poland, opted out.

Justice Minister László Trócsányi self-righteously announced after the meeting that the Hungarian government’s main concern with setting up an EU public prosecutor’s office is its fear of weakening such institutions as Eurojust and OLAF, neither of which has prosecutorial powers. The former is merely a coordinating body that is supposed to improve the handling of serious cross-border crimes by “stimulating” investigative and prosecutorial coordination among agencies of the member states. OLAF can only make recommendations. Trócsányi had the temerity to claim that “these institutions have achieved remarkable results.” In the statement given to MTI, the Hungarian news agency, Trócsányi left open one possibility: “In case they want to establish a European prosecutor’s office, it should be created on the foundation of Eurojust.” As far as Hungary is concerned, “regulating the competence of such a body should require a unanimous vote.” This is in contrast to other countries “who believe that its establishment is possible by a qualified majority.”

Péter Niedermüller, DK member of the European Parliament, somewhat optimistically predicted that “the establishment of EPPO can be delayed but cannot be prevented.” We do know that the EU is reassessing its convergence program, perhaps as a result of all the fraud. Commissioner Věra Jourová, who is in charge of the project, has already indicated that there might be a modification of the rules governing the assignment of EU convergence funds. In plain language, if a member state receives more funds than it contributes to the common purse, it will get less money in the future. The European Parliament can institute “ex ante conditionalities” that would allow for such modifications. That would be a heavy blow to Poland and Hungary, the largest beneficiaries of the convergence funds.

You may have been wondering why I haven’t written about OLAF’s report on its investigation into fraud in the Budapest Metro 4 project, which was reported by Politico at the end of December 2016. It has been heralded as one of the biggest fraud cases ever in the European Union. OLAF recommended the repayment of €228 million to the EC Department of Regional and Urban Policy and €55 million to the European Investment Bank.

Although in the last month the Hungarian media has been full of accusations and counter-accusations, no responsible reporting of the case is possible for the very simple reason that the Hungarian government refuses to make the OLAF document public. As long as we have no idea what is in the document and we have to rely on the interpretations of János Lázár and Nándor Csepreghy, the number one and two men of the Prime Minister’s Office, and Budapest Mayor István Tarlós, who has definite ideas on the subject but admits that he hasn’t seen the report itself, we cannot possibly pass judgment on the case.

The investigation covers the period between 2008 and 2014–that is, two years of the Gyurcsány-Bajnai government and four years of the Orbán administration. The only thing we can say is that it is unlikely that all the fraud took place before 2010 and nothing happened under the new government, which is what the Orbán government claims.

Under the present setup these OLAF reports can be an instrument for political games. The establishment of a supranational European Public Prosecutor’s Office would help prevent the kind of situation that currently exists in Hungary with the latest OLAF report.

January 29, 2017

Not on Viktor Orbán’s Christmas list: A European Public Prosecutor

The establishment of a European Public Prosecutor’s Office (EPPO) has been on the table since at least 2013. In the last three years, despite intensive negotiations, progress has been slow because of the resistance of some of the member states, among them Hungary. As it stands, in order to create EPPO 25 member states have to support the proposal because the United Kingdom, Ireland, and Denmark have opted out. According to reports, 20 member states support the plan while Poland, Hungary, Sweden, and the Netherlands oppose it. The reluctance to cede certain national rights to the European Union is understandable from the point of view of nation states, but we can be sure that Hungary’s unwillingness has other sources as well.

EPPO will have the authority “to investigate and prosecute EU-fraud and other crimes affecting the Union’s financial interests.” Currently, only national authorities can investigate and prosecute EU-fraud. The existing EU bodies, such as OLAF, Eurojust, and Europol, don’t have jurisdiction here. OLAF can investigate, but the prosecution must be carried out by the authorities of the member states. As we know, in the case of Hungary OLAF finds plenty to investigate, but the Hungarian authorities never find anything wrong. Europol has no executive powers, and its officials are not entitled to conduct investigations in the member states or to arrest suspects. Eurojust, an organization I have not mentioned before, is merely a coordinating body which is supposed to improve the handling of serious cross-border crimes by “stimulating” investigative and prosecutorial coordination among agencies of the member states. This is another body that has no power over the justice system in the member states. Eurojust could “stimulate” Péter Polt’s prosecutor’s office till doomsday and it would never investigate crimes committed by Fidesz officials.

From the description of EPPO’s structure on the website of the European Union I have some difficulty envisaging how this independent prosecutorial body will function. Under a European prosecutor, investigations will be carried out by European delegated prosecutors located in each member state. These delegated prosecutors will be an integral part of the EPPO, but they will also function as national prosecutors. I must say that I have my doubts about this setup, which Viktor Orbán’s regime could easily manipulate. But it will probably never come to pass because, among the Central European EU members, Hungary and Poland have no intention of going along with the plan which, according to Věra Jourová, commissioner in charge of justice, consumers and gender equality, should be voted on within three months.

The head of OLAF, Giovanni Kessler, naturally supports the plan because the number of cases his organization has to investigate increases every year. In 2015 OLAF opened 219 investigations and concluded 304. Hungary alone had 17 possible fraud cases, the third highest after Bulgaria and Romania. But OLAF can only make recommendations to the member states, which at least in Hungary’s case are not pursued. Interestingly, several chief prosecutors in member states support the idea of the setting up a European Prosecutor’s Office, among them the prosecutors of Belgium, Bulgaria, Greece, Spain, France, and Romania. As we know, in Romania corruption is just as bad if not worse than in Hungary, yet there is a willingness to allow an independent body to investigate cases of fraud and corruption.

Last July the Hungarian media reported that the negotiations were in an advanced stage since Jourová called together the ministers of justice for an informal talk in Bratislava. At that point HVG reported that “Hungary supports the goals of the organization but is afraid that the sovereignty of the Hungarian prosecution may be undermined.” The explanation Justice Minister László Trócsányi gave for Hungary’s hesitation concerning EPPO was that in the Hungarian judicial system the chief prosecutor is appointed by the parliament and therefore the sovereignty issue might be a constitutional problem. By December, after Jourová’s visit to Budapest, this hesitation became a flat refusal. In addition to the argument about the parliamentary appointment of the chief prosecutor, a new argument surfaced in parliament, which had its source in Trócsányi’s proposed additions to the Fidesz constitution about Hungary’s “national identity and basic constitutional arrangements.”

Practically on the same day that the parliamentary committee said no to the proposal “in its present form,” Věra Jourová told Handelsblatt Global that “the European Commission could impose financial penalties on Poland and Hungary if they block the creation of a European public prosecutor.” Poland and Hungary receive more aid from the European Union than they pay into the budget, and therefore their refusal is unacceptable. She disclosed that on the basis of the known cases, €638 million of structural funds were misappropriated in 2015. The actual figure is most likely much higher. This must be stopped, she added.

Věra Jourová, commissioner in charge of justice. Despite her pleasant smile she’s apparently tough.

On December 8 EU justice ministers gathered again in Brussels to discuss the creation of EPPO, but while the majority of them support the plan, a few member states refuse to budge. To quote euractiv.com, “with no end in sight to this blockage, France’s Minister of Justice Jean-Jacques Urvoas and his German counterpart Heiko Maas decided to propose an enhanced cooperation deal for those countries that are in favor of this ‘super prosecutor.’” Enhanced cooperation is a mechanism that allows EU countries to bypass the requirement of unanimity. A group of at least nine member states may request a draft regulation. If this draft fails, the states concerned are free to establish enhanced cooperation among themselves. I fail to see how that would be disadvantageous to rogue states like Poland or Hungary. Orbán would gladly acknowledge the fact that EPPO has no jurisdiction over Hungary, and he and his friends could continue to steal about a third of the structural funds EU provides. A perfect arrangement.

Now let’s turn to how the opposition parties see the issue. As far as Jobbik is concerned, the establishment of a European Public Prosecutor’s Office is the first step to the dreaded United States of Europe. In fact, Jobbik accuses Fidesz and the Orbán government of not fighting hard enough in Brussels against this proposal. Jobbik must consider the issue very important because they published a statement in English in which Gábor Staudt, a Jobbik MP, explains the party’s position. He recalls the Fidesz members of the European Parliament not having the guts to vote against the proposal; they only abstained. Jobbik’s opposition is based strictly on its nationalistic defense of Hungarian sovereignty whereas Fidesz worries primarily about the legal consequences of an independent European prosecutor’s office investigating crimes of government officials.

The democratic Hungarian opposition parties are all enthusiastic supporters of a European Public Prosecutor’s Office. DK was actually campaigning with the idea ahead of the 2014 European parliamentary election. Benedek Jávor, a member of the European parliament delegated by PM (nowadays Párbeszéd), joined DK’s demand soon after. István Ujhelyi (MSZP), also a member of the European parliament, is of the same mind. He wrote a lengthy piece, published on the party’s website, about the necessity of such a body in the absence of a functioning Hungarian prosecutor’s office. Ujhelyi is sure that if EPPO is set up “the Fidesz hussars will be behind bars in crowded rows, including those corrupt officials who assist them.” He criticizes Fidesz members of the European Parliament for abandoning the position of the European People’s Party to which they belong. They “almost alone abstained” at the time the matter was discussed in Strasbourg.

Ujhelyi somewhat optimistically points out that if Hungary remains outside the group of countries that are ready to be under the jurisdiction of the European Public Prosecutor, the distinction between honest and dishonest countries will be evident. In case Fidesz refuses to support the decision, “it will be an admission that it is a party of thieves.” I’m afraid Viktor Orbán and his government simply don’t care what others think of them. At the moment Viktor Orbán is in Poland on a two-day visit. I understand that he and Jarosław Kaczyński had a leisurely three-hour dinner. I’m sure that the threat of a European Public Prosecutor to the sovereignty of Poland and Hungary was thoroughly discussed.

December 11, 2016