Organised crime poses major risk to Europe's €750BN Covid-19 rescue package - Commission's Justice chief

By STEPHEN RAE

EUROPE’S massive €750BILLION Covid-19 rescue package is likely to be the focus of frauds operated by serious and organised criminals, Didier Reynders, the European Justice Commissioner has revealed.

He told the European Parliament’s Budget Committee on Thursday that the “economic stimuli such as those proposed are likely to be targeted by criminals seeking to defraud public funding.”

The risk of the Euro budget funds falling into criminal hands made the establishment of the European Public Prosecutor’s Office (EPPO) more essential than ever the Commissioner said.

The EPPO has been beset by problems and cuts in budgets and the failure of Malta to forward the names of three suitable candidates to be considered for a role in the prosecutors office.

Mr Reynders also pointed to Europol figures that showed that “98.9pc of estimated criminal profits are not confiscated and remain at the disposal of criminals.”

“To effectively disrupt and deter criminals involved in serious and organised crimes we need to have the EPPO in place more than ever,” he told MEPs.

“Once the EPPO is operational it will be the first European body that has investigative powers” to tackle “the likely rise in fraud against the EU’s financial interest.”

There was a high risk of fraud and he observed that “crimes against the European budget are highly complex and pose a significant threat affecting millions of citizens and thousands of companies in the EU every year.”

However just 20 staff have so far been hired at the EPPO’s office with 70 expected to be in place by the end of the year. Mr Reynders told MEPs the budget for the office would also be substantially increased for 2021.

Separately the European Commission is considering establishing an agency to tackle money laundering.

Valdis Dombrovskis, the Commission’s Economy Executive Vice President (EVP) is consulting EU members over whether to create a new supervisory body to oversee the anti-money laundering fight or hand the additional powers to the European Banking Authority.

Setting out a new action plan, the Commission wants sweeping new regulations to address the differing practices of Members States, including a reluctance by some countries to implement AML directives down the years.

In 2021 the Commission will propose ways of enhancing information-sharing between different member states’ financial intelligence authorities.

“If we want to be more effective, we need to do this at EU level,” Mr Dombrovskis told the Financial Times. “Sometimes . . . issues were falling between two national authorities and none of the national authorities were really taking charge,” he said.

The proposal for a new enforcement body, which would conduct on-site inspections and assess how legislation is implemented, would mark a significant expansion of Europe’s response to a wave of money-laundering scandals.

For some strengthening the EBA would narrow the remit of those new powers.

The commission and MEPs were furious last year when the EBA shelved its own investigation into the Danske Bank scandal despite having prepared a detailed report into supervisory failings.

Its report found four breaches of EU law in how the bank was supervised by Danish and Estonian authorities and made recommendations to the two countries for follow-up action. Instead, the EBA’s board of supervisors, the agency's key decision-making body, voted to close the investigation without adopting any findings.

Meanwhile, MEP Ramona Strugariu, the Parliament Budget Committee’s rapporteur described on Thursday how the European Commission fails to adequately monitor how funds are spent.

Two reports in 2019 said the “Commission lacks insight into the level of detected fraud and has insufficient analysis of fraud patterns and risks,” she outlined.

She also highlighted a report that said the managing authorities “generally lack anti-fraud policies, lack procedures of monitoring evaluation, prevention and detection and most importantly they under-report affecting the reliability of fraud and irregularity detection rates.”

“This is extremely worrying given that €350BILLION went” into European Cohesion Funds between 2014-2020, she said.

Ms Strugariu told fellow MEPs that it was important the EPPO became operational quickly but said she was concerned its budget was just one third of that proposed by the European Parliament.

: Justice Commissioner Didier Reynders warned of a “likely rise in fraud against the EU’s financial interest” once the planned €750 billion recovery fund comes into effect. That’s why, he said, the European Public Prosecutor’s Office (EPPO) must be set up “as soon as possible” to launch criminal investigations into such allegations.

More staff, more money: The EPPO has so far hired 20 people, with a goal of having 70 by year’s end, Reynders told the Parliament’s budgetary control committee. But he criticized a previous budget evaluation for the Luxembourg-based office as “largely insufficient” and called for a “substantial increase” for the coming years, which was “a precondition to have a truly independent and efficient public prosecutor’s office.” Hans von der Burchard has more for POLITICO EU Budget Pros.

Speaking of staff … Budgetary control committee Chairwoman Monika Hohlmeier has written to Budget Commissioner Johannes Hahn to express concern about an internal restructuring of the EU’s anti-fraud office (OLAF), which “may have implications on the office’s ability to perform its mandate and protect the financial interests of the Union,” she told Playbook. Hohlmeier said she wanted to “ensure that OLAF’s investigative capacity and staffing levels are not reduced” by what she described as a “clandestine reorganization.“