The fight against corruption is at the forefront of the European legal scenario: the work of the EPPO
The European Public Prosecutor’s Office (EPPO), an independent body of the European Union which investigates and prosecutes criminal offenses that affect the EU’s financial interests, became fully operational only in 2022. As stated in its yearly report, its innovative role grants EPPO “an unprecedented capacity to identify and trace volatile financial flows and opaque legal arrangements.” 1
While EPPO’s activities last year showed the strength of its investigative and prosecution efforts, we can confidently predict that the fight against such crimes – and especially bribery and corruption – will be at the center of the EU’s strategic interests in the next few years.
Notably, the fight against corruption is part of the EU Commission Work Programme for 2023; the Commission has announced a proposal for a new EU Directive focusing on these efforts as part of its strategic headline for “a new push for European democracy.” 2
These developments put the fight against corruption at the center of the European debate.
1. The EPPO: scope of competence and recent successes
The EPPO, whose functioning is mainly regulated by Directive (EU) 2017/1371 and Regulation (EU) 2017/1939, is the first independent, fully empowered public prosecution office of the European Union. Its predecessors, such as Eurojust, OLAF and Europol, lacked the necessary powers to conduct criminal investigations and prosecutions.
The EPPO’s scope includes, among others:
- passive and active corruption damaging the EU’s financial interests, when committed intentionally
- VAT revenue fraud
- misappropriation of EU funds or assets
- money laundering and organized crime
- additional crimes related to the offenses above.
The EPPO carries out its duties through a network of appointed European Delegated Prosecutors, acting within their member state jurisdictions and having the same powers as a national Public Prosecutor. This allows them to proceed efficiently by coordinating local and central resources.
By way of example, some of the recent cases handled by the EPPO have included:
- Investigating three Croatian citizens on suspicion of receiving and giving bribes for the granting of a tender concerning a project co-funded by the EU; the bribes amounted to a total of EUR23 million 3
- Investigating suspected corrupt practices and manipulation of public contracts at a regional museum in the Czech Republic, also entailing several search operations and the seizure of EUR16,400 4
- Directing investigative operations conducted by the National Anti-Corruption Unit of Portugal’s Judiciary Police on the organization of an event funded with EU grants. That investigation uncovered facts potentially constituting crimes of subsidy fraud, active and passive corruption and financial complicity in business fraud by a public official 5
- Freezing the bank accounts of an Italian company suspected of fraud involving EU and regional funds exceeding EUR70,000, in execution of a judicial seizure decree issued following an EPPO’s request 6
2. The EU Commission is strategically prioritizing the fight against corruption
As anticipated, the Commission’s Work Programme for 2023 includes a proposal for a new Directive to update the EU’s legislative framework on the fight against corruption. The European Commission presented in May and sought public approval for this proposal7, which aims to adjust relevant European legislation to the principles of the United Nations Convention Against Corruption. The Proposal would ensure, among other factors, that:
(i) All forms of corruption are criminalized in all member states
(ii) Legal persons may also be held responsible for such offenses
(iii) Penalties for these offenses are effective, proportionate, and dissuasive.
Along with such a proposal, the Commission has also recently promoted the Handbook on Good Practices in the Fight against Corruption, which arose from a research initiative mapping a variety of anti-corruption practices in EU member states that have “proved to be useful in solving problems related to corruption, and which can inspire similar initiatives elsewhere.” 8
Several of these practices imply the involvement of entities that work directly with the public sector and that are thus required to adapt an enhanced compliance framework to prevent bribery and corruption. Some relevant examples include:
- The Swedish Multi-stakeholder Agreement to Counter Bribery and Corruption in Healthcare, entered into by three large employer-based organizations for education and whistleblowing protection initiatives
- The Slovakian Register of Public Sector Partner, whereby all private sectors companies engaged in public procurement are obliged to disclose their beneficial owners; in the event of an investigation, corruption could thus be traced to the roots of possible shell companies
- The German Alliance for Integrity, a multi-stakeholder initiative, consisting of private and public sector and civil society representatives and seeking to promote transparency and integrity and the co-creation of regulatory frameworks, initiated by the Federal Ministry for Economic Cooperation and Development and the Federation of German Industry.
The EU’s centralization of investigative and prosecuting initiatives in the EPPO and the update of the relevant EU legislative framework are both clear indicators that the fight against corruption is progressively gaining a leading role at the European level.
Indeed, the EU is increasingly sharpening its focus on the fight against those crimes – including bribery and corruption – not only because they affect European financial interests, but, more importantly, because they damage trust in public institutions and social development and frustrate the aspiration towards a culture of ethics.
In this perspective, corporations operating in Europe should expect that they will face ever stronger requirements to either adopt or update their internal control systems to adequately mitigate bribery and corruption risks – especially in light of the possible triggering of corporate criminal liability.
Should you wish to find out more about how to effectively manage the risks at hand, please feel free to reach out any of the authors or your DLA Piper relationship attorney for assistance.
1 EPPO Annual Report 2022, 1 March 2023, pag. 5. Available at: https://www.eppo.europa.eu/sites/default/files/2023-02/EPPO_2022_Annual_Report_EN_WEB.pdf
2 Commission Work Program 2023, par. 3.6, pag. 11. Available at: https://commission.europa.eu/system/files/2022-10/com_2022_548_3_en.pdf; see, also, Annex I: New Initiative, pt. 42, pag. 4. Available at: https://commission.europa.eu/system/files/2022-10/com_2022_548_1_annexe_en.pdf
3 European Public Prosecutor’s Office (europa.eu), Update: Three arrested in Croatia on suspicion of receiving and giving bribes in multi-million euro infrastructure project, 15 July 2022. Available at: https://www.eppo.europa.eu/en/news/update-three-arrested-croatia-suspicion-receiving-and-giving-bribes-multi-million-euro
4 European Public Prosecutor’s Office (europa.eu), Corruption and manipulation of public contracts at museum in Czechia, November 30, 2021. Available at: https://www.eppo.europa.eu/en/news/corruption-and-manipulation-public-contracts-museum-czechia
5 European Public Prosecutor’s Office (europa.eu), Portugal: EPPO carries out searches in investigation into €880 000 fraud involving EU funds, March 9, 2023. Available at: https://www.eppo.europa.eu/en/news/portugal-eppo-carries-out-searches-investigation-eu880-000-fraud-involving-eu-funds
6 European Public Prosecutor’s Office (europa.eu), Italy: EPPO seizes bank accounts in investigation for fraud of over €70 000, November 25, 2022. Available at: https://www.eppo.europa.eu/en/news/italy-eppo-seizes-bank-accounts-investigation-fraud-over-eu70-000
7 European Commission (europa.eu), The European Commission asks for the public’s view in the fight against corruption, January 20, 2023. Available at: https://home-affairs.ec.europa.eu/news/european-commission-asks-publics-view-fight-against-corruption-2023-01-20_en
8 O. Huss et al., Handbook of good practices in the fight against corruption, European Commission, February 15, 2023, pg. 14. Available at: https://home-affairs.ec.europa.eu/news/handbook-good-practices-fight-against-corruption-2023-02-15_en
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