European prosecutor to tackle fraud against EU budget

Olaf anti-fraud chief Giovanni Kessler
Image caption The EU's Olaf agency investigates fraud but has limited powers

A new European Public Prosecutor's Office will be set up to fight fraudsters who target the EU budget, the European Commission says.

Anti-fraud measures will be harmonised across the EU, because currently such efforts vary too much from country to country, the Commission says.

The UK, Republic of Ireland and Denmark will not participate in the scheme.

On average more than 500m euros (£432m; $657m) of EU budget funds is lost to fraud annually.

The EU budget for 2013 totals 132.8bn euros, most of it allocated to agriculture and development projects in the EU's poorest regions.

In a BBC interview, EU Justice Commissioner Viviane Reding said the new prosecutor's office would prevent fraudsters avoiding prosecution by fleeing to a neighbouring EU country.

"In the future this will be prosecuted in all member states at the same level, so that international criminality cannot have a hiding place anymore," she said.

She stressed that criminals would still be prosecuted in national courts, under national law.

When asked about the UK's opt-out, she said "it does not really help the British taxpayers that they are not part of a system that protects the taxpayers' money".

'Federal' move

The EU's Lisbon Treaty gives legal foundation for a European Public Prosecutor's Office, and the aim is to have it in place by 1 January 2015.

But the new office can only be set up once all the participating states have agreed to it in the EU Council, and after approval by the European Parliament.

If there is no unanimity among governments it can still go ahead if at least nine states want it, under the EU's enhanced co-operation mechanism.

The UK Conservatives oppose the plan. Timothy Kirkhope MEP, the Conservatives' justice spokesman in the European Parliament, said "the British government will have our support in seeking to halt the Europeanisation of our justice system.

"This is a step too far down the road towards a federal super-state, with USA-style federal prosecutors," he argued.

The Commission - the EU's executive and treaty watchdog - says the new authority is needed because the EU's anti-fraud office Olaf cannot prosecute fraud cases, it can only pass on its findings to national authorities. Conviction rates vary considerably across the 27-nation EU, the Commission adds.

The Commission says European prosecutors will work alongside existing national judiciary staff, in a "decentralised structure". The arrangement "is based on existing resources and should therefore entail no substantial additional costs", a Commission statement said.

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