The World Ahead 2022
The EU’s new anti-corruption cop will start prosecuting scammers
The union has long needed someone to go after those stealing its money
IN 2021 THE EU acquired something it had been sorely missing: an agency to go after people who steal its money. The new European Public Prosecutor’s Office (EPPO) can try anyone involved in abuses of €100,000 ($116,000) or more of EU funds. The bloc has long had an office to investigate fraud (OLAF), but to prosecute cases it had to turn them over to member states, which usually dropped them. In its first few months the EPPO has launched more than 300 investigations involving total damages of €4.5bn. In 2022 it expects to start indicting and convicting people.
Many of the EPPO’s investigations target embezzlement or kickbacks in EU subsidies and contracts. Its first one involved a Croatian mayor who allegedly took bribes when awarding a €562,000 contract for a recycling centre. Others involve customs duties and VAT, which are administered by the EU. In September the EPPO reported a scheme to evade VAT on imported covid-19 protective gear to the Italian authorities, who seized €11m from the accused companies’ owners. Anomalies in trade figures suggest that VAT fraud in the EU could amount to tens of billions of euros per year.
Bogus contractors and tax fraudsters are the EPPO’s bread and butter. But its most complex job is taking on corrupt politicians who pocket EU funds or use them to reward cronies. Such systemic corruption is especially common in countries such as Hungary and Bulgaria where the government has gained control over the justice system. The EPPO’s prosecutors are independent, but they must try cases in member states’ courts. Four of the EU’s 27 states have no plans to join the EPPO (Sweden will sign on in 2022). They include Hungary, which has the highest rate of fraud involving EU funds.
One case to watch will be that of Andrej Babis, a billionaire who is the outgoing Czech prime minister. For years a conflict-of-interest case against him by Czech magistrates has been stalled. It concerns tens of millions of euros in EU subsidies received by companies he formerly owned. They have now turned it over to the EPPO. In a separate matter, the “Pandora papers” investigation alleged Mr Babis moved $22m through shell companies secretly to buy a villa near Cannes. He denies any impropriety.
The EPPO is especially important because the EU’s budget is rising dramatically. The bloc’s covid-recovery fund will distribute €800bn before 2027, creating big economic opportunities—but also new chances for scammers. One aim of the EPPO is to give the EU’s donor countries confidence that the money they contribute will be spent properly.
Matt Steinglass: Europe correspondent, The Economist, Amsterdam■
This article appeared in the Europe section of the print edition of The World Ahead 2022 under the headline “One cop to nab ’em all”