2000 Corpus Juris Special Part

Ari-Matti Nuutila: The Special Part of the Corpus Juris in Solving old and Creating new Problems in Combating EU-Fraud. In Barbara Huber (Hrsg.): Das Corpus Juris als Grundlage eines europäisches Strafrechts. Freiburg im Br. 2000, s. 177–194.



THE SPECIAL PART OF THE CORPUS JURIS IN 

SOLVING OLD AND  CREATING NEW PROBLEMS IN COMBATING EU-FRAUD ­

 

 Ari-Matti Nuutila

Professor in Law, University of Turku

 

  

 

1. Types and Scale of Fraud


No one doubts the need to take action to protect the assets of the European Union against fraud, corruption and waste. Both traditionally own resources and the VAT-based resources are inherently susceptible to fraud. The Communities[1] have an annual budget of nearly 100 billion Euros. The Commission's Annual Report for 1997 in the Fight Against Fraud stated that detected fraud and irregularities amounted for that year to one billion Euros. While official figures speak of about 1-2% of the Community's budget being lost to fraud, the real figure may be higher, even around 10%.

Both receipts and expenditure are subject to fraud. As regards receipts, the income of the Communities comprises four main elements: agricultural levies, custom duties collected on imports to the Community, a percentage of VAT[2] and a budgetary resource based on each Member State's Gross National Product (GNP). As regards customs duties and agricultural levies, these types of fraud typically involve a deliberate misstatement, for example, as to the value, tariff classification, origin and destination of the goods, given on customs declarations. The main types of VAT fraud are the failure to register for VAT, disappearance without remitting the tax charged, contrived liquidation, false export cases, and the suppression of sales in accounting in order to reduce the true tax liability.

Frauds on the expenditure side of the Community budget may involve, for example, the embezzlement of money from the Community industrial support policies, Common Agricultural Policy (CAP), the European Social Fund or from other structural fund monies.  It may also involve claiming export refunds paid in relation to CAP on a fictitious or false basis. An example of this kind of subsidy fraud is where export refunds are obtained for a consignment of butter destined under transit arrangements for a third country. The butter is improperly withdrawn from transit, using falsified documents and diverted to a Member State.[3]


2. Present Instruments in Tackling Fraud


It is generally agreed that substantial difficulties exist in prosecuting frauds against Community funds in national courts. National criminal laws and procedures are essentially territorial in scope. Problems may arise by virtue of the absence of, or differences in, substantive criminal laws, rules of evidence, or procedural rules. Furthermore, all Member States do not have laws which enable such frauds to be prosecuted extraterritorially. Also, the legal mechanisms for collecting evidence from other jurisdictions are ineffective and outdated. The process of negotiation and adoption of international agreements to harmonise substantive laws and procedures are notoriously slow.

The Commission has taken several steps in preventing fraudulent activities. UCLAF (unité de coordination de la lutte anti-fraude) was set up in 1988. Although UCLAF has been developed into an autonomous task force[4], it has no independent criminal investigative powers. Investigation and prosecution remain matters for national authorities, although UCLAF may be able to obtain assistance by exerting political pressure. On the other hand, UCLAF plays an important role in coordinating anti-fraud activities, both in the Member States as well as in some of the applicant States. In the future, these functions will probably be under the auspices of the recently founded European Fraud Investigation Office (OLAF).[5]

Furthermore, the Court of Auditors is an independent body established to ensure that Community income has been received and expenditure incurred lawfully. The Court can carry out both documentary and on-the-spot audits at Community institutions, in the Member States as well as in non-Member State recipients of developmental aid. Audits in the annual reports have revealed established and potential irregularities and fraud in the administration. In addition the Court has produced special reports on UCLAF, VAT fraud in intra-Community trade and on Agricultural Export Refunds.

It is clear that the Community institutions ought to do more to prevent fraudulent activities. But the responsibility of the Commission (and the other Community institutions) to eliminate fraud and corruption is only part of the picture. The vast majority of fraud cases involving the Community finances are committed by parties operating outside the institutions in the Member States and in third countries. National authorities are responsible for the administration of a very considerable proportion of the Community budget.[6] Furthermore, the consequences do not only affect the Community but also the Member States.

Member States have the primary responsibility for the detection, investigation and prosecution of fraud within their own territory. This legal obligation of assimilation under the Treaty is clear. Since Maastricht, Member States have been required to "take the same measures to counter fraud affecting the financial interests of the Community as they take to counter fraud affecting their own financial interest." They are also required to co‑ordinate action aimed at protecting the Community's financial interests. The Amsterdam Treaty has strengthened the requirement for the Community and Member States to counter fraud and any other illegal activities affecting the financial interests of the Community (Article 280 EC). An additional power has been given to the Council to pass legislation in order to deter fraud and provide effective protection in the Member States.

According to the Corpus Juris, assimilation does not guarantee either efficiency or equal treatment for all economic operators.[7] On the other hand, the assimilation of Community law has rapidly taken place during the last few years and is already now clearly deeper than what it was in 1996 when the expert group presented the proposal for the Corpus Juris for the first time.

According to the Corpus Juris, also traditional cooperation is ill‑suited to the fight against the sorts of organised fraud previously mentioned.[8] Traditional cooperation is organised in a bilateral rather than a multilateral context. In the latter, the current position is a complex one, with a number of conventions on the same subject drawn up by the same partners in different regional capacities (including the Council of Europe, the Nordic Countries, Benelux, and Schengen). It is very difficult to know who can do what in which country. At the same time many of the agreements have not been ratified by all Member States. Hence it is necessary to act at the Community level through the Corpus Juris.

The current situation is, however, probably not so frustrating as the Corpus Juris implies. In June 1995 the Council adopted the Convention on the protection of the European Communities' financial interests (the PFI Convention).[9] This requires Member States to amend their national criminal laws to include certain fraud offences against Community funds. It establishes a common definition of fraud and other offences which damage the Community budget. The Convention and its three Protocols also lay down rules for jurisdiction, extradition, and cooperation. Member States agreed in 1997 to implement the Convention and its Protocols by mid 1998. 

The PFI Convention has so far been ratified by at least five Member States.[10] Whatever the reasons for this rather slow procedure are, in any case the notion of the Corpus Juris, according to which cooperation is a "legislative disaster",[11] does not correspond to the facts anymore. Obviously, it is important that all Member States ratify the Convention and its Protocols as soon as possible. The common definition of fraud shall resolve the problem of double incrimination while difficulties will remain in the practical cooperation between officials from different Member States.

Furthermore, the European Union has brought forward, in pursuance of its Action Plan to combat organized crime, a proposal for a Convention on Mutual Assistance in Criminal Matters between Member States of the European Union. It would update the 1959 Convention between the EU States[12] and include provisions concerning both traditional cooperation and modern cross-border investigation methods. The draft convention also provides for new forms of cooperation, such as the use of live video links for gathering evidence and the use of joint teams.

According to the Corpus Juris, cooperation of this kind is problematic because of the "political stagnation of a process which (...) consists of building a paper wall against a problem of crime".[13] The Special European Council meeting held in October 1999 in Tampere showed that this prognosis was far too negative. The Council concluded that the principles of mutual recognition[14] and cooperation[15] should be the cornerstones of criminal matters in the EU. The Corpus Juris was not discussed in Tampere at all, while this kind of harmonization is likely to be a highly contentious and very time-consuming process. The signs indicate that the strategy which favours mutual recognition and cooperation is, at least for the time being, winning the argument. Also in this respect an important development has taken place since the Corpus Juris proposal was published in 1997.


3. General Problems of the Corpus Juris


The first general problem of the Corpus Juris is that it seems to lack a proper treaty basis required by the principle of legality. The Corpus Juris is a research study conducted by eight academic lawyers and not a formal proposal by the Commission.[16] Under Article 280(4) of the EC Treaty (as amended by Amsterdam), the Council can adopt measures "in the fields of the prevention of and fight against fraud affecting the financial interest of the Community with a view to affording effective and equivalent protection in the Member States." But such measures "shall not concern the application of national criminal law or the national administration of justice." This proviso may preclude the adoption of the Corpus Juris in the form of an EC instrument under Article 280(4) as well as under Article 308 EC. I find it rather obvious that the Corpus Juris would affect the application of national criminal laws and procedures, especially if it were to create the European Public Prosecutor (EPP) as a new European institution.[17]

Even if the power to adopt the Corpus Juris under the EC Treaty existed, it would have to pass the tests of subsidiarity and proportionality. These two principles of Community law are given legislative expression in Article 5 EC. Subsidiarity demands the Community to take action "only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale and effects of the proposed action, be better achieved by the Community." Article 5 EC also requires the observance of the principle of proportionality. Community action "shall not go beyond what is necessary to achieve the objectives of this Treaty. There has to be a real and demonstrable need for the approach set out in the Corpus Juris to justify such radical change in national criminal laws and procedures.

Second, the relationship between domestic law and the Corpus Juris is much more complicated than it appears to be. In principle it is desirable that all those accused of a particular offence should be prosecuted according to one (and the same) law and all in one court of law. The notion of a separate substantive law and procedure for Community fraud is not as such objectionable. The Corpus Juris can, however, cause serious problems. The same course of fraudulent conduct could result in two legal regimes involved in fraud cases in the same jurisdiction. The practical problems surrounding the coexistence of two legal regimes and the relationship between the EPP and the national prosecutor are obvious.[18]

On a practical level, white collar crime seldom restricts itself to only one type of offence. As a result, many cases will probably consist of fraud in respect of the Community budget, (domestic) tax fraud, (domestic) liquidation fraud and (domestic) bookkeeping crimes. The Corpus Juris contains two key rules governing its relationship with national laws and procedures. The first in Article 19 is that the EPP has overall control over all cases involving a Corpus Juris offence.[19] He must be informed of them and he decides whether to prosecute or to close the case. The EPP is also invested with the power of referring cases "which are not serious or which affect principally national interests" to the national authorities (Article 19(4)(a)). This approach is not trouble‑free. The Corpus Juris would potentially apply to a large number of cases, many of which would not have any cross‑border or international dimension. Investigators and prosecutors, working with limited resources, would be subject to competing priorities and complicated procedures.

The second rule is contained in Article 17(2). Like Article 19, it seeks to avoid conflict between European and national criminal law by giving preference to the Corpus Juris offence. Where an act constitutes an offence under the Corpus Juris and national law, "only Community regulations are to be applied." This would appear to leave no discretion to local investigators and prosecutors to take measures against the offence under national law. Article 17(2) would preclude a prosecution under national law, even where under that law there was a greater likelihood of a successful conviction.

I shall not discuss here the prosecution of these kinds of cases, because it belongs to another venue. I shall mention another problem. The range of penalties bears little relationship to those which are available in Finnish courts. In Finland and many other countries, in cases like these, only one common punishment is imposed for all the crimes. But how can you, for example, set a common fine for offences, if your domestic fine system is based on day fines and the Corpus Juris on fixed fines? Furthermore, how can you convert the unpaid fines into the so-called conversion sentence when there are fines imposed on the basis of the Corpus Juris in addition to the national day fines? This problem does not exist in the PFI Convention, in which the definitions of offences are unified to a great extent. The sanctions and procedures are regulated in a harmonizing manner.

With regard to efficiency, I wonder whether the Corpus Juris really has the impact it claims to have in fighting crimes of fraud. After all, the Corpus Juris is itself only "a paper wall against criminality"! Better cooperation between jurisdictions may be more efficient than creating new jurisdictions. The Commission has emphasised the international nature of fraud against the Community's finances and the increasing involvement of organised crime. Especially in the field of Community frauds and corruption, it is obvious that the most important developments should take place in those procedures and structures which at the moment facilitate large-scale customs and subsidy frauds due to the relatively low probability of apprehension.

The scope of application of the Corpus Juris would be limited to the territories of the Member States. The fraudulent conduct or activity in question does, however, not necessarily take place solely within the Member States. Elements of the offence may occur in third States, both in cases of subsidy fraud and customs fraud. Witnesses, evidence and assets may be situated outside the Union. The Corpus Juris does not address this problem at all. The EPP would not be able to request mutual legal assistance from countries outside the European Union.

Last but not least, the rights of the defendant seem largely to be defined indirectly by reference to minimum international standards. One particular concern is the power of remand given to the agents of the EPP. The EDPP[20] or an EDelPP[21] can request a person's remand in custody without charge or remand on bail "for a period of up to six months,  renewable for three months, where there are reasonable grounds to suspect that the accused has committed" a Corpus Juris offence "or good reasons for believing it necessary to stop him from committing such an offence or from fleeing after committing it" (Article 20(3)(g)). Though it would depend on the discretion of the national judge to decide the matter, the prospect that an individual may be held in custody, without being charged, for up to nine months is clearly unacceptable in a Rechtsstaat.


4. The Sources of the Special Part of the Corpus Juris


In general terms, the central problems of the Corpus Juris seem to be concentrated  in Part II (Criminal Procedure) rather than Part I (Criminal Law). However, the definitions of offences in the Corpus Juris would also involve some major departures from the criminal law in Finland and elsewhere in the EU. New offences would be created, some more extensive than the existing provisions. In particular, the notion of fraud would be enlarged from the existing concept, which is that of conscious dishonesty (with intent and with knowledge).

Although Part I of the Corpus Juris is nearly identical with the key provisions of the 1995 PFI Convention, Articles 1 and 10 go further than the Convention in defining fraud as including acts of gross negligence. In a situation where we do not yet have experiences of the effectiveness of the PFI Convention, one might favour a more cautious strategy, in which the requirements of the PFI would clearly form the basis of the Corpus Juris. It is rather difficult to see any justification for extending the crime of fraud in such a manner as to approximate it to gross negligence.

The rules of the Corpus Juris also follow some national criminal laws, especially the German, Italian, French and English criminal codes. The proposal refers to a "common law of synthesis." However, the overlap between the offences in Part I of the Corpus Juris and existing Nordic criminal laws seems to be rather broad. For example, the Finnish and Swedish criminal laws are not present in the footnotes of the Corpus Juris at all, probably because the comparisons have partly been made before Finnish and Swedish membership in the EU. Later on, the question of the compatibility of the Corpus Juris with the national laws has been under consideration by a group of experts for the Commission.[22] The results have not yet been published. The possible revisions to the Corpus Juris are unknown to me.


5. The Definitions of Crimes


I will not go into detail on all the Articles 1-8. Instead, I will especially concentrate on five of them, fraud in respect of the Community budget (Article 1), market-rigging (Article 2), corruption (Article 3), disclosure of secrets pertaining to one's office (Article 6) and conspiracy (Article 8). The definitions of crimes in Articles 4-5 and 7 seem to correspond rather well with the Finnish legislation.


Article 1 - Fraud in the Community Budget


If I compare Article 1 of the Corpus Juris to Finnish criminal law, the basic elements of the offences seem to differ as follows. 


 

 

 

TAX FRAUD

Finnish Criminal Code Ch. 29 Sect. 1 (19.12.1997/1228)

 

SUBSIDY FRAUD and SUBSIDY MISUSE

Finnish Criminal Code Ch. 29 Sect. 5 (13.11.1998/814) and 7 (24.8.1990/769)

 

FRAUD IN THE COM­MUNITY BUDGET

Corpus Juris Art. 1

 

Act

 

- False information

- Concealing facts

- Failing to give a declaration

- Another fraudulent act

 

- False information

- Failing to provi­de information, in breach of a specific require­ment

- An essential diverting of funds­

 

- False or imprecise or incomplete infor­mation

- Failing to provide information

- Diverting funds

 

Consequence

 

Taxation advantage or, in case of a criminal attempt, a risk of harm[23]

 

Economic advantage or, in case of a criminal attempt, a risk of harm[24]

 

Risk of harm to the Community budget

 

Mens rea

 

Intentionality

 

Intentionality

 

Intentionality, recklessness or gross negligence

 

Withdra­wal from attempt

 

Voluntary and before the act has been dis­covered

 

Voluntary and before the act has been dis­covered

 

Not necessarily vo­luntarily if done befo­re the act has been discovered


In Finland the requirements of the PFI Convention have been met by amendments to the Criminal Code in November 1998. The Corpus Juris differs from the PFI and Finnish law in three respects. First, the difference between Finnish law (and, for example, German law) and the Corpus Juris is based on the division of frauds under different articles. Logic requires, according to the Corpus Juris, the unification of tax fraud and subsidy fraud in one Article. Further, it is stated that the characteristics of both types of fraud are "absolutely identical."[25]

This may be true from a formal point of view. On the other hand, these acts are different from a social point of view. If a businessman imports goods into the Union without paying import duties, the crime is totally different from a case in which a farmer declares his fields to be larger than they really are or a small entrepreneur obtains some regional aid through false information.[26] Also the transparency and concreteness of the provisions become clearer when the two crimes are treated separately in law. The general policy in Finland has been that the classical but yet at the same time vague article on fraud is carefully defined into more and more subgroups.[27] General definitions of fraud are vulnerable to problems of interpretation.

Besides, the crimes are not always exactly identical. In tax fraud, we have (in the Finnish law) an open definition of "another fraudulent act", especial­ly in cases where the importer fails to declare his goods at customs. In all of these cases, it is not clear whether this can be conceived as "omitting to provide information (...) in breach of a requirement to provide such information" as stated in the Corpus Juris Article 1(1)(b). In taxation, the definition should perhaps be more vague than in subsidy procedures, while a great deal of the so-called "grey economy" frequently operates completely outside official registers.

Gross negligence or recklessness as criteria of the guilt requirement for fraud offence is something totally new for several Member States, including Finland. Traditionally, fraud has been defined to cover only acts committed with intent and knowledge. Surprisingly, the Corpus Juris does not present detailed reasons for deviating from the criminal laws of the Member States criminal laws as well as from the PFI Convention.

This concern is even more serious because of the broad definition of actus reus. According to the Corpus Juris, not only presenting false information (Article 1(1)(a)) but also failing to provide adequate information (Article 1(1)(b)) would be a criminal offence. Recklessness or gross negligence would be sufficient to establish mens rea even in the latter cases. A mistake would not be a defence freeing one from criminal liability (Article 11(1)).[28]

In regard to subsidy fraud, if, for example, the formulae with which the benefits are applied are unclear and do not require information on all of its relevant aspects, the procedures for delivering subsidies or grants ought to be developed. Punishing those who, without intent and knowledge, profit from weak procedures seems unreasonable. Therefore, in Finnish criminal law, failure to give information is defined as subsidy fraud only if the concealed information was specifically required to be provided in the subsidy procedure and if the applicant knew this requirement. In regard to tax fraud, the requirement of inten­tionality is based on similar reasons.

Furthermore, Article 13 (Criminal liability of the head of a business) seems to exclude any element of mens rea to the extent that an individual might be criminally liable merely because he failed to supervise a dishonest subordinate properly. Article 13 extends criminal liability to "any other person with powers of decision or control within the business," which could encompass any individual, regardless of the managerial level. Article 13(2) would seem to contemplate making a personnel director liable for recruiting someone who commits fraud on the Community budget.

It should be observed here that diverting Community funds (Article 1(1)(c)) is covered by the Finnish Criminal Code, but this is not necessarily the case elsewhere in the Member States of the EU. The case in question relates to the conversion of funds obtained for one purpose when the intention to divert these funds to another purpose was conceived after the funds had been legitimately acquired. In case of normal fraud, the intentionality requirement must be fulfilled at the time of receiving the funds. In case of subsidy fraud, the scope of application of the offence is wider.

My third main argument concerns Article 1(2), according to which a person is not punishable, "who corrects or completes a false declaration, or withdraws an application made on the basis of false documents, or who informs the authorities about the facts that he has omitted to reveal, before the act has been discovered by these authorities." This would appear to permit criminals to conspire or attempt to commit fraud with impunity in the event that they decided not to pursue their criminal enterprise. As Article 8 (conspiracy) shows, this is probably not the intention of Article 1(2), but in any case Article 8(2) would not cover attempts to defraud by individuals acting alone.[29]

This Article seems to be clearly at odds with the law of attempted crime in several Member States. According to Finnish law, an attempted tax or subsidy fraud is equivalent to a successful offence. In these kinds of offences, the success of the offender is not so much dependent on the dangerousness of the act, as on the activity of the officials. In most of the Member States there is a doctrine of voluntary withdrawal from an attempt to commit a crime. I don't see any reasons why the requirement of voluntariness could not be applied here too, because it is precisely tax and subsidy frauds that have traditionally been model examples of this defence.

Even if the definition of Article 1(2) were to be accepted, it would be difficult to decide when exactly the act "has been discovered" by the authorities. Has the crime been discovered when the authorities come to the company to inspect the company as part of a routine procedure? Probably not, and "a change of heart, even late in the day," as the proposal states,[30] would be a defence. Is the situation similar if the inspector already suspects that the Community's resources have been violated and inspects the bookkeeping? What is the relevance of the offender's knowledge about his/her crime being discovered? What if the offender only thinks his offence has been discovered, although in reality this is not the case?

It can be observed here that the same surprisingly lenient policy (compared with the overall severity of the Articles) can also be seen in Article 19(4)(b), according to which the EPP may drop the case, if the accused, having admitted guilt, has made amends for the damage caused and returned funds received illegally. Though the Finnish prosecutors have similar powers in some cases, the policy is nevertheless usually to prosecute offences involving long-term planning and professionals. There may even be a danger that the potential perpetrators will be induced to the Community budget rather than domestic public budgets if he or she thinks that he will be able to "buy his way out of trouble".


Article 2 - Market-rigging


Article 2 would extend the criminal law to conduct which in Finland is mainly subject to civil and administrative procedures. This does not mean that the Article cannot be accepted. Its need should, however, be evaluated more carefully. Particular concern must be expressed when considering the relationship of administrative and criminal sanctions.

If the same protection can be given by means of a less radical measure, criminal law should not be used. The ultima ratio principle presupposes that the use of criminal law, including the Corpus Juris, is limited to situations where there are no other reasonably cheap and morally acceptable ways of achieving criminal policy goals.


Article 3 - Corruption


The intentionality requirement of passive corruption (Article 3(3)) is defined very restrictively. The act must be undertaken "in order to carry out" or "not to carry out an official act or act relating to his duties," in breach of his official obligations. In Finland and in many other Member States, financial or other benefits are not allowed, which are conducive to influencing the official in his/her official duties. The benefit does not need actually to have influenced the official's decision making, nor is it required for the prosecutor to give full proof of the intentions of the official. It is sufficient that the financial benefit or other advantage might have influenced the official and the official is aware of the nature of the benefit. The same applies to active corruption (Article 3(4)).

The reason for the wide Nordic scope of application for the corruption article is obvious. The functions of officials must not only be impartial and objective, they must also be seen to be impartial and objective. In this respect, corruption of Community officials would in the future be more often permitted than that of domestic officials - a situation probably not intended in the Corpus Juris proposal.


Article 6 - Disclosure of secrets pertaining to one's office


The definition of disclosure of secrets pertaining to one's office (Article 6) is drafted in the Corpus Juris in rather broad terms. The concept "secret" information is not defined in the Article at all. Instead, the Article is meant to apply to all information "acquired by or in the course of the official's profession or office."[31] The persons bound to secrecy, the matters to be kept secret, the acquisition of information as well as the mode of disclosure - all "are understood in a broad sense" in the Corpus Juris.[32]

The need for the imposition at the Community level of such an all-embracing rule of secrecy can be questioned. According to the Article, information is prima facie secret. This starting point can be overturned in cases where the law or a regulation imposes or authorizes disclosure of the secret. In the Nordic countries the main rule is fundamentally different: information is public unless otherwise regulated in law or general regulations. In effect Article 6 might prevent rather than facilitate the detection of fraud. The Article may also be in some cases in conflict with the Nordic principle of openness because it is not restricted to business secrets.


Article 8 - Conspiracy


Article 8 has been, according to the proposal, based on Italian criminal law and legal theory. Similar models can be found also in the USA and England. In comparison to the English doctrine, Article 8 defines "conspiracy" rather restrictively. The need to prove the involvement of an organisation rather than an agreement might make the offence incapable of successful prosecution. On the other hand, in Finland preparation of a financial crime is not a crime at all.[33]

Because national differences between the Member States are significant in this issue, the most promising model for the definition of conspiracy is in the Joint action of 21 December 1998 adopted by the Council on making it a criminal offence to participate in a criminal organisation in the Member States of the European Union.[34] This model corresponds more closely (although not perfectly) with the Finnish principles of criminal law than the model presented in the Corpus Juris.

According to Article 1 of the Joint action, a criminal organisation is "a structured association, established over a period of time, of more than two persons, acting in concert with a view to committing offences which are punishable by deprivation of liberty or a detention order of a maximum of at least four years or a more serious penalty." In the Corpus Juris (Article 8) two persons meet the crime definition and the Article can also be applied to offences which are not serious.[35]

Furthermore Article 2(1) of the Joint action defines the required mens rea in precise language. When the Corpus Juris definition refers in broad terms to a "view to carry out" an offence, the Joint action restricts punishment to cases where a person "with intent and with knowledge of either the aim and general criminal activity of the organisation or the intention of the organisation to commit the offences in question" is prosecuted.

An important difference between the Corpus Juris and the Joint action is the activeness required in the definition. Article 2(1) of the Joint action requires that the person "actively takes part in the organisation's criminal activities" or "the organisation's other activities in the further knowledge that his participation will contribute to the achievement of the organisation's criminal activities".[36] Furthermore, if the offences concerned are not actually committed, participation in a criminal organisation shall be, according to the Joint action, defined as a crime only if the general principles of the criminal law of the Member State concerned allow such a broad definition of a crime.[37]

In the proposal, it is stated that Community budget crime is often carried out within the framework of "highly complex criminal organizations."[38] This discovery, it would seem to follow, justifies introducing the offence of conspiracy. But for this purpose the scope of punishable behaviour does not have to exceed the requirements of the Joint action of 21 December 1998.


6. Conclusions


Rational discussion in criminal policy matters requires empirical knowledge of the criminality in question. Despite the growth of public interest in EU-fraud, there has been surprisingly little criminological research on its nature, character, and extent. If we would know more about the frauds and irregularities in Community budget, we could define the goals of criminal policy in a precise way. We would also have better possibilities of choosing well-founded means of achieving the adopted goals.

Professor Ulrich Sieber conducted in 1994-1996 a criminological study of EU-frauds. Sieber concludes that the most effective measures of combatting fraud in the future will be the reduction of the total volume of subsidies.[39] Where this is not possible, efforts should be made to make the procedures and rules less complicated and pay the subsidies directly to the beneficiaries. Professor P. O. Träskman has drawn approximately the same conclusions in Sweden.[40] Improved crime prevention, increased risk of getting caught, international police cooperation and development of court procedures are more effective strategies than new criminal codes or officials in combatting crime.

In fact it is rather surprising that the Corpus Juris does not discuss the problems of crime detection at all. The Corpus Juris does not even attempt to remove the obstacles in the pre-trial stage of police investigation, although the risk of getting caught seems to be extremely low in the field of EU-fraud. To tackle this problem, practical cooperation and mutual recognition of court decisions (discussed above in chapter 2) offer the best way forward in the foreseeable future.

Furthermore, the possibilities which the European Union has in preventing crime are omitted from this analysis. The victim (the European Community and its institutions) should minimize the crime risks by developing subsidy and customs procedures. Approving subsidies and awarding contracts could be organized more effectively. Moreover, the accountability in the bureaucracy of the Commission could be clearer. The customs procedures could become less vulnerable to large scale fraudulent conduct.

Instead, defining crimes in a more consistent manner, setting more stringent penalties[41] in EU-fraud matters and placing criminal proceedings in the hands of a European Public Prosecutor seem to be the key points of the Corpus Juris. I have doubts that the Corpus Juris will not provide answers to problems of fraud prevention.



[1] Strictly speaking, each of the three Treaties establishing the Communities (ECSC, EC and EURATOM) makes provision for a budget or budgets. They are brought together as "the budget of the European Communities" by the Financial Regulation.

[2] Because of national differences in VAT rates, adjustments are made in order to determine a common "VAT base" to be applied by all Member States. Currently the "call in" rate which is applied to the VAT base is 1%. Therefore in relation to VAT fraud, the loss to the national budget is far greater than to the Community.

[3] Another typical subsidy fraud case is where hazelnut oil is imported as sunflower oil and used to dilute olive oil. The olive oil is then placed on the market and consumption aid is collected on the entire product.

[4] At first UCLAF was a small co-ordinating unit in the General Secretariat of the Commission. In 1995 all anti-fraud activities of the Commission were centralized to UCLAF. The next important step came in 1998 when UCLAF's status within the Commission changed from that of a department to a task force which can deal directly with national police authorities.

[5] The Commission proposed the European Fraud Investigation Office originally to the Vienna European Council in 1998 and adopted an amended proposal in spring 1999. As regards "internal investigations", the Office would have the right to initiate inquiries and have access to information kept by the institutions on their premises. The Office would also have powers to conduct "external investigations" in the Member States. Here it would have to abide by existing Community regulations providing for inspections and on-the-spot checks in order to detect fraud and irregularities.

[6] Only about 12% of Community expenditure (i.e. as foreign aid, research and development social funds) is directly managed by the Commission. Less than 6% relates to the administrative costs of the Commission and the other institutions. See The Fight Against Fraud. Annual Report 1997, p. 7.

[7] Mireille Delmas-Marty (ed.), Corpus Juris. Introducing penal provisions for the purpose of the financial interests of the European Union (1997) p. 40.

[8] Corpus Juris (1997) supra note 7, on p. 40.

[9] Official Journal C 316, 27/11/1995 p. 0049 ‑ 0057.

[10] Germany 24.11.1998, Finland 18.12.1998, Austria 21.5.1999, Sweden 10.6.1999 and the Great Britain 11.10.1999

[11] Corpus Juris (1997) supra note 7, on p. 26.

[12] The 1959 Convention is not an EU Convention but a Council of Europe Convention.

[13] Corpus Juris (1997) supra note 7, on p. 38.

[14] This is the model of cooperation which the Nordic countries have promoted for several decades. Mutual recognition means that decisions or orders issued by a criminal court in one EU Member State, based on its legal system, would be recognized by another Member State and could be enforced there. The key underlying principle is that Member States have confidence in each other's legal systems.

[15] To mention one concrete example, there was an agreement in Tampere to create a "Eurojust" institution, made up of prosecutors and investigators from the Member States, in order to support national investigations into organized crime and to promote coordination between national prosecuting authorities. The Council also called for the establishment of a European police chiefs' operational task force to exchange (in cooperation with Europol) experiences, methods and information on current trends in cross-border crime.

[16] In fact there were only seven professors involved in the entire process. Although not indicated in the publication (Corpus Juris (1997) supra note 7), the Swedish professor Nils Jareborg did not remain in the group until the end.

[17] The provisions of Title VI of the Treaty on European Union provide another possible legal basis for the Corpus Juris. Article 29 TEU envisages common action among the Member States in the field of police and judicial cooperation in criminal matters to combat, inter alia, corruption and fraud. Such action might include, under Article 31(e) TEU, establishing minimum rules relating to the constituent elements of criminal acts and penalties in the field of organised crime. It might be possible to bring certain elements of the Corpus Juris within the scope of Article 31 TEU.

[18] For example, collecting evidence under different sets of rules would cause problems. Creating different rules of evidence for different types of cases, depending on the offence involved, would complicate the investigation and prosecution of fraud.

[19] It should be noted that the Corpus Juris, as drafted, covers all frauds against Community funds and is not limited to major frauds having a substantial international element.

[20] European Director of Public Prosecution, whose offices would, according to Article 18(3), be based in Brussels.

[21] European delegated Public Prosecutors, whose offices would, according to Article 18(3), be based in each Member State.

[22] Comité de suivi.

[23] Protecting both the domestic public budgets and the European Communities' budget in respect of revenue. See Finnish Criminal Code Ch. 29 Sect. 9 (13.11.1998/814) Par. 1.

[24] Protecting both the domestic public budgets and the European Communities' budget in respect of expenditure. See Finnish Criminal Code Ch. 29 Sect. 9 (13.11.1998/814) Par. 2.

[25] Corpus Juris (1997) supra note 7, on p. 48.

[26] In some exceptional cases is it not clear, whether the act violating Community's resources is a tax fraud or subsidy fraud.

[27] At the moment, we have articles in the Finnish Criminal Code on fraud (Ch. 36 Sect. 1), tax fraud (Ch. 29 Sect. 1), subsidy fraud (Ch. 29 Sect. 5), liquidation fraud (Ch. 39 Sect. 2) and "payment card" fraud (Ch. 37 Sect. 8).

[28] It should also be noted that Article 11(2) provides that a mistake concerning the existence of a legal prohibition or its interpretation excludes liability if the mistake were unavoidable. If avoidable, the penalty would be reduced. This is contrasted with the Finnish position where a mistake as to the law would not normally constitute a defence or lead to an automatic reduction of the penalty at all, but may, if excusable, be merely taken into account.

[29] Article 1(2) provides a very large freedom of punishment in cases of withdrawal of an attempt, but in Article 8 there is a general provision for conspiracy. According to Article 8, the setting up of a necessary organization with a view to carrying out Community fraud is a criminal offence.

[30] Corpus Juris (1997) supra note 7, on p. 50.

[31] Corpus Juris (1997) supra note 7, on p. 58.

[32] Corpus Juris (1997) supra note 7, on p. 58.

[33] There are some exceptions to the main rule. In cases of arson, has preparation of a serious offence been defined as a special offence. Normally the punishability does not begin until a criminal attempt has been committed.

[34] Official Journal L 351, 29/12/1998 p. 0001 ‑ 0003. In Finland, the Government submitted its Proposal 183/1999 concerning Joint action to the Parliament in December 1999. The legislative process is at the moment unfinished.

[35] In the Corpus Juris offences cannot be separated according to their seriousness, because the same penalties (in normal cases imprisonment for a maximum of five years and/or a fine of up to one million Euros; in aggravating circumstances mandatory imprisonment up to seven years!) apply to all offences irrespective of their seriousness.

[36] Joint action does not prevent a Member State from making punishable conduct in relation to a criminal organisation of a wider basis. In this case conduct by any person consisting in an agreement that an activity should be pursued which, if carried out, would amount to the commission of a serious offence, even if that person does not take part in the actual execution of the activity. See Article 2(1)(b).

[37] The starting point of the above (supra note 34) mentioned Finnish Government Proposal 183/1999 is active participation as well as the requirement of the offence actually being committed. The provision will be in Chapter 17 Section 1a of the Finnish Criminal Code.

[38] Corpus Juris (1997) supra note 7, on p. 60.

[39] Ulrich Sieber, Euro-fraud: Organized fraud against the financial interests of the European Union, Crime, Law & Social Change 1998, p. 32.

[40] P. O. Träskman, "Corpus Juris" - Ett frestande eller ett främmande förslag till en enhetlig europeisk straffrätt? Nordisk Tidskrift for Kriminalvidenskap 1997, pp. 262 et seqq.

[41] In a proposal based on establishing a more stringent criminal justice system, there should be at least an evaluation of the preventive benefits of the new system. This is missing from the draft Corpus Juris. 

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