Changes from report parliamentary committee draft to plenary report

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

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with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Public Prosecutor’s Office for the financial year 2022

(2023/2139(DEC))

The European Parliament,

– having regard to its decision on discharge in respect of the implementation of the budget of the European Public Prosecutor’s Office for the financial year 2022,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the opinion of the Committee on Legal Affairs,

– having regard to the opinion of the Committee on Civil Liberties, Justice and Home Affairs,

Changed– having regard to the report of the Committee on Budgetary Control (A90000/2024),(A9-0117/2024),

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ChangedA. Whereaswhereas the European Public Prosecutor's Office (EPPO) is the independent public prosecution office of the Union and is responsible for investigating and prosecuting crimes against the financial interests of the Union and bringing to judgment the perpetrators of, and accomplices to, criminal offences provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law and indicated by Council Regulation (EU) 2017/1939 of 12 October 2017, implementing enhanced cooperation on the establishment of the Office;

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ChangedB. Whereaswhereas the competence of the EPPO encompasses several types of fraud, and includes amongst them VAT fraud with damages above EUR 10 million, money laundering, corruption and others in which regard the EPPO exercises the functions of prosecutor in the competent courts of the participating Member States, until the case has been finally disposed;

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ChangedC. Whereaswhereas the EPPO is one of the component of the European Union Anti-Fraud Architecturearchitecture and, as such, its actions are coordinated with and complementary to those of the other components of said architecture, to achieve a final result which is bigger than the sum of its parts;

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ChangedD. Whereaswhereas the EPPO intervenes in a scenario where only national authorities could investigate and prosecute these crimes, but their prerogatives stopped at the borders of their country, and other organisations like Eurojust, OLAF and Europol had not the necessary powers to carry out the relevant criminal investigations and prosecutions;

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ChangedE. Whereaswhereas the procedural acts of the EPPO are subject to judicial review by the national courts and the Court of Justice of the European Union (the Court of JusticeJustice’) – by way of preliminary rulings or judicial reviews of those acts – has residual powers to ensure a consistent application of EU law;

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ChangedF. Whereaswhereas the EPPO is composed of a central level, with its headquarters in Luxembourg, consisting of the European Chief Prosecutor, 22 European Prosecutors (one per participating EU country) and the Administrative Director, and of a decentralised (national) level consisting of the European Delegated Prosecutors (EDPs) in the 22 participating EU Member States;

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ChangedG. Whereaswhereas at the central level the European Chief Prosecutor and the 22 European Prosecutors compose the College of the EPPO and supervises the investigations and prosecutions carried out by the EDPs at the national level, who operate with complete independence from their national authorities;

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ChangedH. Whereas,whereas, under Article 93 of Regulation (EU) 2017/1939 the EPPO Administrative Director, acting as the authorising officer of the Office, shall implement its budget under its own responsibility and within the limits authorised in the budget and shall send each year to the budgetary authority all information relevant to the findings of any evaluation procedures;

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ChangedI. Whereas,whereas, in accordance with Article 50(2) of the EPPO's Financial Rules, the Accounting Officer of the Commission shall also act as Accounting Officer of the EPPO and is responsible for the preparation of the annual accounts, which are consolidated with those of the Union;

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ChangedJ. Whereas,whereas, under the current framework, the final annual accounts are scrutinised by the Court and it is with the Council to recommend and to the European Parliament to decide whether to grant discharge to the Administrative Director of the Office in respect of the implementation of the budget for a given financial year;

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ChangedK. Whereaswhereas the Office started its operational activities on the 1st of June 2021 and it operates autonomously in the implementation of its budget only since 24 June 2021, and that this short timeframe allows a limited comparative analysis and trend identification;

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ChangedL. Whereaswhereas the rules governing the management of the EPPO resources and related expenditure need to be adjusted to the peculiarities of prosecution and investigative actions and the relevant provisions of the Financial Regulation are being discussed within the recast of that regulation and, in a wider context, between the EPPO and the Commission;

1. Welcomes the European Court of Auditors’ positive opinion on the reliability of the EPPO’s accounts for the year ended 31 December 2022 and on the legality and regularity of the underlying revenue and payments;

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Added2. Recalls the Parliament’s strong support for the establishment of the EPPO; acknowledges the important role of EPPO as an independent Union body and stresses the particular responsibility that this imposes on it towards the other institutions and the public at large in the areas falling within the remit of the legal system; highly respects and expresses appreciation for the work that the EPPO does in investigating, prosecuting and achieving justice for crimes against the Union budget and the financial interests of the Union such as fraud, corruption and serious cross-border VAT fraud; recognises the important role that the EPPO plays in contributing to the protection of the financial interests of the Union and, in particular, the budget of the Union; recalls that the unique role of the EPPO in the Union law enforcement framework as a prosecution service creates an obligation for the EPPO to investigate all matters under their competence, when brought to their attention;

Budgetary and financial management

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Changed2.3. Notes that the overall final budget allocated to the EPPO for 2022 was EUR 51.251,2 million, reduced from the initial endowment amounting to EUR 57.157,1 million, and sensibly increased from the EUR 35.435,4 million allocated in 2021; remarks that the returned amount of EUR 5.95,9 million (representing 10%10 % of the initial budget for 2022) is an improvement compared to 2021, when EUR 9.59,5 million was returned to the Union’s budget (representing 21%21 % of initial budget for 2021); observes that such amount was gradually returned in 2022 because in part it was overestimated in respect of the effective needs (for linguistic service it was 65%65 % higher), in part it was impossible to use it for the reimbursement of the participating Member States’ exceptionally costly investigations, for example Article 91(6) of Regulation (EU) 2017/1939 (prevented by the Financial Regulation until a derogation was granted in 2023) and, finally, because of the delayed launch of selection and recruitment of new members of staff (which should have been planned in 2021 but became possible only later, when the budget 2022 was adopted);

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Changed3.4. Notes that it is only possible to compare the budgetary performance of the EPPO for the period following its financial autonomy, which began in June 2021; welcomes the satisfactory level of budget implementation of 98.1%98,1 % of commitment appropriations (against 97.4%97,4 % in 2021) and of 76.6% of payment appropriations (compared to 78.2%78,2 % in 2021); appreciates that the overall execution rate for payments progressed in 2022 with 76.6%76,6 % of paid appropriations completed in the final budget, compared to 71%71 % in 2021; observes that the average payment time increased to 23.823,8 days in 2022 compared to 21.021,0 days in 2021 and understands that this trend is linked to the substantial increase in payment requests processed in the year (2 316 payment requests compared to 657 in 2021 represents an increase of 252%);252 %); encourages the EPPO, once again, to further implement the electronic invoicing module (e-invoicing) which only started in 2023, to reduce administrative burdens, time-to-payment and the overall processing costs;

5. Observes that, following the achievement of its financial autonomy, in June 2021, the EPPO has prioritised the operational expenditure related to investigation, prosecution and security measures, limiting non-operational expenditure to essential compliance requirements and basic level support services;

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Changed5.6. Remarks the upward trend in a number of operational expenditure lines; notes that the remuneration of the European Delegated Prosecutors reached EUR 8.78,7 million, and it represents the main operational expenditure because of the increased number of European Delegated Prosecutors in place over 2022; observes that missions and operational meeting costs represented 5.2%5,2 % of the operational expenditure (EUR 1.11,1 million) compared to 2.9%2,9 % in 2021, and for missions alone the increase in 2022 compared to 2021 (after the EPPO gained financial autonomy) was 170%,170 %, as a consequence of the increase in staff and external activities in the first full year of operations; also notes that EUR 2.82,8 million was committed for translation services, representing 14%14 % of the operational expenditures,expenditure, compared to 7.6%7,6 % in 2021; recognises the need for additional resources for translation given the expected increase in investigative cases in the following years; asks the EPPO to inform Parliament about its plans to further expand the use of automated translation services by the ‘translation portal’ developed internally and by the increased use of national sworn translators paid for by the participating Member States;

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Changed6.7. Observes that a forecast of the expenditure related to the EPPO’s activities is very complex because of the level of detection of fraud, the typology and nature of the cases, the EPPO’s efficiency in leading investigations and prosecutions in consideration of their mandatory nature and of the national judicial systems’ procedures and constraints, the lack of a fixed correlation between the number of investigations and their costs, and last but not least, the magnitude of the financial interests of the Union that are to be protected;protected, including Poland and Sweden’s plans to join the EPPO; also observes that it is difficult to estimate the forecast of expenditure for the caseload related to the Recovery and Resilience Facility (RRF)-because(RRF) because of the unprecedented implementation mode and sheer volume of resources;

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Changed7.8. RecallsReiterates its call to factor in the impact of the deployment of the RRF in the forecast that the EPPO is to communicate to the Commission in the framework of the budgetary procedure; shares the view that the workload of the EPPOEPPO, initially underestimated, has gone through a significant growth and will continue to increase in the coming years, in particular with regard to the number of RRF cases (only 15 cases were opened in 2022, but more will be opened in 2023 as it reaches its’ implementation peak) and that a larger number of cases in the trial phase will require a different focus than those in the investigation phase;

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Removed8. Regarding the amount of resources allocated to the EPPO, is of the opinion that the budgetary and human resources allocated should be adequate to allow the efficient carrying out of its mission and the normal handling of the related administrative procedures, and calls on the Commission to engage in a dialogue with the EPPO to find adequate ways to support it in its work, with the knowledge that in the context of a growing number of complex cases, additional resources will be needed; notes that, also in this regard, an increasing number of legal challenges are expected, calling into question the interpretation of the EPPO’s legal framework and its integration into the Member States’ judicial systems or before of the Court of Justice of the European Union;

Added9. Acknowledges that the EPPO clearly contributes to European added value in terms of coordination and cooperation with the Member States in investigating and prosecuting crimes against the financial interests of the Union and that the EPPO has been achieving the goals set out in Regulation (EU) 2017/1939 of 12 October 2017 in that regard; expects Member States to comply with legal obligations and to report all relevant cases to the EPPO; notes with concern that in several instances Member States have been declaring criminal offences affecting the financial interests of the Union as national cases, which are within the competence of the EPPO; notes that questions of competence between the national authorities and the European Delegated Prosecutors have come up in several cases across several countries; is aware that, according to Article 25(6) of Regulation (EU) 2017/1939, cases of disagreement about the EPPO’s competences are to be decided by the same national judicial authority who is responsible for determining the competent body for prosecution at national level; regrets that in many participating Member States the procedures in force and the national authorities entrusted with the decisions on such cases regarding conflicts of competence are not set in compliance with Regulation (EU) 2017/1939, stresses that in cases of conflicts of competence between the EPPO and a national prosecution authority, the national authority competent to decide on the attribution of competence could come to a conclusion without requesting a preliminary ruling by the Court of Justice but rather making a decision that is binding on the EPPO and points out that this is against the spirit of Regulation (EU) 2017/1939, which states that the Court of Justice, in accordance with Article 267 of the TFEU, has jurisdiction to give a preliminary ruling on the interpretation of the provision on conflicts of competence between the EPPO and national authorities; believes that the current situation lacks legal clarity; encourages all Member States to work more closely with the EPPO; emphasises that the competence of the EPPO is clearly outlined in Article 22(1) and (2), and in Article 23, and that all Member States should respect Regulation (EU) 2017/1939; notes that when Member States have doubts about the competence of the EPPO in a particular a case, there is the possibility of submitting a preliminary question to the Court of Justice for a preliminary ruling following Article 267 of the TFEU and Article 42(2)(c) of Regulation (EU) 2017/1939 ; urges the Commission, where there is a case breach of Regulation (EU) 2017/1939, to submit the case to the Court of Justice; notes with concern that the question of competence can cause a halt of the investigation; is concerned about potential loss of evidence when cases are paused; calls on the Commission to collect information regrading cases regarding conflicts of competence for the evaluation report that will be submitted in 2026;

Added10. Observes that, in 2022, of the 15 active RRF cases listed in the EPPO Annual Report, 9 cases occurred in Italy, 2 in Portugal, 3 in Romania, and 1 case in Croatia; strongly encourages the EPPO to look for fraud patterns in countries were more than one RRF case occurred, and to inform both OLAF and the Recovery and Resilience Task Force of these patterns with the goal of reducing the instances of fraud occurring in the first place;

Added11. Notes that the EPPO currently has an estimated 170 active investigations in over 7 countries involving RRF cases and that the damages in these active investigations is currently estimated at EUR 530 million; notes that the EPPO estimates that the number of new active investigations involving recovery and resilience funds will increase as more countries become the recipients of RRF funds, encourages the EPPO to plan their budget and capacities accordingly;

Added12. Regarding the amount of resources allocated to the EPPO, underlines that the budgetary and human resources allocated should be adequate to allow the efficient and successful carrying out of its mandate and the normal handling of the related administrative procedures; calls on the Commission to review the EPPO budgetary framework in close cooperation with the EPPO to find adequate ways to support it in its work, with the knowledge that in the context of a growing number of complex cases, additional resources will be needed and these should not be dependent on the revision of Regulation (EU) 2017/1939 and/or its mandate; notes that, also in this regard, an increasing number of legal challenges are expected, calling into question the interpretation of the EPPO’s legal framework and its integration into the Member States’ judicial systems or before the Court of Justice;

13. Regarding the use of the resources allocated to the EPPO, understands that the EPPO engages in a continuous update and revision of its internal financial rules governing the financial aspects of its operations; welcomes, to this end, the ongoing dialogue with the Commission and is aware that, in line with the suggestions made the Commission, a recent Decision of the College of the EPPO amended its financial rules by adding the possibility to conclude agreements with the competent authorities of Member States and to conclude contracts without having recourse to a public procurement procedure, where procurement is not possible;

14. Understands that, in 2022, a pilot framework agreement was launched, for the reimbursement of claims made under Article 91(6) of Regulation (EU) 2017/1939, to cover exceptionally costly investigation measures carried out at national level on behalf of the EPPO;

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Changed11.15. Points out the need to allow Article 91(6) of Regulation (EU) 2017/1939 to be implemented properly and reiterates its call for an adaptationunderlines ofthat the Financialpeculiar Regulationcharacteristics asof itprosecution currentlyand doesinvestigation notexpenditure allow(including expensesthe incurredexceptional bycases nationalof justicethe systemsEPPO's tooperational beexpenditure reimbursed;governed underlinesby thatArticle the91.6) needhave to have termsbe intaken theinto Financialaccount; Regulationregrets that are compatible with the characteristics of prosecution and investigation expenditure has alsoproposal beenbrought raisedforward in the frameworkrecast oftrilogue thenegotiation recastwas ofdropped; maintains that Regulation;the calls,Commission, in this specific regard,dialogue onwith the CommissionEPPO, andshould onexplore thealternative Councilavenues to provide tangible support toallow thefor proposalsan thateffective areand broughtefficient forwardimplementation inof the recast trilogue negotiations;provision;

16. Highlights that following the start of the EPPO’s operational activity, the 2017 Legislative Financial Statement was no longer fit-for-purpose due to a significantly underestimated workload, and no update to it has been proposed; in this regard, believes that the absence of a mid-term budgetary review for the EPPO prevents the EPPO from having a clear understanding of the resources available for the future activities of the already existing cases and to anticipate budget implementation preparatory activities before the end of the budgetary adoption process;

17. Reiterates its view that the absence of a mid-term resource framework for the EPPO, both in terms of budget and staff, at a time when operations need to be swiftly ramped-up and administrative foundations established, limits the options that should be made available to achieve maximal flexibility in the development of an organisational infrastructure for a project as innovative as the EPPO;

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Changed14.18. Isis aware thethat the EPPO has been striving for cooperation and coordination with Member States on how fraud affecting the RRF should be reported to the EPPO and handled at investigative level and during the prosecutorial stage, and on how the EPPO could effectively intervene effectively in this regard; believes that the EPPO’s involvement in the investigation and prosecution of cases of fraud affecting RRF funds is essential in protecting the Union’s financial interests; recalls that the EPPO is an independent body of the Union and reiterates its call on the Commission to provide adequate guidance to the EPPO on how to support and foster the adoption of the remedial measures towhich befollows adoptedthe followingEPPO detectionindependent investigation and prosecution of fraud affecting the RRF and to keep the budgetary authority informed regarding the available options;

Internal management, performance and internal control

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Changed15.19. Observes the increase in crime reports submitted to the EPPO (3318(3 318 in 2022 compared to 28322 832 in 2021) andand, theas consequenta result, the increase ofin openedopen investigations (865 in 2022 with estimated damages amounting to 9.9EUR 9,9 billion, compared to 576 in 2021);2021 with estimated damages amounting to EUR 5,4 billion); notes that the number of closed cases (251 in 2022 compared to 57 in 2021) and the number of indictments (87 in 2022 compared to 5 in 2021) together with the freezing orders obtained by the EPPO amounted to EUR 359.1359,1 million in 2022 alone (against(compared to EUR 516 million requested); notes that, in 2022, 20 cases were concluded in Court, and deems it important that the EPPO reports systematically on the follow-up to these cases in terms of the financial measures adopted (confiscation and/or recovery) to provide a clearer understanding of the impact of the EPPO’s actions; calls on the Commission to explore the most appropriate avenues to assist the EPPO in the monitoring and follow-up activities, in such a way that the EPPO’s resources are not diverted from their investigative and prosecutorial tasks; encourages the EPPO, where possible and appropriate, to engage in better cooperation with other components of the Anti-Fraud Architecture, such as Eurojust and Europol, or using -via OLAF- the Anti-Fraud Coordination Services (AFCOS) established in the Member States;

20. Calls on the EPPO to put a system in place to monitor efficiency gains, time and cost savings and appreciates the adoption of a quality management system to optimise key processes and achieve an increase in organisational performance, service quality and cost-effectiveness; understands that some procedures have been reengineered to reduce unnecessary administrative burden and redundancies;

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Changed17.21. Understands that the EPPO employs a risk-based approach across its activities, with a focus on identifying high-risk areas; welcomes the adoption of the EPPO Administrative Internal Control Environment Policy and invites the management of the EPPO to monitor the effective implementation of the 17 internal control principles to verify that they are continuously adapted to the EPPO’s organszationalorganisational maturity growth path; appreciates, in this regard, the assessment recently performed resulting in an implementation roadmap focusing on the deficiencies identified; points out that the main residual high risk areas have been identified as originating from a lack of resources (where the EPPO is forced to choose between activities equally essential to the delivery of its mandate or where there is a failure to deliver reasonable assurance on compliance with all the administrative standards);

22. Welcomes the adoption of Key Performance Indicators (KPIs) for both operational and administrative activities, linked to the annual and multi-annual work programme; observes that the main KPIs for operational activities do not include any specific reference to the amounts recovered from the Union’s budget, the safeguard of which is ultimately the raison d'être of the Anti-Fraud Architecture of which the EPPO is an important component; asks the EPPO to adopt indicators linked to the achievement of this essential task;

23. Appreciates the adoption by the EPPO College, in 2022, of the Internal Audit Capability’s Internal Audit Charter and risk-based audit plan, identifying the Internal Auditing priorities for 2022–2024; encourages the Internal Audit Service (IAS) and the Internal Audit Capability (IAC) to coordinate their actions with a view to advising and assisting the EPPO in the establishment of its main core processes and the achievement of its objectives;

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Added24. Calls for a better system of monitoring results and following financial impact of the EPPO work; notes the need for more aggregated data concerning cases in order to better identify patterns of fraud; encourages continued coordination with Europol in this area;

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25. Remarks that the EPPO is aiming to achieve full compliance with the Union’s public administration management standards, and recalls that the adoption of a comprehensive business continuity plan is amongst such basic requirements;

Human resources, equality and staff well-being

26. Observes the upward trend in the number of staff, increasing from 58 in 2020, to 122 in 2021, to 217 by the end 2022; is aware that, for 2022, the EPPO requested 171 temporary agents, 48 contractual agents and 29 seconded national experts, representing a total of 248 posts (compared to the situation in 2021, with 95 temporary agents, 35 contract agents, and 0 SNEs for a total of 130 posts); notes that the budgetary authority granted 100% of the requested posts;

27. Points out that, in 2022, the EPPO’s efforts to recruit an adequate number of qualified staff with fast procedures resulted in the hiring of 85 statutory agents in the central office and 22 EDPs in national offices; notes that, with 217 of the 248 budgeted posts filled at end 2022, the occupancy rate of posts filled by temporary agents, contract agents and SNEs decreased to 87,5% (compared to 94% in 2021) having regard to, while for the EDPs the occupancy rate rose to 82,1% (with 115 out of the 140 budgeted EDP posts filled) compared to 68% in 2021 (with only 95 out the 140 budgeted EDP posts filled) bringing the overall global occupancy rate to 85,56% (compared to 81% in 2021);

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Added28. Underlines that during the visit to the EPPO during the Budgetary Control Mission to Luxembourg in 2023, the EPPO expressed the dire need for more legal experts to handle the large number of investigations; notes that, in 2022, there were over 1117 active investigations (EPPO 2022 statistic); recognises that the Commission has already been active in this area but asks for further capacities to be fulfilled especially considering the backlog and additional RRF-related cases and far-reaching VAT fraud; points out that the Commission may have underestimated needs and capacities; acknowledges that DG Budget and the Commission have fulfilled the EPPO's requests thus far;

29. Understands that the administrative and central support functions are expected to grow, in line with the larger operational population, and that additional recruitment will also be critical in the area of Digital and Security Services; appreciates that the additional operational needs have been included in the EPPO Single Programming Document 2024-2026 and Budget request for 2024;

30. Is aware that the Luxembourgish labour market is very competitive, and that the conditions offered by the Union administration are neither attractive against the local market (subject to diverse salary indexations throughout the year), nor do they adequately take into account the high cost of living (especially in the housing domain); understands that this difficult situation is even more acute for trainees and contract agents, for this reason, contract agents are in the process of being progressively phased out in favour of temporary agent positions as they benefit from a more favourable contract; notes that the attraction and retention of personnel has become even more difficult in 2022 because of the inflation rate and increased cost of living, and that compensation figures are not having the same positive impact as it is outside the Union administration, where national wage indexations have maintained the protection of the citizens’ purchasing power;

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Removed25. Observes that, at the end of 2022, geographical and gender balance is adequately pursued overall across the 217 members of staff (with 122 men and 95 women); remarks, however, that the gender distribution amongst the senior and middle management positions (four to one) is still suboptimal and reiterates that this aspect should be improved in the framework of the overall diversity strategy, including adequate encouragement for people with disabilities to apply; reiterates its request to the EPPO to adopt its charter on diversity and inclusion without delay, in consideration of the increase of staff in the last year;

Added31. Notes that the EPPO has been rendered less attractive than the four other Union institutions operating from Luxembourg, as it cannot offer a path towards becoming a Union Official; highlights the need for the EPPO to offer attractive salaries to contract and temporary agents, that are competitive with what is on offer in the private sector, including legal services and IT services, in order to attract the best and brightest talent with international experience; highlights that current salaries and budget may need to be adjusted to reflect this;

Removed26. Remarks that, by the end of 2022, 275 out of 332 staff (82,83% compared to 186 staff that is 86% in 2021) were deployed in investigative activities (temporary agents, contract agents, SNEs and EDPs) while 57 members of staff were engaged in Administrative Support and Control Functions (17,17%) and 9 investigative posts stayed vacant;

Added32. Observes that, at the end of 2022, geographical and gender balance is adequately pursued overall across the 217 members of staff (with 122 men and 95 women); welcomes that the nationality breakdown of the EPPO population is constantly monitored by the hiring staff, in seeking to ensure balance, especially, in light of the uneven distribution of applicants; remarks, however, that the gender distribution amongst the senior and middle management positions (four to one) is still suboptimal and reiterates that this aspect should be improved in the framework of the overall diversity strategy, including adequate encouragement for people with disabilities to apply; reiterates its request to the EPPO to adopt its charter on diversity and inclusion without delay, in consideration of the increase in staff in the last year;

Added33. Remarks that, by the end of 2022, 275 out of 332 staff (82,83 % compared to 186 staff that is 86 % in 2021) were deployed in investigative activities (temporary agents, contract agents, SNEs and EDPs) while 57 members of staff were engaged in Administrative Support and Control Functions (17,17 %) and 9 investigative posts stayed vacant;