Compatibility of the Estonian Penal Law to the Need for Protection of Financial Interests of the European Union

• Author: Jaan Ginter
• Pages: 184-197

Jaan Ginter

Compatibility of the Estonian Penal Law to the Need for Protection of Financial Interests of the European Union

1. Introduction

The objective of this study is to analyse and assess compatibility of the Estonian penal law to the need for protection of financial interests of the European Union.

The compatibility is assessed on three levels:

(1)a description of the status quaestionis of the financial protection of the EU financial interests in Estonia (lex lata). This level describes the law as it stands with respect to the given question. It explains how the financial interests of the EU are protected under the Estonian positive law;

(2)a description of the short-term perspectives in view of accession (lex ferenda). This level describes the Estonian efforts to make its legislation compatible with the acquis communautaire. It describes the laws that have been adopted and the draft legislation that has been proposed with this objective;

(3)a description of the long-term perspectives (lex desiderata). This level addresses the question of the compatibility of the Corpus Juris 2000 with the current Estonian legal order. The following question are addressed: would there be legal obstacles to the introduction of the Corpus Juris in the Estonian legal order and, if so, can these obstacles be overcome and how.

1.1. Acquis communautaire

1.1.1. Treaty bases

Following the entry into force of the Treaty of Amsterdam on 1 May 1999, the main basis in Community law for the fight against fraud is provided for by article 280 (ex 209a) of the EC Treaty. The other main strand of Treaty acquis is Title VI of the Treaty on European Union (as amended by the Amsterdam Treaty) concerning police and judicial co-operation in criminal matters¹.

1.1.2. Pre-accession pact on organised crime

"Fifteen principles" of the Pre-accession Pact on Combating Organised Crime ² encompass the essential elements of a co-operation strategy between the EU and the accession states in the combating of organised crime. Given the connection between organised crime and fraud against the EU budget it is appropriate to list these principles here. Principle 2 contains an important commitment by the accession countries to adopt and implement relevant international criminal conventions. Principles 12 (on corruption) and 13 (money laundering) are also relevant in the context of this study.

1.1.3. The most important third pillar acquis

On the same date as the Pre-accession Pact was adopted, the Council of the European Union published a list of "third pillar" acquis (and associated texts) extending inter alia to the fields of the fight against organised crime, fraud and corruption, police and judicial co-operation in criminal matters, plus human rights instruments.

The list of "third pillar" acquis published contemporaneously with the Pre-accession Pact was drafted in 1998 and after the date some new documents have been published:

-the Convention on Mutual Assistance in Criminal Matters between the EU Member States which was adopted by Council Act of 29 May 2000 ³ ;

-a statement of European Union priorities for Policy Objectives in Foreign Law Enforcement Policy ⁴ ;

-a Commission "Scoreboard" regarding implementation of the five-year programme of measures for completion of the "Area of Freedom, Security and Justice" established by the Amsterdam Treaty, published by the Commission in March⁵. The Scoreboard will be updated once during each EU Presidency;

-an EU Strategy Paper published in May 2000 on "The Prevention and Control of Organised Crime: A European Union Strategy for the Beginning of the New Millennium"⁶.

1.1.4. First pillar instruments

There are a number of "first pillar" instruments on combating fraud against the Community budget. The most important of the instruments relating to fraud are:

-Council Regulation 2988/95 (EC, EURATOM) of 18 December 1995 on the protection of the European Communities financial interests ⁷ ;

-Council Regulation 2185/96 (EC, EURATOM) of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities ⁸ ;

-Regulation 1073/99 (EC) of the European Parliament and the Council of 25 May 1999 concerning investigations conducted by the European Anti-fraud Office (OLAF) ⁹ ;

-Council Directive of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering¹⁰.

1.2. Lex lata

The question as to what is lex lata is a confusing issue, because the answer may be different, depending on whether one looks at it from the perspective of the EU or from the perspective of national legal systems. From the perspective of the EU, an impressive number of international instruments exists that, directly or indirectly, protect the financial interests of the Union. Many international conventions on the subject exist, not only in the EU ("Third Pillar Conventions") but also in the Council of Europe. Both the EU and the Council of Europe have drafted conventions dealing with issues such as extradition, mutual assistance in criminal matters, execution of foreign sentences, etc. Some of these conventions have been widely ratified by all member states, others still need to be ratified. A prominent example is the "PIF Convention" of 1995 ¹¹ , which has not yet been ratified by all member states. Quite often, ratification is lagging behind because member states have failed to adopt the necessary domestic legislation. The paradoxical result of this is that while the EU requires the candidate states to adopt these conventions (ratification, domestic implementation) as part of the acquis communautaire, many of the current EU member states still need to adopt elements of the acquis themselves. For example, the execution of foreign penal sentences is impossible under most domestic laws of the EU member states, even though a convention on the subject exists since the 1970s. On the other hand, all EU member states have ratified and implemented the 1957 Convention on Extradition.

1.3. Corpus Juris

The Corpus Juris was drafted in 1997 ¹² and revised in 2000, after an in-depth study of the compatibility with the proposed system in the 15 member states¹³. Although Corpus Juris does not, as such, belong to the acquis communautaire, it incorporates many elements of the acquis and it integrates elements of the criminal procedure systems of the 15 member states.

The "vertical" system proposed in the Corpus Juris, based on a European Public Prosecutor with Union-wide jurisdiction in the European legal area, is meant to overcome the problems inherent in traditional co-operation between states (extradition, mutual assistance, etc.), which is of a more "horizontal" nature. The Corpus Juris proposes a more "vertical" system based on a European Public Prosecutor who would have investigative and prosecutorial powers throughout the Union. For example, if a European arrest warrant would exist (article 25ter CJ 2000), extradition would become superfluous and all the current obstacles to the inter-state surrendering of suspects and convicted criminals (fiscal exception, double criminality, economic exceptions, etc.) would disappear. In the same way, letters rogatory (e.g. requesting searches and seizures) would be replaced by European Enforcement orders and drastically replace traditional mutual assistance in criminal matters.

At this stage, the Corpus Juris belongs to the lex desiderata, whereas the lex lata, from a European point of view, constitutes a labyrinth of conventions with varying success as to ratification. Until these conventions have been effectively ratified and implemented by the states, domestic legislation in the field of co-operation in criminal matters remains crucial. Paradoxically, the adoption of the Corpus Juris, even though it is now only a long term lex desiderata project, may be an easier solution from a pragmatic point of view than the ratification and implementation of the labyrinth of conventions that constitute the acquis communautaire.

1.4. The scope of the study

This study focuses on offences which apply or might apply to protecting the Community budget. To this end, the analysis breaks down into two stages. The first stage gives consideration to how national legislation, including draft legislation currently before the Riigikogu (Estonian parliament), complies with the "acquis communautaire".

At this stage the following issues are analysed:

(1)provisions of Estonian law designed to protect Estonian national financial interests, with a view to assessing their protective function;

(2)extent of application of these national provisions in like manner to protecting the financial interests of the Community;

(3)compatibility of the national provisions concerned with...