Opposition casts doubt on convention implementation

Opposition spokesman on Justice Josè Herrera yesterday cast doubt on whether the Maltese courts could implement a European Union convention to be included as part of the Laws of Malta.

Speaking during the debate in second reading of the European Communities’ Financial Interests Convention Bill, Dr Herrera queried if the convention was in fact reflected as offences in the Criminal Code. He referred, among others, to the concepts of passive and active corruption described in the convention, and to the punitive sanctions which gave the court authority to order a company’s winding up or the disqualification of a person from performing acts of commerce.

Dr Herrera insisted that such disparity between the future Act of Parliament, which would give effect to the convention, and the national criminal law would create the sort of uncertainty that had already been found by the European Court to be in violation of one’s rights.

Winding up the debate on the Bill, Justice Minister Carm Mifsud Bonnici assured Dr Herrera that the proposed Act would not cause any real uncertainty in relation to the offences contained in the convention because these were already found in the Criminal Code.

The Labour MP challenged the minister to indicate the offences to which he was referring and to indicate the provisions of Maltese law which already provided the courts with the punitive powers indicated in the convention.

Dr Mifsud Bonnici replied that in the two-year consultation process with the Attorney General’s office, he had been assured that the provisions of the Criminal Code adequately reflected the legal concepts mentioned in the convention and also established the relative punishment.

Earlier, Dr Herrera queried whether the proposed Act was effectively automatically enacting new criminal offences, even if the convention did not establish the punishment for such offences. He suggested that on the signing of conventions, Parliament ought to immediately enact a positive law to implement the provisions of that convention without leaving room for uncertainty.

While it was good to embrace conventions, even if they included concepts which were alien to national law, this process must be carried out after due consideration of the legal and juridical consequences.

Fraud was considered as a serious problem for the EU institutions, with healthcare fraud, for example, costing the EU €56 billion a year. The institutions had had to seriously address this abuse and had done so not only through this convention but also through the establishment of OLAF, an anti-fraud office to combat European fraud.

Malta participated in OLAF and because of the strong losses that the EU institutions suffered due to abuse of their funding systems, Dr Herrera expressed his agreement with the aims of the convention.

He said that in 2007, the European Ombudsman had received more than 3,200 complaints and proceeded on almost 650 inquiries. While a good number of complaints had been received from Germany and Spain, most claims of corruption and fraud had been received from Luxembourg, Malta and Cyprus.

Concluding, Dr Herrera asked the minister to indicate which legal provision would take precedence where an ordinary law would be in conflict with a provision of the convention.

Introducing the Bill on Monday, Dr Mifsud Bonnici said it was meant to safeguard the financial mechanism in Malta and the machinery to guarantee transparency and accountability.

It provided for the protection of the European Communities’ financial interests and for the criminal prosecution of fraudulent conduct affecting those interests while adopting a common definition. Such prosecution in Malta was already included in the Criminal Code and the Money Laundering Act.

Dr Mifsud Bonnici said that basically the Bill concerned the Convention on the Protection of the European Communities’ Financial Interests, signed in Brussels on July 26, 1995, and subsequent protocols.

The convention obliged member states to prosecute such cases as expense with false documents, withholding of full information when one was obliged to give it, or bad use of funds earmarked for different uses.

There could be cases of presentation of false documents that could adversely affect EU financial resources. Malta was morally bound to protect the mechanism by which it had received EU funds ever since access.

Malta was obliged to introduce all legal mechanisms against abuse, and to prosecute any such abuse in Maltese courts. This was being done to protect seriousness and transparency and attack any illegality.

Dr Mifsud Bonnici said the convention alluded to active and passive corruption, both at national level and when committed against the EU or any of its institutions, such as when EU officials received benefits for not doing anything they were duty-bound to do.

The second protocol enlarged the field to natural and legal persons, companies or entities which may take part in EU programmes with funds for particular aims. Member states were being obliged to seize any funds known to have come from fraud, money laundering or any other criminal activity.

Through this Bill Malta was joining other member states in taking an important step forward in its judicial system.

Dr Mifsud Bonnici said Malta would be ratifying the convention not only because it was so obliged to do, but also because it believed in what it was doing and in its obligations to the EU.

These protocols had been expressly created to ensure transparency. This was also important to Malta not only because it was a contributor to EU funds but also because it was a net beneficiary.

It was good to know that even before adhering to the protocols, Maltese legislation was already rather advanced with the necessary provisos to link into the European chain. This meant there would be no problem for Malta to proceed.

Turning to the general provisions of the convention, the minister said that fraud that affected the European Communities’ financial interests consisted of intentional acts or omissions, use of false or incorrect or incomplete documents, non-disclosure of information and misapplication of funds in respect of expenditure and revenue.

Such misconduct was punishable by law with penalties which set the minimum at €50,000. These provisos had already been transposed into the national criminal law.

The state had to take measures so that heads of businesses could be declared criminally liable in accordance with the principles defined in national law in cases of fraud affecting the EC’s financial interests. Although one could not condemn these businesses to jail, they would be condemned to pay penalties when decisions taken by such companies caused damage to the environment or the cultural heritage. Member states had jurisdiction over these matters.

Dr Mifsud Bonnici said the convention also established extradition and prosecution mechanisms. This also entailed cooperation among member states.

The first protocol under the convention gave detailed definitions of passive and active corruption. These already had formed part of national criminal law since 2002.

The second protocol in 1996 extended the definitions on fraud to include money laundering, binding members to provide that legal persons could be held liable in cases of fraud or active corruption and money laundering committed for their own benefit that damaged or were likely to damage the EC financial interests. In such cases it was possible to confiscate the proceeds of such fraud and corruption.

Dr Mifsud Bonnici said it was significant that courts had jurisdiction to attack passive and active corruption. Parliament was to discuss two other related Bills, one referring to the Permanent Commission against Corruption and the Whistleblower Act.

The party in government had always increased the Criminal Code’s provisos against corruption. Culture in the public sector and in the private sector had changed radically. Such legislation had not been enacted in the 1970s and 1980s when, he said, corruption had been tolerated and institutionalised. Today’s system rested on transparency and accountability.

The Permanent Commission against Corruption, which had done sterling work, had the authority to recommend presidential pardon for persons exposing cases of corruption so that action could be taken in the courts.