Opinion of the Advocate-General
1 The issue in this case, referred by the 4a Vara Criminal do Círculo do Porto (Fourth Criminal Chamber of the Oporto District), is what action may be taken by Member States where individuals make improper use of Community funds.
2 The questions were referred in the context of criminal proceedings against Mrs Nunes and Mrs de Matos. The facts are not set out in the order for reference; it appears however from a brief description in the annex to the order that both defendants are charged with forgery and that Mrs Nunes is additionally charged with embezzlement of public funds. The charges, brought under Portuguese law, (1) concern events that allegedly took place in 1986 and 1987 in connection with grants for vocational training received from the European Social Fund. Before the national court, Mrs Nunes argued that Community legislation laid down sanctions for the improper use of Community funds by private individuals; that those sanctions, being of a civil nature (refund of the sums advanced and non-payment of the balance claimed), were sufficient to safeguard the financial interests of the European Union; and that therefore, in view of the primacy of Community law over national law, a Member State could not classify the conduct covered by the relevant Community legislation as a criminal offence. The national court referred for a preliminary ruling the questions:
(1) whether the Community legislation in force at the time of the acts imputed to the defendants classified such conduct as constituting a criminal offence; and
(2) whether a Member State is empowered to impose criminal penalties for conduct which, being harmful only to Community financial interests, attracts only a sanction of a civil nature under Community legislation.
3 Written observations have been submitted by Mrs Nunes, the Finnish and Portuguese Governments and the Commission. In accordance with Article 104(4) of the Rules of Procedure, the Court decided that the procedure would not include a hearing.
4 The Community legal framework is set by Council Decision 83/516/EEC of 17 October 1983 on the tasks of the European Social Fund. (2) That decision provides for general rules on the Fund and is implemented by Council Regulation (EEC) No 2950/83. (3) Article 6(1) of Regulation No 2950/83 provides that `when fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment'. (4) Article 6(2) provides for the refund of sums not used in accordance with the conditions.
5 By prescribing those consequences where funds are not used for the purposes intended, the Community legislation plainly does not seek to lay down exhaustively the sanctions which may be imposed by Member States where the conduct of the persons concerned constitutes a criminal offence under national law. Whether Community legislation classifies such conduct as constituting a criminal offence is therefore not relevant to the essential issue before the Court. The Finnish and Portuguese Governments and the Commission have stated that the EC Treaty conferred no competence on the Community in criminal law. As they recognise, however, that does not preclude Member States from taking criminal proceedings in cases such as the present. The definition of embezzlement and other crimes as criminal offences, and the range of penalties that may be imposed, may be matters which do not currently fall within the scope of Community law, regardless of the nature of the funds involved. But, as becomes clear from the answer to the national court's second question, Member States are required by Community law to take all appropriate measures to prevent and punish the misuse of Community funds.
6 As to the second question, it is clear from the case-law of the Court that a Member State may impose criminal penalties for offences involving Community funds: see for example Commission v Greece, (5) where the Court held that Greece had infringed Article 5 of the Treaty by failing to institute criminal or disciplinary proceedings against the persons involved in evading agricultural levies which were payable to the Community budget. In its judgment, the Court stated that:
`... where Community legislation does not specifically provide any penalty for an infringement or refers for that purpose to national laws, regulations and administrative provisions, Article 5 of the Treaty requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law.
For that purpose, whilst the choice of penalties remains within their discretion, they must ensure in particular that infringements of Community law are penalised under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive.
Moreover, the national authorities must proceed, with respect to infringements of Community law, with the same diligence as that which they bring to bear in implementing corresponding national laws.' (6)
7 That judgment was affirmed in Hansen, (7) which concerned a Community regulation on road transport requiring Member States to take the measures necessary to ensure compliance with its provisions. The Court ruled that a Member State could impose strict criminal liability for infringement and repeated the ruling of the Court in Commission v Greece set out above.
8 Those judgments to my mind resolve the second question which has been referred to the Court. They make it clear, moreover, that Member States are not merely empowered to impose criminal sanctions but are obliged to take all effective measures, which may include criminal sanctions. That obligation flows from Article 10 EC (ex Article 5), which, as mentioned in Commission v Greece, requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law.
9 The nature of the obligation imposed by Article 10 is underlined by Article 280(2) EC (ex Article 209a, first paragraph), which expressly requires Member States 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 interests. Although that article was not in force at what appears to have been the material time (it was introduced by the Maastricht Treaty), it none the less serves to highlight the tenor of the obligation in Article 10.
10 I would also mention the Convention on the protection of the European Communities' financial interests. (8) That Convention, based on Article K.3 of the Treaty on European Union, now Article 31 of that Treaty, is not yet in force pending ratification by all the Member States. However, it is none the less of interest to note the reference in the preamble to the Contracting Parties' conviction that `protection of the European Communities' financial interests calls for the criminal prosecution of fraudulent conduct injuring those interests' and to `the need to make such conduct punishable with effective, proportionate and dissuasive criminal penalties', (9) reflecting the formula used by the Court in Commission v Greece.
11 It may finally be noted that, according to the Portuguese Government, the national legislation is in conformity with the principles laid down by the Court in Commission v Greece in that it treats in the same way acts against the financial interests of the Community and acts against the national budget.
Conclusion
12 I accordingly consider that the questions referred by the 4a Vara Criminal do Círculo do Porto should be answered as follows:
(1) Community law does not classify acts of embezzlement or improper use of Community public funds as criminal.
(2) Member States are required by Article 10 EC (ex Article 5) to take all effective measures to prevent and penalise such conduct, which measures may include criminal sanctions; in that case the penalty provided for must be similar to that imposed in the event of infringement of provisions of national law of a similar nature and importance and be effective, proportionate and dissuasive.
(1) - Article 228(1) and (3) and Article 424 of the Penal Code as in force at the relevant time.
(2) - OJ 1983 L 289, p. 38.
(3) - Regulation of 17 October 1983 on the implementation of Decision 83/516/EEC on the tasks of the European Social Fund, OJ 1983 L 289, p. 1.
(4) - See further on Article 6(1) of Regulation No 2950/83 Case T-142/97 Branco v Commission, judgment of 15 September 1998.
(5) - Case C-68/88 [1989] ECR 2965.
(6) - At paragraphs 23 to 25 of the judgment. See also paragraph 12 of the Opinion of Advocate General Tesauro.
(7) - Case C-326/88 Anklagemyndigheden v Hansen & Søn [1990] ECR I-2911, paragraph 17 of the judgment.
(8) - Convention drawn up on the basis of Article K.3 of the Treaty on European Union, annexed to Council Act 95/C 316/03 of 26 July 1995, OJ 1995 C 316, p. 48.
(9) - See the fourth and fifth recitals in the preamble.
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