Laura Codruţa Kovesi: “VAT fraud was underestimated, often even tolerated” – 03.09.2024

VAT fraud is often underestimated and even tolerated by the authorities of the Member States of the European Union, which benefits criminal organisations and harms citizens, said Laura Codruţa Kovesi, Chief Prosecutor of the European Public Prosecutor’s Office, in a lecture she gave yesterday to students and professors of the Faculty of Law of Chisinau State University on the occasion of the opening of the academic year in the Republic of Moldova.

Laura Codruţa Kovesi said: “VAT fraud has been underestimated and often even tolerated, to the benefit of criminal organisations seeking to undermine and replace legitimate authorities. In certain circumstances, these criminal organisations do not shy away from extreme violence. (…) Financial fraud is more likely to be tolerated because it is not seen as dangerous and I think that is wrong. For too long, too many have denied financial fraud. At least in Romania, we did not deny it and decided to act accordingly, but that is not the case everywhere in Europe.”

The head of the European Public Prosecutor’s Office pointed out that financial fraud is closely linked to organised crime, drug trafficking, arms trafficking, human trafficking, money laundering and other crimes that are not possible without corruption in certain fields of activity.

Codruţa Kovesi said: “In reality, corruption has been and is widely tolerated everywhere. There is no clean country, and I repeat, to be clear: there is no clean country. (…) In other countries, the phenomenon of corruption may be less investigated, but that does not mean that there is less corruption. Not investigating corruption does not mean that it does not exist. In reality, wherever there is organized crime, there is corruption. For example, a large illegal drug market is usually a very reliable indicator of widespread corruption (…) because these drugs enter through the port, airport or border crossings of one country or another. However, in these places there must be scanners checking everything that enters and leaves the country, there are border police, customs inspectors, ANAF inspectors, etc. If there were no corruption, the drugs in question would not enter the country.”

She recalled the important role of the European Public Prosecutor’s Office in solving cross-border fraud, citing Operation Admiral as an example. This started with a report from a Portuguese tax official who noticed that a company with just two employees had a turnover of several hundred million euros. The investigation, carried out at European level, uncovered fraud worth EUR 2.2 billion, criminal activities in 14 EU Member States and direct or indirect links between the company in question and almost 9,000 other small and medium-sized enterprises in Europe.

The head of the European Public Prosecutor’s Office also stated that, in her experience, citizens’ trust in democratic institutions is largely undermined by the perception that the judiciary is subordinate to political interests. In conclusion, Kovesi stated that the judiciary is the first area that needs to be cleansed of corruption.