Insight: “Sanctioning members of EU institutions in case of misconduct: the pending case Court of Auditors v Karel Pinxten” by Dolores Utrilla
Yesterday, on 29 September, the Plenary of the Court of Justice held a hearing in the case Court of Auditors v Karel Pinxten (C-130/19), an action brought by the European Court of Auditors (ECA) against one of its former members on the basis he allegedly failed to meet his obligations under Articles 285 and 286 TFEU (and the rules adopted in application thereof), and in which the Court of Justice has been called upon to impose a penalty on Mr Pinxten pursuant to Article 286(6) TFEU.
This is a case of high relevance from both an institutional and a strictly legal point of view. On the institutional page, it is the very first case brought before the Court of Justice concerning the alleged misuse of EU funds by one of the members of the ECA, an EU institution defined as the guardian of the EU’s finances. It therefore brings to the limelight the design and the effectiveness of the ECA’s internal control and good administration mechanisms. Moreover, the case represents a key opportunity for the Court of Justice to further explore its powers to impose penalty in respect of those holding high office within the EU institutions.
1. A rather unexplored point of EU law
Articles 285 and 286 TFEU regulate the duties of the members of the ECA and the consequences of their breach. The pattern followed by these provisions resonates in other areas of EU (primary) law governing the standard of conduct of the members of the EU institutions – as a matter overarching the standard of conduct of EU officials or staff members, which are governed by the EU Staff regulations. In essence, the TFEU (i) sets out the core duties involved in the office of members of the institutions, (ii) calls on the respective institution to further specify these duties through internal rules, and (iii) aims to safeguard the independent functioning of the concerned institution by reserving exclusively to the Court of Justice the power to declare that such duties were breached and, if appropriate, to impose the corresponding sanctions on the member at hand. This happens regarding, for example, the Commission and the European System of Central Banks (SECB).
(i) The duties of members of the institution under primary law
Concerning the ECA specifically, Article 285 TFEU (ex Article 246 TEC) is quite vague. It merely sets out that its members ‘shall be completely independent in the performance of their duties, in the EU’s general interest’. Article 286(3) adds that, in the performance of their duties, they ‘shall neither seek nor take instructions from any government or from any other body’ and ‘shall refrain from any action incompatible with their duties’ (emphasis added). Article 286(4) TFEU further prohibits that ECA members ‘during their term of office, engage in any other occupation, whether gainful or not’ and requires that they ‘shall give a solemn undertaking that, both during and after their term of office, they will respect the obligations arising therefrom and in particular their duty to behave with integrity and discretion as regards the acceptance, after they have ceased to hold office, of certain appointments or benefits’ (emphasis added). Beyond this, Article 287 TFEU requires the Council to approve the ECA’s Rules of Procedure, and the ECA itself determines its own rules for implementing the rules of procedure.
(ii) The detailed rules governing the duties of institution members
Although the ECA has existed ever since 1975 and became an EU institution in 1992, it was not until recently that it adopted internal rules detailing the duties and obligations of its members. Building on the Rules of Procedure adopted in 2010 by the Council of the European Union, in 2016 the institution approved its Rules for Implementing the Rules of Procedure through Decision 38/2016. However, they contained hardly any substantive and detailed provisions on the duties of ECA members. These were introduced at a later stage, by means of an amendment to the Implementing Rules by means of ECA decisions of 14 September 2017 and 13 December 2018.
(iii) The powers of the Court of Justice
According to Article 286(6) TFEU (ex Article 247 TEC), a member of the ECA ‘may be deprived of his office or of his right to a pension or other benefits in its stead only if the Court of Justice, at the request of the ECA, finds that he no longer fulfils the requisite conditions or meets the obligations arising from his office’. This provision has never been activated before the Court of Justice. The only (loose) precedent in this regard is case T-132/13, Sonja Deweerdt and Others v ECA, in which the applicant – who later discontinued the action – sought the annulment of the ECA’s decision not to refer to the Court of Justice a request concerning Ms S, an ECA member at that time.
However, the scope of Article 286(6) TFEU might be interpreted in light of the Court of Justice’s case law on the second paragraph of Article 245 TFEU (ex Article 213 TEC), which contains an essentially equivalent rule for members of the European Commission. Article 245 TFEU sets out that, in the event of a breach by a Commissioner of the duties inherent in his office, the Court of Justice ‘may, on application by the Council acting by a simple majority or the Commission, rule that the member concerned be, according to the circumstances, either compulsorily retired in accordance with Article 247 or deprived of his right to a pension or other benefits in its stead’.
To date, the Court of Justice has had only one occasion to apply the second paragraph of Article 245 TFEU, in the well-known case Commission v Cresson (C-432/04). A previous application had been brought by the Council, but was withdrawn at a later stage, against former Commissioner Bangemann in respect of an appointment he intended to accept after his term of office (C-290/99).
In the Cresson case, the Commission called on the Court of Justice to: (i) declare that former Commissioner Édith Cresson breached the duties arising from the office of Member of the Commission by acting with favouritism in respect of certain appointments of Commission staff, and (ii) deprive her in whole or in part of her right to a pension or other benefits in its stead. For what is relevant here, the Cresson ruling made clear the following points:
- Article 245 TFEU (ex Article 213 ECT) forms a proper legal basis for the bringing of proceedings before the Court of Justice, and this provision allows the Court of Justice to impose a penalty where there is a breach of the obligations arising from the office of member of the Commission, in the form of compulsory retirement or the deprivation of his right to a pension or other benefits in its stead.
- The fact that a term of office of a member of the Commission has expired and that he can no longer be the subject of compulsory retirement cannot prevent that member from being punished in respect of a breach which occurred during his term of office, but which was discovered or established once this expired.
- As there is no provision regarding the extent of the deprivation of the right to a pension or other benefits in its stead, it is open to the Court of Justice to order deprivation in whole or in part thereof, depending on the degree of gravity of the breach.
- The disciplinary proceedings before the Court of Justice are independent from national criminal proceedings concerning the same facts and actions by the concerned member of the Commission.
- The lack of access to two levels of jurisdiction inherent in the mechanism of Article 245 TFEU does not breach the right to effective judicial protection under the standards set out by the European Court of Human Rights (ECtHR) in respect of Protocol No 7 to the European Convention on Human Rights (ECHR).
- The circumstances of the case must be regarded by the Court of Justice, which means, inter alia, that the finding of a breach may constitute, in and of itself, an appropriate penalty. It is thus possible for the Court of Justice to conclude that it is not appropriate to impose on the concerned Commission member a penalty in the form of a deprivation of his or her right to a pension or other benefits in its stead.
2. Background to the Pinxten case
The case ECA v Pinxten stems from an investigation by the European Anti-Fraud Agency (OLAF) following a complaint by a whistleblower in 2017, a time at which Mr Pinxten, who had been an ECA member from 2006, was seeking a third term of office in that institution.
On 29 November 2017, OLAF officers reportedly raided the ECA’s premises as part of the investigation into Mr Pinxten. In July 2018, upon conclusion of the investigation, the press reported that OLAF had found evidence of abuse of the ECA’s assets as well as infringements of ethical obligations, and that it had addressed recommendations to the ECA and to the judicial authorities of Luxembourg for possible follow-up. However, OLAF’s final report on the case has not been made public, in line with the Agency’s policy to protect individual rights and confidentiality requirements, as well as possible ensuing investigations by authorities competent for any eventual subsequent action.
It is unclear whether the administrative investigation by OLAF played a role in the European Parliament’s refusal on 15 November 2017 to renew the mandate of Mr Pinxten. The decision, adopted by 310 votes against, 284 for, and 81 abstentions, was in any case in line with the Parliament’s call to limit the number of mandates of ECA members to two. On 1 March 2018, the European Parliament voted in favour of the nomination of Annemie Turtelboom as the new Belgian ECA Member, to replace Mr Pinxten.
It must be noted that these developments concerned the alleged misconduct of Mr Pinxten prior to 2017, when his duties were regulated only in the TFEU and in the 2010 Rules of Procedure. It was only between 2017 and 2018 that the ECA, through the amendment of its internal rules, clarified the standards of conduct making explicit mention of the kinds of conduct that were not admissible for the members of the institution.
3. The pending ECA action before the Court of Justice
In its action before the Court of Justice, the ECA argues that Mr Pinxten breached his duties as member of the institution, claiming that he: (i) made improper use of the resources of the ECA in order to finance activities with no connection or incompatible with his duties as a member; (ii) made improper and unlawful use of tax privileges; (iii) made false insurance claims in the context of alleged accidents involving the service vehicle made available to him; (iv) exercised managed activities for a commercial company and intense political activity within a political party although he was in the service of the ECA; and (v) created a situation of conflict of interests by making a service offer to an official of an audited entity.
The Pinxten case represents a perfect complement of Cresson: while the latter concerned primarily the legal basis and the scope of the Court of Justice’s penalty powers, the former focuses on the problem of how to define the duties of the members of the EU institutions for the purposes of imposing sanctions in the event of misconduct. Indeed, the key legal problem that the Court of Justice is called on to solve in Pinxten is whether the vague provisions in Articles 285 and 286 TFEU, together with the duties enshrined in the 2010 Rules of Procedure, are enough to establish that a (former) ECA member violated the terms of his office, and whether the new standards approved at a later stage can in any way be of (retroactive) relevance to shape the boundaries of such terms.
Yesterday’s hearing made it clear that Mr Pinxten may have complied to some extent with the relevant formalities in place at the time and that the ECA was aware of significant information regarding the activities of Mr. Pinxten that are now under scrutiny. This adds two further elements to the entanglement faced by the Court of Justice, namely: (i) the effectiveness of the ECA’s mechanisms of internal control, and (ii) whether in these circumstances it is possible to attribute any omission, negligence or bad faith to the former ECA member.
In this respect, the fact that the case revolves around the functioning of not just any EU institution, but the one in charge of monitoring the EU’s financial management, may have implications on the final decision of the Court. Beyond that, one cannot but evoke the Court of Justice’s words in Cresson, justifying a broad construction of the Commissioners’ duties: ‘having regard to the importance of the responsibilities assigned to them, it is important, that the Members of the Commission observe the highest standards of conduct… in a manner which is beyond reproach’.
The Opinion of Advocate General Hogan in the case is expected to be released on 17 December.
Dolores Utrilla is Associate Professor at the University of Castilla-La Mancha and Assistant Editor at EU Law Live.