EU Commission Plans to Strip Funding From Public Prosecutors Investigating Ursula von der Leyen’s Pfizergate Scandal

Surely just a coincidence!

As regular readers are well aware, EU Commission President Ursula von der Leyen is facing a number of legal challenges over the Pfizergate scandal, including from the New York Times, the governments of Hungary and Poland, a Belgian lobbyist and the European Public Prosecutor’s Office, or EPPO. In early April, we discussed the possibility that her reelection campaign may be over-shadowed by these multiple lawsuits as well as other corruption allegations. At that time, the EPPO had just proposed taking over a Belgian criminal probe into the highly opaque vaccine negotiations between von der Leyen and the CEO of Pfizer, Albert Bourla.

Since then, the Commission, it seems, has gone on the offensive. According to an article published earlier this week by POLITICO EU, the EU executive plans to reduce the EPPO’s funding, prompting the EPPO, in a rare move, to threaten to sue the Commission. Founded in 2017 with the mission of “investigating transnational and complex financial crimes, notably serious organised crimes and money laundering flows,” the EPPO last year launched more than 200 fraud investigations related to the EU-wide Recovery and Resilience Facility, which has provided €800 billion of EU cash to help support post-COVID economic recovery.

Also last year, the EPPO launched an investigation into the Commission’s procurement of 4.5 billion COVID-19 vaccines — for a continent of 450 million people (I’ll let readers do the maths) — after the Commission had refused to provide EU auditors with records of its preliminary discussions with Pfizer, whether in the form of minutes, names of experts consulted, agreed terms, or other evidence. The EPPO has warned that the Commission’s plans to slash its budget will make it difficult for its prosecutors to continuing fulfilling their duties. From the POLITICO EU piece:

On April 9, Laura Codruța Kövesi, who heads the European Public Prosecutor’s Office (EPPO) — tasked with investigating serious financial crimes affecting the EU’s interests — took the unusual step of launching a so-called “amicable settlement procedure” with the Commission. This is the last legal step before litigation and if no agreement can be found, the fight could go as high as the EU’s General Court.

The prosecutors fear they will be unable to do their job properly if the Commission goes through with a plan to squeeze its budget — a move that was announced in February and came as a surprise, EPPO claims.

Kövesi’s letter was shared in early April with three senior officials from the Commission, according to the document obtained by POLITICO. In it, the EPPO chief alleges that the Commission is depriving it of the means to carry out its work effectively by putting pressure on its budget, notably on the amount spent on IT.

When EPPO was launched in summer 2021, the Commission agreed to provide IT facilities with no end date given. The Commission has now told EPPO it wants to withdraw the IT support. The amount of money involved is around €5 million, according to EPPO’s estimates.

“The unilateral decision … to terminate, on 31 December 2024, the provision of the mentioned services to the EPPO risks that the Union’s independent prosecution office will be in the impossibility to carry out its tasks and achieve its mission,” Kövesi wrote, adding that “it is incumbent on the Commission to abstain from any measure that could jeopardize the attainment of the Treaty objective entrusted to EPPO in combating crimes affecting the financial interests of the Union.”

In response to the EPPO’s letter, a Commission spokesperson said:

“The Commission has replied to EPPO within the designated period for an amicable settlement. In its reply, the Commission has expressed willingness to continue to support the IT services of EPPO for the foreseeable future under specific conditions. We cannot comment further.”

What Conditions?

What are the Commission’s “specific conditions”?  Who knows? Presumably, Kövesi or someone else at the EPPO will soon find out in a private meeting — and certainly not by text message — if they haven’t already. As for the rest of us, we will probably never know. By all outward appearances, the Commission is sending a message to the EPPO to stay in its lane, and not ruffle any feathers at the Berlaymont, particularly those of the president as she prepares to secure a second term. Otherwise, the flow of funds will slow.

If that is indeed the case, it raises serious questions about the EPPO’s operational independence. That in turn throws up yet more questions about the state of the rule of law, democracy and judicial independence in the very heart of the EU, especially given how the Commission has been using judicial independence and rule of law issues (largely) as a pretext to withhold billions of euros of EU funds from Hungary over the past two years. In reality, the main reason for freezing the funds is President Viktor Orban’s unyielding opposition to project Ukraine, as Conor Gallagher explained in a previous post.

It is uncommon for an EU institution like the EPPO to threaten to sue the Commission, but according to the POLITICO EU piece, tensions have been building:

Through an open letter sent to MEPs and public remarks at the European Parliament, Kövesi has for weeks been asking the Commission to reevaluate its decision to cut a substantial part of the support it provides to the Luxembourg-based EPPO team, who have recently taken over a case looking into von der Leyen’s handling of Covid vaccine deals.

The “Pfizergate” story was first broken in April 2021 by the New York Times when it revealed that European Commission President Ursula von der Leyen had negotiated a contract for 1.8 billion COVID-19 vaccine doses during the pandemic with Pfizer CEO Albert Bourla in mobile phone texts. Those texts remain undisclosed to this day. They may have already been destroyed. In May 2021, the journalist Alexander Fanta tried to obtain a copy through an FOI request but the Commission refused.

Since then the New York Times has presented a legal complaint against VdL based on articles 41 and 42 of the Charter of Fundamental Rights of the European Union — articles that recognise the right of access to the documents of the European Parliament, the European Council and the European Commission. In April 2023, Fedéric Baldan, a Belgian lobbyist specialising in EU-China trade relations, lodged a criminal complaint at the Lieges courthouse, accusing VdL of “interference in public functions”, “destruction of public documents” and “illegal conflicts of interests and corruption.”

A dozen other organisations, individuals, and even the countries of Hungary and Poland (under the previous PiS-led government), have joined his complaint. The governments of Poland and Hungary did so after Pfizer and its German vaccine partner, BioNtech, announced they were suing both countries over their refusal to take delivery of millions more doses of their COVID-19 vaccines, many of which would never be used. There have already been at least €4 billion worth of wasted vaccine doses in the EU.

More Questions Than Answers

In its investigation, the EPPO can theoretically seize phones and other relevant material from the Commission’s offices or in other countries in Europe. That doesn’t appear to have happened yet. In fact, it is unclear just how far the EPPO investigation has progressed. There are still far more questions than answers regarding this case.

What will happen to the charges being pursued in the Belgian investigation that do not fall within the EPPO’s remit, such as interference in public functions and destruction of evidence? Today (May 17), the EPPO is presenting its indictment at a hearing before the Court of First Instance in Liege. It will try to explain why it — and not Belgian prosecutors — should be in charge of the investigation. According to sources cited by Euractiv, the Belgian investigating judge does not agree with the EPPO taking over the case and is calling for the case to remain in Belgian hands.

If the EPPO does take over the case, how long will it be before its prosecutors actually present charges (assuming they ever will)? The EPPO has been investigating the EU’s vaccine purchases for well over a year, yet no one has been charged in connection with the case. This has prompted accusations from some quarters that the EPPO’s role in all this is to take the case off the hands of Belgian prosecutors and bury it, at least until well after the elections. In which case, why is the Commission threatening to cut the EPPO’s operational budget?

As I said, there are a lot more questions than answers. Here’s what we do know so far:

• “Maladministration”. VdL’s behaviour has been denounced by the European Ombudsman, Emily O’Reilly,  who concluded in 2022 that the Commission’s refusal to properly consider FOI requests for the text messages constitutes “maladministration.” More recently, O’Reilly has warned that the EU’s mounting political scandals risk having a “shattering effect” on how people perceive and trust the entire project of European integration.
• Auditors up in arms. A September 2022 report by the EU’s Court of Auditors claims that VdL threw out the existing rule book by directly participating in preliminary negotiations for the vaccine contract, in a total departure from the EU’s standard negotiating procedures. The Commission then refused to provide the auditors with records of the discussions with Pfizer. A senior auditor told POLITICO EU that the Commission’s refusal to divulge information was highly unusual: “This comes up almost never. It’s not a situation that we at the court normally face.”
• Refusal to testify. Both VdL and Bourla were called to testify to the European Parliament’s COVID inquiry. Bourla refused, on two occasions, and ending up sending one of his minions, while European Parliament bigwigs rallied around to protect VdL from a public grilling. Instead, she was invited to answer questions in private at a future meeting of the Conference of Presidents. A motion tabled by the recently deceased French Green Party leader Michèle Rivasi to at least curtail Pfizer lobbyists’ privileged access to EU institutions was blocked by the European Parliament President Roberta Metsola.
• Familial conflicts of interest. VdL has also faced accusations of conflicts of interest over her husband’s role as scientific director at US biotech company Orgenesis. Heiko von der Leyen was appointed to the role just months before the Commission signed the mega-deal with Pfizer. Orgenesis would go on to receive around €320 million in EU-backed subsidies from the Italian government, shortly after which Heiko was elected to sit on the supervisory board of the project. He stepped down from the board after EU lawmakers and Italian media drew attention to his role. VdR’s public declaration of interest did not mention her husband’s position on the board and was only updated after the allegations were made public.
•  A history of deleting sensitive information. This is not the first time that VdL has faced a criminal investigation for alleged deliberate destruction of evidence. In late 2019, just after VdL had resigned as German Defence Minister, Tobias Lindner, a member of the opposition Green party, filed a complaint over suspected deliberate destruction of evidence requested by a German parliamentary committee investigating lucrative contracts her defense ministry had awarded to outside consultants without proper oversight. Just as in Pfizergate, VdL was accused of deleting all of her mobile communications, not on one phone but two.
• EU security and weapons procurement. If VdL wins reelection in two weeks’ time, she is determined to play a larger role in Europe’s security. Given her disastrous record as German defence minister, which included a committee investigation into potential nepotism and malfeasance among her close advisers, this should give everyone serious pause. As part of her plan, she has pledged to create a new disinformation unit for detecting and weeding out online disinformation promoted by foreign agents while “inoculating” (interesting choice of words) EU citizens against false information through education.

The Orwellian title for this new initiative? “European Democracy Shield. “The irony of VdL, once described by POLITICO EU as “Europe’s American president”, talking about the risks posed by foreign agents is certainly rich.

VdL also wants to play a larger role in the procurement of weapons for EU member states, building on the apparent success of the Commission’s vaccine purchases. As we first reported in October 2022, the Commission wants a direct role in procuring not only vaccines for all EU Member States, but also energy and even arms, arguing that pooling demand through a commission-run platform would allow EU Members to secure better terms from suppliers. Yet that is the exact opposite of what appears to have happened with the Pfizer BioNTech deal: the more vaccines the Commission agreed to buy, the higher the price went up.

In a speech to the European Parliament in February, VdL called for “joint defence procurement” to reassure Europe’s defence industry that it will be able to find buyers for its increased production. She also said it was “time to start a conversation about using the windfall profits of frozen Russian assets to jointly purchase military equipment for Ukraine”. As the German satirist and a German MEP and former editor-in-chief of the Satirical magazine Titanic, Martin Sonneborn, documented in an article last May, similar procedural irregularities and opacity to those witnessed in the Commission’s vaccine deals are already in evidence, even at this early stage in proceedings:

The Commission has entrusted the approval of projects from the €8 billion European Defence Fund to an opaque network of ‘external experts’ without even remotely guaranteeing that conflicts of interest will be avoided and that the EU code of conduct will be observed. According to Politico, Ombudsman Emily O’Reilly pointed out that the names of these experts were nowhere to be found, which is unusual by EU standards and which she says undermines public scrutiny.

Of course, energy and arms — particularly arms, as US readers well know — are two industries where huge sums of money change hands, and often not in the most transparent of ways. Ungodly sums of money can get “lost” in the process. Whatever the outcome of the multiple  investigations VdL faces, the Commission’s handling of the COVID-19 vaccine purchases for the entire 27-nation bloc has demonstrated that it cannot be trusted to abide by even the most basic standards of transparency or accountability in its dealings with large corporations.

It still remains to be seen whether the accusations against VdL end up harming her bid to secure a second mandate. Even if that were to happen, it appears that French President Emmanuel Macron, who was instrumental in appointing VdL as Commission president, already has a plan-B candidate up his sleeve: Mario Draghi, the consummate technocrat-cum-Goldman Sachs alum who has already served as Italian prime minister despite never standing for election and who has compiled an as-yet unpublished report on the future of EU economic competitiveness which is expected to have significant influence on the Commission’s next mandate.

Per Bloomberg, VdL is grappling with “deep dissatisfaction” in many European capitals, including Paris, over how she has run the commission over the past five years — particularly the way in which she has over-politicised the role, taking unilateral decisions in key areas where she has no purview. Even if VdL is selected by the national leaders at the EU post-election summit, she would still face a daunting confirmation vote in the European parliament. In 2019, she was elected by only nine votes, despite having no challengers. Her margins are likely to be even finer this year, given the expected increase in support for populist parties.