Mr President, protection of the Community's financial interests is a concept that the citizen out there finds difficult to understand. But it is of deep concern to him, as someone who pays his taxes, that his money should be used for the development and extension of a united Europe and that it should not be misused or employed for the purposes of fraud or other kinds of criminal activity. He has every right to demand that the European institutions to which he entrusts his money will handle it carefully and that, should frauds be committed, these will be detected and punished. The message we must get across is that we are using every available means to justify the citizen's trust. The means to hand have, though, been blunt weapons to date, and there has been increased leakage from the Community budget due to criminal practices – figures show it as having doubled to over EUR 2 billion in the past year. The percentage of undetected crime, may well, by the way, be even higher. Despite better detection of fraud, judicial cooperation across frontiers is limping along, far behind multinational organised crime. The Council, the Commission and Parliament have been lamenting this situation for years, but little or nothing has as yet been done about it. The agreement on protection of the Community's financial interests, signed in Cannes all of six years ago, and the protocols appended to it, have still not been ratified by all the Member States and are therefore not in force. Despite all the appeals and resolutions by Parliament, and several summit declarations by the Council, there is still no common European legal area to protect the Community budget, indeed, not even an unambiguous definition of the concept of fraud against Community funds. Still less are any investigations carried out or punitive sentences handed down, which must be in equal measure effective, proportionate and deterrent. This blockade situation has now seen the Commission produce a proposal for a directive which recalls elements of the 1995 agreement and incorporates parts of them in the protocols, a proposal which, incidentally, Parliament had already made before the 1995 Summit. The Commission, rightly, bases its proposal upon Article 280(4) of the Treaty of Amsterdam under which the Community is obliged to play an active part in protecting its funds. This should circumvent the sterile debate about allocation to the first or third pillar of the Treaty, particularly as the Treaty of Nice affirms that the protection of the Community's finances belongs in the first pillar. So we should not lose ourselves in legal analyses, but send a clear signal. For us, the criminal-law protection of European funds against criminal misuse is a serious matter. We therefore welcome the Commission's proposal for the harmonisation of national legislation. It can, though, only be a first step towards the establishment of a European Public Prosecutor's Office to protect Community financial interests, something that was called for at the IGC for the Treaty of Nice but was not, unfortunately, actually discussed. Mrs Schreyer, we are waiting impatiently for the Green Paper from the Commission on this subject. It would have been a good thing if we had already had this Green Paper together with the proposal for a directive. In order to make good this deficiency, the amendments tabled by the Committee on Budgetary Control call for the next revision of the Treaties to include the establishment of a European State Prosecutor's Office, on the corpus juris model and appertaining to the first pillar. The course must be set for this as early as the Laeken Summit. The Committee on Budgetary Control proposes, as an intermediate step without amending the Treaty, the establishment of an internal financial prosecutor in accordance with the three-phase model in the second report of the Committee of Wise Men. As has already been said, we welcome the Commission's proposal, but call for an effective instrument, that is to say, a regulation rather than a directive. Why? Directives commit the Member States to objectives, whilst regulations prescribe the instruments they are to use to achieve those objectives. The proposal for a directive is meant to insert into the criminal law of all the Member States a standard definition of offences such as fraud, corruption, money-laundering etc. to the detriment of the Community Budget. There is no doubt that a regulation is the legal instrument to be preferred in order to avoid new confusion of the sort that there has been in the past. I strongly invite Parliament, the Commission and the Council to now go down this necessary political road together. I ask you to adopt my report, on which no amendments have been tabled.

Political group: PPE-DE