Council attempts to limit Panama Committee’s mandate and powers

The Council of the European Union has made an early, but unsuccessful, attempt to sabotage the work of the European Parliament’s inquiry into the Panama Papers – the European Parliament’s committee of inquiry into money-laundering, tax evasion and tax avoidance (PANA).

Shortly after the establishment of the PANA Committee, the Council issued an Information Note to the Permanent Representatives Committee regarding PANA on 1 July 2016.

The Information Note was a legal opinion from the Council’s Legal Service which argued that the European Parliament’s decision to establish the PANA committee of inquiry does not meet legal requirements. Most disturbingly, the opinion calls for a coordinated and unified approach among Member States to limit the scope of the inquiry, and to refuse to participate in the inquiry if requests for participation do not meet certain requirements.

The PANA secretariat have stated that they disagree with the analysis and believe the mandate is within the scope of the Parliament’s existing powers.

Council’s arguments

To briefly summarise the legal opinion, the Council’s legal service argues:

  • That the Parliament’s decision to establish the committee of inquiry does not meet the requirements of the existing legal framework; that the mandate does not specify precisely the facts that are under inquiry; and that it does not specify the precise provisions of Union law that are alleged to have been contravened.
  • That, as a consequence of this alleged lack of precise, specific detail in the Parliament’s decision, Member States and institutions may not be “in a position to ascertain the extent of their obligations towards a committee of inquiry” and they may be unable to sufficiently prepare for participation in the PANA committee.
  • That existing laws in relation to tax evasion and avoidance remain primarily a Member State competence, so the matters under inquiry are not within the scope of the application of Union law but rather domestic tax legislation and double taxation treaties, and the EP decision encroaches on Member States’ tax powers.

Council’s Legal Service recommends refusal to participate in PANA

The Council’s legal service recommends:

  • That the “reasoned request” on which individual Member States or the Council may be called to participate in the inquiry “should identify in sufficiently clear, precise and unequivocal terms the factual and legal elements which form the object of the inquiry, so that the former are in a position to determine their obligation to participate and, if applicable, invoke any of the exemptions not to do so” under Article 226 of the Treaty on the Functioning of the EU and the Commission’s 1995 Decision (1995/167/EC) – ie, on the grounds of secrecy or public or national security.
  • That Member States and the Council can validly refuse to participate in the inquiry if the “reasoned request” does not include such specific and precise terms.
  • That the Member States and Council should coordinate their decisions to participate in the inquiry “so that the scope and modalities of such participation (or their decision not to do so) respond to a unified approach”.
  • That such coordination could be organised within the framework of the Council’s Code of Conduct (business taxation) or Tax Questions working groups.
  • That the Member States or Council (if authorised by a majority of its members) may legally challenge the Parliament’s decision.

GUE/NGL demands Parliament has proper powers of inquiry

GUE/NGL wholeheartedly rejected the conclusions reached in the Council’s highly political ‘legal opinion”.

Among other things, this issue shows the urgent need for increased powers for inquiry committees in the Parliament, a longstanding demand from the left political groups. These increased powers should relate to both scope and the collection of evidence.

The Parliament’s existing powers of inquiry determined in 1995 are governed by an inter-institutional agreement (between the Parliament, Council and Commission).

The European Parliament’s Research Service explains: “In order to collect evidence, committees of inquiry can invite witnesses or receive their written submissions, request documents, hold hearings with experts and undertake fact-finding visits in Member States and in third countries. A committee of inquiry does not, however, have the power to subpoena individual named witnesses. Rather, upon its request, Member States and EU institutions and bodies should designate and authorise an official or servant to appear before the committee of inquiry.”

In 2012, the Parliament endorsed a proposal for a regulation on the right of inquiry with strengthened powers, but progress on achieving these changes have been blocked by the Council and Commission. For example, an inquiry should have the power to compel witnesses to appear before it, rather than merely “invite” them to do so, and to ‘summon’ a specific EU official or other servant to testify. While the Parliament voted in favour of these new powers in a resolution in 2014, the Council and Commission continue to oppose giving sufficient inquiry powers to the Parliament.

The PANA secretariat have stated that they disagree with the Council Legal Service’s analysis on PANA and believe the mandate is within the scope of the Parliament’s existing powers.

Links to related media coverage

Media coverage and comments on the Council’s Legal Service opinion are below (in German).

Süddeutsche Zeitung – Dispute about Panama investigation
Spiegel Online – Lawyers slap to Panama Papers investigation
Press review (Fabio De Masi) – Dispute over Panama committee