OLAF REPORT - 11 INVESTIGATIONS, 9 RECOMMENDATIONS IN ROMANIA Romania held the top position when it comes to fraud involving European grants last year

English Section / 11 septembrie 2020

Romania held the top position when it comes to fraud involving European grants last year

The European Anti-Fraud Office last year issued nine recommendations of recouping European grants, in 11 cases investigated in Romania, which puts the country on an unenviable top position in the EU, according to its activity report for 2019 of the institution in question.

Another chart where we rank among the top positions, is that of the total number of frauds and financial irregularities found by the OLAF between 2015-2019 among EU member states.

After Spain, which has 11,029 detected frauds and financial irregularities, and Poland with 5017 cases, Romania ranks third in the top of structural funds, investment and agriculture fraud, in the period 2015-2019, with 4968 frauds and irregularities, followed by Italy, with 4415 cases of fraud. Regarding the financial impact on the payments made, we rank, with 2.92%, behind Slovakia, with 21.03%, but ahead of Spain, which, in 11,029 cases (more than twice as many as Romania), had a financial impact of 2.7%.

Between January 1st 2015-December 31st, 2019, following the cooperation between the EAFO and criminal prosecutors, out of 46 cases notified by the European officials, Romanian authorities have not yet rendered rulings in 22 of them. Out of the 24 cases prosecuted, 11 have resulted in criminal indictments, and 13 have been closed.

The above-mentioned situation led MEP Dacian Cioloş, the president of the European Parliament Group Renew Europe, to write on the official Facebook page: "We have the 2019 OLAF report.

(...) We are not a country of thieves, but we are one that has fallen under the control of thieves.

International data does nothing but confirm again, as if there was any need, that their wealth is our poverty.

Until we vote to end thievery, all we will know is poverty. According to the OLAF, as a country, we are ranked first in 2019 when it comes to investigations and recommendations received. Just as worrisome is the fact that between 2015 and the end of 2019 we are ranked second, after Spain, in terms of possible frauds and irregularities concerning structural funds and also second, in terms of Hungary, when it comes to the investigations out of which came recommendations. Essentially, us and Hungary split 35% of the serious cases of serious irregularities with European grants in the EU. Maybe like that you will understand why PSD leaders have always seen Viktor Orban as a model. Extremely unpleasant is the fact that we are present in the OLAF report with many examples of fraud in the environmental protection segment in the last five years. Out of the examples presented in the report, Romania spans frauds pertaining to forest protection, aquaculture and waste management. The topics presented overlap perfectly with a number of legitimate concerns of the Romanian society. Under these circumstances, I would very seriously suggest to the minister of Justice to urgently send to the European Parliament the number of prosecutors requested by European chief-prosecutor Laura Codruţa Kovesi. Postponing that in any way raises serious questions".

In his message, the leader of the Renew Europe group claims that frauds involving European grants is a practice of PSD local elected officials, and he reminds of the investigations made a few years ago by the OLAF concerning Tel Drum and the former head of the PSD, Liviu Dragnea.

"Anything stamped by the PSD is stained with their theft and our pain. Regardless of whether they hide their logo or they change it, the members of the PSD change it with shame, the shame of being a thief", says Dacian Cioloş, campaigning for the local and parliamentary elections which will be held on September 27 and December 6.

Over 6 million Euros - fraud in a project involving water and sewer networks conducted in Romania

Several cases investigated by the OLAF closed in 2019 concern infrastructure projects related to water and sewer grids, as well as waste management.

According to a report drawn up by the OLAF employees, an extremely complex cross-border case has focused on a project conducted in Romania. Together with the prosecutors of the National Anti-Corruption Department, the employees of the OLAF have uncovered a network of fraud and money laundering in a project concerning the water and sewer grids. The project has been valued at 102 million Euros and had as its beneficiary a local public company.

The OLAF investigation concerning this project has also taken place in Germany, where the European inspectors have analyzed several banking transactions in order to identify the real destination of European grants allocated for the program in question. The OLAF found that, following the procurement proceedings, the beneficiary awarded two contracts to a Romanian-German joint-venture, in which the Romanian company was the project leader, controlling 70% of the business and being the only recipient of the European grants allocated for the works in question.

During the investigation, the OLAF established that the German company was not in fact aware of its actual involvement in the project and that, in order to demonstrate that it had the capacity to carry out the contracted work, the Romanian company had created a fictitious joint venture, using the name, the reputation, experience and financial situation of the German company to win the calls for tenders submitted by the beneficiary of the project.

Furthermore, the OLAF found that the Romanian company had falsely claimed, in public procurement procedures, that in the past, it had executed projects similar to the one for which it had submitted the tender.

The investigation carried out in connection with the case shows that, after receiving part of the sums allocated to the project, the Romanian company simply abandoned the works and the contracts for the construction of water networks and sewerage were canceled, which had a negative effect on environmental policy.

Because of all the elements recorded in this case, the OLAF has asked the General Department of the Urban and Regional Policy Department of the European Commission to recoup from the Romanian authorities over 6 million Euros.

Most frauds pertain to structural funds and agriculture funds

According to the drawn up report, the OLAF last year completed 181 investigations, issuing 254 recommendations addressed to the relevant authorities of the member states and of the EU. The institution which oversees the correct spending of European grants has recommended the recouping of 485 million Euros, which would be returned to the EU budget, by the EU member states. Throughout 2019, the OLAF has launched 223 new investigations.

The report identifies the main trends which have appeared or continued throughout 2019:

- collusive practices and the manipulation of public procurement procedures;

- cross border systems which make detection more difficult;

- the frequent targeting of projects in third-party countries;

- the continued targeting of research funding;

- smuggling and counterfeiting, which involve cross-border complex networks.

The document, published on September 10th, outlines the wide variety of fraud systems uncovered by the investigations the OLAF completed in 2019. For example, it was recommended that EUR 3.3 million be recouped after the OLAF uncovered a complex attempt to undermine the procurement and bidding process for the purchase of knitting machines financed by the European Regional Development Fund. Buyers and suppliers had secretly agreed on four different EU-funded projects to sell and buy equipment at a higher price and divert EU funds set to be laundered.

Also in 2019, the OLAF concluded an investigation with a recommendation for the recouping of almost 1.5 million euros, an amount intended to provide emergency assistance to civilians affected by the conflict in Syria, but which was collected by former members of the staff of an NGO through a sophisticated fraud system.

In order to exemplify how the fraud involving European grants occurs, during the activity report for last year, the OLAF mentions a case from 2013, whose investigation of completed in 2017, which involved a beneficiary of five aquaculture projects financed by the European Union in Romania. The individual in question has received subsidies for tracts of land that were never covered in water. More specifically, two aquaculture farms located in a Natura 2000 site and three projects where the EU funding was going to be used in order to support the transformation of traditional aquaculture farms into certified organic farms.

The OLAF investigation has confirmed the initial accusations about the false projects, which were only drafted to obtain the European grants via fraudulent means. The case was closed in 2017 with a recommendation of recouping 100% of the European grants, almost 1.3 million Euros, amount which was recouped by the General Department for Maritime Affairs and Fishing of the European Commission.

The OLAF investigation confirmed the initial allegations of false projects, which were made for the sole purpose of obtaining European funds by fraudulent means. The case was closed in 2017 with a recommendation to recover 100% of European funding, almost 1.3 million euros, the amount being recouped by the Directorate-General for Maritime Affairs and Fisheries of the European Commission.

Out of the total 456 ongoing investigations conducted in 2019 by the OLAF, 88 pertain to structural funds, 82 to centralized spending, 42 to agricultural funds, 32 to the new financial instruments, 13 to the European social fund, 5 to the maritime and fishing fund and only 3 to the cohesion funds.

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