The District Court of Vilnius in Lithuania has convicted six individuals and one company of document forgery, fraudulent account management, and high value fraud following an investigation led by the European Public Prosecutor’s Office (EPPO).

The business owner applied for EU-funded projects to promote small and medium-sized enterprises, which led to the purchase of Covid-19 protective filters and equipment. The business owner and his business partners were involved in fraudulent activities, causing €580,000 in damage to the EU budget. The six individuals received suspended custodial sentences of between nine months and one year, while the individuals and convicted company had to pay fines ranging from €19,000 to €150,000.

Embezzlement presents a formidable challenge in projects financed by EU funds, compromising the effectiveness of initiatives aimed at economic development and cohesion. The distribution complexity of EU funds, involving numerous stakeholders, creates opportunities for corruption and misappropriation. Inadequate oversight and enforcement at national and EU levels contribute to this issue, allowing malfeasance to go undetected or unpunished.

Corruption within public institutions, collusion between project implementers and contractors, and a lack of transparency in decision-making processes further exacerbate the problem. Additionally, insufficient capacity within public institutions to manage and oversee complex projects, delayed disbursements, complex reporting requirements, and ineffective whistleblower protections contribute to the vulnerability of EU-funded projects to embezzlement.

Addressing this issue requires a comprehensive approach, including strengthened oversight mechanisms, enhanced transparency, improved capacity building, and robust anti-corruption measures.

The European Public Prosecutor’s Office has in recent years taken measures that are considered to have curbed the worst excesses previously observed in EU funded projects in various countries.