OLAF: Fraud involving EU funds for environmental projects is growing trend

The office recommended the recovery of €485m to the EU budget for last year

Photo: EU Ville Itälä.

The European Anti-Fraud Office (OLAF) that is carrying out independent investigations into fraud and corruption involving EU funds, concluded 181 investigations, issuing 254 recommendations to the relevant national and EU authorities and recommended the recovery of €485m to the EU budget. This shows the organisation’s annual report for 2019, the year when OLAF turned 20.

For these 12 months, the office opened 223 new investigations.

The analysis identifies that among the main trends that have emerged or continued in 2019, are collusion and manipulation of procurement, cross-border schemes that make detection more difficult and frequent targeting of projects in third countries. It also ascertain continued targeting of research funding, as well as smuggling and counterfeiting, involving complex cross-border networks.

The report displays the large variety of fraud schemes uncovered by OLAF’s investigations concluded in 2019. For example, €3.3m was recommended for recovery after OLAF successfully uncovered a complex attempt to undermine a procurement and tendering process for the purchase of knitting machinery financed by the European Regional Development Fund. Buyers and suppliers had colluded in four different EU-funded projects to sell and buy machines at an inflated price and siphon money off EU funds and then launder it.

Also last year, the office concluded an investigation with a recommendation to recover nearly €1.5m, meant originally to provide emergency assistance to civilians affected by the conflict in Syria but were instead pocketed by former staff of an NGO.

OLAF investigations have increasingly focused on fraud related to environmental projects or projects with an environmental impact. As part of the so-called Dieselgate, for example, OLAF uncovered how EU money meant for research to reduce vehicle emissions was instead used to develop an engine on which the notorious ‘defeat device’ circumventing EU rules on emissions was deployed.

The investigations have tackled as well trade in endangered species and illegal logging and import into the EU of wood and timber, sometimes from protected forests. They have uncovered international trade schemes of illicit biodiesel, fraud against forest fire detection funds, and several cases focusing on water and waste management. One case concluded in 2019 involves faking green credentials in order to obtain EU funding.

Last year, OLAF has helped national authorities seize more than €251.4m smuggled cigarettes and concluded a number of investigations into suspicious water pipe tobacco consignments that had entered an EU country. The related loss in revenue was estimated at around €14m – making water pipe tobacco smuggling a very lucrative business for smugglers.

OLAF continues to invest in the cooperation with national authorities of EU Member States and international partners alike. An operation built on OLAF intelligence, with the support from Spanish customs and cooperation with the Colombian and Mexican authorities led to the seizure of 400 tonnes of counterfeit shampoo, quantity enough to fill several swimming pools, originating from China.

In this spirit, OLAF worked on a number of new arrangements with international bodies and EU and non-EU national authorities over 2019.

For 20 years, OLAF has put its unique expertise to the benefit of the EU, ensuring that taxpayers’ money is properly spent and fighting against fraud, corruption, smuggling and counterfeiting, stated OLAF Director-General Ville Itälä. We keep abreast of fraud trends and we adapt to the ever-changing fraud patterns that seek to take advantage of the money that Europe makes available to achieve its priorities, he said adding that  OLAF’s success is a crucial asset for Europe as the eyes of fraudsters turn towards the 2021-2027 budget with its €1.8tn designed to power Europe’s recovery from the consequences of the Covid-19 pandemic.

“We have already observed a growing trend building up over the last few years in fraud involving EU funds for environmental and sustainable projects. The focus chapter in our annual report shows OLAF’s growing work in tackling environmental fraud. This is particularly timely, as the Green Deal is a key part of the EU’s recovery effort’’, Ville Itälä emphasised.


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