European prosecutors seize assets in latest action in Bulgaria

In the latest of actions this year announced by the European Public Prosecutor’s Office (EPPO) in Sofia, EPPO secured the seizure of assets in an investigation into a 2.6 million euro project involving works to the water supply network of a municipality in Bulgaria, funded by the European Union, the office said in a statement on August 26.

Under investigation are public officials and a mayor, suspected of defrauding the EU budget.

At the EPPO’s request, the Sofia Court of Appeal imposed precautionary measures, including the seizure of real estate and vehicles belonging to the suspects under investigation, which were enforced by the public bailiff on Friday.

Seven buildings, with а total area of 1956 square metres, were seized, as well as three vehicles, in order to compensate the estimated damage to the EU budget, the statement said, without identifying the municipality.

At issue is a project to reconstruct the water supply network and the water reservoir of a municipality in Bulgaria, funded by Bulgaria’s State Fund for Agriculture (SFA), under the EU’s Rural Development Programme, to an amount of 2.6 million euro (5.2 million leva).

The investigation uncovered evidence of fraud in the execution of the contract, awarded to private companies.

Public officials from SFA are suspected of making fraudulent arrangements with a mayor and those companies, in order to inflate the price of the works and overcharge the paying agency.

The public officials are also believed to have drafted documentation with false information, certifying that all the works had been completed within the established deadline, which were then submitted to the SFA, in order to obtain the EU funding.

The suspects also include experts from the municipality’s department supervising the works. One of the suspects is also being investigated for money laundering.

On August 9, EPPO lodged criminal charges against an entrepreneur, accused of using false documentation to obtain EU funds for the construction of a farm for laying hens.

The defendant is the manager of a company that obtained EU agricultural funding from SFA for a project to develop a farm for egg production, amounting to 490 000 euro (958 459 leva).

In order to receive an advance payment of the funds, the manager submitted a bank guarantee that was rejected by the paying agency, as it did not respect the requirements.

It is alleged that the defendant subsequently presented a forged amendment to the original bank guarantee, making it appear as if it had been issued by the bank with the required changes – thus misleading the paying agency, which made an advance payment of approximately 245 000 euro (479 229.70 leva), equivalent to 50 per cent of the funds.

In addition, according to the investigation, the works for which the beneficiary received the funds were never executed, EPPO said.

On June 27, EPPO Sofia lodged criminal charges against an entrepreneur, accused of using false documentation to obtain EU funds for the construction of a dairy facility.

The defendant is the manager of a company that obtained support from SFA for a project to build a factory to process raw milk and produce dairy products, to the amount of 474 000 euro (927 352.44 leva)

In order to receive an advance payment of the funds, the manager submitted a bank guarantee that was rejected by the paying agency, as it did not respect the requirements.

It is alleged that the defendant subsequently presented a forged amendment to the original bank guarantee, to make it appear as if it had been issued by the bank with the required changes – thus misleading the paying agency, which made an advance payment of 237 000 euro (463 676.21 leva), equivalent to 50 per cent of the funds.

In addition, according to the investigation, the works for which the beneficiary received the funds were never executed.

On April 11, EPPO announced that an entrepreneur was fined by the Sofia District Court for attempted subsidy fraud and forgery of documents involving a car repair shop, following an investigation by EPPO Sofia.

The defendant, on behalf of her company, had submitted an application to SFA, under the measure ‘Investments in support of non-agricultural activities’, in order to obtain funding to build and equip a car repair shop, amounting to approximately 200 000 euro (391 159 leva) – 85 per cent of which was to be granted by the EU and 15 per cent by the Bulgarian state.

However, the investigation established that the defendant submitted forged documents, including false certificates of education, falsified building permits and forged offers to purchase equipment, in order to obtain the funds.

As a result of the investigation, the funds were not paid out, preventing damage of 200 000 euro to the EU and Bulgaria’s national budget, EPPO said.

The court imposed a fine of 3000 leva. This penalty was the result of a plea agreement, as the defendant pleaded guilty to all charges, and there was no material damage to the EU budget.

On April 3, EPPO Sofia proposed to the Sofia District Court an administrative penalty for a farmer suspected of agricultural subsidy fraud and document forgery.

The suspects owns a sheep farm in the municipality of Vurshets (Montana district) and had successfully applied for funds to modernise his farm in the amount of 134 770 leva, 85 per cent of which was financed by the European Agricultural Fund for Rural Development (EAFRD) and 15 per cent by the national budget.

In order to obtain these funds, the suspect needed to submit a number of documents, including one to prove that he had no existing tax obligations. The investigation carried out by SFA showed that the farmer actually did have tax obligations and submitted a false document during his application for the funds. The requested funds were therefore not released and the damages were prevented, EPPO said.

On April 1, EPPO announced that at its request, searches were taking place in six companies and four private houses in two Bulgarian districts.

The searches were intended to gather evidence in a suspected case of embezzlement, misuse of EU funds and money laundering linked to the construction of the Zheleznitsa tunnel, the longest road tunnel in Bulgaria that was recently opened for traffic.

On March 28, EPPO Sofia announced that it was leading searches in two hotels in a Bulgarian ski resort in an investigation into Covid-19 subsidy fraud.

In 2020 and 2021, the company under investigation obtained 220 000 euro from the European Social Fund (ESF) under three Operational Programmes. The subsidies were intended to compensate for the staff’s remuneration when tourism came to a halt during the pandemic.

It is suspected that some of the employees were asked by their employer to return a part of the salaries they received and that documents were forged on their behalf to prove that they did receive the financial compensation, EPPO said at the time.

On March 27, EPPO Sofia said that it had lodged criminal charges against a suspect for subsidy fraud, following an investigation into projects for cultivating agricultural products, fully funded by the EU.

In January 2020, the suspect allegedly applied on behalf of three different companies to the SFA Regional Directorate Plovdiv for EU funds from the European Agricultural Guarantee Fund (EAGF) allocated to Bulgaria, under the scheme for coupled support for the cultivation of vegetables. In total, the funds the suspect applied to amount to 190 000 euro.

According to the evidence, the suspect supplied several documents such as invoices for his sold production to prove the required minimum amount of produce.

In the application, it was declared that a substantial production had been achieved on specified plots.

However, the investigation revealed discrepancies between the declared production and the actual harvest obtained.

On March 21, EPPO Sofia said that it had lodged criminal charges against an individual, accused of using false documentation to illegally obtain over 220 000 euro (445 726.73 leva) in EU and national funds.

According to the evidence, the defendant electronically submitted a project proposal to SFA for the construction of a heating, ventilation and air conditioning installation, co-financed by the European Agricultural Fund for Rural Development (EAFRD) at a rate of 85 per cent, and the state budget of Bulgaria at a rate of 15 per cent.

It is alleged that, in this proposal, the defendant presented false information – three offers  from potential subcontractors for the construction of such an installation – in order to appear eligible for EU funds, EPPO said.

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