Author: Daniele Alessandro Luison
Subcommittee: Banking insurance and financial authorities
Date: 12/09/2023

The pivotal role of the European Public Prosecutor’s Office (EPPO) in combating financial crime is perfectly highlighted in the context of a new ongoing investigation in Bucharest.

Recently, indeed, a Romanian businessman and his company have been indicted before the Bucharest Tribunal for fraudulently obtaining over €3 million in EU funds for the development of ‘RECUMED’, a research and development center in medical recovery and bio-reconstruction.

Leading the investigation is the European Public Prosecutor’s Office (EPPO) in Bucharest, which suspects that, in addition to defrauding the EU’s financial interests, the company involved and its legal representative have engaged in money laundering following the receipt of the funds.

In fact, to win a tender for RECUMED, project funded by the European Union, the Romanian businessman submitted several false and inaccurate statements and documents pertaining to the procurement of medical equipment and construction work needed for the project. These actions were aimed at securing non-repayable grants totaling over €3 million between 2018 and 2020.

Both suspects are believed to have created fraudulent statements to demonstrate no conflicts of interest with the companies they represented, seemingly complying with legal provisions regarding transparency, legality, and competitiveness in procurement procedures. The procurement process was further manipulated through the submission of fictitious competing offers on behalf of other commercial entities and the presentation of false documents suggesting that the Spanish company met eligibility requirements for proving technical capacity to fulfill the contract.

The investigation therefore reveals that the suspects did not stop at procurement fraud. After obtaining EU funds, the Romanian company transferred the project’s allocated funds to the bank accounts of Spanish firms. Subsequently, this money was channeled to other companies in Cyprus and Portugal, with a significant portion ultimately funneled back to the initial beneficiary in Romania through the issuance of bogus invoices.

Finally, the investigations brought to light that the actual purchase value of medical equipment and related products for project execution was approximately four times lower than the declared purchase value within the project. The initial purchase prices were negotiated and set by the first suspect himself. The value of medical products was artificially inflated through successive transactions involving initial suppliers, Cyprus-based companies, Portugal, and Spain, ultimately leading to their sale to the initial Romanian beneficiary at an inflated price.

A second individual, an accomplice in the fraudulent scheme, reached a plea bargain on September 20, 2022. The penalty was set at 3 years in prison, suspended with a 4-year supervision period, as the individual pleaded guilty. The plea agreement has been referred to the Bucharest Tribunal, awaiting a final judgment.

In conclusion, this case underscores the crucial role of EPPO in investigating EU financial crimes and the significance of financial law in tracing funds through a complex web of transactions and money laundering. A rigorous oversight and an effective cooperation between EPPO and both supervisory authorities and financial & banking institutions are essential in the fight against EU financial crime to ensure the protection of EU funds and the effective prosecution of those responsible.

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