Criminals increasingly targeting EU green funds, says anti-fraud agency

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Fraudsters in Europe are increasingly targeting European Union funds intended for environmental and sustainable projects.

It came as the bloc planned to unlock €1 trillion in green investments over the coming years.

In its latest report released on Thursday, the European Anti-Fraud Office (OLAF) said that it concluded 181 investigations in 2019, opened 223 new probes, and recommended the recovery of €485 million from the EU budget.

Among the investigations it completed were cross-border fraud schemes affecting humanitarian aid as well as the EU’s environment, agricultural and regional development funds.

The agency’s Director-General, Ville Itälä, also flagged that it had “observed a growing trend building up over the last few years in fraud involving EU funds for environmental and sustainable projects.”

“OLAF’s success is a crucial asset for Europe as the eyes of fraudsters turn towards the 2021-2027 budget with its 1.8 trillion euros designed to power Europe’s recovery from the consequences of the COVID-19 pandemic,” he added.

Investigations by OLAF that had an environment or sustainability element, included cases looking into the misspending of EU funds intended for green products and also the counterfeiting and smuggling of products with the potential to harm the environment and health.

The anti-fraud office is, for instance, helping in the battle against the illegal trade in European glass eels, which are smuggled to Asia where they are farmed to maturity and then resold for huge profits.

Illegal activity impacting wood is also of interest — in particular, the illegal logging and smuggling of precious wood and timber from Myanmar into the EU and allegations of the import and end-use of wood from certain protected forests in Ukraine.

Investigations are also underway regarding the illegal dumping of biodiesel from the world market into the EU.

The EU Commission has put a proposed New Green Deal at the heart of the bloc’s 2021-2028 budget to make its economy more sustainable, with the aim of becoming the world’s first carbon-neutral region by 2050. To fund the Green Deal the EU plans to mobilise €1 trillion in public and private investments.

Another major trend identified by OLAF during the year was fraudsters using the procurement and tendering process to gain access to EU funds for illegal purposes.

One of these cases concerned a “well-known non-governmental organisation” involved in supporting EU humanitarian aid efforts in Syria.

The NGO received €19 million in EU funds over the past four years through four separate grants, but OLAF found evidence of corruption by two former staff members who had designed a “sophisticated fraud” to siphon money into their own pockets and that of their collaborators.

The agency has recommended the recovery of €1.5 million but the two individuals remain at large.

Three Polish companies were also found to have defrauded the EU’s food, farming and rural development fund by faking and inflating invoices and manipulating tendering procedures. OLAF has recommended the recovery of over €1.1 million in EU financing.

Four other cases, this time impacting the European Regional Development Fund, found that several companies in textile manufacturing had colluded to undermine the procurement and tendering process.

OLAF issued financial recommendations worth €3.3 million and judicial recommendations against six individuals and five legal entities.

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