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EPPO carries out 40 house searches in Romania and France in investigation into €30 million fraud

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Forty house searches are being carried out today, 16 May 2023, in several locations in Romania and France, as part of an ongoing investigation led by the European Public Prosecutor’s Office (EPPO) in Bucharest into suspected fraud involving EU and national funds, amounting to more than €30 million.

At stake is a suspected criminal scheme to provide false letters of guarantee to awardees of projects financed by EU funds, which claimed to insure the projects against potential damages.

In Romania, the searches are being conducted in Bucharest, Alba, Arad, Cluj, Constanța, Hunedoara, Iași, Mureș and Olt. Searches are also being carried out in Roquebrune-Cap-Martin, in the south of France.

According to the investigation, between 2020 and 2023, in the framework of several projects benefitting from EU funding, several letters of guarantee were issued by fictitious banks or dubious financial entities that did not have the necessary cash to cover the insured damages.

In particular, a fictitious bank apparently operating in the Comoros Islands issued letters of guarantee by which it assured the public authorities in Romania the payment of sums totalling almost €20 million. Similarly, financial institutions that apparently operate in Czechia, Latvia and Spain issued letters of guarantee to be used in Romania, without having the right to do so, and without the necessary funds to cover the insured damages.

How it works

For projects benefitting from EU financing, the winner of the EU-funded contract must submit a letter of guarantee of good execution, issued by a financial institution that undertakes to pay certain sums of money (the value of the guarantee), in the event that the services are not properly executed. In addition, if the beneficiary of the funds receives an advance payment, he/she must also submit a letter of guarantee to the contracting authority, insuring the recovery of the advance.

The suspected perpetrators are believed to have issued letters of guarantee in the name of fictitious financial entities or with fictitious financial resources. In exchange for issuing the letters of guarantee, the suspects are understood to have collected large sums of money, which they used for their own interests.

In the event that a contractor failed to perform their contractual obligations, the contracting authorities would not be able to execute these letters of guarantee, as the issuing entities did not have the necessary financial resources.

The searches, which are still ongoing, are being carried out with the support of police officers from several law enforcement agencies in Romania and France:

  • The EPPO Support Structure in Romania
  • The Economic Crime Investigation Directorate of the General Inspectorate of the Romanian Police and subordinate territorial structures (Direcţia de Investigare a Criminalității Economice din cadrul IGPR si structurile teritoriale subordonate)
  • The Romanian Police - Special Operations Directorate (Poliția Română – Direcţia de Operaţiuni Speciale)
  • DCCO - Service for Combatting Computer Crime (Serviciul de Combatere a Criminalităţii Informatice), Romania
  • Romania’s National Institute of Forensics (Institutul Național de Criminalistică)
  • The Romanian Gendarmerie (Brigada Specială de Intervenție a Jandarmeriei Române)
  • Nice Financial Judicial Investigation Service (Service d’Enquêtes Judiciares des Finances – unité locale de Nice), France