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Four convicted in Latvia for procurement fraud, €780 000 in EU funds fully recovered

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Last week, following an investigation by the European Public Prosecutor’s Office (EPPO) in Riga, the city’s District Court convicted four persons of organising a fraudulent tendering procedure, through which they had obtained €780 000 in EU funds.

The tender, partly funded by the EU and organised by a Latvian company that produces water-heating radiators, was for a contract to construct a new production facility. The four colluded to produce fake documents in order to secure the awarding of this contract to a second, pre-selected company, also involved in the fraud.

The legal representatives of the two companies and an employee of the bidder company were assisted by an EU funds consultant in drawing up the false documents, which included fictitious bids with higher prices, to give the appearance of the advantageous nature of the bid presented by the chosen company. Despite receiving an economically cheaper offer that complied with the requirements, the members of the group falsified documents pointing to the non-conformity of the valid proposal, thus misleading the national agency that evaluates the legality of such procedures. In this manner, the company organising the tender obtained €1 775 000 for the project, of which €780 000 was financed by the European Regional Development Fund.

Thanks to the EPPO investigation, the unlawfully obtained EU funds were fully recovered before the trial.

Investigation took less than a year

The offenders were prosecuted less than a year after the beginning of the investigation, which was fully carried out by the EPPO’s European Delegated Prosecutors. The court reached its verdict on 26 September 2022.

The legal representatives of both companies were sentenced to three years’ imprisonment, suspended for three years, and to each pay fines of between €20 000 and €30 000. The employee of the company submitting the fraudulent tender was sentenced to two years and six months, suspended for the equivalent period, and to a fine of €10 000. The EU funds consultant was sentenced to two years’ imprisonment, suspended for that duration, and a fine of €12 000. The company that organised the tender was sentenced to pay a €40 000 fine.

The verdicts were the result of plea bargains, as the four accused pleaded guilty to all charges. 

This case is an excellent example of cooperation with the Competition Council of the Republic of Latvia (‘Konkurences Padome’). This government agency identified a possible breach of competition regulations and shared information with the EPPO, which was crucial for obtaining and preserving the evidence for a successful prosecution.