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Conviction in EPPO investigation in Czechia – accused found guilty of EU subsidy fraud

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On Wednesday (10 May 2023), a company and a company manager were convicted by the Regional Court in Ostrava (Czechia), in an investigation by the European Public Prosecutor’s Office (EPPO) in Zlín. They were found guilty of subsidy fraud affecting the financial interests of the EU, with damages to the EU budget of around €74 000.

Between August 2020 and March 2021, the convicted company and its manager  successfully applied for and received a subsidy of €60 900 (CZK 1 523 656.66 ) from the Czech Ministry of Labour and Social Affairs, for a project aiming to support new businesses that offered employment insertion programmes for the production of baked goods. The grant was financed by the EU’s European Social Fund (ESF), under the ‘Operational Programme  on Employment’.  

The project consisted of building new production premises and employing workers, but the grant’s beneficiaries never implemented this. Though they signed employment contracts with three people, these people never worked for the project.

In addition to the grant from the Czech Ministry of Labour and Social Affairs, the convicted company and its manager had also benefitted from a Covid-19 financial support package of €13 300 (CZK 333 316.60), to pay wages of employees and support their baked goods production. As this grant was also financed by the EU, the beneficiaries did not respect the terms of the grant agreement that prohibited the use of other EU funds for the same purpose. As a consequence, the total damages incurred to the EU budget amount to around €74 000.

The company manager was sentenced to two years of imprisonment with a probationary period of five years, with the obligation to compensate the damages caused by the offence during the probationary period. In addition, the accused was also sentenced to the prohibition of such activity – he cannot liaise with subsidy bodies, or participate in subsidy procedures in any capacity, for a period of seven years.

The convicted company was found guilty of the offences of causing damages to the financial interests of the EU and subsidy fraud. Its sentence prohibits it from receiving grants and subsidies for seven years, without the compensation of the damages, due to its insolvency.

The criminal police and investigation service of Ostrava (Krajské ředitelství policie Moravskoslezského kraje, Služba kriminální policie a vyšetřování, odbor hospodářské kriminality v Ostravě) greatly supported this EPPO investigation.