Types of Financial Fraud in Estonia Exposed: €725,000 IT Project Scandal Uncovered

The European Public Prosecutor’s Office (EPPO) in Tallinn has filed an indictment in the Harju County Court against five individuals and five companies for fraud involving a project to develop IT systems co-funded by the EU. The scheme, which dates back to 2018, allegedly defrauded €325,000 in EU funds.

Background

The beneficiary of the funds, a company specialized in transport, warehousing, and customs services, submitted an application to Enterprise Estonia (EAS) for a subsidy from the European Regional Development Fund. The goal was to create an IT program and carry out IT development activities to implement the company’s value-added sales and marketing activities.

Investigation Reveals Fraudulent Scheme

However, an investigation revealed that payments were never actually made by the beneficiary of the funds to other companies providing services. Instead, the money was transferred to related companies using false invoices to create the appearance of real commercial transactions.

Charges Brought Against Suspects

Two legal representatives of the company and their managed company are charged with subsidy fraud, while three individuals and four companies are charged as accomplices of the fraud. If convicted, the defendants face prison sentences up to five years and pecuniary punishment for the companies.

Pre-Trial Investigation

The pre-trial investigation was conducted by the department of cyber and economic crimes of the Criminal Bureau of the Estonian Police and Border Guard Board under the direction of the EPPO. Earlier in May 2023, searches were conducted at the places of residence of the suspects and company locations, resulting in the apprehension of extensive documentation.

Next Steps

The preliminary hearing of the criminal case will be held on November 14, 2023. All concerned parties are presumed innocent until proven guilty in the competent Estonian courts of law. The EPPO is responsible for investigating, prosecuting, and bringing to judgment crimes against the financial interests of the EU.

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