Financial Crime World

European Public Prosecutor’s Office Spearheads Major Corruption Probe in Czech Republic 🇨🇿

Arrests and Searches in 11 Cities

[Prague, Czech Republic, 19 February 2024]

The European Public Prosecutor’s Office (EPPO) in Prague led a major corruption probe on Wednesday, 19 February 2024, resulting in the arrest of ten suspects and conducting searches in 11 cities.

Focus on Financial Irregularities in Hospital Medical Supplies

This investigation, headed by the Czech police’s National Centre against Organised Crime (NCOZ), targeted suspected financial irregularities involving public contracts for hospital medical supplies.

Criminal Organization Allegedly Falsified Tendering Conditions

The arrests followed 36 searches at suspects’ homes, offices, and the management offices of two hospitals. Detainees included hospital general managers, contracting authority managers, and directors of medical equipment suppliers.

  • Alleged Criminal Organization: An organized crime group with suspected ties to manipulating the public procurement process for medical supplies since 2022 was under investigation.
  • Irregularities: The group is believed to have falsified the tendering conditions to favor specific suppliers and, in some instances, procured equipment without adhering to formal procurement procedures.
  • Impact on Medical Supply: Various medical equipment, including operating tables, laparoscopic and arthroscopic surgery equipment, endoscopes, defibrillators, surgical drills, and ventilators, were affected.
  • Preferred Suppliers: These suppliers reportedly had undue access to tender information, allowing them to tailor their offers and responses, submitting favorable bids that were awarded.

Bribes Paid to Contracting Authority Members

When public contracts went to preferred suppliers, bribes of roughly 10% of the contract’s value were allegedly paid to members of the contracting authority. These payments were channeled through intermediaries who acted as the head of the criminal organization.

  • Masking Illicit Cash: The corrupt group is suspected of using forged invoices from associated firms to mask the illicit cash.
  • Funding: The European Regional Development Fund (ERDF) co-funded the supply of some of the implicated medical equipment to hospitals under the ‘Recovery assistance for cohesion and the territories of Europe’ (REACT-EU) programme.

Offenses Under Investigation

An array of offenses is being investigated, including:

  • damage to the EU’s financial interests
  • procurement fraud
  • active and passive corruption
  • participation in an organized criminal group
  • money laundering

European Public Prosecutor’s Office

The EPPO is an independent public prosecution office of the European Union, tasked with investigating, prosecuting, and bringing to judgment crimes against the EU’s financial interests.

Update

[20 February 2024]

The details of this case were updated on 20 February 2024, with the inclusion of the formal accusation of the ten suspects and the European Delegated Prosecutor’s pending request to put some of them into custody. Damages to the EU budget now documented were €900,000.