Financial Crime World

EU Cracks Down on Alleged Criminal Organization Manipulating Public Procurement Processes for Medical Supplies in Hospitals

February 19, 2024, Prague, Czech Republic

In a major operation against financial crime, the European Public Prosecutor’s Office (EPPO) in Prague, Czech Republic, announced the arrest of ten individuals and the execution of 36 searches in connection with a suspected criminal organization manipulating public procurement processes for medical supplies in hospitals.

Arrests and Searches

The suspects, including top hospital managers, contracting authorities, hospital suppliers’ directors, and suspected members of the criminal organization, were detained in 11 cities across the Czech Republic and management offices of two hospitals. This was a collaborative effort by the Czech police’s National Centre against Organised Crime (NCOZ) and Europol.

Criminal Network Exposed

The European Delegated Prosecutor, leading the investigation with the EPPO, unveiled an organized criminal network involved in corruption and possibly money laundering since at least 2022. The individuals allegedly rigged procurement procedures to favor pre-selected suppliers.

Preferred Suppliers’ Advantage

Preferred suppliers were reportedly given the opportunity to influence tendering conditions before public tenders were announced, with confidential information passed on to them, enabling them to craft favorable bids. In exchange, bribes, amounting to ten percent of the contract value, were purportedly paid to individuals within the contracting authority, funneled through an intermediary posing as the head of the criminal organization.

Charges and Damages

The suspects are currently in custody facing charges related to:

  • Damage to the EU’s financial interests
  • Procurement fraud
  • Active and passive corruption
  • Organized criminal activities
  • Money laundering

The European Regional Development Fund (ERDF) is reportedly affected, as some of the tainted medical equipment supplies were co-funded by the REACT-EU program.

Damages to the EU budget currently exceed €1 million, but the investigation remains ongoing to evaluate the complete extent of the suspected illicit activities and the ensuing total damage.

EPPO’s Role

The EPPO is the EU’s independent public prosecution office responsible for pursuing and bringing to justice crimes against the EU’s financial interests.