Financial Crime World

Major Anti-Corruption Operation in Czech Republic: 36 Searches, 10 Arrests, and €11 Million in Suspected Fraud

Feb 19, 2024 – Prague

The European Public Prosecutor’s Office (EPPO) in Prague launched a significant anti-corruption operation uncovering a criminal network manipulating public contracts for hospital medical supplies. A total of 36 searches were carried out in 11 Czech cities, resulting in the arrest of ten suspects.

Arrested Suspects and Charges

The suspects included:

  • The general manager of a hospital
  • Contracting authority managers
  • Hospital suppliers’ directors
  • Alleged members of a criminal organization

The suspects faced charges of:

  1. Corruption
  2. Money laundering

The European Delegated Prosecutor overseeing the investigation is considering requesting their detention.

The Alleged Criminal Organization

This suspected illegal organization had been operating since 2022 and had manipulated the public procurement process for medical supplies.

Some of their tactics included:

  1. Favoring pre-determined suppliers
  2. Awarding contracts without following official procedures
  3. Allowing actors to influence tendering conditions before contracts were announced

Confidential Information Transmission

Confidential information, such as opposing suppliers’ offers and tendering document clarifications, was allegedly transmitted to preferred suppliers, helping them draft responses for contract selection.

Approximately €10 Million in Public Contracts

Public contracts worth approximately €10 million were granted, with pre-determined suppliers paying a bribe of up to 10% in return, amounting to roughly €1 million.

Covert Scheme and EU Funds

Bribes, believed to be part of illicit funds, were diverted using forged invoices from related companies to conceal their origin and were later distributed among the group as cash.

A worrying aspect of this case is that some hospital equipment purchases were co-financed by the European Regional Development Fund (ERDF) under the REACT-EU program, leading to €1 million in EU funds being compromised.

EPPO’s Continued Investigation Efforts

The European Public Prosecutor’s Office will continue their investigation efforts to determine the extent of the suspected criminal activities and the overall financial damage inflicted on the EU budget. Crimes under investigation include:

  • Damage to the EU’s financial interests
  • Procurement fraud
  • Active and passive corruption
  • Participation in a criminal organization
  • Money laundering