Zagreb: EPPO Charges Four Over Serbian Machinery Fraud
The European Public Prosecutor's Office in Zagreb has charged four people and two companies: machines bought in Serbia for 398,866 euros were sold as new for 935,297 euros, funded by EU money.
The Zagreb office of the European Public Prosecutor’s Office (EPPO) filed an indictment today against four people and two companies on suspicion of defrauding European Union funds. At the center of the case are secondhand machines bought in Serbia and, according to the indictment, presented as brand new equipment. For Belgrade this is not just a Croatian story: the indictment states that companies from Serbia were part of a chain through which money from the EU budget was allegedly diverted in breach of the subsidy’s terms, raising the question of how closely transactions with Serbian partners are checked once a project is financed by the Union.
What project was involved
The case centers on the construction of a new plant for producing briquettes, with a total eligible value of 945,858 euros. Forty five percent of that amount was to be covered by non refundable grants from the European Structural and Investment Funds (ESIF) and the REACT-EU instrument, part of the wider Next Generation EU recovery plan. According to the indictment, instead of buying new equipment at market price, the company receiving the subsidy entered into an arrangement that EPPO has now classified as subsidy fraud.
How the fraud was allegedly carried out
According to the prosecution, the director and de facto head of the subsidized company agreed with the remaining defendants to buy secondhand briquette production machines at a price several times lower than the one at which the machines were later resold, in violation of the co-financing contract’s terms. Here the available sources diverge on one detail. Croatia’s N1, citing an EPPO statement, reports that two of the defendants bought the machines through their companies from an enterprise in the Republic of Serbia, meaning from an independent Serbian seller. Telegraf, citing the Croatian outlet Index, writes that the same machines were bought through the defendants’ own companies in Serbia, which would mean the intermediary firms were themselves registered in Serbia rather than the seller being an independent Serbian company. The difference matters for understanding which side of the chain each party was on, but both sources agree on the amounts and the order of the transactions.
Both sources report that the machines were paid for at 398,866 euros, then sold on to the subsidized company as new equipment for 935,297.63 euros. The difference, 536,431.63 euros, stayed with the intermediary companies as profit, according to EPPO.
Payment halted after the first installment
With an inflated invoice in hand, the first two defendants asked the Croatian Agency for SMEs, Innovation and Investments (HAMAG-BICRO) to pay out 420,883.93 euros in grant funds, claiming the equipment was new and bought at market prices. The agency paid the first installment of 285,904.84 euros, then halted the rest of the payment once its inspectors spotted irregularities. That, by the prosecution’s own calculation, limited the damage to the EU budget to the portion already paid out.
If their guilt is proven before the competent Croatian courts, the defendants face a prison sentence of one to ten years. EPPO notes that all four are presumed innocent until proven otherwise by a final court ruling.
Why EPPO has jurisdiction at all
The Zagreb office is one of the national branches of the European Public Prosecutor’s Office, an independent EU body responsible for investigating, prosecuting and indicting crimes against the Union’s financial interests. Serbia, as a candidate country, does not fall under its jurisdiction, but this case shows that Serbian companies are not beyond the reach of an investigation once they enter a chain of transactions tied to a project financed by the Union. For businesses dealing with buyers in EU member states, it is a reminder that a border is no shield from scrutiny once European money is involved.
No trial date has been set yet. The case now moves into the hands of the Croatian courts, where, following the indictment, it will be determined whether the prosecution’s claims hold up.
