Four people and two companies have been indicted in Croatia over suspected fraud involving EU support for a briquette production plant. EPPO’s Zagreb office announced the indictment on 18 September, alleging that used machines were presented as new equipment and sold at inflated prices to obtain public funding.
The case concerns a project supported by the European Structural and Investment Funds and REACT-EU, the recovery assistance programme under NextGenerationEU. Eligible procurement costs were set at €945,858, with 45% available as non-refundable support. The alleged fraud relates to the equipment purchases used to justify the subsidy application.
According to prosecutors, the director and the person actually managing the beneficiary company arranged the purchase with the other defendants. The machines were used, contrary to the conditions for co-financing, but the application allegedly presented them as new. EPPO also alleges that the prices were several times higher than the equipment was worth.
The purchase chain began with a company in Serbia. The other two defendants allegedly used their respective businesses to obtain the machines for €398,866. The equipment was then sold to the beneficiary company for €935,297.63. Prosecutors say the resale concealed its second-hand status while creating the expenditure on which the support request was based.
The beneficiary requested €420,883.93 from HAMAG-BICRO, Croatia’s agency for small and medium-sized enterprises, innovation and investment. According to the indictment, the application stated that new equipment had been purchased at market prices. The agency made an initial payment of €285,904.84, then refused the remainder after irregularities were detected.
Those figures describe several different financial steps. The original purchase price was the amount paid for the used machinery. The resale price was charged to the beneficiary. The grant request represented the public contribution sought towards that expenditure, and the initial payment was the amount actually disbursed. The full resale price should therefore not be described as money paid out by the EU.
EPPO attributes an unlawful benefit of €285,904.84 to the beneficiary company at the EU’s expense. It also identifies a benefit of €536,431.63 to other companies from the difference between the purchase and resale prices. These alleged gains arise at different points in the transaction chain. The announcement does not establish that the two figures can simply be combined as a single measure of loss to the European budget.
The case turns on both eligibility and representation. A machine may be capable of producing briquettes while still failing a funding condition requiring new equipment. Similarly, an invoice can show that a sale occurred without proving that the description of the goods or their stated market value was accurate. The prosecution alleges that those descriptions were deliberately used to secure support.
A price increase between purchases is not, on its own, proof of fraud. Businesses can resell goods at a profit. Here, the indictment alleges a coordinated arrangement involving concealment of the machines’ condition and false statements in a grant application. Establishing that arrangement requires evidence about the defendants’ knowledge and the relationship between the purchases, resale and request for public money.
The decision to stop the remaining grant payment limited further disbursement, but the initial payment had already been made. The public statement does not say how much, if any, has since been repaid or recovered. It also does not report a confiscation order. A blocked balance, an alleged unlawful benefit and a completed recovery are separate stages and should be reported as such.
The indictment moves the case beyond the initial investigation, but it is not a judgment against the defendants. EPPO said the individuals could face prison sentences of between one and ten years if convicted. The announcement does not provide their names, the companies’ names, a trial date or a defence response. It also does not describe the current operating status of the plant.
The court proceedings will have to determine whether the machinery was knowingly misdescribed, whether the transactions were arranged as prosecutors allege and how responsibility should be allocated among the people and companies charged. The reported presence of a Serbian seller does not by itself establish that the seller committed an offence. The charges announced in Croatia concern the four individuals and two companies identified as defendants. All remain presumed innocent unless a court establishes their guilt.
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