EPPO Croatia: Briquette Plant Subsidy Fraud Indictment for EU Funds Misuse

• The European Public Prosecutor's Office in Croatia has indicted four individuals and two companies for subsidy fraud.
• The charges relate to the alleged misuse of EU funds for a briquette production plant by purchasing used machinery at inflated prices and presenting it as new.
• The beneficiary company received €285,904.84 in non-refundable subsidies from HAMAG-BICRO before further payments were halted due to irregularities.
• Other companies involved in the scheme allegedly gained €536,431.63 from the fraudulent sale of the equipment.
• If convicted, the defendants face potential prison sentences ranging from one to ten years.

The indictment underscores the European Public Prosecutor's Office's commitment to actively pursuing cases of EU funds misuse, particularly those involving inflated procurement costs and deceptive declarations.

The European Public Prosecutor's Office (EPPO) in Zagreb, Croatia, has formally charged four individuals and two corporate entities with subsidy fraud. This significant indictment, filed on September 18, 2026, centers on the alleged misuse of European Union funds earmarked for the construction of a new briquette production facility. The investigation uncovered a complex scheme designed to illicitly obtain subsidies intended for a project co-financed by the European Structural and Investment Funds (ESIF) and the Next Generation EU’s Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU).

According to the EPPO's findings, the fraudulent activity revolved around the procurement of machinery for the briquette plant. The director and the actual business manager of one of the indicted companies, which was the beneficiary of the EU subsidy, conspired with other accomplices. Their arrangement involved purchasing used briquette production machines at prices significantly higher than their actual value, a practice directly contravening the stipulated co-financing conditions.

To execute this plan, two other defendants, acting through their respective companies, acquired the used equipment from a company based in the Republic of Serbia for €398,866. Subsequently, these machines were resold to the beneficiary company for a substantially inflated price of €935,297.63. Crucially, the fact that these machines were not new was deliberately concealed during this transaction. Following this, the initial two defendants submitted a request to the Croatian Agency for SMEs, Innovation and Investments (HAMAG-BICRO) for €420,883.93 in non-refundable subsidies, falsely asserting that new equipment had been purchased at market rates. HAMAG-BICRO initially disbursed €285,904.84, but further payments were halted after irregularities were detected, preventing the full requested amount from being paid out.

The alleged fraudulent scheme resulted in substantial financial gains for the implicated parties, to the detriment of both EU funds and the integrity of the subsidy program. The beneficiary company ultimately secured a pecuniary gain of €285,904.84 from the EU, representing the portion of the non-refundable subsidy that was successfully disbursed by HAMAG-BICRO before the irregularities came to light.

Beyond the direct subsidy, the other companies involved in the deceptive sale of the machinery also reaped significant profits. Through the difference between their purchase price of €398,866 for the used machines and their subsequent sale to the beneficiary company for €935,297.63, these entities collectively obtained a pecuniary gain totaling €536,431.63. The overall project had eligible procurement costs set at €945,858, with 45% designated as non-refundable, highlighting the scale of the attempted fraud against these public funds.

This indictment underscores the European Public Prosecutor's Office's commitment to actively pursuing cases of EU funds misuse, particularly those involving inflated procurement costs and deceptive declarations. As the independent public prosecution office of the European Union, the EPPO holds the critical mandate to investigate, prosecute, and bring to judgment crimes that harm the financial interests of the EU. This includes a wide array of offenses, with subsidy fraud being a primary focus.

The legal ramifications for those found guilty in this Croatia EPPO briquette plant subsidy fraud indictment are severe. The four individuals and two companies facing charges could, if convicted in the competent Croatian courts of law, be subject to prison sentences ranging from one to ten years. It is important to note that all persons concerned are presumed innocent until proven guilty, in accordance with established legal principles. This case serves as a clear example of the EPPO's proactive stance against Croatia EU financial interests crime.

The ongoing prosecution in Croatia, spearheaded by the European Public Prosecutor's Office, sends a strong message regarding the rigorous enforcement against the misuse of EU funds. This particular case, involving HAMAG-BICRO subsidy fraud and the alleged misrepresentation of equipment for a briquette production plant, highlights the vulnerabilities that can arise in large-scale, co-financed projects. The focus on inflated procurement costs and false declarations regarding the condition of purchased assets—specifically, used machinery being presented as new—is a recurring theme in EU funds misuse Croatia indictment proceedings.

The EPPO's involvement, leveraging its authority over ESIF REACT-EU funds fraud, demonstrates the increasing scrutiny applied to projects receiving European financial support. This case is a critical reminder for all stakeholders involved in EU-funded initiatives, from beneficiaries to contractors, that strict adherence to co-financing conditions and transparent procurement processes are paramount. The European Public Prosecutor's Office Croatia continues to be a key player in safeguarding the Union's financial integrity, making such indictments a significant deterrent against future attempts at fraud.

This indictment highlights the European Public Prosecutor's Office's active enforcement against the misuse of EU funds in Croatia, particularly concerning inflated procurement costs and false declarations. Lawyers and compliance officers advising clients on EU-funded projects, especially those involving equipment procurement, should reinforce due diligence and strict adherence to co-financing conditions to mitigate significant fraud risks and potential criminal prosecution.

Source: Original reporting via European Public Prosecutor's Office.