Dubai Telegraph - Crime groups shifting to fraud schemes in EU: bloc's prosecutor

Laura Kovesi said that value-added tax (VAT) fraud accounted for 59 percent of the estimated 19 billion euros ($21 billion) in damage to the EU budget arising from cases opened for investigation last year by her European Public Prosecutor's Office (EPPO).

"Behind this fraud in general there are a few organised crime groups that operate everywhere in Europe. They are very flexible," she said.

"We have to deal with the most dangerous criminals," she added.

"And our concern is that if we let them grow, if we let them have more financial power, of course they can become more violent and they can be a real threat to our security."

Kovesi's comments, made in a telephone interview with AFP on Thursday, ahead of the release of its annual report on activities in 2023.

Her relatively new office -- it started operating in June 2021 -- is tasked with investigating and prosecuting fraud involving European Union money.

"In the last period of time, criminal groups have reshuffled their activity," Kovesi said, moving from "very risky" drug trafficking towards "easier" financial crimes -- where both punishments and the level of detection are lower.

"You need just an accountant, a lawyer or person who knows how to speak, and you can make big money," she said.

- Financial crimes minimised -

The annual report said the EPPO opened 1,371 investigations in 2023 -- 58 percent more than in the previous year -- representing an estimated damage to the EU budget of 19.2 billion euros.

Suspected VAT fraud accounted for only 339 of those cases.

But the estimated budgetary damage to the EU -- which draws on VAT payments made in member states -- was 11.5 billion euros of the total 19 billion lost, underlining how lucrative it could be to criminals.

The fraud can involve false or incorrect VAT documents to falsify the origins of goods to avoid tax on goods such as motor vehicles, electronic items, pharmaceutical products, e-bikes and alcohol.

The office also noted a rise in suspected fraud involving 1.8 billion euros linked to EU money from a Covid recovery fund. Pay-outs from the fund only began in 2023 and are set to continue over the next few years.

The EPPO's work was not being facilitated by some EU member countries that were minimising or doing away with criminal punishment for financial crimes involving EU money, Kovesi said.

Slovakia, for instance, was seeking to lower the statute of limitations for such crimes to be investigated.

And in Greece and Romania there were provisions for financial fraudsters to get off the hook just by paying back ill-gotten gains, Kovesi said.

- Italy's 'dedicated' police -

In terms of newly opened investigations in 2023, Italy stood out from the pack, having launched 556 cases -- by far the biggest number among participating countries.

But Kosevi stressed that was thanks to the country's "very active" Guardia di Finanza police unit that deals specifically with financial crimes.

"We think that in all the member states we should have dedicated police officers to work EPPO cases," Kovesi said, and her office stood ready to give training if needed.

The agency has European prosecutors appointed in 22 of the EU's 27 member countries.

Personnel are due to be appointed to Poland in a few months, once European Commission procedures are completed. Talks are also underway to bring Sweden into the EPPO fold.

With Poland about to participate in the EPPO and 24 appointed prosecutors in four offices, Kovesi said "this means that we will have a big reinforcement of the EPPO zone".

The EPPO's budget in 2023 was 66 million euros and in 2024 is currently set at 72 million euros.

Denmark and Ireland do not participate in the EPPO, having opt-outs from EU justice policy.

Hungary -- criticised by Brussels for corruption -- refuses to join though it has a working arrangement with the office.

Y.Chaudhry--DT