European citizen sentenced for EU aid fraud in Paraguay

OLAF /09/11 Brussels, 8 September 2009

The Supreme Court of Paraguay has confirmed in the last instance the condemnation of a Spanish national and his Paraguayan accomplice for defalcation of EU aid funds. The judgement is related to an European Anti-Fraud Office (OLAF) investigation into irregularities in an EU-funded project for drinking water supplies in rural communities in Paraguay.

OLAF's Director-General Franz-Hermann Brüner welcomed the judgement: "The decision of the Supreme Court shows that close co-operation between OLAF and the judicial authorities is a key element in the protection of EU funds. It can lead to excellent results, even far beyond the borders of the European Union".

The EU-funded project was designed to improve the drinking water supply in 50 communities in Paraguay and to provide them with a sewage system; € 4.8 million were allocated to it from the EU. The programme funds were managed by an NGO, presided by a Spanish national, who had lived long-term in Paraguay, and a Paraguayan co-director.

The OLAF investigation was triggered in 2004 by initial information received from the European Commission (EuropeAid). In close co-operation with the competent public prosecutor’s office in Paraguay, it was established that the co-directors of the project had authorised payments of € 2.3 million from project funds to a private foundation in Paraguay with no involvement in the project. The main beneficiary of this money was a person close to the European co-director of the project.

OLAF co-operated closely with the Paraguayan judicial authorities investigating the case and with the European Commission. In its final judgement of 1 September1 , the Supreme Court found both co-directors of the NGO guilty of defalcation and sentenced them to three years' imprisonment. The main beneficiary of the diverted funds had been previously sentenced.

The Paraguayan judicial authorities are currently inquiring into further irregularities in the project: in the construction of nine water wells, the OLAF investigation had discovered substantially inflated invoices.

1Corte Suprema de Justicia, Acuerdo y Sentencia número 709, 1/9/2009

Alessandro Butticé
Head of Spokesman, Communication and PR Unit
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