Digitalisation

Breach of public procurement rules by a public administration

OLAF investigated a project co-financed by the European Social Fund in Italy, aimed at improving the administrative capability of a public administrative authority in Italy by re-designing and digitising their operational processes.

OLAF investigators, together with the managing authority, the Public Prosecutor’s Office and the Department of the Carabinieri, established irregularities and possible unlawful conduct linked to the project. This included several possible breaches of public procurement legislation relating to contract modification, sub-contracting, conflicts of interest, double funding and violation of the principle of sound financial management.

As a result, OLAF recommended to the European Commission to recover approximately €6.5 million, and issued a judicial recommendation to the National Court of Auditors.

Combined actions show results

OLAF investigated the alleged embezzlement of EU funds in Croatia by a public authority. The investigation concerned a project co-financed by the European Regional Development Fund, specifically the award of a contract for a “strategic management” software to a local consortium of two Croatian economic operators. The allegations involved favouritism and tender manipulation by the public authority, since the lead partner of the winning consortium had very limited capacity before the award of the contract.

During its investigation, OLAF reported the case to the EPPO, which soon opened its own investigation. OLAF and the EPPO agreed that OLAF should continue its investigation into the matter as a complementary investigation.

OLAF in cooperation with the EPPO, conducted simultaneous on-the-spot checks combined with digital forensic operations at the headquarters of the lead consortium partner as well as at the public authority which was the beneficiary of EU funds. Furthermore, both Offices shared the results of their preliminary analysis of the material collected.

The investigation uncovered potential collusion between the public authority and the economic operator to both inflate the value of the public procurement procedure and ensure that the contract was awarded to the pre-chosen economic operator.

This investigation was one of the first complementary investigations conducted by OLAF in close cooperation with the EPPO. Following these joint efforts, OLAF recommended to the European Commission to recover €1.4 million of EU funds, while the EPPO indicted several high ranking Croatian officials on charges of trading in influence and abuse of official position and authority.