Internal investigations

Kickback and fraud linked to IT related procurements by an EU Agency staff member

OLAF investigated allegations concerning suspicions of possible corruption and other illegal practices involving at least one EU staff member of an EU agency in Spain and at least one EU service provider. It transpired that the person concerned created many fraudulent schemes from which the individual concerned and their friends benefitted financially.

OLAF established that the EU staff member owned a significant number of shares in a company that had participated in two procurement procedures organised by the Agency where the person under investigation worked.

The EU staff member used their position on the evaluation committee to unduly influence the evaluation procedures in favour of this company, which had ultimately won the tender. The staff member also artificially manipulated the electronic file of the financial offer submitted to the Agency by their company.

In exchange for their services aiming at helping win the two procurement contracts, the staff member received a kick back from the contracted company. This was done by creating consulting contracts which allowed for large amounts of money to go to the staff member for all their underhand dealings.

The same staff member used their position to create a scheme where another company would apparently acquire a number of IT software licenses for the Agency from an intermediary. However, OLAF established the licences did not exist and the transactions between the intermediary and the company were fictitious. OLAF established that this was part of a scheme devised to defraud the company and the Agency, who unknowingly paid the company for the fake licenses. The intermediary explained that it had transferred the money that it received for the fake licences to the concerned staff member.

Another of the staff member’s corrupt schemes concerned the procurement of IT equipment. The staff member engineered illicit payments which were to be made to a company managed by a friend. The scheme resulted in the Agency paying twice for the same IT equipment: first to the company owned by the staff member’s friend, and then to the company that actually had the contract to supply the Agency with IT equipment.

The investigation concluded that by exercising undue influence during the procurement procedure, accepting kickbacks, fabricating two schemes devised to defraud the Agency and omitting to inform the Agency about existing conflict of interest situations, the staff member, given their role as a public official, acted in a fraudulent manner.

OLAF recommended that the Agency initiate disciplinary proceedings against the staff member for breaches of statutory obligations and to recover €1,664,610.

Abuse of diplomatic privileges

OLAF completed an investigation concerning serious professional misconduct mainly related to unauthorised external activities and abuse of diplomatic privileges by staff members of an EU Delegation and a Regional Office in a country in South East Asia.

The investigation established that these staff members were actively involved in a scheme to evade VAT and excise taxes at import in this third country. Alcohol and cigars were ordered, using the name of the EU Delegation and subsequently passed on to several persons external to the Delegation. This practice breached the applicable rules and procedures on placing orders for diplomatic goods and gave undue benefits to persons who did not qualify for diplomatic privileges.

On occasion orders for alcohol were placed before receiving the authorisation from the third country’s authorities and by using the name of a Delegation’s colleague and retired staff member.

Moreover, the investigation showed that one staff member carried out external activities without prior authorisation for a period of 13 years intensively engaging in teaching activities during working hours, thus interfering with the proper performance of their duties at the EU Delegation. They also released several publications and sat on different editorial boards without having requested prior authorisation.

The individual abused their position in the EU Delegation, the professional email address and the Delegation’s network/services for tasks ancillary to these unauthorised external activities (preparation of presentations, syllabuses, evaluation of students’ theses and correspondence with external persons). Another staff member of the EU Delegation had, engaged in a similar unauthorised external activity as manager of a private company.

OLAF recommended that the institution initiate disciplinary proceedings against the staff members concerned in relation to the breaches of the statutory obligations, which also harmed the image and the reputation of the EU institutions.

Favouritism and conflict of interest of EU staff members

OLAF completed an investigation concerning alleged favouritism of an external service provider and conflict of interest with this service provider by an EU staff member.

OLAF established that the EU staff member used their position to recommend the professional services of an external consultant who happened to be a good friend and a former colleague.

The investigation established that apart from being the appointed evaluator of the offers presented by the external service provider, the staff member was also the project manager responsible for the several contracts awarded to the entity.

It also emerged that the EU staff member did not submit a declaration of conflict of interest to their management to signal his previous ties and connection to the external service provider.

OLAF issued a recommendation to the EU Institution concerned to initiate disciplinary proceedings against the EU staff member.