EU subsidies: Krzysztof Brysiewicz discusses subsidy fraud in an article for Prawo.pl.
The implementation of EU-funded projects, when irregularities are detected, can result not only in the loss of assets but also in criminal liability for those beneficiaries or their representatives who have crossed the line between ignorance or unawareness that led to the irregularities and actual knowledge and awareness of their actions.
The system for applying for public funds is complex and requires beneficiaries to have knowledge across multiple areas of law. Some issues prove to be too complicated even for lawyers or experts working in institutions that handle EU funding. One example is the determination of company affiliations for the purpose of establishing enterprise status.
In this context, allegations of knowingly submitting documents that turn out to be false or flawed should be approached with particular caution by prosecutors and investigators—similarly to accusations of ties with a specific service provider or of incorrectly defining the content of an application.
In my view, particularly concerning are the attempts to hold beneficiaries accountable for incorrectly determining their company’s status, as well as the unclear rules regarding the identification of potentially questionable links between a beneficiary and the contractor selected through a competitive procedure.
Procurement within projects is especially problematic for beneficiaries. Oversight institutions often take an overly formalistic approach to procurement processes carried out by beneficiaries, identifying alleged errors or irregularities where none exist.
Far too often, they take shortcuts—relying on vague claims such as “someone once sat on the board of a company” or that certain individuals have known each other from previous professional relationships, explains Krzysztof Brysiewicz.
There are various mechanisms used to defraud grant systems—such as applying for funding across multiple areas (in the case of regional competitions) and eliminating competition. Another method involves organizing project procurements in a way that ensures the contracts go to entities affiliated with the beneficiary.
Other schemes include fraud related to the declaration of no state aid or misrepresenting the enterprise’s status (e.g., when a larger entity uses a front company to apply for funding intended for micro-enterprises).
It is also common practice to provide false information in the application documents—such as overstating capacity or experience—or to conceal disqualifying facts, like prior exclusion from grant programs, under the assumption that no one will verify the information.
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