Eight Czech officials under investigation for embezzling EU money

09-11-2005

In the run up to joining the European Union last year, the Phare programme was the main channel through which the Czech Republic received financial assistance for various projects. But in future the EU may become a good deal more cautious in what it offers to Czech businesses and public administrations. Eight people entrusted with the process of transferring money from the Phare fund to the Czech Republic are now suspected of having tried to put millions of crowns into their own pockets.

Photo: European CommissionPhoto: European Commission The Czech Republic has come dangerously close to a scandal that could seriously tarnish its name in Brussels. Eight people, two of them who had influential posts at the Ministry for Regional Development, are under investigation for fraud and embezzlement. They are accused of the illegal transfer of 229 million crowns (close to 9.5 million US dollars) of EU project assistance money into private bank accounts. The money came from the Phare fund and was to be used for specific projects by the Foundation for Regional Development, before the foundation was dissolved.

Petr FormanPetr Forman The group was active when the regional development ministry was led by current Justice Minister Pavel Nemec. Mr Nemec was succeeded in the post by Jiri Paroubek, now prime minister. One of the main suspects is former deputy minister for regional development, Petr Forman. He prepared the system through which EU money gets into the country. He even travelled around to give businesses and public administrations advice on how to use money from the Eurofund. With the intricate system of the allocation of EU funds, it could have been fairly easy for Mr Forman and others to get away with fraud. But under Mr Paroubek's tenure the ministry began to get suspicious, a police investigation was started and charges were brought.

Understandably the European Union is furious. It has asked for all the money to be returned. Catherine Sustek is the spokeswoman for the European Commission's representation in Prague:

"The European Commission will wait until the investigation by the Czech authorities is finished and a verdict is issued by the Czech court. Then the Commission will make any further decision, especially concerning the money returned."

According to state prosecutor Boris Havel, only some 144 million crowns have so far been found in various bank accounts. Part of the remaining sum was transferred back to the Regional Development Foundation's account as if by magic, but some money is still missing. If found guilty, the group could face between 5 and 12 years in prison.

09-11-2005