ZAGREB, 30 July 2022 - Former HDZ minister Tomislav Tolušić, whom the European Public Prosecutor's Office (EPPO) suspects of misappropriating European funds to build a winery, was released from investigative custody on Friday.

Tolušić was released at the EPPO's request after all 16 witnesses who he could have tampered with were questioned.

The former minister was remanded in custody on 8 July, after he and Željko Ferenc, an employee at the Paying Agency for Agriculture, Fisheries and Rural Development, were arrested in Virovitica.

Ferenc was released from investigative custody on Thursday after having been previously suspended.

Following their arrest, the EPPO said, without revealing their identities, that Tolušić, as an owner of a family-run farm, submitted an application for a project for the construction and equipment of a winery, worth HRK 4.65 million, with the Paying Agency for Agriculture, Fisheries and Rural Development in early May 2020, and that the level of co-financing with European funds was 70%.

In the application, Tolušić falsely stated that the financing of the project would be secured with a loan from a financial institution. However, he did not apply for a loan, and he financed the project with money whose legal origin cannot be proved, the prosecutor's office said.

Moreover, he did not inform the agency about the change in the financing, and was granted HRK 2.92 million in aid.

Tolušić applied to another tender, advertised by the agency on 2 June 2021 for the construction of new vineyards and the reconstruction of existing ones.

For the second application, Tolušić reportedly incited Ferenc to give a positive opinion on his application for the grant, although the application falsely stated that the piece of land in question had no crops planted in it, when in fact he had previously planted a vineyard there.

However, the Ministry of Agriculture and the Croatian Agency for Agriculture and Food refused to issue a positive opinion on the submitted technological project due to knowledge of the existence of a vineyard already planted there and due to other observed irregularities, the EPPO said.

After the rejection, Tolušić removed the grapevine that had been planted, obtained a new technological project and submitted it with the application.

He expected to receive a grant of HRK 1.5 million, with 85% being co-financed by EU funds, that is, more than HRK 1.3 million. However, the agency established that he did not meet the conditions, so the funding was not granted, the EPPO said.

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ZAGREB, 25 March (2022) - The European Public Prosecutor’s Office (EPPO), which started operating on 21 June 2021, opened 576 investigations in the first six months of its existence and 515 were active on 31 December, the Večernji List (VL) daily reported on Friday.

Eight of the 576 cases or 1.4% of them are related to Croatia.

The EPPO is an independent body of the European Union responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU, including fraud corruption, money laundering and cross-border VAT fraud.

Currently,  22 member-states of the European Union, including Croatia, are participating members of the EPPO. 

"EU institutions and bodies, as well as the competent authorities of the 22 member states which joined the EPPO, must report any criminal conduct affecting the EU budget to the EPPO. Individuals can also report alleged cases of fraud and other crimes," it was reported on the EPPO website.

According to the estimated damage in the opened cases, Italy with cases accounting for aggregate damage of €1.7 billion tops the ranking.

Romania ranks second (€1.3 billion), and Croatia ranks 15th with estimated damage totalling €30.6 million.

Considering the number of opened cases, Italy is again on the top of the ranking, with 120 cases.

Bulgaria follows with 105 cases, and Romania ranks third (60 cases). Croatia and Latvia share the 13th position.

With regard to the suspects implicated in these cases, former Bulgarian Prime Minister Boyko Borisov is the highest-profile suspect for now who is believed to have been engaged in misusing EU funds.

In Croatia, a former minister of EU Finds and Regional Development, Gabrijela Žalac, is the best-known indictee covered by EPPO probes. The investigation was launched by the EPPO following a criminal report filed by the National Police Office for the Suppression of Corruption and Organised Crime. Žalac,  former Central Finance and Contracting Agency (SAFU) director Tomislav Petric and IT company owners Mladen Šimunac and Marko Jukić, are suspected of defrauding the European Union and Croatia of €1.8 million. Žalac is suspected of fixing the public procurement of an information system for strategic planning and development management for the companies owned by Šimunac and Jukić.

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ZAGREB, 11 Nov, 2021 - The European Public Prosecutor’s Office (EPPO) has launched a probe and proposed pre-trial detention against four suspects in Croatia: a former minister Gabriela Žalac, the SAFU Agency's director and two businessmen on suspicion that they embezzled €1.8 million from the EU and Croatian budgets.

The EPPO issued a statement on the matter on Thursday without revealing the identity of the four suspects.

The statement reads that the EPPO "has initiated an investigation against four Croatian citizens, as well as two companies, for the criminal offences of trading in influence and the abuse of office and official authority."

Among the suspects are the former minister of the Ministry of Regional Development and EU Funds (MRRFEU) and the Director of Croatia’s Central Finance and Contracting Agency (SAFU), Tomislav Petric and the businessmen Marko Jukić and Mladen Šimunac.

All four suspects were arrested on Wednesday at the request of the EPPO.

Based on the results of the preliminary investigative activities, carried out in cooperation with the European Anti-Fraud Office (OLAF), the Croatian National Police Office for the Suppression of Corruption and Organised Crime and the Independent Financial Investigation Sector of the Tax Administration of the Croatian Ministry of Finance, the EPPO has now officially initiated an investigation.

The Croatian police specify that the former minister is suspected of abuse of office and influence peddling, SAFU director Petric of abuse of office while the businessmen Šimunac and Jukić are suspected of having encouraged the office-holders to commit wrongdoings.

EPPO says in its press release that "it is alleged that the first suspect, in her joint capacity as Minister of the MRRFEU and President of the Governing Board of the SAFU, took actions aimed at ensuring a privileged position for the second and the third suspects, as well as the companies linked to them."

"These activities occurred in 2017 and 2018, in the process of the public procurement of an information system for strategic planning and development management. During this time, the former minister was responsible for both the lawful conduct of public procurement procedures at the MRRFEU, and for proposing the appointment and relieving of duties of the Director of the SAFU. "

Adjusting ministry's procurement plan to benefit suspects

"The privileged position of the second and the third suspects was ensured by: adjusting the MRRFEU Procurement Plans for 2017 and 2018 to benefit the second and third suspects and the companies linked to them; inflating the estimated value of the procurement of that information system; changing the type and manner of procurement; and adjusting the technical specifications of the software required for the MRRFEU’s purposes to the software that the suspects and their companies had at their disposal.

The former minister decided that the MRRFEU would make this purchase at a price much higher than the market price for the development of software with such technical specifications and functionalities.

It is alleged that, in order to carry out what was agreed, the former minister first decided, in 2017, to conduct a negotiated procurement procedure without prior publication of a public invitation to tender, with an overestimated procurement value of HRK 9,860,000.00 (EUR +/- 1.31 million); and in that process, the companies linked to the second suspect were invited to submit their bids.

"In order to ensure the continuation of the negotiated procurement procedure without prior publication of a public invitation to tender, and by using her joint authority as Minister of the MRRFEU and President of the Governing Board of the SAFU, the former minister requested that the fourth suspect, the Director of the SAFU (the agency responsible for the ex-ante control of EU-funded MRRFEU public procurement procedures) made sure that the SAFU, in the ex-ante control of the documentation of the procurement of software licences unduly estimated at HRK 9,860,000.00, did not dispute the negotiated procurement procedure."

As this request came from the President of the SAFU and the minister who was in a position to propose, to the Croatian government, the appointment and relieving of his duties, the director agreed, and instructed the SAFU administrative and professional services to be as lenient as possible in their comments referring to the procurement documentation.

"When, in October 2017, the Croatian State Commission for the Supervision of Public Procurement Procedures annulled the public procurement procedure due to the breach of the law on public procurement, the former minister and the second suspect continued, in 2018, to take action to award the contract to the companies of the second suspect.

"Finally, after having conducted an open public procurement procedure, the MRRFEU concluded a purchase contract for this information system with the companies linked to the third suspect, a business partner of the second suspect, with the price unrealistically set at HRK 12,991,000.00 (EUR 1.73 million) – although the realistic price of that system would have been approximately HRK 2,000,000.00 (EUR 265,000). "

As much as 85% of the procurement of that software was financed by the EU’s Operational Programme Competitiveness and Cohesion grant.

"The above amount, inclusive of VAT (HRK 16,238,750.00 in total, or EUR 2.16 million), was paid to the account of the company of the third suspect, after which a part of the money was transferred to the accounts of the companies of the second and third suspect, and a part was withdrawn in cash."

The EPPO concluded that "In the end, the financial interests of the European Union and the Republic of Croatia were damaged by the total amount of EUR 1.8 million."

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