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Cyprus in the dock over EU budget fraud

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European prosecutors accuse Cyprus of inadequately monitoring how EU funds are spent, claiming one in 10 fraud cases against the European Union budget has a Cypriot connection, an accusation Nicosia denies.

Cyprus has come under the spotlight for possible misuse of EU funding after the European Public Prosecutor’s Office (EPPO) implicated Cyprus in a significantly large number of fraud cases.

The EPPO said that 10% of the estimated 3,000 fraud investigations against the EU budget it would be dealing with each year would involve Cyprus.

This is not the first time European authorities have been on Cyprus’ case over possible fraud involving EU funds, as earlier last year, Cyprus was under investigation by Olaf, the European Anti-Fraud Office, for possible misuse – or worse – of EU funds in relation to contracts promoting Cypriot goods.

The EPPO said that around 10% of all pending fraud cases against the EU budget to be tackled by a new EU prosecutors office are linked to Cyprus.

The figure was revealed by Laura Kovesi, who leads the EPPO, noting there “is a lot of work and this is the reason why we need to have full-time prosecutors there in Cyprus”.

The Luxembourg-based EPPO is tasked to carry out criminal investigations against the EU budget.

The stakes are particularly high after the EU recently agreed to a €1.85trn recovery package.

EPPO’s claims were refuted mid-week by Attorney-General George Savvides, arguing that figures given by the EPPO did not “appear to be consistent with the information we have in our possession”.

He referred to an investigation carried out by the state Legal Service with Cyprus police in 2019, which was sent to European advocate general Kövesi, covering the period 2016 to 2019.

Savvides said criminal acts examined by Cypriot authorities that would fall into the category of offences investigated by the EPPO never exceeded four cases per year.

In a written statement, Savvides said: “Cyprus has been an ardent supporter of the establishment of the European Public Prosecutor’s Office from the very beginning and for this reason has chosen to participate, on its own initiative, in this institution, which aims to handle crimes affecting financial interests of the European Union”.

In response to the Attorney General’s comments, the EPPO said the data it had come from member states.

“Based on information received from member states, we assume that an average of up to 10% of all EPPO cases will have a Cypriot component,” said Kövesi.

The EPPO is an independent and decentralised prosecution office of the EU with the competence to investigate, prosecute and bring to judgment crimes against the EU budget, such as fraud, corruption, or serious cross-border VAT fraud.

Currently, there are 22 participating EU countries and only national authorities can investigate and prosecute fraud against the EU budget, but their powers stop at national borders.

The Luxembourg-based EPPO is scheduled to operate as a single office across all participating EU countries from March.