Home Brussels Fraud-busters swoop on Greek contracts involving €2.5B of EU recovery funds

Fraud-busters swoop on Greek contracts involving €2.5B of EU recovery funds

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ATHENS — Authorities are investigating allegations of fraud linked to the way €2.5 billion in EU funds has been awarded to just 10 companies in Greece, POLITICO can reveal. 

The offices of the country’s three telecommunications firms — Cosmote, Vodafone and Nova — as well as five IT companies and two consultancies were raided by investigators from the Greek competition commission last month. The European Public Prosecutor’s Office (EPPO) has also launched an investigation, it confirmed.

The probe is the latest blow to the credibility of the EU’s post-pandemic economic recovery fund, originally worth €723 billion, which doles out loans and grants to the bloc’s 27 countries. Last week, police arrested more than 20 suspects in Italy, Austria, Romania and Slovakia connected to an alleged plot to defraud €600 million from the fund in Italy.

The Greek investigation centers on public tender processes where companies allegedly colluded to avoid more than one of them competing for the same contract ― limiting the number of firms who benefited. This may have driven up the fees they could charge, ultimately preventing Greek taxpayers from reaping the full benefits of its EU money.  

With projects worth €35.95 billion, Greece is one of the main beneficiaries of the fund, known as the Recovery and Resilience Facility (RRF). About a fifth of that amount goes toward making the country more digital, according to the plan submitted to the European Commission.

To date, some 600 digital projects worth more than €2.5 billion have been tendered and contracted, according to data from the Central Electronic Register of Public Procurement. The EPPO and the Greek competition commission are investigating how these projects were awarded.

In a statement, Greece’s competition commission said it was examining whether there was a violation of the EU treaty that “prohibits anti-competitive agreements and decisions of associations of undertakings that prevent, restrict or distort competition, unilateral practices that constitute invitation to collude or future price announcements to competitors and the abuse of a dominant position.”

Vodafone confirmed the investigation by the competition commission. The other companies didn’t respond to requests for comment. The Greek prime minister’s office and the country’s development ministry didn’t immediately comment.

More than one bid

Between them, the 10 companies under investigation won contracts for more than 600 projects in the technology sector between 2020 and 2023 , each one worth at least €100,000. Few of those projects had more than one bid during the tender process. 

The investigation began when European Dynamics, a Greek software and IT services company, filed a complaint in Nov. 2023 to the European Commission, which oversees the management of the RRF, claiming one public tender was biased in favor of specific companies.

When first published, the tender set the budget for a digital modernization project linked to Greece’s National Electronic Public Procurement System (ESIDIS) at €44 million, several times more than how much a national e-procurement project costs in other EU countries. 

For example, in Ireland it cost €4.6 million for seven years, in Cyprus €4.5 million for nine years and €1.3 million in Malta. 

Vodafone confirmed the investigation by the competition commission. | Carl Court/AFP via Getty Images

Eventually, after protests by four companies. the project was split into two tenders with a total budget at €5.7 million and €12 million over two years. The Greek state must also pay for the equipment, software licenses and hosting costs for the project.

There was also a complaint about irregular access by unauthorized accounts to ESIDIS systems, according to two officials with knowledge of the matter, sparking questions about the credibility of a system used to manage thousands of tendering processes worth billions of euros. 

Greece’s digital governance ministry said there had been no violation of the system and no complaint has been filed.

A Commission spokesperson confirmed it had received a letter from European Dynamics regarding the ESIDIS tender and had shared all relevant information with the European Anti-Fraud Office, OLAF.  

“We will continue to treat every information or complaint we may receive within the scope of the powers foreseen under the EU Treaties and the RRF Regulation,” the spokesperson added.

An official with knowledge of the issue told POLITICO that EPPO had asked the Greek competition commission for evidence gathered.

Greece’s particular problem

Greece is not the only EU country where there are concerns regarding how these funds are distributed. Aside from the arrests in the Italian case, OLAF is investigating potential fraud using the bloc’s post-pandemic recovery cash in several EU countries.

Problems with public procurement seems to be a particular problem in Greece however. There has long been widespread criticism in the country about the way it is carried out, with allegations that companies collaborate over how and when to apply for a public tender, rather than allowing them to be competitive and offer better value for money. 

People with knowledge of the matter cite opaque processes and concessions to companies. Despite numerous reforms imposed by international creditors in return for bailout cash during the country’s debt crisis more than a decade ago, research suggests corruption has got worse rather than better.

In the tech sector companies report growing dissatisfaction as they fail to win government contracts, while others, some very small in size, have been awarded projects worth tens of millions of euros. 

Only one bid

POLITICO reviewed 110 EU-funded Greek public tenders primarily from the EU’s recovery fund between 2021 and January 2024. 

The vast majority of the contracts, 101 bids, were awarded to one of the 10 companies under investigation, and they didn’t compete with any other bidder. Only nine tenders had more than one bid. 

A Commission spokesperson confirmed it had received a letter from European Dynamics regarding the ESIDIS tender. | Julien Warnand/EPA

Even in tenders where multiple companies bid on one tender, each company had seemingly only bid on a unique segment. 

When asked for comment, a Commission spokesperson said decisions to award contracts fell within the remit of relevant Greek authorities. 

“The primary responsibility to ensure compliance with EU and national rules on public procurement lies with the member states,” the spokesperson added.

Alleged bid-rigging

The complaint by  European Dynamics was transferred to OLAF, which sent it to the EPPO for investigation for “potential criminal elements for which the EPPO is competent to investigate,” according to several officials with knowledge of the case.

As well as the telecommunications companies, raids took place at the IT and software companies Byte, Uni Systems, Netcompany-Intrasoft, Space Hellas, Cosmos Business Systems and the two consulting companies Toolbox and Active.

OLAF did not respond to POLITICO’s specific questions. Its press office said: “OLAF does not usually issue comments on cases it may or may not be treating in order to protect the confidentiality of any possible investigations and of possible ensuing judicial proceedings, as well as to ensure respect for personal data and procedural rights. “

According to an European Court of Auditors report in 2021, some 42.4 percent of public contracts in Greece were awarded where there was only one offer. In 2011, 15 percent of contracts only received one bid.

The percentage of single bidding tenders in countries with similar populations, like Portugal, Belgium and Czech Republic, was 31.6 percent, 27.1 percent and 47.8 percent respectively.

The argument often used by business officials is that the pattern of one-bid tenders is because of hundreds of tender opportunities being open. Companies do not have enough resources to participate in every one.

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