KNAB investigates possible fraud involving EU funding in Valka

On Tuesday, the 7th of November, Latvian Corruption Prevention and Combating Bureau (KNAB) together with the European Public Prosecutor’s Office (EPPO) performed various investigative activities, including searches and interrogations, in multiple locations in Valka and other parts of Latvia, as LETA was told by KNAB.
The investigation concerns a possible fraud involving EUR 776 000.
On the 27th of February EPPO commenced criminal proceedings and submitted the case to KNAB as a competent institution to commence pre-trial investigation. KNAB investigates a possible abuse of power for personal gain and large-scale fraud.

Information available to KNAB shows that two serving and one former official of Valka County municipality may have abused power

for personal gain and had acted together with an official of some company to commit illegal activities in order to illegally acquire at least EUR 744 000 from European Regional Development Fund (ERAF) financing and at least EUR 32 000 from the Latvian state budget. The project in question is related to the construction of a production building and related infrastructure.
Investigators suspect the relevant infrastructure could have been constructed in the interest of a specific company and violating the project’s implementation conditions.
Currently four people involved in criminal proceedings have the rights for defence. No one is presented with any security measure as of yet.
Valka County Council’s vice-chairman Viesturs Zariņš confirmed to LETA that KNAB has performed investigative actions in the municipality and other locations. Zariņš is a witness in this case. Because he has signed a non-disclosure agreement, he is not authorised to provide any more information.
LETA attempted to contact former chairman of Valka County Council Vents Armands Krauklis, but his phone number is currently unreachable. LTV reports Krauklis is detained.
It is possible KNAB’s investigation concerns a project involving the establishment of a production area in Ērģeme. According to information provided by the municipality, the project was commenced “to promote creation of new companies and/or assist with expansion of existing companies”.
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The total costs of the project, according to available documents, reach 1.37 million. This includes funding from ERAF EUR 744 480, state budget grant EUR 31 647 and co-financing from Valka municipality EUR 164 972.
A similar case, following EPPO’s request, was commenced this year over another EU-funded project in Valmiera’s industrial territory this year.
In both cases it is most likely about the intensity of the use of funding from the European Regional Development Fund. It means that if a municipality decides to build a factory and then starts looking for a tenant, it is possible to receive up to 85% of funding from EU funds. Funding for the construction of a factory for a previously known company is half as big.
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