The Corruption Prevention and Combating Bureau (KNAB) has urged the European Public Prosecutor’s Office (EPPO) to initiate criminal prosecution against three officials of the Valkas Municipality, including the mayor, Vents Armands Krauklis, for alleged large-scale fraud in connection with a production area development project, the news agency LETA reports.
According to KNAB, as a result of the alleged criminal actions, more than €168,000 was fraudulently obtained from the European Regional Development Fund (ERDF) and the Latvian state budget.
Municipalities in Latvia are eligible to receive EU structural funds to develop production facilities on municipal land and later lease them to private companies. If the future tenant is unknown and selected through an open competition, the municipality may receive up to 85% EU co-financing. However, if the facility is intended for a specific company already identified as the operator, the co-financing rate is lower—typically 45–55%, with the remaining share to be covered by the company itself.
KNAB’s investigation gathered evidence that the three officials—employed by Valkas Municipality at the time—agreed to construct the production building for a specific company’s business expansion, effectively acting in that company’s interests.
The officials did not inform the responsible authorities about the pre-selected company
and fraudulently applied for higher EU funding than permitted by law. As a result, €160,000 was misappropriated from the ERDF, and an additional €8,026 from the Latvian state budget.
KNAB also noted that one of the implicated officials was the manager of the company intended to lease the production site.
EPPO, as the lead authority in the case, will now decide on further procedural steps in the criminal process, which was initiated on November 6, 2023.
KNAB emphasized that EU funding plays a vital role in supporting entrepreneurship in Latvia’s regions, but both municipalities and private companies must remember that these funds come from European taxpayers. Therefore, their allocation and use must be handled with utmost integrity and responsibility.
As previously reported, KNAB last year also transferred another case to EPPO involving a beverage manufacturing company and two Valkas Municipality officials, who allegedly defrauded EU structural and Latvian state funds totaling €581,709.
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