European prosecutor’s office investigating three universities over alleged fraud

The European Public Prosecutor’s Office (EPPO) is currently investigating three universities in central and eastern Europe over fraud allegations involving EU funds.

The cases involve alleged procurement fraud of the EU Social Fund by Daugavpils University in Latvia, where damages are estimated at €600,000, and an investigation into Lucian Blaga University of Sibiu in Romania over suspected fraud of €1 million in Erasmus+ funds.

The third EPPO case centres on the University of Zagreb’s geodesy faculty, where earlier this month the dean was arrested alongside a fellow professor and 27 others on suspicion of subsidy and procurement fraud worth over €2 million, including €1.7 million in EU funds.

A spokeswoman for EPPO has since confirmed to Science|Business that the alleged Zagreb fraud involves money from the European Regional Development Fund (ERDF), which is designed to bring up under-developed regions, and the EU Solidarity Fund, in place to respond to needs caused by natural disasters.

A spokesperson for Croatia’s Central Finance and Contracting Agency (CFCA), the body responsible for managing ERDF funds in Croatia, said it is fully cooperating with EPPO to resolve the matter and that CFCA has hired an expert to investigate.

“We have discovered actions that are not in accordance with the grant agreement, which resulted in identifying irregularities connected to public procurement and use of goods that are not in line with the project purpose,” the spokesperson said. The CFCA has suspended all further payments to the geodesy faculty at Zagreb University.

The investigation into Daugavpils University was launched in January of this year and is ongoing. The university has not replied to requests for comment.

The case at Lucian Blaga University of Sibiu in Romania is slightly different, with new university management that was installed in 2020 reporting financial anomalies discovered in Erasmus+ funds.

“The Lucian Blaga University of Sibiu management team deplores the situation which led to these accusations being made, they are eager for the case to be finally resolved and are fully confident that the actions taken by the team upon arrival have definitively averted all risk in this domain,” the university said in a statement. 

Smaranda Bălan, spokeswoman for the university, confirmed that the people involved in the decision-making chain in the Erasmus department are no longer in this position and the department has been re-organised. 

“In terms of monitoring and control, there is a new procedure that regulates in a distinctive chapter the Erasmus incoming mobilities, so that the accountability becomes more specific and the process more transparent,” she said. 

EPPO could not comment further on the three cases but said that in general, “EU fund fraud involving universities does not represent a significant part of the investigations of the EPPO”.

The European University Association, which includes all three universities as members, declined to comment when asked about concerns over EU fund fraud at universities. The European Commission also declined to comment. 

Isolated cases

The arrests at Zagreb University came on the heels of reports in the Croatian media that the former rector of the University of Zadar, Dijana Vican, who still works at the university in a different role, is also being investigated in a separate procurement fraud case. The university did not reply to a request for comment. 

Blaženka Divjak, Crotian education minister between 2017 and 2020 and current professor at the University of Zagreb, told Science|Business she finds the silence on the alleged frauds concerning. Divjak believes these are isolated cases and not symptomatic of wider corruption in Croatian higher education, but says the universities need to address the investigations publicly.

“All around the globe, cases such as this can happen. But it is the reaction after that is important, to find out what was wrong with the system, why it wasn’t spotted,” she said. “I would like to see a very strong and very focused reaction and to send a clear message to the European and global community to say, okay, it happened here, but we are taking actions to prevent future misuses of funds.”

Neither university has publicly acknowledged the cases and have also not responded to requests by Science|Business for comment.

“These potential fraud investigations are very harmful for the reputation of the universities,” Divjak said. “We have really wonderful researchers and professors in Croatia, and some of them are very successful on a global level. These cases are isolated, but they are significant because there is no reaction.”

Broader concerns

The silence around the Croatian cases extends to the government, which has also not responded to requests for comment.

There are broader concerns in Croatian academic circles about the close ties between leading politician and universities. Earlier this year, 16 academics, including Divjak, wrote an open letter to the country’s president, prime minister, the national rectors’ board and other relevant bodies calling for an end to politicians being promoted to higher academic positions while still serving politically. 

The letter was prompted by an attempt to have Mario Banožić, who until earlier this month was the country’s defence minister, promoted from assistant professor to associate professor at Josip Juraj Strossmayer University’s faculty of economics. The letter highlights other cases of this happening in the past, describing it as a systematic problem. 

“It is not prohibited by law, but it is academically extremely unethical for someone from a position of power to demand election to a (higher) academic position, given the real danger of conflict of interest and academic corruption,” the letter says. 

The academics received no reply, despite media coverage. They followed up with a second letter this month addressed to the national rectors’ board demanding again that action be taken to stop politicians advancing their academic careers while in power. The letter also called on the re-establishment of the national body for ethics in science and higher education - which was abolished last year - to better monitor academic appointments. 

Divjak did not say that the autonomy of Croatia’s universities was necessarily compromised but is concerned that several rectors have close relationships with the ruling political party. “There are some cases of unhealthy alliances between academia and politics,” she said. 

“When I was minister, I tried to establish official and transparent negotiations with universities about multiannual agreements and it was not appreciated by a majority of rectors, who preferred to have more direct communication with the minister in charge,” Divjak said.