Latvian Mayor, Officials Accused of €168,000 EU Funds Fraud
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The Corruption Prevention and Combating Bureau (KNAB) is urging the European Public Prosecutor’s Office (EPPO) to launch a criminal investigation into the Mayor of Valka, Vents Armands Krauklis, and two other municipal officials, alleging large-scale fraud in connection with a regional development project. The alleged scheme involved misappropriating over €168,000 – comprised of funds from the European Regional Development Fund and the Latvian state budget.
Project “Līdumi” at the Center of Allegations
The case centers around the “Līdumi” production area in Kārķi parish, which opened in early 2022. The facility was intended to support the expansion of organic fodder production by the farm “Jasmīni.” According to reports from Latvian Television, a key figure in the project’s promotion was Varis Juškevičs, son of the farm’s owner and a manager at “Jasmīni,” who simultaneously served as a member of the Valka Regional Council. Currently, “Jasmīni” operates as a tenant at the “Līdumi” site.
Mayor Krauklis Confirms Investigation
Mayor Krauklis acknowledged the initiation of criminal proceedings related to the production site in an interview with the regional newspaper Ziemeļlatvija in early October. “I am the main defendant in this process and I have the right to a defence,” Krauklis stated.
This is not the first time Krauklis has faced accusations of fraud. The KNAB has previously accused him in a separate case involving nearly €600,000. That investigation also implicates Pēteris Pētersons, the head of the Erģemes parish administration, and Krišjānis Putniņš, a board member of Mūrbūdu Cider Brewery.
EU Funding Rules and Alleged Misconduct
Municipalities in Latvia are able to secure European Union structural funds to construct production facilities on municipal land, subsequently leasing them to private companies. The KNAB explains that municipalities are eligible for up to 85% EU funding if the tenant is selected through an open tender process, with the tenant remaining unidentified during the facility’s construction. However, if the facility is built for a specific operator, co-financing is reduced to between 45% and 55%, requiring a larger financial contribution from the company itself.
The KNAB investigation revealed evidence suggesting that three Valka Municipality officials colluded to construct the production building specifically for the benefit of a pre-selected trader. Crucially, these officials allegedly failed to disclose this arrangement to the relevant authorities and, as a result, fraudulently obtained a higher level of funding than permitted under existing legislation.
Financial Impact and Next Steps
The alleged fraud resulted in the misappropriation of €160,000 from the European Regional Development Fund and €8,026.12 from the Latvian state budget. Criminal proceedings were officially opened on November 6, 2023, signaling a significant escalation in the investigation.
The case highlights the importance of transparency and adherence to regulations in the allocation of EU funds, and underscores the ongoing efforts to combat corruption within Latvia’s regional development initiatives.
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