EPPO proceedings: EU subsidy fraud and cross-border investigations
Two men concealed their ties to the Russian and Belarusian defence industry in order to obtain European funding. They were convicted, not for sanctions evasion, but for subsidy fraud. That is not a concession to thin evidence. It is the most telling sentence in European sanctions enforcement this year: those who become criminally liable in a sanctions context increasingly do so through the declaration, the tax and the customs form, not through the embargo regulation.
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Where EU money
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What the EPPO is and what it investigates.
The European Public Prosecutor's Office (EPPO) is an independent EU prosecutor that investigates and prosecutes offences against the financial interests of the European Union, in particular fraud involving EU funds, cross-border VAT fraud and related corruption. It acts across borders and with its own powers, working through delegated prosecutors in the member states. Where EU money is affected, it is increasingly the EPPO, not only national authorities, that leads.
The case from Vilnius
In an EPPO investigation codenamed "Precision", a court in Vilnius convicted two Belarusian nationals, father and son, and a company they controlled. The charge was subsidy fraud, committed jointly, together with forgery and the use of forged documents. A company based in Lithuania had obtained EU funding to develop high-precision satellite-navigation receivers, intended to make the high-accuracy service of the European Galileo system usable for agriculture. What was concealed was decisive: the participants' ties to Russian and Belarusian defence undertakings subject to EU restrictive measures.
Why subsidy fraud, not sanctions evasion
The EPPO's mandate is the protection of the EU budget. Where the harm can be framed as fraud against EU funds, that is the natural charge, and it is often easier to prove than a breach of the embargo regulation. The lesson is not that sanctions no longer matter, but that liability in a sanctions context often crystallises in the funding application, the declaration and the customs form.
Transferred to Germany: section 264 StGB
In Germany the equivalent charge is subsidy fraud under section 264 of the German Criminal Code (Strafgesetzbuch, StGB). Concealing information relevant to a subsidy, including ties that would bar the funding, can meet the offence without any separate proof of sanctions evasion. For companies drawing on EU or national funding, the funding declaration is therefore a criminal-law document, not a formality.
What companies should do
Treat funding applications and declarations with the same care as a regulated filing. Know the ownership and control structure behind partners and beneficiaries, document what was disclosed, and take advice before signing where sanctions, subsidies or customs overlap. The safest defence is a complete and accurate declaration in the first place.
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The EPPO and subsidy fraud, briefly explained.
What does the EPPO investigate?
The European Public Prosecutor's Office investigates offences against the EU's financial interests, in particular fraud involving EU funds, cross-border VAT fraud and related corruption. It acts across borders and with its own powers through delegated prosecutors.
Why were the defendants convicted of subsidy fraud, not sanctions evasion?
The EPPO's mandate is the protection of the EU budget, and fraud against EU funds is often easier to prove than a breach of the embargo regulation. Liability in a sanctions context frequently crystallises in the funding application and the declaration rather than the sanctions regulation itself.
How does this translate to German law?
In Germany the equivalent charge is subsidy fraud under section 264 StGB. Concealing information relevant to a subsidy, including disqualifying ties, can meet the offence without separate proof of sanctions evasion. The funding declaration is a criminal-law document.
This page places a foreign judgment and the German legal position in context. The account of the Lithuanian proceedings is based on publicly available reports; the binding assessment of the law there rests with local practitioners. The German analysis is a general overview and does not replace advice on the individual case.
An EU-funds or subsidy allegation?
We defend in cross-border proceedings and where sanctions, subsidies and customs meet.
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