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EU anti-fraud agency cracked down on fake pandemic supplies

  • EU imports of Chinese healthcare products grew by 900 percent in the second quarter of 2020, compared with 2019, the report found (Photo: Ian Sane)

The EU's anti-fraud agency helped seized millions of counterfeit masks, testing-kits, and hand-sanitisers over the past year, as the pandemic opened up a major business opportunity for fraudsters, the agency, OLAF's report published on Thursday (10 June) said.

EU imports of Chinese healthcare products grew by 900 percent in the second quarter of 2020, compared with 2019, the report found.

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The EU decided to accelerate the certification process for much of the medical gear that was suddenly in extremely high demand across the bloc.

"It soon became clear that while relaxing the rules did indeed help speed up the supplies of legitimate, safe products to the EU, it also made it easier for millions of substandard or fake medical products, with invalid EU conformity certificates, to be imported into the EU," OLAF's report noted.

The agency opened an investigation on 19 March last year, which is still ongoing.

Not all cases are fraudulent, the report adds. Some are just opportunistic and move into a line of business trying to profit from the pandemic with little control over their supply chain - and thus susceptible to fraudsters, who pass off fake products.

Up until the end of last year, OLAF's investigation has seized 31,500 fake Covid-19 test kits, 2,416,000 face masks, 140,000 litres of hand sanitisers, 105,000 spray cans and 3,636 litres of counterfeit Dettol (antiseptic disinfectants) products.

In one case, the OLAF investigation led to the seizure of 140,000 litres of counterfeit hand-sanitiser from Turkey that contained dangerously high-levels of methanol, which has a direct toxic effect on the optic nerve.

OLAF was first tipped off by Danish authorities in August 2020, who seized 6,000 litres of hand sanitiser from Turkey.

A month later, OLAF identified a suspicious shipment heading for Ireland and alerted Irish customs authorities, who intercepted the cargo with unacceptably high levels of methanol.

The pandemic meanwhile also made it more difficult for OLAF agents themselves to investigate, but they continued to visit countries during the lockdowns, even if travelling has been more tedious and unpredictable.

Hungary and Italy top list

On the whole, last year OLAF concluded 230 investigations, issuing 375 recommendations to the relevant national and EU authorities. It opened 290 new investigations.

The agency recommended the recovery of €293.4m to the EU budget.

It recommended to the EU Commission that it recover some 2.2-percent of payments made to Hungary under the bloc's structural and independent funds and agriculture funds between 2016-20.

Hungary has been leading the rate of financial recommendations - with the EU-27 average being 0.29 percent - in previous reports as well.

OLAF last year closed the most number of cases in Italy (13) and sent recommendations in nine of those cases. Bulgaria comes second with eight cases closed and seven recommendations, with Hungary getting third place with eight closed cases and four recommendations in 2020.

OLAF cannot prosecute inside member states - it can only make legal recommendations to national authorities and prosecutions if they find misuse of EU funds.

It is, however, up to the national authorities themselves whether to then investigate and prosecute the cases.

Between 2016 and 2020, around 37 percent of the cases which OLAF sent to national judicial authorities, and on which these authorities have already taken a decision, led to indictments.

In Bulgaria the rate is 25 percent, in Hungary 67 percent. In Italy, the indictment rate is also 67 percent.

The newly launched European Prosecutor's Office (EPPO) will have prosecutors in 22 member states to indict possible criminals.

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Fraud against EU dropped 20% last year

There were a total of 1,056 fraudulent irregularities in 2020, with a combined financial impact of €371m. Currently, Cyprus, Denmark, Finland, Germany, Ireland, Netherlands, Slovenia and Spain do not have domestic anti-fraud plans.

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