EU funding agency boss investigated for laundering EU money to Malta trust

A scandal has erupted in Austria with the head of the Agency for European Integration and Economic Development (AEI) in Vienna being accused of the fraud and embezzlement of EU funds to a private trust in Malta.

In July, raids were carried out at the Austrian finance ministry and at the offices of the federal police, which falls under the interior ministry after several dozen officials from the Austrian finance ministry and 15 employees of the interior ministry reported suspicions of illicit activities.

Malta’s tax authorities are also reported to have informed their Austrian counterparts about the trust companies belonging to AEI chief’s family, in which she was personally registered as a trustee.

The AEI filed for bankruptcy this week and proceedings have now been initiated at the Vienna Commercial Court.

While there was nothing illegal about being a trustee, a further analysis of AEI’s consolidation of accounts raised suspicions that EU funds were being transferred to the trust in Malta, in a suspected case of laundering the proceeds of the theft of EU funds.

The agency’s funds are awarded by the European Commission, and the fact that AEI’s balance sheets increased from €580,000 to €15.5 million between 2017 and 2019 is another consideration being investigated by Austrian authorities.

After the raids on the interior and finance ministries, the AEI was stripped of its primary ‘twining’ functions, where an EU member state trains an accession candidate country on the reforms needed to acquire EU membership.

The investigations are centred on the agency’s senior officials – mainly on the agency’s chief, a federal police chief inspector, who was a project partner, and another individual – who are being accused of anti-trust violations and embezzlement.

In the wake of the 20 July raids, the Austrian foreign ministry said the agency had been stripped of its functions following months of investigations that uncovered transfers of funds between the AEI chief and the chief inspector, as well as money laundering through trust companies in Malta.

Back in 2006, Malta’s Foreign Affairs Ministry received €122,000 from the agency, founded in 2003, for a Twinning ‘Light’ Project between the Foreign Affairs Ministry under the European Commission’s Transitional Facility programme. Under the twinning agreement, the AEI provided assistance to strengthen Malta’s visa-issuing capacity.