Corrupt EU officials escape justice after a decade of probes

Ten years after two EU employees were first linked to money laundering and bribery, one of them still works for the European Commission. The other has been living off a very generous civil servant’s pension since last year. The statute of limitations for the criminal case against the two officials has expired by now and the Commission does not seem in a hurry to wrap up its internal investigation. ‘The inability to find justice in this case is astounding.’

This article in 1 minute

What's the news?

  • In early 2013, Belgian and European authorities were tipped about a fraud case concerning European agricultural subsidies in which two European Commission employees were involved. But it would take until 2018 before criminal proceedings began.
  • The court initially found that the two officials ‘showed no awareness of guilt at all’ and gave one a three-year and the other a two-year sentence, for accepting bribes and money laundering respectively. On appeal, however, the court ruled that the statute of limitations had expired.
  • They seem to be escaping any type of punishment so far. The bribed official is still earning a generous salary at the Commission. The other reached pension age last year.

Why does this matter?

  • Last December, Qatargate broke, the largest EU corruption scandal in years. This case offers an interesting retrospective take on how bribery cases are being  dealt with in Brussels.
  • The case shows how slowly the Belgian wheels of justice turn and sheds light on how the Commission fails to walk the talk when dealing with internal corruption cases. 

How did FTM investigate this?

  • Follow the Money was able to consult the court rulings and spoke with parties involved and with legal experts. The findings are troubling.
Read more

On 5 May 2015, Belgian police officers searched the flat of 55-year-old Stella Scarlis, in a building overlooking the Cinquentenaire parc in the European district in Brussels. They suspected that the Greek-Australian woman and her husband, Alexander Hedersven, were committing fraud with European subsidies intended for promoting agricultural products. 

At the time, Hedersven – aged 63, who has both Greek and Swedish nationality and who is also known as Konstantinos Tanis and Alexandros Filaretou – was serving a sentence in a Greek prison after being convicted in 2011 in a similar fraud case. 

In his bedside cabinet in Scarlis’ flat, the investigators found an envelope marked ‘Malliaris’. The envelope contained three A4-sized transparent folders. Two contained a total of 14 photographs of a meeting between Hedersven and a middle-aged man, somewhere in Brussels. The photos had been shot from a distance using a telephoto lens, with some also marked with the meeting date: 31 August 2011. 

‘Crook that takes bribes wants to become politician’

The third folder contained a photograph of twenty 500-euro banknotes and a single 200-euro one. The envelope also contained a printout of an Excel table detailing payments. The table showed that 70,000 euros had already been paid and that 60,000 were still owed. On Scarlis’ iPad, the investigators also found a note in English: ‘Crook that takes bribes wants to become politician.’

The investigation conducted by the police and the European Anti‑Fraud Office (OLAF) revealed how Scarlis and Hedersven fraudulently received subsidies for promoting European agricultural products outside the European Union; this not only was taking place at the time of the house search, but went on for years afterwards. 

The couple helped Bulgarian agricultural associations to source their own 20 per cent-contribution required by the EU to become eligible for 80 per cent in subsidies. They achieved this with fictitious or padded invoices for services provided by two Belgian companies, Agropromotion and Spinmarketing. 

They then provided just a fraction of the promotional services and channelled the rest of the money to private bank accounts; laundered it through companies in Bulgaria, Ukraine and Seychelles, before using it to purchase property in Brussels.

OLAF estimated the total damage to the EU budget at over 13 million euros. This is the total amount of the 50 per cent subsidies that the EU awarded for the promotional campaigns. Luckily, the actual damage was lower: only 5.57 million euros had actually been disbursed. The EU was able to block payment of the rest of the subsidies.

Georgios & Georgios

The name ‘Malliaris’ on the envelope that the investigators discovered in 2015 referred to Georgios Malliaris, a Greek official employed by the Directorate-General for Agriculture of the European Commission, who was tasked with promoting agricultural products on international markets. The couple considered him to be an important asset in reeling in the subsidies.

According to the court’s ruling in January 2023, they probably intended to use the envelope’s contents to blackmail Malliaris (referred to in the anonymised ruling with the letter M) if he tried to break his promises.

Malliaris admitted that he had received the money, but said that it was intended for charity and that he had transferred the funds to a Greek priest, an explanation that the judges in the case described as entirely unbelievable.

The note found on the iPad – about a crook becoming a politician – dated to just prior to the European Parliament elections in 2014. Malliaris, who at that time had been employed by the Commission for over a decade, was standing as a candidate for the Greek European Citizens Party, which had just been formed. 

A Greek news website described him as a ‘champion of Greek interests’, who had ‘already been fighting for years for the consolidation of Greek products on international markets’. According to the article, it was Malliaris who ensured that ‘feta’ was included in the European Union’s protected designation of origin (PDO) list in 2002. Since then, the popular white cheese may only be called feta if it comes from Greece. 

‘Cheating, abuse and self-enrichment, to the detriment of society and their fellow citizens’

Malliaris was not elected and in 2015 his party merged with the centre-right New Democracy party, home to the current Greek prime minister Kyriakos Mitsotakis.

The criminal file also mentions suspicious transactions involving a bank account of another Greek European Commission official sharing the same first name: Georgios Giannakakis. This Georgios was initially also suspected of bribery, but was later only convicted on money laundering charges.

Statute of limitations expired

It seemed like such a cut-and-dried case for the Belgian public prosecutor’s office. In March 2013, over two years before Scarlis’ home was searched, they received a report from the Belgian Financial Intelligence Unit, the Cel voor Financiële Informatieverwerking (CFI), on money flows between companies managed by the couple, located in Belgium, Bulgaria, Cyprus and Estonia.

Scarlis and Hedersven were subsequently both given a four-year sentence and were banned from running a Belgian company for ten years. They were also fined and some of their possessions were confiscated.

It also first seemed as if Georgios Malliaris and Georgios Giannakakis would not go unpunished. In 2021, the court sentenced them for bribery and money laundering. The judge didn’t pull any punches in her ruling: ‘The crimes perpetrated by the defendants are extremely serious and condemnable. They bear witness to an antisocial character and a way of life based solely on cheating, abuse and self-enrichment, to the detriment of society and their fellow citizens.’ She also noted that neither defendant showed any awareness of guilt. ‘The gravity of the crimes requires a clear signal to society.’

Yet just two years later, the two officials ended up getting away with their misdeeds. Just this last January, the court of appeal ruled that the statute of limitations on the case had by now expired, so the defendants could walk. Not only have they escaped prison sentences, fines and the confiscation of their possessions, but they also retained their employment at the European Commission, including a generous salary and pension.

The Commission, which is also conducting disciplinary proceedings against its employees, says that it was ‘required’ to suspend these for the duration of the criminal trial, but that they had been resumed subsequent to the ruling of the court of appeal.

The Commission does too little

The Georgios & Georgios case shows that the Belgian criminal law system and the terms of employment of staff at the European Commission currently make it difficult to effectively tackle corruption. This puts the Commission in an awkward position, given its claims it will deal decisively with Member States that fail to address corruption properly. The answers that Follow the Money received from the Commission about the matter are lacking in substance

‘I don’t understand why the Commission is unable to enforce this’

With Brussels experiencing its most significant corruption scandal in years, since Qatargate unfolded in December, the Commission cannot escape setting its own house in order. 

Yet a sense of urgency is still clearly lacking in this case. The Commission let every available opportunity to signal its intolerance of corruption go to waste. During the criminal proceedings, it could have demanded financial compensation for the incurred damage. It also could have suspended the two involved employees (temporarily) and withheld part of their salary.

Contrary to what it claims, the Commission was also not obliged to stall the entire disciplinary proceedings until after the criminal trial. According to its own internal rules, all it was required to do was postpone passing its definitive judgement. The Commission could have chosen to punish the two employees as soon as the Belgian procedure had been completed, but by now another 100 days have passed since the court of appeal’s ruling.

‘I don’t understand why the Commission is unable to enforce this. There’s no good reason for this that I can see,’ says Sophie in ’t Veld, an MEP for the Dutch social-liberal party D66. ‘It is also certainly not the usual state of affairs for an EU institution to tolerate these kinds of scandals.’

Toothless European fraud watchdog

Other EU institutions also did not double down on their efforts. The European fraud watchdog OLAF – formally a Commission department – also received the Belgian CFI report in 2013. 

In 2014, it started investigating whether Giannakakis was bribed. During an inspection at the Agropromotion office in the first half of 2015, it also came across potential evidence that Malliaris was bribed. But it was only in late 2017 and early 2018 that OLAF submitted its final reports to the Commission, with its recommendations for dealing with Giannakakis and Malliaris.

Although OLAF advised the Commission to conduct a disciplinary investigation, it appears as if OLAF attempted to shield the Commission. In its 2018 annual report, OLAF explained its own resolute actions in resolving the fraud case at length, yet did not spend a single word on the involvement of the EU officials. 

In a response, OLAF says that it conducts its investigations ‘fully independently and objectively’. The agency also reported that the average duration of an administrative investigation is just over two years, which was substantially shorter in this case.

Unwittingly employed by a criminal organisation

Follow the Money spoke with Sophie,* who worked for Agropromotion for years. She claimed she had no idea that there was anything wrong. ‘In retrospect, there are plenty of little details: one of the partner companies was registered in the Seychelles, for instance, or [Stella Scarlis] was continuously complaining about accounting challenges.’ 

Sophie described Scarlis as a diligent woman who wanted to constantly check everything for herself. ‘She saw herself as a strategist or a mastermind. She wanted to succeed and be smarter than others.’ But Sophie doesn’t consider Scarlis to have been the leader of the criminal organisation, but rather Hedersven, her husband at the time. ‘She was constantly calling him for his advice.’ 

When Sophie was employed by Agropromotion, Hedersven was in prison, which she was unaware of. She also had no idea that Scarlis was also briefly detained while she was working there. It was only after she left the company, that Sophie heard it had been the centrepiece of a fraudulent network. ‘I felt completely betrayed. It felt bad, emotionally and psychologically.’

* Sophie is a pseudonym. Her real name is known to Follow the Money.

Read more Fold in

‘Incredible inability’

It results from our inquiries that not one single authority can be held responsible for the statute of limitations expiring. The Belgian public prosecutor, the investigative judge, the European fraud watchdog OLAF and the courts: they all failed in their collective role of seeing that justice is done. 

‘This appears to be a sorry tale about the slow workings of the Belgian legal system, in which a case went through nearly every possible stage, but no single authority felt sufficiently responsible to ensure a timely finalisation,’ says an experienced Belgian criminal lawyer we consulted about the case.

In a response, the Belgian public prosecutor’s office pointed out that the investigative judge worked on the case between 2015 and 2018, and that it then only took the office one month to bring the case to court. The defendants’ lawyers also used every legal option at their disposal to delay the proceedings, according to the spokesperson.

‘The inability to bring people to justice is quite incredible,’ says Nicholas Aiossa from the anti-corruption NGO Transparency International. ‘It seems to me there were huge faults in the Belgian justice system accompanied by what seems to be inadequate disciplinary proceedings in the European Commission.’

Complex criminal cases deadlocked

The case is a clear reminder that the Belgian judiciary plays a key role in the European democratic system. This is also apparent in the Qatargate scandal. Although King Philippe and prime minister Alexander De Croo were proud to take credit for the arrests made in the case in January, there are now substantial doubts whether the case will be successfully concluded. 

Due to a dispute between the Belgian and Italian authorities about extraditing suspects, the legal investigation is being delayed according to the Financial Times. In the past few decades in Belgium, various major and complex criminal cases, often economic in nature, have ended in deadlock. 

There is a glimmer of hope that things may change thanks to a current plan to reform the statutes of limitation in Belgium, based primarily on the proposal of stopping the clock once a case has been brought before court. This would have prevented the expiry in this case.

‘No single authority felt sufficiently responsible to ensure a timely finalisation’

In the aftermath of Qatargate, the European Commission launched a series of proposals on 3 May, intended to improve how Member States prosecute corruption. According to one proposal, the statute of limitations for bribing public officials may not be lower than 15 years. The plan still needs to be approved by the Member States and the European Parliament, which given the time remaining will be difficult to achieve before the next parliamentary elections in May 2024. 

Dutch MEP Sophie in ’t Veld (D66) advocates strengthening the role of EPPO, the European public prosecutor’s office which has been investigating crimes against the financial interests of the EU since 2021. ‘EPPO is setting a gold standard for how to run a European organisation. I would love to see a broader role for this prosecutor and for Europol, including enforcement powers and a larger scope of activities.’

And Georgios & Georgios? They are carrying on with their lives. Giannakakis turned 65 in 2020, his pension age. At just 58, Malliaris has found a pastime he supplements his income with. He has already published six books on Greek gastronomy since 2018.