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Croatia indicts five over EU funds fraud


    ZAGREB (Reuters) - Croatia has indicted five people for cheating clients by promising to secure European Union loans for their companies, state prosecutors said on their website on Friday, in the first Croatian criminal case involving false promises of EU funds.

    Croatia is due to join the bloc on July 1, 2013, when it will have up to 1.5 billion euros per year at its disposal for eligible local projects in agriculture, environment and rural development.

    Until then it can tap into various pre-accession funds.

    The state anti-corruption office USKOK, which raised the indictments, said the five had set up a company which they said was authorised by the finance ministry to act as an intermediary in disbursing EU loans.

    Between May 2011 and January 2012, the five were promising quick disbursement of such loans but clients first had to pay a fee, which earned them a total of around 420,000 Croatian kuna (43,564 pounds), USKOK said. The loans themselves did not exist.

    Small private businesses in Croatia are struggling because of a shortage of loans on favourable terms, and overdue bill and tax payments totalled 44.5 billion kuna in July.

    (Reporting by Zoran Radosavljevic, editing by Tim Pearce)