In its report for 2017, the EC’s Anti-Fraud Office (OLAF) describes a fraud in which more than €1.4 million of EU research funding was misappropriated. An Italian led consortium with partners in France, Romania and the UK obtained funding for a project to build prototype hovercraft for use as emergency vehicles able to reach remote areas in case of environmental accidents. On-the-spot checks in Italy by OLAF and the Italian Guardia di Finanza discovered various disassembled components of one hovercraft, as well as another hovercraft which was completed after the end of the project.
They also discovered that the British partner only existed on paper: the company was in fact created and owned by the Italian partner. To simulate the development of the project and to divert funds, fictitious costs had been recorded. Analysis of more than 12,000 financial transactions showed that part of the EU funds received by the Italian and UK partners had been used to pay off a mortgage on a castle facing foreclosure.
But fraud in EU research funding is rare. According to OLAF, in 2017 only eight cases of fraud related to payments totalling €520k were detected in the Research and Innovation policy area. This amounts to about 0.01% of payments made that year, similar to the percentage for the period 2013-17. So not much money for castles!