Zatecka Teplarenska Fined CZK 2.25M For Subsidy Fraud

Zatecka Teplarenska convicted of subsidy fraud

Žatecká teplárenská (ZT) has been ordered to pay CZK 2 million for committing EU subsidy fraud. In 2016 ZT, falsified an EU subsidy application for a CZK 80 million project. The EU subsidy covered 85 percent of the costs, and the State Environmental Fund (SEF) paid the remainder of the balance. The Ústí nad Labem Regional Court fined the three defendants. The judgment is not final.

According to the indictment, the subsidy’s application stated that storage tanks had been built with electrical installations and landscaped areas around them. However, the work was never done; the company falsified the application for payment of the European subsidy.

Petr Šmíd, the Chairman at the time, signed the fraudulent subsidy application and received a CZK 600,000 fine. Tomáš Špirek, who provided technical supervision, received the same penalty. The court established a one-year prison term as an alternative sentence.

The third defendant is Daniel Folk, the construction manager of Metrostav, who prepared the list of work performed for the subsidy application.

The indictment estimated the damage at CZK 953,000. The court ruled that the three defendants should pay the state damages over CZK 400,000.

The court also ordered Žatecká teplárenská to publish the verdict in the local press. For the company, the public prosecutor proposed a fine of CZK 1 million and a ban on receiving subsidies for five years. According to the judge, the penalty of CZK 2.25 million corresponds to proven criminal activity, and imposing a ban would be an excessive penalty.

The defendants are to pay the fines to the Ministry of the Environment. Altogether it is about CZK 448,000. “We have taken into account that the company has returned part of the subsidy. Regarding the rest of the claim, we refer to the Ministry of the Environment to the proceedings in civil matters,” the judge said.

Prosecutor Lukáš Otipka stated that he was satisfied with the verdict. Žatecká teplárenská appealed on the spot, as did one of the defendants, two of whom kept the deadline for appeal.