Slovenia coal fraud charges serve as warning for other Balkan countries, say NGOs

Ljubljana, Slovenia: Slovenian police yesterday reported that ten people had been charged with fraud [1] in relation to the beleaguered Sostanj 6 lignite power plant project, causing a suspected EUR 284 million in financial harm to Slovene electricity consumers. The charges serve as a new warning to decision-makers across the Western Balkans [2] to closely scrutinise coal power plant projects planned across the region if the mistakes made in the Sostanj 6 project in Slovenia [3] are not to be repeated, warned several NGOs today.

Slovene police declined to provide any names, but unofficial information obtained by the Slovene Press Agency/Slovenska tiskovna agencija indicates the company suspected of this EUR 284 million fraud is Alstom, the main contractor for the Sostanj 6 project, which is believed to have secured financial gains by changing contracts and increasing the cost of the project.

The allegations come at a particularly sensitive time for Croatia, which at the beginning of September chose a consortium including Alstom for the controversial Plomin C coal plant project.

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Less than two weeks ago Bankwatch and Zelena akcija/Friends of the Earth Croatia drew attention to Alstom's troublesome integrity record in a briefing paper detailing the repeated convictions and charges of Alstom employees for corruption offences [4].

“The Sostanj 6 project has been dogged by scandals, its price tag has doubled to EUR 1.4 billion, and now some of those involved are being charged for fraud,” says Bankwatch's Pippa Gallop. “European development money has potentially been lost to fraud here and the two public banks financing the project – the European Bank for Reconstruction and Development and the European Investment Bank – owe it to the public to expand their internal investigations to include these new charges in Slovenia, to complete the investigations and make their findings known to the public.” [*]

“Sostanj 6 is the perfect alarm call for everyone in southeast Europe to wake up and start looking more carefully at what's going on with coal projects in the region”, said Barbara Kvac from Focus Slovenia. “In Slovenia, our state is already struggling under the financial burdens of this failed project. This should not be allowed to happen in other countries too. It's time to stop swallowing unsubstantiated promises of jobs and economic development and time to start asking tough questions.”

* The doubtful economic viability of the Sostanj 6 project has been repeatedly presented to the EIB and the EBRD by civil society. However, according to the results of an investigation by the EIB's Complaint Mechanism, this kind of information was not sufficiently presented by the EIB management to the Board of the Bank, leading the Board of the EIB to make the questionable decision to finance Sostanj 6. Such gaps in proper assessment of a project before financing need to be properly investigated by the EIB so as to avoid future risky use of scarce European development funds. Similarly, better due diligence is also expected of the EBRD, who also financed this project despite corruption suspicions and whose internal investigation into Sostanj 6 has still not yielded any public results. Evidence of the miscommunication at the EIB can be found in correspondence between NGOs and the EIB which is available upon request.

Contacts:

Pippa Gallop, CEE Bankwatch Network
pippa.gallop@bankwatch.org
Tel.: 00385997559787

Notes for editors:

[1] For more information see here:
http://www.sloveniatimes.com/alstom-caught-up-in-tes-criminal-investigation
A total of ten persons have been charged with abuse of office and forgery or destruction of business documentation according to the head of criminal investigators at the Celje Police Administration, Damjan Turk. Eight persons from Slovenia, one from Austria and one from France are among the suspects.

[2] For information about the plants see here: http://www.bankwatch.org/coal

[3] For more information about the ill-fated Sostanj 6 project, see:
http://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-pla...

[4] See here:
http://bankwatch.org/news-media/for-journalists/press-releases/marubeni-...