European Public Prosecutor’s Office arrests 2 suspects in biodiesel fraud investigation

The European Public Prosecutor’s Office in Brussels, Belgium, announced June 28 that it has arrested two suspects in connection with an investigation into a customs fraud involving biodiesel imports, with an estimated damage of 3.1 million euros (USD$3.3 million). 

The two suspects, who have dual citizenship (Bosnia and the U.S.), were arrested in May during the course of a trial at the Court of Antwerp, where they were being tried in a separate case, carried out by Belgium’s national prosecutor, which also involved a biodiesel scam.

Following their arrest, two other individuals, who were working as their lawyers, allegedly attempted to move and hide potentially incriminating evidence for their clients and were in turn also arrested. They were later released under certain conditions. 

The suspects had been on EPPO’s radar for its investigation into a criminal organization that fraudulently imported biodiesel of U.S. origin into the EU, which has led to their arrest, carried out by Belgium’s Federal Police (CDGEFID/OCDEFO). They remain under electronic surveillance.

As the main suspects are U.S. citizens with assets located in the United States, EPPO is committed to obtaining cooperation from the relevant U.S. authorities in order to seize the assets and recover the estimated damage to the EU budget.

Complex biodiesel scam  

The facts under investigation were first reported to EPPO by the European Anti-Fraud Office (OLAF) and Belgium’s General Administration of Customs and Excise (AAD&A/AGD&A).

The two suspects are understood to be the ringleaders of a criminal organization that imported biodiesel of U.S. origin into the EU, while fraudulently declaring its origin as Morocco. Both are also the subject of other EPPO ongoing investigations involving possible biodiesel frauds. 

The importation of biodiesel produced in the U.S. is subject to EU antidumping duties, as the production is subsidized and cheaper than biodiesel originating in other non-EU countries.

Biodiesel originating from the U.S. is often produced using soybean oil, which is generally cheaper, according to EPPO.

The imports under investigation were most probably produced from soybean oil and not used cooking oil, as was declared, EPPO stated.  

“According to the investigation, to avoid the application of the antidumping duties, the biofuel exported from the U.S. transited via non-EU countries (including Costa Rica and Morocco), where it was imported as used cooking oil methyl ester, temporarily stored and allegedly transformed into biodiesel,” EPPO said. “The legal origin of the product may change if the initial product is subject to a sufficient transformation process, usually changing the nature of the product itself—which, based on the evidence, was not the case.”

In addition to avoiding the antidumping duties, the biodiesel was imported at a preferential import duty rate of zero percent, resulting from the preferential tariff the EU applies to goods originating from Morocco.

The EPPO is the independent public prosecution office of the European Union.

It is responsible for investigating, prosecuting and bringing to judgement crimes against the financial interests of the EU.