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Friday, May 09, 2025

European Prosecutor Initiates Investigation into Serbian Railway Project

A probe into potential misuse of EU funds linked to the contested Belgrade-Budapest railway project raises critical questions.
Laura Kovesi, the European chief prosecutor, has confirmed the initiation of an investigation concerning the Belgrade-Budapest railway project, specifically examining its funding and financial management.

This project includes the railway station in Novi Sad, where a tragic accident occurred in which a roof collapsed, resulting in the deaths of 15 individuals.

The investigation's focus will be on potential misuse of funds allocated by the European Investment Bank (EIB) for the reconstruction of the railway and the station.

Kovesi clarified in a statement to Radio-Television of Serbia that her inquiry does not pertain to the roof collapse incident, but rather to the financial dealings related to EU funds used in the project.

The inquiry was prompted by a complaint from a private individual, and Kovesi expressed optimism for cooperation from Serbian authorities in the investigation.

Despite the presence of EU funding during the project's planning stages, specifics regarding the amounts and sources of that funding remain ambiguous.

It is known that Serbia had access to loans from both the EIB and the European Bank for Reconstruction and Development (EBRD) but it is unclear whether these funds were utilized, as the country has predominantly engaged in business with Chinese firms.

Vladimir Medjak from the European Movement in Serbia emphasized the lack of clarity regarding the utilization of EU funds, questioning whether these funds were allocated appropriately for the project.

He highlighted that if Kovesi is investigating, it implies that EU funds are indeed part of the financial framework of the project.

Kovesi's office is expected to refer the case and gathered evidence to domestic prosecutors for further action.

Should Serbian authorities refuse compliance, this could result in the suspension of future EU funds.

Furthermore, it has been suggested that the roof collapse may have shed light on deeper issues within the financial arrangements of the railway project.

Dragoljub Rajić, coordinator of the Business Support Network, pointed out major concerns about the lack of pre-investment studies that could explain why Chinese companies were chosen over European competitors for this project, especially given the necessity for alignment with European railway standards.

He noted the absence of proper procurement processes, with contracts awarded directly to Chinese firms, contravening the EU Stabilization and Association Agreement.

Rajić also raised issues regarding the capability of Chinese companies to adhere to European project standards, claiming that they lacked experience in constructing railways meeting those criteria.

He raised concerns about the significant cost implications of maintaining the railway, particularly with regard to international service logistics due to the distance from China.

The overall transparency of the project financing has been questioned, with initial estimates suggesting that a total of $1.9 billion was required, predominantly financed through Chinese loans.

However, additional funding for unforeseen costs, including station renovations, remains uncertain.

Rajić criticized the contractual terms with Chinese firms for not aligning with European construction norms, suggesting that the entire project may represent an atypical approach to infrastructure development.

The investigation is being watched closely as unresolved issues regarding financial management and project execution could have lasting implications for Serbia's infrastructure investments and its relations with European partners.
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