EU Prosecutors Probe €1.4 Million Latvian Factory Project as PM Adviser Detained

European prosecutors have launched searches in Latvia over suspected procurement fraud involving more than €1.4 million in EU funding for three industrial facilities, while Latvian media report that a senior government adviser was detained during related investigative activities.

The European Public Prosecutor's Office (EPPO) announced on October 28 that Latvia's Corruption Prevention and Combating Bureau (KNAB) had carried out searches and other investigative measures in the municipality of Alūksne.

The investigation concerns allegations that municipal officials and local business representatives may have manipulated the allocation of EU-funded industrial facilities to benefit companies selected in advance.

According to Latvian news agency LETA, Mārtiņš Brencis, an adviser to Prime Minister Andris Kulbergs and a newly elected member of parliament, was detained after investigators carried out procedural measures involving him.

The prime minister's office confirmed the detention to LETA. EPPO has not publicly identified Brencis as a suspect or detailed his alleged connection to the industrial project.

Three Industrial Facilities at Center of Investigation

The investigation focuses on an industrial infrastructure development project financed through the European Regional Development Fund (ERDF).

More than €1.4 million in European funding was involved in constructing three manufacturing facilities in Alūksne municipality, with the objective of making industrial premises available to private companies.

Under the project's funding conditions, companies leasing the facilities were supposed to be selected through open, transparent and non-discriminatory auctions.

EPPO suspects that municipal officials and representatives of local businesses may instead have arranged for the facilities to benefit predetermined operators.

According to prosecutors, the alleged conduct involved misleading responsible authorities while using European funds to construct buildings intended for particular businesses.

The allegations concern the integrity of the selection process and whether public financial support was allocated in accordance with EU funding rules.

Prosecutors have not disclosed the identities of the companies or individuals formally suspected of wrongdoing.

Searches, Seized Documents and Government Adviser Detention

Latvian investigators conducted searches on October 28 as part of the EPPO-led investigation.

Law enforcement officers seized documents and cash. Ammunition was also discovered and confiscated during the searches.

Authorities have not indicated whether the ammunition was connected to the suspected procurement fraud or represented a separate issue.

Local reporting has identified additional investigative activities involving Mārtiņš Brencis, an adviser to the Latvian prime minister.

LETA reported that the prime minister's office confirmed his detention and that Brencis had not attended work on Wednesday.

Prime Minister Kulbergs said he had only learned about the investigative activities that morning and did not have sufficient information to comment on the substance of the case.

The investigation is ongoing, and no findings of criminal liability have been announced.

Municipality Rejects Allegations of Improper Allocation

Alūksne municipal chairman Dzintars Adlers confirmed to LETA that investigators had conducted procedural activities at the municipality.

He said the municipality had provided the requested documents and telephones relating to the ERDF-funded industrial development project.

Adlers rejected suggestions that the facilities had been allocated improperly, stating that all newly constructed manufacturing premises had been leased following auctions.

The municipality maintains that it acted in accordance with applicable regulations.

The distinction between the two positions will be central to the investigation. EPPO's concern is not necessarily whether auctions formally occurred, but whether their outcome may have been predetermined in violation of the funding conditions.

No court has ruled on the allegations.

Corporate Due Diligence and Public Funding Risks

The investigation raises questions relevant to corporate due diligence, particularly in projects where public officials, private operators and European development funds intersect.

Even where a procurement or leasing process formally follows published procedures, investigators may examine whether business relationships, prior agreements or undisclosed arrangements affected the outcome.

Potential areas of examination include the timing of agreements, relationships between decision-makers and beneficiaries, ownership structures and the documentary record surrounding the selection process.

Such issues are relevant not only to public authorities but also to companies evaluating investment partners, acquisition targets and suppliers that depend on government contracts or subsidized infrastructure.

The Latvian investigation is not a defense procurement case. However, similar governance questions can arise in industrial projects involving public financing and strategically important supply chains.

As AdriaDefense previously reported, European prosecutors have also examined defense-related procurement concerns elsewhere in the Baltic region. That investigation is separate from the Alūksne case.

EPPO has not indicated when the Latvian investigation will conclude or whether charges will follow. All individuals and companies concerned are presumed innocent unless proven guilty.

Sources: European Public Prosecutor's Office, October 28, 2026; LETA, October 28, 2026, as published by Dienas Bizness and Latvian regional media.