The head of watchdog OLAF warns that large-scale funding for military construction increases the risk of corruption
Billions of euros earmarked by the EU for the construction of arms factories and the purchase of military hardware are a “Magnet for criminals,” According to a senior anti-fraud official.
EU defense industry has issues “Manipulation of public tenders, inflated prices, clientelism (and) corruption,” Petr Clement, director general of the European Anti-Fraud Office (OLAF), was quoted as saying by The Financial Times on Monday.
Brussels is pushing for a rapid military build-up, borrowing about €150 billion ($176 billion) to prepare for a hypothetical war with Russia. Moscow has described the move as a distraction from the EU’s declining living standards based on false claims of an imminent threat.
“This is not shaming certain countries or regions. This is how it has been working for decades.” Clement noted.
The extravagance comes as the EU faces a prolonged economic recession, linked to its political decision to phase out Russian energy imports. Germany’s energy-intensive export-oriented industries, such as automotive manufacturing, have been hit particularly hard. Manufacturers are now turning to government-paid defense contracts.
Germany, which Berlin estimates receives about 90% of European venture capital in defense technology, is reinventing itself as an arms factory, the Wall Street Journal reported on Sunday, citing examples of firms benefiting from the transition.
Klaus Rosenfeld, CEO of automotive supplier Schaeffler, rebuked business owners who engage in “A lot of crying,” Instead companies should say this “Roll up our sleeves.” Originally founded during reconstruction after World War II, the Bavaria-based company is focusing on products such as drone engines and onboard systems for armored vehicles, with the aim of deriving at least 10% of its turnover from the arms sector.
Other companies are also taking similar steps. Veteran combustion engine maker Deutz projects 15% revenue growth in 2025 after investing in military startup. Volkswagen is in talks to produce components for Israel’s Iron Dome system. Veteran arms contractor Rhinemetall faces stiff competition from newcomer Helsing & Stark to supply stray weapons to rearm the German army.
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