EU authorities are investigating a potential case of fraud in Portugal, in which €3.6 million of EU regional development funding, earmarked for reforestation measures, was paid to suspected fraudsters.

The European Public Prosecutors Office (EPPO) led the investigation, which resulted in multiple searches being carried out last week on the island of Madeira, as well as in Lisbon, Portugal's capital.

The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.

At the EPPO's request, Portuguese police carried out 26 searches at the homes of suspects, and at addresses of public entities and companies under investigation.

Five individuals have been named as suspects, including three public officials, as well as two companies.

The investigation relates to a programme funded by the European Regional Development Fund, and more specifically relates to a rural development programme aimed a reforestation in Madeira.

Of the €3.8 million of EU funds earmarked for that scheme, almost all of it - €3.6 million - was paid to beneficiaries currently under investigation.

The EPPO has alleged wrongdoing in public procurement procedures.

It is understood that there may have been a conflict of interest involving the beneficiaries of the funds and the suppliers, which could have harmed EU and Portuguese financial interests, the EPPO said.

It is also alleged that the subsidies were unlawfully obtained with the help of public officials working for agencies responsible for managing the funds.

According to the EPPO, the facts under investigation may constitute procurement fraud, unlawful participation by a public official in a business transaction, unlawful receipt of funds by public officials, corruption, and money laundering.

The investigation is ongoing to "clarify the facts" and assess whether any criminal offences have occurred.

The investigative measures were led by two European delegated prosecutors, with the support of Portuguese police.

The EPPO stressed that all persons involved are presumed innocent until proven guilty by the competent Portuguese courts of law.