Innovation model questioned after collapse of ‘fraud-hit’ network

The collapse of a major innovation network after a fraud investigation has raised questions about the risks universities face when taking part in such partnerships.

The European Institute of Innovation and Technology (EIT), an independent European Union (EU) body established to boost university-business collaboration across the continent, has been urged to reassure universities that there is “sound financial management” at its networks.

It comes after investigations by the European Anti-Fraud Office (OLAF) found “irregularities” at EIT Manufacturing, a Knowledge and Innovation Community (KIC) overseen by the EIT. Funding has been on hold for more than a year while the inquiry was ongoing and last week the network reportedly filed for liquidation.

KICs are large partnerships focused on major sectors in the economy and provide funding to projects that bring together universities, businesses and start-ups.

Jan Palmowski, secretary general of the Guild of European Research-Intensive Universities, told Times Higher Education that the collapse of the KIC had raised serious questions about the EIT model itself.

“Such a KIC defaulting on its obligations obviously can never happen again, and it should never have happened. And that really raises the question whether the complex structure of the EIT is fit for purpose,” he said.

EIT told Times Higher Education that it had ended all funding to EIT Manufacturing following the OLAF investigations.

A spokesman said the body had flagged concerns with OLAF after “detecting irregularities” and it “took immediate actions to protect the EU funds”.

After an initial OLAF report in 2024, the EIT said it had “terminated the ongoing contracts with the KIC, started to recover funds unduly spent, and put on hold further payments to EIT Manufacturing”.

The spokesman said EIT had still authorised some “targeted payments” in 2025 “to support the most vulnerable beneficiaries such as start-ups”. 

But after a second OLAF report in December 2025 found “further irregularities”, the EIT reviewed the situation again in March this year. It then concluded that “no further EIT funding can be awarded to EIT Manufacturing” unless legal procedures were completed and conditions around governance and internal controls were met.

EIT said it remained committed to ensuring that “legitimate claims” for funding were “duly honoured and settled”.

Media reports suggest that EIT Manufacturing filed for liquidation on 25 March after the EIT funding was halted. Times Higher Education has contacted the KIC for comment. 

The fallout will likely be closely watched by higher education institutions linked to the network. On its website, EIT Manufacturing says it has over 170 partnerships with corporations, universities and research technology organisations. Universities include TU Delft, University College Dublin, Aalto University, the Zurich University of Applied Sciences, and many others.

Palmowski said the case should not be read as a sign that universities face wider risks participating in EU-backed funding schemes, adding that the European Commission would ensure institutions were supported in all EU-funded projects.

“There are plenty of innovation structures that are directly sponsored by the European Commission, where the commission is one of the most reliable funders one can imagine,” he said.

“The key here is that this has happened in relation to the EIT, which has an autonomous status in managing the KICs,” he said, adding that such networks are not managed by the commission.

“All KICs have a different way of working. I absolutely do not think we can nor should infer from the crisis around EIT Manufacturing that other higher education institutions are at risk, but it will also be critical now for the EIT to assure higher education institutions that this is the case,” he said.

seher.asaf@timeshighereducation.com