The Italian Supreme Court has issued a final ruling that a scheme to avoid paying extra levies under CAP milk quota rules amounts to fraud against EU financial interests.
The milk quota regime is part of the European Common Agricultural Policy (CAP) intended to control EU-wide milk production. Extra levies are payable on milk produced in excess of the quota when it is put on the market, but those involved in the case had avoided the levies by using what the European Anti-Fraud Office (OLAF) called “a common fraud scheme.”
Those behind this particular scheme have been indicted in what OLAF said is a “landmark decision” that sets “an important precedent” for other pending cases in Italy.
The case centred on a frequently practised fraud in which milk producers set up several co-operative companies to which, on paper, they sell their milk. This makes the cooperative companies responsible for paying the levies for ‘extra-quota’ milk. In reality, however, the producers sell directly to the dairies and no business is conducted by the cooperatives.
This means that the cooperative companies rack up large debts for non-payment of levies, but when government officials attempt to claim them, there is no income with which to pay and no assets to sell. Those who carry out the fraud justify non-payment by claiming that it would be possible for their debts to work in favour of producers when national production is under quota in later years, OLAF said.
The decision follows an initial judgement in April 2008 from the Prosecution Office and the Judge of First Instance that the defendants had committed a fraud. With the assistance of OLAF, this resulted in Italian judicial authorities temporarily seizing €21m worth of assets but the defendants subsequently challenged the order.
The new decision from the Italian Supreme Court is final and is not open to further appeal.
OLAF did not make it clear who was involved in the case and no one from the office was available to comment prior to publication.