Italy-Dairy scandal hits the courts.

ITALY-SUPREME COURT RULE ON MILK FRAUD.

The ruling goes back to an Italian investigation supported by the European Anti-Fraud Office (OLAF) and is an important precedent for other pending cases in Italy concerning similar schemes to evade the extra levy payment in the sector.

The ruling was handed down by the Italian Supreme Court (Corte di Cassazione) in Rome on 21.1.20091 and is not subject to further appeal. In the underlying case, the scheme consisted of the establishment of a network of companies with the sole purpose of simulating commercial operations of sale and purchase in order to avoid the payment of the extra levy in the milk quota payment scheme.

The Prosecution Office and the Judge of First Instance (Pre Trial Judge) considered this a fraud and issued a seizure order in April 2008. OLAF gave significant assistance to this case, led by the Italian judicial authorities, consisting, in particular, in providing the Office of the Prosecutor with legal arguments on technicalities of the milk quota system and of the legislation to be used in the request of seizure to the Court. OLAF assistance contributed to the temporary seizure of assets for the amount of 21 million Euros. The order issued by the Judge of First Instance was then challenged. The Supreme Court has now finally ruled that the legal assessment of the Judge of First Instance, who issued the seizure order, was correct.

According to the ruling, the evasion of the payment of the extra levies by setting up a fraudulent scheme amounts to the crime of fraud against EU financial interests (article 640bis of the Italian Criminal Code).

This decision strengthened the criminal investigation, which resulted in the indictment of the authors of the scheme.