Alleged Mafia links and corruption lead to calls for OLAF investigation into EIB-backed Italian motorway

Today, three NGOs (Counter Balance, Re:Common and Opzione Zero) filed a complaint with OLAF, calling on the EU’s anti-fraud office to open an investigation into a €350 million European Investment Bank (EIB) loan for a motorway project in Italy. The project and several subcontracting companies are under investigation by the Italian authorities for alleged fiscal fraud and the possible infiltration of the Mafia.

The concerned project is known as Passante di Mestre, a motorway bypass around the city of Mestre in northern Italy. In April 2013 the EIB disbursed a loan of €350 million to refinance the debt the project has been accumulating since its start in 2003. The motorway, which was initially budgeted at €750 million, faced serious cost overruns. By 2010 costs had already amounted to €1.3 billion, an increase of 80 percent.

In March 2011 the project was subject to a critical report by the Italian Court of Auditors. The concerns raised in the report included a lack of public supervision and control leading to an unjustified increase in costs, as well as the risk of infiltration of organised crime via subcontracting companies carrying out the construction.

In addition, the project and the subcontracting companies are under investigation by the Italian magistrates for alleged criminal conspiracy aimed at fiscal fraud. This led to the arrest of four people in February 2013, and up to 20 more in the following months, including the CEO of one of the main subcontractors of Passante di Mestre, police agents and former secret services people.

In October 2013, the anti-Mafia authorities have taken into custody the CEO of FIP Industriale, another member of the constructing consortium, accusing him of alleged links to criminal organisations and the Mafia and false registration of assets.

These events failed to prevent the EIB from signing the loan in June 2011, three months after the Italian Court of Auditors published its report, and disbursing the loan in April 2013, two months after the first arrests were made related to alleged fiscal fraud in the projects.

“This case raises real concerns about the due diligence carried out by the EIB, the EU‘s bank, and its inability to withdraw from projects where alleged corruption has been detected. This is a problem that has arisen in other cases in the past but so far the bank has failed to properly address it. Now it is up to OLAF to get to the bottom of this”, said Xavier Sol, director of Counter Balance.

To refinance the project’s remaining debt, the European Commission and the EIB are considering using the controversial Project Bonds mechanism through which private investors can buy bonds of the project. The mechanism, currently in its pilot phase, has already been used to refinance the Castor Project in Spain where it risks increasing the debt burden of the Spanish government and taxpayers.

Elena Gerebizza, from Re:Common, in Italy said “The EIB should immediately cease any further refinancing of the project including through mechanisms such as the Project Bond Credit Enhancement (PBCE) or Project Bonds Initiative (PBI). Refinancing the debt through the financial markets will only increase the burden on Italian citizens and the economy.”

“We hear for years now that ‘it is Europe demanding this project’. Today Italian citizens demand Europe to investigate the direct responsibilities of its own institution. Local committees and groups have publicly denounced the opacity of how local politicians and business leaders have been managing the region. We call on the EU to support our demand for more democratic control over the use of public finance instead of backing the interests of local baronies,” said Rebecca Rovoletto, Opzione Zero’s spokesperson.