Sunday, November 18, 2018

The scale of Italian food fraud

The very complexity of the Common Agricultural Policy provides opportunities for fraudsters. One recalls that a British farmer claimed for fields which turned out to be in mid-Atlantic. A herd of cows was supposedly living on the upper floors of an office block in Rome. Italy has been particularly prone to systemic fraud involving organised criminals.

According to the Rome-based think tank, the Observatory of Crime in Agriculture and the Food Chain, the Mafia have infiltrated the entire food chain. The value of the so-called agromafia business has almost doubled from €12.5bn in 2011 to more than €22bn in 2018 (growing at an average of 10 per cent a year) according to the Observatory. It now accounts for 15 per cent of total estimated Mafia turnover.

According to a recent article in the FT Weekend Magazine 'the cartels have developed white collar expertise in infiltrating the local councils and committees that award tenders and subsidies.' A Mafia family could claim about €1m a year in EU subsidies on 1,000 hectares, while leasing it for as little as €37,000.

In part the Mafia's interest in land deals stemmed from lower earnings from its drugs business and a drop in public money for public works contracts. With margins as high as 700 per cent, profits from olive oil can be higher than those from cocaine and with less risk. According to police, about 50 per cent of all extra-virgin olive oil sold in Italy is adulterated with cheap, poor quality olive oil.

Counterfeited organic food also offers the opportunity for big profits. Italian gangs were discovered importing wheat from Romania and labelling it as organic, which commands a price three to four times higher.

Apart from the opportunities to make money, the move into food also reflected the organisations's growing propensity to enter legitimate businesses. Of course, laundering profits in this way is not a new tactic.

However, there has been a crackdown. Even the smallest leaseholders have to pass police checks, enforced retrospectively, and there have been numerous confiscations of land. Specialist police tasters work to uncover adulterated foods, especially in olive oil.

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