“Organic Fraud” in Italy – the facts

According to updated information, the events related to the current food fraud took place from 2007 to the first half of 2010. Sunny Land stored and distributed barley, corn, wheat, field beans, linseed, millet, oats, alfa alfa, field pea, rapeseed, wheat, sorghum, soybeans, sunflower and potato. Italian press claimed fruit and vegetables were affected too. This is not correct, however: the involved companies are not part of the national database of traders in fruit & vegetables (Commission Regulation EC No 1148/2001) and without such registration it is practically impossible to market these products, AssoBio reports.
 

The company claimed to have established a system of traceability "Organic Agricultural Food System" involving 4,000 hectares in northern Italy, 4,000 in central Italy, 16,000 in Romania and 9,300 in Moldova and boasted a sophisticated system of tracking and tracing. The investigations have revealed the hypothesis that the company and its accomplices bought non-organic products from Romania, with forged certificates by QC&I International Romania (a company connected with the German certification body QC&I). The original certificates were checked by the Italian control body, asking the issuer for confirmation of its validity; not having confirmations, an Italian certificate was not issued, the product was downgraded to conventional and competent authorities were informed. According to the accusation, the downgraded product was equally sold as organic thanks to forged certificates.
 

The charge is based on the following assumptions:
 

1. The unfaithful regional officer of an Italian control body created false production plans of several farms, thus bringing in the organic circuit a “potential” quantity of product that had not even been sown or whose real production was lower.
 

2. Sunny Land, which also was into purchase contracts with real organic farms, with which had normal trade relations, since 2007 integrated these regular products with illegal imports either via direct import or via some of the companies that were part of the group, according the quantity of the “potential” production explained in point 1 (not sown products or with a lower yield). Most of the marketed products would then be derived from conventional agriculture (mostly foreign) and were therefore accompanied by false or forged certificates. Partner companies, in many cases, notified their “organic” activity to the competent authorities, but they withdrew from the control system very quickly in order not to be the lists that control bodies have to submit to the authorities by 31 December each year, thus avoiding the additional control performed by the control bodies’ headquarters.
 

3. An unfaithful inspector of the same control body forged the minutes of some inspection visits adding larger non-existent crop areas, adjusting the farms' production plans, or even notified directly to authorities changes of production plans. Many farms did not recognize "their" notifications of changes exhibited to them by the police.
 

4. To make traceability more complex, the company "sold" - actually it only issued invoices - to other accomplice companies which also frequently changed their control body. The same batch, but without moving from the silos, was the subject of repeated inter-group transfers to muddy the waters. The control bodies of buyers, seen the original forged certificate apparently by QC&I International-Romania confirmed by an Italian forged one, issued their own certificate for the splitted batch.
 

This is the reason why the Guardia di Finanza (Italian Revenue Guard Corps, a police corps specialized in tax and financial crimes) speaks of hundreds of thousands of tons and hundreds of millions of euros.  If the same batch is "sold" 15 times within the group, the Guardia di Finanza counts it 15 times both for quantity and value as there are 15 false invoices.
 

Two Swiss companies also seem to be part of the scam, as the products were not sold only in Italy, but even abroad. Therefore the Public Prosecutor turned to Eurojust (the organ that promotes the coordination of investigations and prosecutions among the UE Member States against serious forms of organized and cross-border crime) and in the first phase the Guardia di Finanza had cooperated with Europol.
 

2,500 tons of products are suspected to be non-organic at the time, but not harmful: at worst, they are conventional products. The development of the procedure will confirm whether the products conform to organic methods. They were placed on preventive seizure; documents and computers were seized too, according to AssoBio.
 

The investigation started from controls in Catherine Galbiero’s company, whose turnover increased from around 1.5 million euros to nearly 60 million euros in just a couple of years. At the moment, it is not known how much of the turnover is due to fictitious "intergroup" sales.
 

The control body suspended its unfaithful regional officer as early as July 2010, when the internal audits in the framework of its self-control system found out about the irregular behavior, and dismissed him as well as the inspector in September 2010, filing a complaint against them. The Public Prosecutor was then able to draw the hypothesis of a crime of tax fraud besides the fraud on the market. Since that point of time, all control bodies revised and strenghten their self-control procedures, taking corrective actions and taking more stringent measures in internal audit.
 

The first searches and seizures of documents date back to early July 2010. All inspection bodies have co-operated with the Guardia di Finanza, supporting it with the provision of documents and data. The inspection bodies of the injured party in the fraud and FederBio announced that they will be a civil party in the process.
 
The suspected companies (of which five CEOs or managers are now in prison) are: Sunny Land Spa, Agribioscaligera, Agridea SA (Svizzera), Agripoint società agricola srl, Agroeuroserv srl (Romania), Bioagri sas,  Bioecoitalia srl, Bioecoland, Biopolesine, Centro cereali srl, Eridano Trading srl, La Spiga srl, Life Group Holding sa (Svizzera), My organic srl, Sc Transilvania organic srl (Romania), Società agricola Fattoria della Speranza, Società Agricola Marinucci; Terrasana sas,Terre del sole. The two former control body’s clerks are in prison too.
 

The Italian organic food industry consists of 47,663 farmers, processors and traders and of more than 300,000 employees. Seven people seem to have passed conventional soybeans, field beans and lupins and some batches of wheat off as organic. The attempts of fraud are (and were) discovered by control bodies and public authorities and shall be punished, as fraud damages not only buyers, but discredits the industry. No agro-food sector has stricter controls than organic, but even the best control system cannot always prevent criminal activities. It can work as a deterrent and, as in this case, can discover or help to discover fraud easier to put criminals in conditions of no harm.
 

To public authorities’ and control bodies’ inspections, in-field inspections and analysis are added to ensure a product is good for the environment and good for consumers. AssoBio’s members have (and had) nothing to do with the charged companies: suppliers are selected on the basis of the quality of their products, not on the lowest prices.
 

AssoBio