Press Release OLAF/10/2000, 19 December 2000
Further to a first wave of on-the-spot checks carried out in June 2000 by the District Antimafia Branch of the Naples Prosecutor's Office in association with the Italian Guardia di Finanza (Financial Police) and the competent Judicial Authorities of France and Belgium (see OLAF press release 07/2000 of 5 July 2000), the European Anti-fraud Office (OLAF) is actively collaborating in various national investigations aimed at detecting and prosecuting an organised criminal network responsible for manufacturing and distributing adulterated butter in the European market and defrauding the Community budget. As was reported in OLAF press release 07/2000 in July of this year some 70 searches have been carried out on business premises and at private homes in Italy, France and Belgium and all adulterated butter found was seized.
The fraud operated in the following way, for several years a number of Italian based companies manufactured industrial butter using substances such as animal fat and synthetic materials and have thereafter sold on this 'butter' to clients based in other Member States, more particularly France and Belgium. Following inquiries conducted in Member States it was discovered that a number of possibly adulterated shipments were also made to Germany prior to April 1999.
The clients of the Italian based companies, normally reputable butter traders and producers, were attracted by the cheaper price of this product and the possibilities of obtaining further gains through the Community disposal measures and export refunds in respect of butterfat.
Annually, EU butter production stands at 1.900.000 tonnes and over 700.000 tonnes of this amount is subsidised either by disposal measures, export refunds or public and private storage. These Community actions are designed to find a remedy to the Community butter surplus. Refunds stimulate butter exports to Third Countries, while butter disposal measures aim to increase consumption by providing aid for the use of butter. These measures cost respectively Euro 350 million (export refunds) and 600 million (other aid) per annum.
The fraud in question is particularly invidious as it illegally makes use of resources from the Community budget (estimated at several million Euros) and reduces the effectiveness of the Community measures in this field.
OLAF investigators are currently assisting the national authorities in tracking the end users of the butter which is suspected of being adulterated, establishing the actual loss for the European budget and identifying the individuals responsible for the fraud. Once responsibility for this fraud has been established OLAF intends to request recovery of sums fraudulently obtained in accordance with the relevant national and European provisions.
Consideration has been given to the protection of the consumers, without prejudice to ongoing investigations. All competent authorities in the Member States concerned by the suspected shipments have been informed. Expert analyses so far carried out on the products which have been seized exclude any possible direct health risk to consumers.
Although the investigations, encompassing several dozen companies throughout Europe, will take several months to be concluded, a major criminal syndicate has been broken up by the national law enforcement authorities in collaboration with OLAF and plans are being discussed to extend control initiatives to other Member States.
Therefore any further comment made by OLAF concerning investigations covered by judicial secrecy of the Member States would be a breach of the law by the European Anti-fraud Office and OLAF is not in a position to make any such comment.
In accordance with Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF), OLAF reiterates that information forwarded or obtained in the course of investigations, in whatever form, shall be subject to professional secrecy. This regulation stipulates that such information may not be communicated to persons other than those within the institutions of the European Communities or in the Member States whose functions require them to know, nor may it be used for purposes other than to prevent fraud, corruption or any other illegal activity.
Mr Alessandro Butticé
Spokesman of the European Anti-fraud Office (OLAF)
Tel : +32 (0)2 296.5425
Fax: +32 (0)2 299.8101