The 98 -billion Euro hot potato

Marco Smiroldo, magistrate with the National Audit Office

Yesterday, the blog and one of its representatives were at the National Audit Office hearing. There were very few other journalists there. 98 billion Euro of alleged tax fraud by the slot machine concession holders obviously don’t warrant very much attention. Three annual budgets’ worth of money. I wonder why? Could it perhaps be that there are certain political parties are involved in this matter, because if this were indeed true, then suddenly everything else would make a lot more sense. The administrative proceedings ended in a decision to let someone else make the decision. In essence, the National Audit Office left the decision regarding who should decide on the precise extent of the fraud to the Court of Cassation. Perhaps, in a few years time, this Court will, in turn, place the decision under the jurisdiction of the Lazio Regional Administrative Court, the National Audit Office or to the normal justice system.
Just two weeks ago in Milan, an Italian woman with no previous criminal record was arrested for stealing a few dozen Euro’s worth of food because she was hungry.
Do you hear the sound of the buffalos? The thundering of their hooves is becoming ever louder.

D.Martinelli: I am here in Rome where a National Audit Office hearing ended just a few minutes ago, a court hearing held by the financial judges regarding the slot-machine scandal, involving ten concession holding companies that managed the slot machines between 2004 and 2007, three years in other words, and that, according to Public Prosecutor Marco Smiroldo who is overseeing the investigations, were allegedly involved in tax fraud amounting to ninety-eight billion Euro, excluding accumulated fines. Today that amount is bound to have increased somewhat, given the fact that the information dates back to January this year. The fact remains that today’s decision was expected to establish the precise amount to be paid over to the State by these companies but, instead, the proceedings were suspended and turned over to the Court of Cassation. Let’s take this one step at a time: meanwhile, on the day, there were very few journalists present. I had a video camera, then there was a small crew made up of two youngsters sent there by Giovanni Minoli and finally a couple of colleagues from the printed press. The National Audit Office employs accountant magistrates as opposed to criminal judges. Marco Smiroldo is one such magistrate and the one who placed a monetary value on this tax fraud by virtue of the investigations conducted by the Financial Police over a period of months, and he established that a number of the slot machines were unrelated to the State Monopolies Board, with a number of officials from the State Monopolies Board thus facing charges. So, what then was the concession holders’ defence strategy? They immediately appealed to the Lazio Regional Administrative Court. Last April, the Lazio Regional Administrative Court handed down a ruling requesting that the Public Prosecutor reduce the amount to be demanded...
G.Rigido: ...then there is the matter of the culpable behaviour of the Public Monopolies Administration that waited until the National Audit Office intervened before demanding penalties and everything else, with these penalties mounting up all the while, until they reached these inordinate figures, through no fault of the concession holders, to the point where the Regional Administrative Court said: let’s re-calculate these figures, taking into account the needs of the individual concession holders and keeping in mind that for two and a half years there was no network in place. In other words, some of the blame also lies at the door of the Administration that failed to start levying the penalties earlier.
D.Martinelli: ...the Public Prosecutor then proceeded to recalculate the value of the tax fraud and came up with another figure (which we do not know because it is classified information), obviously then submitted this figure to the judges (we were not able to find out today by virtue of the decision handed down by the Lazio Regional Administrative Court) and the concession holders’ attorneys raised certain doubts regarding legitimacy, telling the National Audit Office judges that: "you do not have the jurisdiction to quantify the extent of the alleged fraud. The extent of the fraud must be established by the Lazio Regional Administrative Court". Therefore, after meeting in chambers, the judges granted the request and have forwarded the entire matter to the Court of Cassation, which will now have to decide who will make the final decision regarding the extent of the fraud. Okay? In essence, it is much like the situation where someone who gets fined by a municipal policeman lodges an appeal because he believes that he should have been fined by a Carabiniere instead and the judge then approaches the Court of Cassation to decide whether the fine should rightfully have been issued by a municipal policeman or by a carabiniere. That is the situation we’re in. This suspension will result in further delays since the Court of Cassation could take as long as six months, one year or even two years to hand down its decision, and even then we don’t know whether the Court will rule that the National Audit Office must quantify the fraud or whether the matter must be handled by a normal magistrate. And so we wait! This was the ruling and anyone that was expecting some sort of quantification was sadly mistaken. I close by simply reminding you that the figure of ninety-eight billion Euro is equivalent to three annual budgets for the Italian Government. I would also like to remind you that in Minister Tremonti’s most recent Budget amounted to 35 billion Euro and included a three-year plan, while here we’re talking about ninety-eight billion, so work it out for yourself. At this point I will love you and leave you, leaving you with a few statements I got from the Public Prosecutor and a few of the attorneys.
M.Smiroldo: ...the department that is charged with protecting the economy of the Republic, in other words the community of citizens that pay from their own pockets in order to ensure not only that the required services are provided, but that they are provided properly. We have now discovered that this service that the concession holders were supposed to provide has not in fact been provided as expected and that the party that was supposed to keep tabs on the service has failed to do so. This has resulted in certain damages and, in any law-abiding country, the extent of the damages is directly proportional to the value associated with the legality of specific behaviour. It will be up to the judge to establish the extent of these damages and, in this regard, I am confident that the Court of Cassation will rule in our favour. Thank you.
D.Martinelli: so, are these ninety-eight billion Euro then in actual fact the missing amount, or what?
M.Smiroldo: it is an estimate of the value of the tax fraud. What should have been done was not done properly and therefore certain damages were caused. An extract from one of the companies’ defence attorneys’ contentions: ...if this liability is contractual in nature, then the public prosecutor is usurping the responsibility of the current administration and is asking this Court to apply penalties that fall within the jurisdiction of the said current administration.
D.Martinelli: and you, as attorney, have nothing to say?
Attorney: no, because the company is quoted on the Stock Exchange and any news reported in the press could contain confidential information and, as such, the public relations department handles all press releases.
D.Martinelli: what I would be interested in is to obtain some sort of statement regarding the current proceedings, as regards some of the things you have said.
Attorney: no, no, I’m sorry... you know how keen I am on journalists (laughter) so, what I am trying to say is...
D.Martinelli: that you will grant us an interview?
Attorney: I’m sorry but I won’t be granting any interviews.
D.Martinelli: Oh, so no interviews?
Attorney: no, I cannot.
Other attorney: no no... I have always been willing to be interviewed, but this time we have been asked to refrain from saying anything, also because some damaging things have been said in the past...
D.Martinelli: the public prosecutor is alleging a tax fraud amounting to x billion Euro, but now instead the issue seems to be focusing on jurisdiction.
Attorney T.Varrone: it is not only a matter of jurisdiction, in other words whether it is up to the Court of Cassation or the National Audit Office to quantify the damages, but the fact of the matter is that in reality no damages have been incurred since the penalties are essentially in the process of being applied.
D.Martinelli: if there are in fact any penalties being applied, then it must mean that some sort of mismanagement has in fact occurred!
Attorney T.Varrone: there are certain penalties, but very minor ones. The main application, the one that gave rise to this stratospheric increase in the claims lodged in court, cannot even be applied because there was never any commission that could have applied the penalties, and the subsequent arrangements have led to these laughable levels.
Judge M.Ristuccia: ...given that the Lazio Regional Administrative Court has already established its jurisdiction regarding such matters... provides for the suspension of these proceedings and postpones any provisions decided on by the judges in their chambers. The public hearing is now closed."

Previous postings:
The hunt for the tax evaders

Government gambling dens

The power of silence

Posted by Beppe Grillo at 06:40 AM in | Comments (3)
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Well, in all honesty would anyone wish to invest in such a zoo?
You really mean that with such a huge amount in scams no Italian news organization even bothered to report?
Scary, very very scary....

Posted by: Maurizio Odello | December 8, 2008 11:48 AM

cassation |kəˌseɪʃ(ə)n|
noun Music
an informal instrumental composition of the 18th century, similar to a divertimento and originally often for outdoor performance.
ORIGIN late 19th cent.: from German Kassation ‘serenade,’ from Italian cassazione.

Another linguistic "False Friend".
Careful with you interpretations; they sometimes make a mockery of your serious intent.

Posted by: Rolly Wheeler | December 8, 2008 01:21 AM

That is an unreal amount of money!

Posted by: Alex Conic | December 7, 2008 02:57 PM

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