WRITTEN QUESTION E-2652/97 by Giacomo Santini (UPE), Claudio Azzolini (UPE) and Guido Viceconte (UPE) to the Commission (1 September 1997)

Subject: Insolvency of Unioncoop in course of implementing 'Objective 1' Multiregional Operative Programme

For some time now, many farms in Southern Italy have been in a very difficult position, as they are owed billions of lire after taking various measures to improve production which should have received assistance from Community funds.

The farms in question participated in the operational programme to improve typical Southern Italian agricultural products and develop alternative crops in connection with the Objective 1 multiregional operative programme approved by the Commission in its decision No 91 ITO6005 of 29 November 1991, pursuant to Regulation (EEC) No 2052/88 ((OJ L 185, 15.7.1988, p. 9.)). On the basis of that legal framework the farms were the intended beneficiaries of the activities provided for in sub-programme 1, measure 2, concerning actions aimed at achieving qualitative improvements by means of crop conversion.

The body appointed to implement the programme was the Unioncoop Soc.Coop. a.r.l - a regional consortium for the cooperative promotion and and marketing of agricultural products- in accordance with the Italian Ministry of Agriculture's decrees nos. 1716 of 29 September 1992 and 486 of 7 October 1993. Pursuant to those decrees the Unioncoop, to guarantee the sound management of the public funds entrusted to it, nominated as its guarantor the Financial Institute for the Development of the Local Economy (FIS.VI. SpA).

After an initial payment of advances to the farms that were the beneficiaries, Unioncoop paid neither further instalments nor the outstanding balance of the Community contribution, despite having received documents certifying that the works had been carried out as specified and, in most cases, completed during the first half of 1996. After the Ministry had been informed of this incredible situation, on 20 January 1997 it finally served notice on Unioncoop to take, within 30 days, prompt and precise action to comply with the legitimate requests of the farms concerned. Subsequently, on 13 June 1997, it launched a further investigation of administrative and accounting procedures with a view to eventually releasing the funds to which the beneficiaries laid claim. In view of this extraordinary situation, for over a year the farms concerned have had no guarantee as to whether or when they would receive the payments owed to them by the implementing body.

The Commission is asked, therefore:

- What practical measures the Commission is taking or has taken, in connection with its monitoring powers, to ensure that the implementing body's activities are brought back within the bounds of legality?

- What were the reasons for the Commission's failure to take coercive measures against the guarantor (FIS.VI.SpA), given the implementing body's obvious failure to fulfil its obligations?

- What sums, provided as Community support, were paid to Unioncoop in its capacity as implementing body, and what funds does the Commission understand to be still effectively at the disposal of the Ministry?

Answer given by Mr Fischler on behalf of the Commission (9 October 1997)

The Commission does not have coercive powers with regard to the financial guarantor (FIS.VI.SpA) but it is aware that the national Ministry of Agriculture has already taken the necessary steps to involve the competent authorities ('Avvocatura Generale dello Stato') in order to resolve the situation. It is the Ministry's task to monitor and check Unioncoop's activities as a body responsible for implementing part of the Objective 1 multiregional operational programme (1991-93).

According to the information available to the Ministry, Unioncoop has received from it a total of LIT 43 830 billion (about ECU 22.75 million) in public aid, i.e. 93.8% of the total public sector contribution, in respect of all the measures Unioncoop covers; this is on the basis of investments made (collaudo) and verified expenditure. The outstanding balance will be paid after scrutiny by the Commission of the final request for payment.

However, with regard to the measure in question (subprogramme 1, measure 2 'varietal conversion') it appears that Unioncoop has indeed paid out only 43.2% of the public aid, i.e. LIT 6 798 billion (about ECU 3.52 million), to the final beneficiaries. There remain therefore another LIT 8 913 billion (about ECU 4.62 million) to be paid out, i.e. 56.8% of the total for this measure.

The Commission is well aware of this situation, which is having an adverse effect on the farmers who completed their work in good faith. The financial winding-up of this programme by the Community - the Ministry has already sent in its request for payment of the outstanding balance - will be reconsidered in the light of an overall check on this programme which the Commission has undertaken. In consequence, the Commission will be taking all suitable steps together with the Ministry to safeguard as far as possible the interests of the final beneficiaries.