WRITTEN QUESTION E-3191/03 by Roberta Angelilli (UEN) to the Commission. Alleged violation of Community company law by Telecom Italia in the Telekom Serbia affair.
Date: 2003-10-28
Institutions: European Parliament, Provisional data
Subjects: European standard, Italy, Serbia, company law, corporate governance, economic concentration, liability, protection of shareholders, telecommunications

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4. Would it be prepared to finance this rehabilitation within the bounds and in the ways set out in the
programmes currently running?

Answer given by Mr Barnier on behalf of the Commission

(2 December 2003)

The Commission considers that investment in infrastructure for inland navigable waterways of helps to
maintain the fluidity of the various modes of transport (river/road, railway and sea) and hence their
satisfactory operation. It has part-financed work on navigable waterways, in particular under the Trans-
European Networks and the Structural Funds.

The total financial appropriation for the Interreg III A Italy-Switzerland programme is EUR 74 442 644 mil-
lion. Of this the European Regional Development Fund (ERDF) will be contributing EUR 25 560 000 mil-
lion.

As regards the environment and protection of nature, the Locarno-Milan ‘cultural tourism’ navigable
waterway (Sesto Calende-Lonate Pozzolo stretch)
is covered by the above programme (Priority 2
Development of cooperation in land management and conservation of the environmental and cultural
heritage, Measure 2.3 Integration and improvement of transport infrastructure and systems), one of whose
main purposes is to support alternative means of transport and expand the range of options available for
group tourism.

The Italy-Switzerland Programming Committee has approved two projects relating to navigation between
Locarno and Milan. The first is a study on the Locarno-Milan route and the second is the actual work to be
done on the Sesto Calende-Lonate Pozzolo stretch, which is the part of the route located in the zones
covered by the programme. The total cost of
the two projects is EUR 1 250 000 and the ERDF
contribution EUR 346 500.

The Commission complies with the provisions on management of assistance contained in the Structural
Fund Regulations. Thus, the scrutiny, assessment and selection of the actual projects to be included in each
programme is entirely a matter for the national and regional authorities appointed by the Member States
to act as managing authorities and provide members of the monitoring and steering committees for
programmes. The Commission is involved in programming only at the general level and in the committees
has solely an advisory function. The correct selection procedures must be observed for projects and they
must meet the eligibility criteria set in the programme.

(2004/C 84 E/0062)

WRITTEN QUESTION E-3191/03

by Roberta Angelilli (UEN) to the Commission

(28 October 2003)

Subject: Alleged violation of Community company law by Telecom Italia in the Telekom Serbia affair

In addition to having been shown to be extremely prejudicial to Italy, Telecom Italia’s acquisition of a 29 %
stake in Telekom Serbia would seem to have been carried out in violation of EU company law with regard
to the responsibility of directors vis-à-vis shareholders in joint stock companies. The board of directors,
which was responsible for the acquisition, is in fact guilty of having concluded harmful negotiations, while
being fully aware of having caused serious losses and of having failed to take the necessary steps to assess
such losses correctly. The shares were bought at a price much higher than their actual value and with no
consideration for the risk involved in investing in a country with a very low average income (EUR 1 900),
a very high inflation rate and a non-convertible currency, and which is one of the 21 countries in which
there is a danger of instability. A 16 % penalty and a commission of around EUR 15 000 were paid to the

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British intermediary. The shares themselves were sold two years later, devalued by more than 50 % and
representing a loss to the Italian treasury evaluated at 99,1 % of the purchase price, i.e. EUR 450 million.
One of the many anomalies in this transaction is the fact that the chairman and assistant director of the
Stet (run by Telecom Italia), who were formerly in charge, firmly opposed the transaction. Preference was
given to private trading over the normal procurement contract procedure. The matter was not treated with
all the necessary diligence to be expected in such a major transaction. A task force inside Telecom Italia
concluded the negotiations instead of Stet International, the parent company.

In the light of the above considerations and the principles on which the twelve company law directives are
based, as well as Article 14 of the proposal for a fifth directive (1) and the Commission communication (2)
on modernising company law, will the Commission state:

1. whether it does not consider that the transaction described above constitutes an infringement of the
principles and standards relating to the responsibility of directors in terms of transparency and
protection of shareholders’ rights?

2. whether it does not consider that, in this particular case, the Italian Government of that period bears

some responsibility?

3. whether it has conducted a thorough investigation into this case, or intends to do so, within the limits

of its powers?

(1) COM(90) 629, OJ C 7, 11.1.1991, p. 4.
(2) COM(2003) 284.

Answer given by Mr Bolkestein on behalf of the Commission

(3 December 2003)

In answer to the three questions raised by the Honourable Member, the Commission would like to make
the following remarks:

(cid:1) The existing company law directives, to which the Honourable Member refers, contain very few

provisions on liabilities or sanctions.

(cid:1) The few provisions which do exist in this area deal, for the most part, with issues relating to the
disclosure of certain information, particularly financial information (annual accounts and consolidated
accounts). None of the details given in the question asked by the Honourable Member would
necessarily lead to the conclusion that the transaction described infringes the provisions in the
company law directives relating to the disclosure of certain information.

(cid:1) Two company law directives contain provisions urging the Member States to at least lay down rules
governing the civil liability of members of the administrative or management bodies in respect of
misconduct on their part in preparing and implementing certain transactions, i.e. company mergers
(third directive (1)) and the division of companies (sixth directive (2)). Since the transaction described by
the Honourable Member was a simple acquisition, neither of these two directives is applicable to it.

(cid:1) In 1972, the Commission presented a proposal for a fifth company law directive relating to the
structure of public limited companies and the powers and obligations of their organs. Although it was
discussed over many years and amended several times, no agreement could be reached on this
proposal and it was eventually withdrawn by the Commission in December 2001.

(cid:1) In view of the foregoing, it would appear that the existing company law directives contain no rules
relating to the liability of administrators which would have been breached by the transaction described
by the Honourable Member.

(cid:1) Secondly, with regard to whether the Italian Government of that period bears some responsibility, the
Commission would point out that it is not for it to comment on whether or not the government of a
Member State bears political responsibility in a particular case.

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(cid:1) Finally, as regards the possibility of a thorough investigation into this case, the Commission can
confirm that it has not conducted such an investigation, and has no intention of doing so, given that
there is nothing in the information brought to its attention to suggest that there has been any breach
of the Community rules on company law.

(1) Third Council Directive 78/855/EEC of 9 October 1978 concerning mergers of public limited liability companies,

OJ L 295, 20.10.1978.

(2) Sixth Council Directive 82/891/EEC of 17 December 1982 concerning the division of public limited liability

companies, OJ L 378, 31.12.1982.

(2004/C 84 E/0063)

WRITTEN QUESTION E-3214/03

by Jillian Evans (Verts/ALE) to the Commission

(30 October 2003)

Subject: North Korean refugees

The enforced repatriation of North Korean refugees in China has been brought to my attention. Some of
the individuals who are being repatriated face the real risk of detention and torture in North Korea.

This is concerning in view of Article 33 of the 1951 UN Refugee Convention which says that a state shall
not return a refugee to a situation of serious risk.

What is the Commission’s policy with regard to relations with North Korea and what can the Commission
do to ensure that North Korean refugees in China are not forced to return to North Korea when it might
be unsafe for them to do so?

(2004/C 84 E/0064)

WRITTEN QUESTION P-3333/03

by Glyn Ford (PSE) to the Commission

(6 November 2003)

Subject: North Korean refugees in China

Is the Commission aware of the current situation in China of North Korean refugees being deported back
to the DPRK?

What measures are being taken by the Commission to address this state of affairs? Has it raised this issue
with the Chinese government and reminded them of their obligations under the 1951 UN Convention on
the status of refugees?

Joint answer
to Written Questions E-3214/03 and P-3333/03
given by Mr Patten on behalf of the Commission

(28 November 2003)

North Korea is currently a major concern for the international community including the Union.
The Commission has various channels to meet representatives of the North Korean Government and to
put forward its concerns. Human rights issues, including the situation of North Korean refugees on the
border with China, are systematically raised during these regular political contacts. It has expressed to the
North Korean authorities its concerns about the treatment of these people once returned by China to the
Democratic Peoples Republic of Korea (DPRK). The Commission urged the DPRK to respect
the
fundamental rights of these citizens.