Assets have been frozen, and significant quantities of sugar have been seized in Malta and the UK, as part of an investigation by the European Anti-Fraud Office (OLAF) into fraudulent sugar imports.
International investigations carried out by OLAF have uncovered fraudulent sugar imports to Malta through the use of false documentation in 2004 and 2005 – after Malta joined the European Union and in clear contravention of EU laws.
The European Commission said that administrative and judicial proceedings have also been initiated against the violating companies as a result of the investigation’s findings.
Recent investigations coordinated by OLAF found that sugar originating in Brazil and refined in Bulgaria had been imported and that false documentation had been presented in Malta at the import-ation stage in order to disguise the consignments’ true origin.
The EC explains: “The fraudsters tried to take advantage of the system of preferential trade arrangements with the Africa-Caribbean-Pacific (ACP) countries, and falsified relevant documents to execute their plans.
In all, OLAF has established that, between Malta and the UK, over 4,000 tonnes of raw cane sugar had been “misdescribed” at import stage in 2004 and 2005, resulting in tax evasion of some e2 million.
Several suspect sugar imports – declared as originating in ACP countries such as Zimbabwe, Malawi and Zambia – had been identified. As such, the imports would have been entitled to a tax exemption, thanks to the preferential treatment given to products originating from ACP countries. The EC estimates that a total of up to e30 million could be involved in all the sugar cases that OLAF is currently investigating.
OLAF describes how false documentation (EUR.1 movement certificates) had been presented at import to disguise the real origin of the goods, and that the importer had already previously been involved in similar irregularities with regard to imports of sugar from the Western Balkans.
The EU holds a preferential trade agreement on sugar with the ACP countries, under which the price of sugar is guaranteed and the beneficiary countries are allowed to export a fixed amount of sugar at zero duty to the EU.
In the case of the illegal Maltese and British sugar imports, the OLAF investigation was triggered by initial information having been received from the UK Customs Department.
The case follows Malta’s recent e1.2 million fine over surplus sugar stocks having been hoarded by companies in the lead-up to EU membership.
The fine stems from Malta’s pre-accession obligation to ensure that there was no speculative stockpiling of agricultural products, including sugar, which the EU insists would have upset the balance of the entire EU market.
Malta’s fine had originally been in excess of e7 million, but had been brought down to the e1.2 million level after negotiations between the European Commission and Malta’s Rural Affairs and Environment Ministry.
During discussions on the matter, the Ministry had successfully argued that one particular local private company found to have a sugar surplus uses its sugar for the export of products to third countries and not for local consumption.
Although the fine stems from surpluses held by the private sector, it is the Maltese government that is liable for the fine’s payment. At the time, the Ministry had stressed that the government “can still investigate if there has been any possible speculation on the market”.
Of the five member states fined, Malta has received the lowest overall fine compared with Estonia (e45,686,268), Cyprus (e19,991,489), Latvia (e4,418,577) and Slovakia (e4,209,786).