Italian papers yesterday claimed that Conad Sicilia, based in Modica-Pozzallo, is being investigated for the fiscal fraud of €4 million claiming it was exporting goods to Malta, where it is in association with a local entrepreneur who owns seven retail outlets.

Investigations have revealed, the Sicilian media has claimed, that for three years, from 2007 to 2009, the company moved some €20 million worth of goods, but these goods actually never left Italy and never came to Malta. It was distributed to wholesalers and retailers in Sicily without the State getting its taxes.

The fraud was carried out by means of a paper trail, consisting of fictitious names, claiming to be Maltese importers of the goods and based on invoices issued by non-existent companies.

Besides evading the Italian 20% VAT, this has also caused quite a substantial distortion of the free market since the level playing field was distorted.

It was this that permitted Conad Sicilia to have such low prices which affected competition for the food items placed on the market.

The investigation, the Sicilian media say, has culminated in two reports to the police authorities and in the confiscation of a huge quantity of food items worth some €1.5 million. This is the first operation of its sort in the province of Sicily and the culmination of weeks of investigations by the Italian border police, the Guardia di Finanza, in collaboration with the tax police and the anti-fraud office of Catania, as well as the customs authorities. It was officials from this latter body who had noticed an anomalous traffic of goods towards commercial operators in Malta by Conad Sicilia.

The conclusions of the investigations were announced by procurator Francesco Puleio, the commander of the Guardia di Finanza of the province, Francesco Fallica, accompanied by major Massimiliano Pacetto and by the director of the anti-fraud office of Catania, Maria Concetta Calandra.

The investigation began in 2009. It was found out that the supposed heads of companies in Malta, later revealed to exist only on paper, were all Italians and all operating for a long time in the food sector.

From the criminal records of some of those who have been arrested, it would seem that they have been found guilty in the past of tax fraud.

Meanwhile Conad, the Italian cooperative, said in a statement it trusted in the investigations currently ongoing and hopes that any irregularities that exist are found. It also stated that Conad must have been the victim, but never the author of such fraud. “It is not according to our behaviour to engage in activities that defraud the tax regime and to create distortions in the market”. The Conad statement also adds that no food items have been confiscated in any of its stores.