April 24th 2008: Ghost Tobacco

Three million Euros of European taxpayers money was evaded by a large-scale fraud with fictitious tobacco. The scheme involved claiming agricultural subsidies for in excess of 900,000 tons of non-existing raw tobacco. The discovery by Italian Carabinieri police force supported by the European Anti-Fraud Office (OLAF) led to 80 individuals being placed under investigation by the Italian judicial authorities. The illegally claimed subsidies will now be recovered and fines imposed of around 20 million Euros.

Producers, processors and transport companies were all involved in the fraud which was jointly investigated by OLAF and customs authorities in Luxembourg, the Netherlands, France, Austria and Romania. The Carabinieri, over the last ten months, carried out searches, observations and other activities concerning the economic operators involved in Italy. The public prosecutor’s office (Procura della Repubblica) in Perugia will now handle the case.

In the first fraud, shipments to foreign companies were invented to conceal the non-existence of the raw tobacco from the Italian control bodies and to evade paying value added tax. The second fraud involved the creation of “tobacco carousels”, with producer A taking tobacco to a processor who would return it to producer B who would bring the same tobacco back to the processor with EC agricultural subsidies being illegally claimed for all transactions.