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Italy: EPPO seizes €20 million in investigation into Palermo’s water service company

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On behalf of the European Public Prosecutor’s Office (EPPO), the Italian Financial Police (Guardia di Finanza) have executed a freezing order of up to €20 million, in an investigation involving the public company that operates the water service in Palermo (Italy).

The investigation began after the European Investment Bank (EIB) filed a complaint with the EPPO, regarding a loan agreement granted to the public company of the municipality of Palermo responsible for managing the drinking water distribution and the sewage system for the entire province.

In 2020, the public company received a loan of €20 million from the EIB, funded by the European Fund for Strategic Investments (EFSI) and guaranteed by the European Union. The loan agreement, signed on 20 December 2017, concerned an investment programme for drinking water production and wastewater treatment.

According to the investigation, however, the company deliberately omitted information from the EIB that would have shown it did not comply with environmental legislation, as was required for obtaining the loan.

Specifically, between 2017 and 2020, the public water provider committed serious and repeated violations of environmental regulations, which led the judge for preliminary investigations of the Court of Palermo to appoint, on 26 May 2021, a judicial commissioner for the ‘Environment and Purification’ sector of the company. There was also, subsequently, a request to indict those responsible.

The failure to report these facts prevented the EIB from carrying out assessments to confirm whether the company complied with the conditions for obtaining the loan.

The crime under investigation is undue receipt of public disbursement, aggravated by the fact that the suspects are public officials.

At the request of the EPPO, on 15 May 2023 the judge for preliminary investigations of the Court of Palermo issued a freezing order against three public officials and the public company, up to the amount of €20 million, in order to recover the damages to the EU budget.

The judicial order was executed today, 25 May 2023, by the Guardia di Finanza – Comando Provinciale di Palermo.