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Probe clears Italian party treasurer of defrauding EU

February 6, 2011

By Guy Dinmore in Rome, Published: February 6 2011

A long-running Italian investigation backed by the EU’s anti-fraud unit into the suspected defrauding by Italian politicians of more than €3m of European funds has cleared Lorenzo Cesa, treasurer of the Catholic UDC party.

Rosalba Liso, a Rome judge, said in a statement there was insufficient evidence to proceed against Mr Cesa in the probe into Digitaleco, a company in which he had been a shareholder. The case against five other suspects continues.

Italian prosecutors in submitting their case to court last year had argued that Digitaleco was a “paper” company that had failed to produce anything despite receiving EU and Italian government funds to make DVDs since 1998.

Olaf, the EU Brussels-based anti-fraud unit, was also involved in the inquiry. In a separate earlier probe it had cleared Mr Cesa of allegations that he had used his position as a member of the European parliament from 2004 to 2006 to help Digitaleco.

As the preliminary investigating judge, Ms Liso is to decide whether there is sufficient evidence to proceed with charges and initial hearings before a full trial might begin. The entire process could take years.

Luigi De Magistris, a former prosecutor and now a member of the European parliament for Italy’s opposition IDV party, began the Italian probe into Digitaleco’s receipt of EU structural funds in 2005 before the case was transferred to other investigators. Mr De Magistris suspected the company’s main shareholders used it as a vehicle for fundraising for three political parties that were then part of Silvio Berlusconi’s government coalition.

Right-wing media commentators, who have accused Mr De Magistris of waging a political vendetta in his investigations, welcomed the dropping of the case against Mr Cesa.

The multiple probes into Digitaleco that have piled up mountains of documents and led to a seizure of shareholders’ assets last year highlight the difficulties facing the EU in monitoring the €347bn that European taxpayers have committed to regional aid budgets, much of its spent on thousands of small projects.

Compounding the frustration of investigators, Digitaleco continued to receive EU funding of just over €1m through Calabria’s regional government in 2005 – even after official inspections had revealed the company was close to financial ruin and in no state to start production, according to Olaf.

The European Court of Auditors, which checks EU accounts, has also raised questions about the time it took Olaf to complete its own investigation into Digitaleco.

Mr Cesa, whose UDC party broke with Mr Berlusconi and has formed a centre-right alliance with other opposition groups, has been a vocal critic of corruption and publicly defended Olaf’s efforts to combat fraud. He denied any wrongdoing in the Digitaleco case.

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