On July 23, 2024, the Public Prosecutor’s Office at the Milan Court ordered the seizure of approximately 121 million euros (US$ 131 million) from an Amazon branch in Italy, as part of an investigation into tax fraud and illicit exploitation of workers.
1) Amazon Italy, tax fraud and illicit workers exploitation
The 94-page ordinance, signed by the public prosecutors Paolo Storari and Valentina Mondovì, accuses the logistics services unit Amazon Italia Transport Srl of having organized a massive tax fraud, from 2017 to 2022, ‘ with very significant losses for the treasury and ogoing situations of labor exploitation ‘.
The e-commerce giant, according to the public prosecution, guaranteed competitive rates on the logistics market through the ‘illicit supply of labour’. Practically:
– rather than hiring the workers, Amazon contracted out the services to limited liability companies or cooperatives, companies or consortia (‘filter’ companies)
– the ‘filter’ companies acquired the workforce from cooperatives (‘labor pools’)
– labor suppliers’they systematically failed to pay VAT, as well as social security and welfare costs’. These are the words of the chief prosecutor of Milan, Marcello Viola.
2) Digital gangmastering
The management software used by Amazon Italia Transport ‘exercises directive powers by effectively organizing the overall distribution and delivery of goods, including that related to last mile delivery apparently contracted out to delivery companies.
The ‘digital foreman’ thus excercises over the individual couriers, formally dependent on the aforementioned suppliers, the specific powers of the employer in terms of organizing the activity of individual couriers, managing their operations, controling their work, providing the necessary IT tools for the execution of services’. (2)
‘In practice, there is a single economic entity, directed, managed and organized in all respects by AIT itself, which exercises the decisive powers of the employer by interacting with the staff responsible for “last mile” deliveries also with the further names of Amazon Logistics or Amazon Prime’. (3)
3) Fake documents, searches and seizures
The Milan prosecutor’s office refers to ‘a complex tax fraud resulting from its use by the final beneficiary’ Amazon Italy, ‘of the illicit invoice mechanism for legally non-existent operations following the stipulation of fictitious procurement contracts for the supply of manpower, in violation of sector regulations, which led to the issuing and consequent use of false documents’.
The investigations continue with ‘several searches in the provinces of Milan and Turin against the natural and legal persons involved, with simultaneous notification of the guarantee information, also on the subject of administrative liability of the entities in relation to the criminal offenses committed by the company’s managers, in favor of the latter’. (1)
4) ‘Manpower tanks’, the precedents in Italy
The exploitation of workers through ‘manpower pools’ by the giants of logistics, large-scale distribution and industry is also a recurring phenomenon in Italy. And it has already been the subject of numerous investigations, also thanks to one of the prosecutors who is now investigating Amazon Italia Transport.
The public prosecutor Paolo Storaci, in April 2024, had in fact ordered the seizure of €64,7 million from Supermercati GS spa, a Carrefour group, as part of an investigation for the same crimes with false documentation for over 362 million euros, as we have seen. (4)
Previous investigations by the same investigator at the Milan Prosecutor’s Office concerned:
- DHL Supply Chain, Geodis, TNT, UPS, Schenker, Uber, BRT, Movimoda, Chiapparoli, Aldieri in logistics
- Lidl and Esselunga in retail
- Spumador, Salumificio Beretta, Spreafico in the agro-industry
- Nolostand-Fiera Milano (exhibition stand rental), Cegalin-Hotelvolver (hotel cleaning) and Securitalia (guardianship) in services.
5) Amazon Italy, first statements
‘We respect all the laws and the regulations in force in each country in which we operate and we require that the companies that work with us do the same’ Amazon said in a press release.
‘We have set high standards both for us and for our suppliers, and we have a Code of Conduct that suppliers must comply with in order to work with us.
We will continue to promptly collaborate with the relevant authorities during the investigation’. (3)
6) Amazon, what social impact?
The social impact of Amazon appears favorable towards consumers, who receive praiseworthy after-sales assistance and thus contribute to its success.
The dominant position of the US giant on Western e-commerce markets has already distinguished itself, however, by practices of exploitation that are generally abusive:
- cyber-slavery. The extremely burdensome working conditions and pace imposed by Amazon on workers, both employed and otherwise. Of possible importance also for what concerns safety at work, as we have seen (5)
- cyber-bullying. The writer denounced several times the unfair commercial practices implemented by Amazon both towards consumers and above all towards suppliers of goods, including food.
The Italian Antitrust however, even when faced with the evidence of the noose clauses imposed by Amazon on its suppliers, it decided not to follow up on them, citing that it had other priorities. (6)
Amazon’s unfair competition meanwhile, continues, as the ongoing investigation shows.
Dario Dongo
Footnotes
(1) Amazon Italy, mega seizure of 121 million euros for “tax fraud”. EFA News. 23.7.24 https://tinyurl.com/5c2dm88u
(2) Seizure of 121 million from Amazon Italy. Three managers under investigation. AGI. 23.7.24 https://tinyurl.com/mrh9m98e
(3) Luigi Ferrarella. Amazon Italia Transport, 120 million seized for tax fraud: «The algorithm directs couriers not from him, but from the coops». The response: we respect the laws. Corriere della Sera, Milan. 23.7.24 https://tinyurl.com/3xbfczj9
(4) Marta Strinati. GS-Carrefour, ‘labor tanks’ and tax fraud. GIFT (Great Italian Food Trade).
(5) Dario Dongo. Amazon, cyber-slavery. GIFT (Great Italian Food Trade).
(6) Dario Dongo, Giulia Torre. Amazon, cyberbullying. GIFT (Great Italian Food Trade).
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
