The Court of Auditors has transmitted to the House and Senate its report 28.1.21 on the work of AGEA (General Agency for Agricultural Disbursements) – under the leadership of Director General Gabriele Papa Pagliardini – in fiscal year 2018. (1)
Investigations carried out by the Audit Section on Entities of the Court of Auditors, summarized in 102 pages, reveal serious inefficiencies and losses in the management of European funding. As well as budget gaps, omissions and ambiguities, including in relation to executive compensation.
The constitutional body of supervision of public budgets ‘Recommends the adoption of measures – including organizational and regulatory measures – deemed most effective in order to prevent the recurrence of the phenomenon in the future‘ of losses in the state budget and other ‘Detrimental consequences resulting from the inability to spend, within the allotted time, EU funding‘.
CAP 2014-2020, the resources for agriculture in Italy
AGEA-in its role as paying agency-manages the entire process of disbursing European aid in agriculture, from payment authorization to the accounting that follows. For a total amount of € 52 billion, including € 41.5 of European funds allocated to Italy under the CAP (Common Agricultural Policy) 2014-2020. Of these:
– 27 billion euros in direct aid (first pillar) is made available by the EAGF (European Agricultural Guarantee Fund),
– 20.9 billion for rural development (second pillar) is allocated 50% by the Italian state, 50% by FEARS (European Agricultural Fund for Rural Development),
-4 billion in CMO (Common Market Organization) funding, on wine and fruit.
Direct aid, a 31 million euro hole
In fiscal year 2018, against €4.299 billion disbursed to Italian farmers by the paying agencies belonging to AGEA, the Commission reimbursed Italy €4.268 billion. The €31 million deficit-which burdens the state budget and is not recoverable-‘stems from the negative financial corrections and corrections made by the Commission as a result of found deficiencies and irregularities in the management and control systems of EU funds allocated to Italian agriculture.’
‘The reasons behind the aforementioned defunding at the expense of the Italian state are – for the most part – due to lack or absence of control and supervision. (…) For all the decisions there was no appeal for annulment to the General Court of the European Union, thus, lending, acquiescence to the defunding.’ (1)
Rural development, 4 billion euros burned
On the rural development front, where AGEA is also supposed to coordinate funding, the 10.444 billion euros made available in the EAFRD (2014-2020 period) has only been used to a small extent. As of 12/31/18 Italy had used only € 2.953 billion, as of 12/31/20 € 6.276 billion. In practice, 4.168 billion euros owed to Italian farmers and ranchers are being dispersed due to the inability and disorganization of the AGEA headed by Gabriele Papa Pagliardini.
‘The considerations made and data highlighted in this chapter regarding AGEA’s functions in the EU sector highlight the need for the Agency, to the extent of its competence, to take organizational measures and steps to avoid the risk of losing programmed funding.’
AGEA, fraud and irregularities
The Military Geographical Institute had signed a cooperation agreement with AGEA so that it could have aerial images to check, with extreme ease, the prerequisites for the disbursement of direct aid in agriculture. Thus putting an end to fraud on applications for decoupled funding (i.e., paid for the mere fact of carrying out an agricultural activity, regardless of productivity) in relation to cadastral parcels not intended for agricultural use. However, AGEA has failed to carry out the necessary checks.
The 2019 Annual Report of the Court of Auditors on ‘Financial Relations with the European Union and the Use of European Funds‘ found a high number of irregularities, 272 cases reported to theEuropean Anti-Fraud Office (OLAF ), with a total amount of €17.8 million. (2)
Food aid, 36 million euros not even solicited
AGEA’s lines of intervention in the national arena act on two fronts,
– food aid to developing countries (DCs) and Central and Eastern European countries (CEECs),
– Support for agricultural and agribusiness market sectors in contingent situations.
Commitments hired in the ‘Food Aid Convention‘ (London, 1999) provide for Italy to dispose of 36 million euros/year in food aid for developing countries and CEECs. AGEA is in charge of implementing these measures, through the purchase and redistribution of huge quantities of foodstuffs. ‘In the year under review‘ however ‘AGEA stated that it has not received funding for the purpose in question‘, without even soliciting them as required.
National support, shortcomings and delays
Support for agribusiness market sectors recorded, in 2018, ‘a tendency stalemate in the dynamics of transfers (commitments and payments) of resources allocated by the state. Specifically, in the agriculture and agribusiness sector, state allocations-about 29.8 million-had not even been committed as of Dec. 31, 2018. While in the Fruit and Vegetable Common Market Organization sector, on the residuals as of January 1, 2018, no payment is reported to have been made.
Only in the area of “rationalization and reconversion of the sugar beet sector” is there a paid percentage as of Dec. 31, 18 on state allocations of 69 percent in transfers. A cross comparison of the data reported in the tables and those recorded in the 2018 financial statements (…), shows a discrepancy of 500 thousand euros, between the figure of commitments reported in the table (for 9.5 million euros) and the corresponding figure reported in Chap. 341 of the 2018 financial statements (for 9 million euros).
Notwithstanding the above, the Court notes the need for appropriate measures to be taken in order to remedy the impasse as noted above.‘ (1)
Gabriele Papa Pagliardini, conflicts of interest and outlaw compensation
Gabriele Papa Pagliardini was appointed director general of AGEA by MiPAAF decree 19.2.16. And he was reappointed for another three years by decree 6.11.20 signed by then-Minister Teresa Bellanova, regardless of his conflicts of interest – smelling of corruption, as adumbrated by 4 MEPs and 14 Italian senators – with the Coldiretti magic circle (3,4). A situation that is all the more critical because the reform introduced by Law 135/12 (reconfirmed by Legislative Decree 74/18), under the pretext of hypothetical spending savings, concentrated in the DG the powers of political guidance previously attributed to a collegial body (BoD).
AGEA’s monocrate , as if that were not enough, in 2018 received 101,000 euros more than the cap on the gross annual compensation of top executive in the civil service. 320 instead of 219 thousand euros, including € 61,246 in ‘expense reimbursements’ and especially € 43,800 as self-certified ‘production bonus’. The Court of Auditors then points out that ‘with regard to theprerequisites under which the performance-related part of compensation is awarded, the absence of control and validation measures comparable to those provided within the civil service should be noted.’
Golden salaries
AGEA’s parody might recall Mario Monicelli’s Marchese del Grillo (1981), with a masterful performance by Alberto Sordi. Farmers and ranchers, outside the palaces, toiling from before dawn to after dusk to make a living. Managers at the AGEA palace, in burning for starvation the 4 billion euros meant for the vulgar, instead indulge in the luxury of extraordinary salaries for unachieved results.
‘ Performance pay accounts for 43 percent of the total ‘cost’ 2018 executive staff and 191 percent of the cost of regular pay.’
16.1 million was used in 2018 for personnel, including 2 for second-ranking management staff (13 units) and 14.1 for non-management staff (199 units). To the people, dried pine cones.
Litigation without provisions
1.088 billion was at stake in fiscal year 2018 in the 9314 disputes dragged out by AGEA. With a historical average loss rate of 50%. In 2018 alone, the agency lost 86 of the 157 cases settled that year, with €7.6 million in losses in addition to €1.5 million to be paid in legal fees and interest.
The data are biased, reports the Court. Despite reminders from the accounting judiciary, Agea has failed to inform the supervisory body about litigation related to contracts, personnel, tax, etc. The litigation to be settled will cost AGEA at least 44.3 million euros. And ‘such “loss risks” have not been valued in the administrative situation of the Entity, which does not report any provision in the administrative result‘. (1)
Deficit at the expense of citizens, budget gaps
In 2019 AGEA managed to conclude the deficit recovery plan, the Court of Auditors warns, only thanks to 14.9 million euros in additional resources provided by the state, that is, by Italian taxpayers. But even more serious are the anomalies and violations of law in AGEA’s budget management:
– Overestimation of surpluses in the budget, in violation of accounting regulations,
– Systematic delays in the approvals of final accounts and budgets (including in fiscal years 2019 and 2020), essential documents for any economic planning.
Omission of official acts
Mismanagement undermines the principles at the heart of accounting standards (annuality, clarity, truthfulness and reliability). And it adds to the persistent omission of official acts related to the organization, as Gabriele Papa Pagliardini in 5 years of autocracy still has not adopted:
– an economic-analytical accounting system, nor
– a management control system (both prescribed by Presidential Decree 97/2003), nor has it approved
– A set of Administration and Accounting Rules of the Corporation updated to current standards.
Spoil system, #CleanSpades.
Stefano Patuanelli – newly appointed Minister of Agriculture, Food and Forestry – should exercise the spoil system as soon as possible to remove Gabriele Papa Pagliardini from the undeserved post. Initiate disciplinary proceedings and civil action for compensation for the damage he caused to the public administration, as already ascertained in the Court of Auditors’ report.
#CleanSpades, if not now when?
Dario Dongo and Giulia Orsi
Notes
(1) Court of Accounts, Determination of 01/28/21, no. 10, Entity Control Section, Determination and report on the result of the audit performed on the financial management of the Agricultural Disbursement Agency (AGEA) 2018, published on 10.02.2021, Rapporteur First Referee Vanessa Pinto. https://www.corteconti.it/Download?id=985feb57-b92e-46f1-9e41-9cbd106ca044
(2) Court of Accounts, Deliberation of 20.12.19 no. 16, Control Section for Community and International Affairs, Annual Report to Parliament 2019 on Financial Relations with the European Union and Use of European Funds, published 12/30/19, https://www.corteconti.it/Download?id=7d88336e-1125-487a-988b-f6b6bf8120a3
(3) Dario Dongo, Conflict of interest AGEA – Pagliardini – Coldiretti, Questions to the European Parliament, GIFT(Great Italian Food Trade). 01/30/2021 https://www.greatitalianfoodtrade.it/idee/conflitto-d-interessi-agea-pagliardini-coldiretti-interrogazioni-al-parlamento-europeo
(4) Dario Dongo, Coldiretti, Federconsorzi 2 and the director of AGEA. Question to the Senate, GIFT(Great Italian Food Trade). 08.01.2021, https://www.greatitalianfoodtrade.it/mercati/coldiretti-federconsorzi-2-e-il-direttore-di-agea-interrogazione-al-senato
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Graduated in Law at the University of Bologna, now enrolled in the master of law of agri-food markets at the University of Turin. She is a practicing lawyer.
 - under the leadership of Director General Gabriele Papa Pagliardini - in fiscal year 2018. (1)Investigations carried out by the Audit Section on Entities of the Court of Auditors, summarized in 102 pages, reveal serious inefficiencies and losses in the management of European funding. As well as budget gaps, omissions and ambiguities, including in relation to executive compensation.){kind=link}