- In October 2006, FIBE and FIBE Campania took legal action before the Regional Administrative Court Latium in a complaint stating that the Commissioner failed to comply with his obligations pursuant to the abovementioned Decree Law No. 245/2005 (converted into Law No. 21/2006), with regard to: (i) recovering the amounts owed by local administrations for the fees charged for waste disposal services up to the date of termination of the contracts (December 15, 2005); and (ii) identifying the disposal sites for stabilized organic waste and stockpiles generated by the RDF facilities and preparing and implementing a maintenance plan for the facilities.
On April 27, 2007, having granted the precautionary motion filed by FIBE and FIBE Campania (by its ruling of October 11, 2006, upheld by the Council of State on November 7, 2006), the Administrative Court of Latium handed down Decision No. 3790 finding that:
- FIBE and FIBE Campania did in fact provide the waste disposal service entrusted to them under the 2000 and 2001 contracts up until December 15, 2005 and thus had the right to request completion of the legally-provided for procedure for the collection of accrued receivables by the Administration;
- due to the termination of the service contracts by force of law, FIBE and FIBE Campania, “effective as of December 15, 2005 became mere implementers of a service [the waste disposal service] on the Commissioner’s behalf, having permanently lost title to this service;”
- the Commissioner’s organization was expected to complete within 45 days the procedure aimed at meeting the requests of the complainants;
- in the event of a protracted failure of the Administration to comply with its obligations, an ad acta Commissioner would be appointed as a replacement to take the necessary measures within a further 45-day deadline.
In the interim, the newly introduced regulations eliminated the interest of the companies in completing the procedure for the identification of the disposal sites for stabilized organic waste and stockpiles generated by the RDF facilities and preparing and implementing a maintenance plan for the facilities, given that they are to be transferred to the relevant administrations, but the companies continued to have an interest in completing the procedure for the recovery of their accrued receivables for services provided until December 31, 2005.
The ad acta Commissioner appointed by the Regional Administrative Court to recover the receivables owed to the former contractors by local administrations in Campania for the waste disposal services provided until December 15, 2005, after filing an initial report in August 2009, submitted a second report in June 2013, based on a more detailed investigation and assessment of the abovementioned receivables through subsequent adversarial audits of the accounting records and documents submitted by the parties, which while containing a review of the receivables owed to FIBE for the activities performed pursuant to contract, submitted to the Regional Administrative Court the issue of the offsets claimed by the Administration for the relevant jurisdictional considerations and the respective decisions. The regional Administrative Court, at a hearing for the discussion of these issues scheduled for December 4, 2013, adjourned the proceedings to June 25, 2014.
- By Decision No. 7280 handed down on July 23, 2008, the Regional Administrative Court of Latium reaffirmed the principles stated in the abovementioned Decision No. 3790/2007, which was upheld by the Council of State with Decision No. 6057/07. These same principles were also confirmed and expanded in the legislation enacted in the interim, including the abovementioned Decree Law No. 90/08 and Decree Law No. 107/08, both converted into Law No. 123/08.
This decision, which is has become final not having been appealed by the Administration, is particularly important for the Companies because, in the rationale section, it reconstructs the role and responsibilities attributable to the former service contractors after December 15, 2005—by then “mere implementers” of the Commissioner’s orders—and to the Delegated Government Commissioner, solely responsible for the waste disposal service and the coordination activities required to identify the best waste disposal solutions. At the same time, the decision points out that all obligations imposed on the former contractors pursuant to law lapsed on December 31, 2007, as the challenged extension orders were in conflict with the previous provisions governing the conditions and limits of the specific emergency measures. In any event, the Regional Administrative Court pointed out that subsequent regulations also affected the challenged orders because this applied to past contractual relationships involving the complainants, of whom “no further activities are requested except those needed to allow the Provincial Administrations and the Armed Forces” to take over management of the facilities, employees and equipment, as well as existing transactions with third parties.” In light of the above, the Regional Administrative Court concluded that “It is therefore logical to believe that the Delegate Commissioner is responsible for the assumed obligations…”
- In December 2008, FIBE and FIBE Campania challenged before the Regional Administrative Court of Latium a number of orders by which the parties delegated by the Government Commissioner to handle technical and operating activities (the Head of the technical-operational mission pursuant to Prime Minister’s Order No. 3705/2008 and the ad acta Commissioners for the provinces) required the Companies to re-acquire possession of certain areas and storage sites, taken over by the abovementioned delegated parties in August 2008, as these areas and storage sites were not deemed operable for the delivery of the service, also asking the Court to find that “the appealing parties were under no obligation whatsoever to operate offices, sites and facilities used at any time as part of an integrated waste disposal system in the Campania region, in light of current sector regulations, which also apply to prior-period situations, and totally consistent with Decision No. 3790/2007 by the Regional Administrative Court of Latium, upheld by the Council of State with Decision No. 6057/2007, and Decision No. 7280 of July 23, 2008 by the Regional Administrative Court of Latium concerning the nature of the transactions occurring between the Administration, Fibe and Fibe Campania and third parties, and the Administration obligation to comply with the merit findings set forth in the abovementioned Decision No. 3790/2007 by the Regional Administrative Court of Latium, upheld by the Council of State with Decision No. 6057/2007, and Decision No. 7280 of July 23, 2008 by the Regional Administrative Court of Latium concerning the nature of the transactions occurring between the Administration, Fibe and Fibe Campania and third parties.”
Subsequent to the hearing of January 19, 2009, the Regional Administrative Court stayed the enforcement of the challenged orders and, by Decisions No. 2357/09 handed down on March 13, 2009, upheld the challenge filed by FIBE and FIBE Campania, voiding the challenged orders.
The Administration appealed this decision to the Council of State in a complaint notified on July 8, 2009. In joining these proceedings, the companies filed, in turn, an incident appeal against the same decision asking that the challenges deemed to have been covered by the lower court decision be reviewed and allowed, specifically as they relate to the non-existence of the assumptions about the alleged inoperability of the sites for the purposes of the waste management service in general; the requested of finding that the Companies had not obligation whatsoever to manage the offices, sites and facilities used at any time for the integrated waste treatment system in Campania in line with the sector regulations; and the existence of the Administration’s obligation to comply with Decisions No. 3790/07 by the Regional Administrative Court of Latium, as upheld by the Council of State with Decision No. 6057/07 and Decision No. 7280 handed down by the Regional Administrative Court of Latium on July 23, 2008 concerning the nature of the transactions occurring between the Administration, Fibe and Fibe Campania and third parties.
In the interim, on July 22, 2009, the Undersecretary of State, acting through the ad acta Commissioners of the provinces served FIBE and FIBE Campania with notices of new orders to take back control of the abovementioned sites. These orders were also duly challenged before the Regional Administrative Court.
Lastly, on January 26, 2010, the Council of State handed down Decision No. 290/2010 definitively confirming the voiding of the orders issued in December 2008, releasing FIBE and FIBE Campania from any obligation to operate the sites, which according to the Administration were not suitable for its activities.
More specifically, by this decision, in which it analyzed and interpreted Prime Minister’s Order No. 3693/2008, the Council of State found the that challenged orders were unlawful, being contrary to the applicable statutes, due to an incorrect understanding of the notion of the functionality of the assets for the overall performance of the waste disposal service.
Specifically, the Council of State based its assessment of the operability of the sites on the basic rule of Article 183, Section 1, Letter D), of Legislative Decree No. 152/2006, which expressly defines the concept of waste management as the collection, transportation, recycling and disposal of waste, including monitoring these activities and the landfills after they were closed.
This led to confirmation of the operability of the assets, the return of which had been ordered, for the waste management service as a whole, which resulted in the finding that the challenged orders were unlawful.
Despite this outcome, the party responsible under Law No. 26/2010 for managing the sites in the Province of Caserta and, subsequently, those responsible for managing the sites in the Provinces of Naples and Benevento took new action aimed at assigning to FIBE S.p.A. responsibility for the custody of the sites and the related costs.
The Company responded to this action by filing a motion to void these orders with the relevant judicial authority, but the motion was denied on October 25, 2010. Following a request for clarifications about the custodian’s obligations, the Fifth Criminal Part of the Court of Naples, in its order of November 24, 2010, ruled that a court appointed custodian has “as its sole prerogative and responsibility that of ensuring the integrity of the seals, safeguarding the value of the seized property and reporting any dangers to the judicial authority.” This ruling, with which the Company’s counsel concurs, is consistent with the Company’s argument that a court appointed custodian is exempt from any liability, provided it diligently and promptly informs and/or reports to the relevant authority any events that could in any way compromise the integrity of the seized asset, and that this is the conduct that is being followed by the persons designated as custodians.
Other developments occurring within this context included the civil proceedings filed before the Court of Naples Court by S.A.P.NA. S.p.A., a local company established by the Naples Provincial Administration that, with about 40 legal actions, contested the decision to transfer to it title to certain temporary and permanent areas and storage sites that the ad acta Commissioners had already found to be inoperable in their orders of December 2008 challenged by FIBE S.p.A., with regard to which the Regional Administrative Court of Latium and the Council of State handed down Decision No. 2357/09 and Decision No. 290/10, respectively, and requested that it be reimbursed and held harmless by FIBE S.p.A. and/or the Government Commissioner from the operating costs incurred in the interim and those that may be incurred in the future for environmental remediation. FIBE S.p.A. responded in each of these proceedings, which are still in progress.
- The Companies filed a new complaint with the Regional Administrative Court of Latium on April 30, 2009 (R.G. No. 3770/2009) with regard to the apathy shown by the Administration in completing the administrative procedures for the recording and recognition of the costs incurred by the former service contractors for activities carried out pursuant to law and the work ordered by the Administration and performed by the Companies during the transitional management period (December 16, 2005 to December 31, 2007). They thus requested that the Regional Administrative Court rule that such inaction was unlawful and verify the obligation of the respondent Administrations to complete the abovementioned procedure within an adequate timeframe, with the concurrent appointment of an ad acta Commissioner who, should the abovementioned timeframe elapse without results, would take the necessary action in lieu of the defaulting Administrations. Further to the oral arguments hearing of June 24, 2009, the Regional Administrative Court handed down Decision No. 7070/2009 finding that the complaint was inadmissible, noting that because the complaint dealt with the “verification of financial claims, albeit based on obligations assumed pursuant to law,”, the Companies should not have already activated the special silence procedure but should have filed a specific action for declaration and satisfaction before the Regional Administrative Court on an exclusive jurisdictional basis.
Upon learning of the decision by the Regional Administrative Court, the Companies filed a new complaint with the Regional Administrative Court of Latium (RG No. 7338/2009), on an exclusive jurisdictional basis pursuant to Article 4 of Decree Law No. 90/2008, asking the Court to hand down the necessary verification decisions ordering the Public Administration to pay the requested amounts, including on an admonitory basis. The admonitory motion was denied as the Regional Administrative Court did not find that there was a justification for issuing a payment injunction. The merit hearing is currently pending. While waiting for the oral argument hearing to be scheduled, a discovery motion was notified and subsequently filed on April 8, 2010 asking for the designation of a court-appointed technical consultant who, after examining the documents included in the record of the proceedings, shall determine the following amounts:
- the debt owed by the Administration for the management activities reported by the companies starting on December 16, 2005;
- the amount already paid by the Administration for the abovementioned service;
- the amount of indebtedness already verified and acknowledged but not yet paid by the Administration in accordance with administrative measures issued and included in the record of the proceedings;
- the amount not yet verified or paid by the Administration for the services reported by the abovementioned Companies;
- the debt owed by the Administration for the work entrusted to the abovementioned Companies and provided by them since December 16, 2005;
- the amount already paid by the Administration for the services referred to in item (e) above;
- the amount of indebtedness already verified and acknowledged but not yet paid by the Administration in accordance with administrative measures issued and included in the record of the proceedings;
- the amount not yet verified or paid by the Administration for the services provided by FIBE S.p.A. and FIBE Campania S.p.A. at the Administration’s request, based on documents included in the record of the proceedings;
- the amount, as identified and specified by the appointed consultant based on the verification of the documents included in the record of the proceedings, owed by the Administration for all of the activities imposed on and carried out by FIBE S.p.A. and FIBE Campania S.p.A. for the benefit of the Administration, starting on December 16, 2005, net of the amount already paid for such services and any other question that the Court may wish to ask.
- the debt owed by the Administration for the management activities reported by the companies starting on December 16, 2005;
- By a complaint notified on May 18, 2009 (RG No. 4189/09), the Companies again petitioned the Regional Administrative Court of Latium, challenging Prime Minister Order No. 3748/09 insofar as it ordered that only waste produced and stored after the date of termination of the service contracts with the Companies (after December 15, 2005) could be conveyed to the Acerra waste-to-energy facility. A date for a merit hearing has yet to be set.
While they are convinced that the obligation to dispose of all of the bales produced and stored in the Campania region (regardless of the solution selected by the Public Administration as to which waste was to be disposed of first and which one later) rests solely with the Administration, the Companies challenged this order before the Regional Administrative Court of Latium – Rome as a precaution.
- It is also worth mentioning that, on May 5, 2011, the Regional Administrative Court of Latium, acting in response to a motion filed by FIBE (R.G. No. 9942/2009) asking for a determination that the Public Administration was in default with regard to the obligation to pay FIBE’s unamortized costs at December 15, 2005 for the Campania RDF facilities, handed down Decision No. 3886 granting FIBE’s motion and ordering the Public Administration to pay FIBE the sum of 204,742,665.00 euros, plus statutory and delinquent interest from 15 December 2005 until settlement. This decision correctly reconstructs the transactions between the parties as per the reference contractual and legislative framework, confirming that, due to the termination of the contracts, the Administration regained control of the RDF facilities and is therefore obliged to pay to the former contractors the unamortized costs at the contract termination date (December 15, 2005), as expressly stated by the Administration. As to the amount of the claim, the Regional Administrative Court based its ruling, in addition to the accounting records submitted by the complainant, on acknowledgments provided by the Public Administration in previous calls to tender for the award the service, in which the corresponding amounts are stated and acknowledged.
It is important to point out that the Public Administration appealed this decision with a motion notified on July 11, 2011. This motion (R.G. 6313/11) was heard at a hearing on December 13, 2011, after which the Council of State handed down Decision No. 868/2012 on February 20, 2012, denying the motion filed by the Administration and ordering that the parties bear their own legal costs.
The Government Solicitor’s Office appealed the Council of State’s decision to the Supreme Court of Cassation claiming lack of jurisdiction by the administrative judge. FIBE, in turn, filed a counter-motion and incidental motion, on the one hand disagreeing with the Administration’s arguments and, on the other hand, challenging on an incidental basis the part of the abovementioned decision in which the Council of State held that it had first to rule about its jurisdiction (even though the ruling was in the affirmative) rather than acknowledging the tardiness of the appeal and, therefore, invalidating it. The Government Solicitor’s Office then filed a counter-motion in response to FIBE’s incidental motion and the Supreme Court of Cassation, after a hearing held on March 6, 2013, denied the motion filed by the Government Solicitor’s Office. The enforcement procedure aimed at forcefully collecting the entire amount awarded continued. The Government Solicitor’s Office filed a motion opposing the enforcement and asking for a stay, which was argued at a hearing on July 9, 2013. By a decision dated July 24, 2013, the Enforcement Actions Judge at the Court of Rome awarded to FIBE the amount of 240,547,560.96 euros in satisfaction of the actioned claim, including both principal and statutory interest, but stayed the enforcement action for the additional interest claimed, setting a deadline of November 30, 2013 for the introduction of a merit judgment in connection with the challenge.
Both parties then filed for a merit judgment and, at the hearing of February 3, 2014, the Court ruled that the Prime Minister’s Office had failed to appear as required and set a deadline of February 21, 2014 for producing a certificate that the summons promoted by the Prime Minister’s Office, with date set (in the summons) at February 10, had not been duly recorded. Both FIBE and the Government Solicitor’s Office joined the proceedings for a continuation of the merit judgment; however, the two summonses were assigned to two different judges who left to the Chief Judge of the Court the decision about combining and assigning the proceedings; a decision is now pending.
- By Order No. 292 of February 23, 2012, handed down in response to Complaint R.G. 301/2012, the Regional Administrative Court of Campania denied the motion by the complainant S.A.P.NA. to stay the Ministry order requesting that the provincial company provide the results of the characterization plan and the implementation of emergency safety measures for the contaminated aquifer at the Settecainati landfill, in the Municipality of Giugliano, owned by FIBE S.p.A. The complainant sued FIBE S.p.A. for its alleged liability for the contamination and its obligation to carry out the characterization and implementation of emergency safety measures. The court order denying the motion offset the charges for the precautionary phase. A merit hearing has not yet been scheduled. S.A.P.NA. S.p.A. challenged the abovementioned Order No. 292/2012 of the Regional Administrative Court of Campania, entered into the record with No. R.G. 3247/2012, before the Council of State, which, by Order No. 1968 of May 23, 2012 upheld the lower court’s decision. Court costs were offset.
- The Regional Administrative Court of Latium, by Decision No. 5831 of June 26, 2012, handed down in response to Complaint R.G. 7434/2008 and subsequent additional arguments filed by FIBE S.p.A. asking the Court to void the Commissioner and Ministry orders mandating the communication of the results of the characterization and emergency safety measures for the soil and aquifer, under penalty of the activation of substitute damaging procedures, recognition of the actual cost and assessment and recovery of the environmental damage at the landfill located at Cava Giuliani in the Municipality of Giugliano, ruled that it lacked jurisdiction in favor of the Superior Court of Public Waters, as the abovementioned orders constituted administrative measures concerning public waters. The proceedings were transferred to the Superior Court of Public Waters and the preliminary hearing was ultimately scheduled for October 9, 2013. Due to the execution, on September 9, 2013, of an agreement with the Delegated Government Commissioner involving, inter alia, the characterization of the Cava Giuliani landfill, the hearing was postponed to June 25, 2014.
- By Decisions No. 6033/2012, published on July 3, 2012 and notified on September 13, 2012, the Regional Administrative Court of Latium combined and denied complaints R.G. 10397/2007, 10398/2007 and 2770/2012 and related additional arguments by which FIBE asked the Court to void the Commissioner and Ministry orders requiring the characterization plan and urgent safety measures, under penalty of the implementation of substitute damaging procedures for the Pontericcio site, the RDF production facility and storage area, and the Cava Giuliani site and storage area.
The company challenged this decision in appeal to the Council of State (R.G. 7313/2012) arguing that the decision appeared to be adversely affected by an obvious misrepresentation of the facts as it was based on contamination found at a site different to those subject of the proceedings. Specifically, reference was mistakenly made to contamination at the Cava Giuliani landfill (as shown in the report by court-appointed technical consultant to the Naples Public Prosecutor, prepared for the criminal proceedings R.G.N.R. 15968/2008), subject of Complaint R.G. 7434/2008 reviewed in Letter I) above. On November 12, 2012, the Council of State denied FIBE’s precautionary motion to stay the enforcement of the decision and the parties are currently waiting for a merit hearing to be scheduled.
Following the denial of a precautionary motion by Decision No. 6033/2012 and considering the consequences of the crime of omitted remediation, also with regard to the Company’s liability, pursuant to Legislative Decree No. 231/2001, and further to the communication by the Government Commissioner delegated pursuant to Order No. 3849/2010 that, while the proceeding were in progress, it executed with Sogesid S.p.A. a contract for the characterization of areas at the Pontericcio and Cava Giuliani locations, subject of Decision No. 6033/2012 and of Appeal No. 36/2013 to the Supreme Court of Public Waters, FIBE, in a letter dated December 13, 2012, informed the Ministry of the Environment and other relevant authorities that it was willing to voluntarily implement Decision No. 6033/2012 and asked for a meeting in order to finalize an agreement governing the mutual relationships. All of the above without admitting any responsibility and without any effect on pending litigation for merit purposes, and reserving the right to reimbursement for the costs of performing the abovementioned activities. This agreement was signed on September 9, 2013 by FIBE and the delegated Government Commissioner. Under the agreement, FIBE agreed to comply with the requests of the delegated Government Commissioner with regard to characterization and environmental surveying activities, excluding any liability with regard to any issues that may be identified upon completions of these activities and confirming that its actions were being carried out exclusively in implementation of the abovementioned Decision No. 6033/2012 by the Regional Administrative Court.
By a summons served in May 2005, the Government Commissioner filed an action requesting compensation from FIBE, FIBE Campania and FISIA Italimpianti for alleged damages of about 43 million euros. In the course of the proceedings, the Government Commissioner increased its damage claims to over euro 700 million, plus a further to claim for damages to its image quantified at 1 billion euros.
The Companies joined the proceedings and, in addition to disputing the claims made by the Government Commissioner, filed a counterclaim requesting compensation for damage and sundry charges determined in the initial filing at more than 650 million euros, plus a further to claim for damages to their image quantified at 1.5 billion euros. More specifically, the respondent Companies complained about the significant delay (compared with the schedule of the 2000 and 2001 contracts) in issuing the permits required to build the waste-to-energy facilities and the resulting delay in the construction of such facilities. These delays led both to a lengthening of the temporary storage period of the so-called “eco-bales” produced and an increase in the volume of stored “eco-bales,” which resulted in the need to find bigger storage areas: circumstances that caused the contractors FIBE and FIBE Campania to incur greater costs.
In the same proceeding, the banks that issued FIBE and FIBE Campania’s performance bonds to the Government Commissioner also moved for the Commissioner’s claim to be denied and, in any case, asked to be held harmless by Impregilo from the commissioner’s claims. Impregilo joined the proceedings contesting the request of the guarantor banks.
The proceedings were concluded with Decision No. 4253 of April 11, 2011, which found that jurisdiction rested with the administrative court and not with the ordinary court. The Government Solicitor’s Office appealed this decision and FIBE duly joined the proceedings concerning R.G. 686/12. The hearing for closing arguments before the Naples Court of Appeals was scheduled for December 11, 2014.
By a “reactivation brief” filed on August 1, 2012, the Ministry of Justice and the Cassa Ammende reactivated the before the Court of Milan the proceedings concerning the enforcement of sureties totaling 13,000,000.00 euros provided by some large credit institutions to guarantee the performance of the orders issued by the Public Prosecutor of Naples in connection with the seizure of the RDF facilities.
The Impregilo Group companies joined the proceedings before the Court of Milan (R.G. 57109/2012 challenging the substance of the claims from various standpoints, objecting, inter alia, that the policy was invalid, having been activated after its expiration date and the lack of grounds for its enforcement, and, in turn, sued the Government Commissioner.
At the initial hearing of January 17, 2013, the proceeding were adjourned and a hearing for closing arguments was scheduled for December 5, 2013. Following this hearing, the court will hand down a decision within the customary deadline.
Also worth mentioning at civil court level are some lawsuits recently filed by public administrations that, under various titles, have standing in contesting FIBE’s activities with respect to the complex management of the receivables and payables arising from the “contractual management” period. Although these proceedings are separate from those described above, they refer to the same issues subject of the claims filed by FIBE in the administrative courts, with regard to which the activities of the ad acta commissioner is still in progress (see Section II.1.A supra). Accordingly and comforted by the advice of counsel that supports it in this complex context, the Group believes that FIBE’s fully compliant conduct during the “contractual” period can reasonably be confirmed and that the risk of a negative outcome of these proceedings is merely possible.
Specifically, the Company’s counsel believes that the public administration’s claims can reasonably be resisted considering the counterclaims and, moreover, the admissibility in these proceedings of a court ordered offsetting process.
Lastly, pending proceedings include a lawsuit in opposition to a payment injunction issued by FS Logistica (formerly Ecolog) against the Office of the Prime Minister for the payment of consideration owed for assignments it received from 2001 to 2008 by the then Government Commissioner for shipment of waste outside Italy. The claim, made through a summary procedure, was lodged against the Office of the Prime Minister which turned to FIBE as guarantor. FIBE, on the one hand, objected pointing out that this request for guarantee was the same as the one already subject of lawsuit filed by the Office of the Prime Minister/Government Commissioner before the Court of Naples and concluded with Decision No. 4253/11, as mentioned above, in which the Court found that it lacked jurisdiction, and, on the other hand and with regard to the counterclaims lodged by the Office of the Prime Minister, noted both the inadmissibility of the counterclaims due to the totally different titles compared with the original claim of FS Logistica and the fact that these counterclaims had already been put forth by the Office of the Prime Minister in numerous other proceedings that are still pending.
Following a hearing held on July 11, 2013, the judge adjourned the proceedings and scheduled a discovery hearing for January 24, 2014. At that hearing, the judge allowed a court ordered technical expert’s report only with regard to the claims of FS Logistica towards the Office of the Prime Minister and subject to the payment injunction.
In September 2006, the Public Prosecutor of the Court of Naples served Impregilo S.p.A., Impregilo International Infrastructures N.V., FIBE S.p.A., FIBE Campania S.p.A., FISIA Italimpianti S.p.A. and Gestione Napoli in liquidation with a “Notice of the completion of the preliminary investigation about the administrative liability of legal entities” related to the alleged administrative violation pursuant to Article 24 of Legislative Decree No. 231/2001, within the framework of criminal proceedings against some former Directors and employees of the abovementioned companies, who were being investigated for the crimes subject of Article 640, Sections 1 and 2, No. 1, of the Italian Criminal Code in connection with the contracts for management of the urban solid waste disposal cycle in the Campania region. Following the preliminary hearing of February 29 2008, the Preliminary Hearing Judge at the Court of Naples granted the motions for indictment made by the Public Prosecutor.
It is also worth mentioning in this regard that the Court, upholding the exception raised by the defense counsels of the Companies, excluded the option of allowing parties to join the proceedings as plaintiffs seeking damages from the public entities involved pursuant to Legislative Decree No. 231/2001 and, consequently, declared that all filings to join the proceedings as plaintiffs seeking damages from the companies were inadmissible.
Please also note that, at a hearing held on June 15, 2011, the public prosecutors Messrs. Noviello and Sirleo filed an additional charge pursuant to Article 517 of the Code of Criminal Procedure against just the individuals involved for the crime subject of Article 110 of the Criminal Code, Article 81 of the Criminal Code and Article 53-bis of Legislative Decree No. 22/97, now Article 260 of Legislative Decree No. 152/06.
Within the framework of these proceedings, the Public Prosecutor requested the following precautionary measures relating to:
- “property,” pursuant to Article 19 of Legislative Decree No. 231/2001 (attachment of: the RDF production facilities and Acerra waste-to-energy facility; approximately 43 million euros belonging to Impregilo Group companies; receivables of 109 million euros owed to FIBE and FIBE Campania by municipalities in the Campania region); and
- "interdiction,” pursuant to Article 9 of Legislative Decree No. 231/2001 (alternatively: ban on contracting with the public administration; exclusion from subsidies, financing and similar benefits; ban on advertising goods and services).
With regard to the abovementioned precautionary measure, the Preliminary Hearing Judge, with an order dated June 26, 2007, ordered the preventive attachment of the alleged “profit from the crime” quantified at about 750 million euros, as the equivalent of:
- 53,000,000.00 corresponding to the amount advanced by the Commissioner for the construction of facilities in provinces other than Naples;
- the total amount of the waste disposal fee regularly collected, amounting to 301,641,238.98 euros;
- the certain, liquid and collectible receivables claimed from the Municipal Administrations and not yet collected, totaling 141,701,456.56 euros;
- the amount of the expenses incurred by the Office of the Commissioner for the disposal of USW and the residual waste after processing by the RDF facilities, amounting to 99,092,457.23 euros;
- the amount of 51,645,689.90 euros corresponding to the unpaid security deposit, the payment of which had been stipulated to secure the faithful performance of contractual obligations;
- the amounts received as fees for the collection activities carried out on behalf of the Office of the Commissioner and the Municipal Administrations, for an amount to be determined upon enforcement;
- the amount of 103,404,000.00 euros, corresponding to the value of the work carried out in the construction of the Acerra waste-to-energy facility until December 31, 2005.
The precautionary proceedings, activated with the orders described above, continued for five years, before definitively ending, without any action taken against the Group, in May 2012, when, in its the final decision, the Sixth Criminal Section of the Court of Cassation found that there were no new elements that could supersede the findings developed in the precautionary proceedings with regard to the latest motions for precautionary measures filed by the Public Prosecutor regarding the “fees,” as set forth in the decision handed down by the Second Section of the Court of Cassation on April 16, 2009. A more detailed analysis of the complex process that developed with regard to precautionary measures and has now ended is provided in previous financial reports of the Impregilo Group.
On November 4, 2013, the Court of Naples handed down a decision finding all defendants not guilty on all charges and in the most ample manner, revoking the seizure orders targeting the storage site and handing them over to the respective provincial administrations. The detailed decision of acquittal (265 pages long) was filed on February 1, 2014 and was appealed by the Naples Public Prosecutor in March 2014.
Also in 2008, as part of a new investigation by the Court of Naples into waste disposal and related activities in the region carried out after the termination of the contracts by force of law (on December 15, 2005), the Preliminary Investigations Judge, upon a request by the Public Prosecutor issued preventive measures against some managers and employees of FIBE, FIBE Campania and FISIA Italimpianti and managers in the Commissioner’s office.
As part of this investigation, which in the record is described both as a continuation of an earlier investigation and as separate proceedings based on new charges, the former contractors and FISIA Italimpianti are again charged with the administrative liability attributable to legal entities pursuant to Legislative Decree No. 231/01.
The preliminary hearing was completed on January 29, 2009 with the indictment of all defendants. In the pre-trial hearing, the civil actions brought against the companies involved were found to be inadmissible. Moreover, on December 16, 2009, the Court of Naples ruled that it lacked jurisdiction and ordered that the record of the proceedings be forwarded to the Rome Public Prosecutor. The Court of Rome Court scheduled a preliminary hearing for October 27, 2010, at which time the Preliminary Hearing Judge adjourned the proceedings to December 13, 2010, due to errors in the process by which FIBE’s counsel was served with a notice of the hearing. At a subsequent hearing held on January 10, 2011, the Preliminary Hearing Judge at the Court of Rome Court decided to address separately with regard to some charges the position of the Chief Executive Officer of the Companies in office when the events took place and adjourned the proceedings first to a hearing scheduled for March 23, 2011, then to a hearing scheduled for September 21, 2011, again to a hearing scheduled for December 14, 2011 and, lastly, to a hearing scheduled for March 28, 2012. As for the other defendants and the remaining charges, the Preliminary Hearing Judge deferred to the Supreme Court for a decision about the negative conflict in territorial jurisdiction, finding again that the Court of Naples Court was competent to rule on these issues. On July 6, 2011, the related hearing was held before the First Section of the Supreme Court, which, however, adjourned the proceedings while waiting for guidance from the Joint Sections of the Court of Cassation. However, further to a decision by the Chief Justice of the Supreme Court, the “similar but related to another event” issue was not addressed by the Joint Sections and, consequently, the decision was left to Second Section of the Supreme Court, which, on March 2, 2012, ruled that the Preliminary Hearing Judge at the Court of Rome had jurisdiction with respect to all defendants and all charges. Consequently, the proceedings resumed with a preliminary hearing before the Preliminary Hearing Judge at the Court of Rome, originally scheduled for May 16, 2012 and postponed by the Court to September 26, 2012, as the case was assigned to a different Preliminary Hearing Judge replacing Mr. Mancinetti, who was transferred to a different assignment.
At the abovementioned hearing, the new Judge, Mr. Saulino, having combined the different segments of the proceeding, scheduled extraordinary hearings for January 10 and 31, 2013 and March 14, 2013 as a continuation of the preliminary hearing.
Subsequent to these hearings, during which some defendants made unsolicited statements, the Preliminary Hearing Judge issued an order ruling the inadmissibility of the only civil party who asked to join the criminal proceeding as a plaintiff. The Public Prosecutor asked for the indictment of all defendants and legal entities involved pursuant to Legislative Decree No. 231/2011.
Hearings were scheduled for March 14, 2013 for the discussion of the defense arguments and for March 21, 2013 for the decision.
Upon the conclusion of the hearing of March 21, 2013, the Preliminary Hearing Judge indicted all defendants and legal entities involved pursuant to Legislative Decree No. 231/2011 for all of the charges in the proceedings before the Court of Rome scheduled for July 16, 2013.
At that hearing, the Court of Rome, upon being informed of a defect in the process by which a notice of the decree ordering the trial was served on numerous defendants, adjourned the trial to a hearing scheduled for April 1, 2014.
The companies of the Group involved in the new proceedings firmly believe that their actions were lawful, because their activities were not only expressly mandated by Law No. 21/2006 but were also carried out “merely at the behest” of the Delegated Commissioner (see in this regard the decisions of the Regional Administrative Court of Latium and the Council of State reviewed in Section II.A earlier in this Report).
In January 2011, FIBE joined as an injured party the proceeding No. 61604/10 RGNR against the member of Parliament Nicola Cosentino pending at the Santa Maria Capua Vetere Court. The alleged charges to be examined during the trial, which legitimize FIBE’s position as a “party injured by the crime” is that Mr. Cosentino provided a decisive input “in the planning and implementation of the project aimed—specifically through the consortium company […], the consortium […] and other consortia in the Province of Caserta controlled by him—at establishing in Campania an integrated cycle in competition with the one lawfully managed by the FIBE-FISIA Italimpianti system, thus boycotting the contractor companies in order to take sole control of the entire management of the related financial cycle and thus create an unlawful independent management system at the provincial level (so-called ‘provincialization’ of the waste disposal cycle, directly controlling the landfills where the waste is ultimately disposed of, becoming involved in the construction and operation of a waste-to-energy facility and manipulating for his own benefit the activities of the Government Commissioner for the Waste Emergency).”
On January 27, 2011, an order for immediate judgment of the defendant was issued and FIBE was specifically identified as a “party injured by the crime.” As mentioned above, this trial is currently in the oral argument phase.
On December 23, 2011, FIBE S.p.A., in its capacity as the legal entity involved pursuant to Legislative Decree No. 231/01, was served with a notice of completion of the preliminary investigations related to another investigation by the Naples Public Prosecutor. The charges are based on a violation of Article 24 of Legislative Decree No. 231/01, as it applies to the occurrence of the crime subject of Article 81, Section Two, Article 110 and Article 640, Sections 1 and 2, of the Criminal Code, committed jointly and with the prior agreement of the defendants (individuals) and other parties to be identified, in connection with the management of an urban wastewater purification service based on treatment facilities.
Specifically, certain individuals from the Commissioner’s Officer and FIBE S.p.A. allegedly actively encouraged and induced other competitors to implement stratagems and tricks to hide and conceal the very poor management of the abovementioned wastewater treatment facilities.
FIBE S.p.A. is a defendant because it allegedly submitted expense reports that, among the other items related to the disposal of USW, included the cost of transporting leachate, while failing to mention the fact that the leachate was transported to facilities without the requisite proper permit and lacked the technical qualifications and residual treatment capacity.
The Public Prosecutor asked for an indictment before the Preliminary Hearing Judge at the Court of Naples. After an initial adjournment, due to some defects in the summonses, the next two hearings were scheduled for April 11, 2014, to verify that all parties duly joined the proceedings, and April 24, 2014, to address the preliminary motions.
However, because in this case as well the events in question occurred during the period following the cancellation of the contracts—during which the Companies’ activities were not only specifically dictated by Law No. 21/2006 but were also carried “merely at the behest” of the Delegated Commissioner—the Company is fully convinced that its conduct was lawful.