Highway to hell: European money fuelling controversial infrastructure projects

Providing an in-depth analysis of two major infrastructure projects in the Veneto region in Italy, Re:Common and Counter Balance's report focuses on the corruption and state capture issues related to them. Both the Passante di Mestre and the Mose projects have become enmeshed in one of the biggest corruption scandals in Italian history, leading to the arrests of politicians, businessmen and public officials. We refer here to this scandal of systemic corruption as the “Veneto system”.

As NGOs whose mission is to make public financial institutions more open, transparent, accountable and sustainable institutions, we have also focused in this report on the financing side of the Veneto system. Indeed, for a decade European money has been fuelling the controversial mega-projects at the heart of the Veneto system.

Despite the emergence of red flags and civil society’s appeal, the European Investment Bank (EIB) has provided both projects with several loans and continued to disburse tranches of these loans even once the corruption scandal burst and high profile investigations opened in Italy. In fact, the EIB and the European Commission are still intent on refinancing the debt accumulated by Passante di Mestre via the Project Bond Initiative. This blatantly contradicts the EIB’s commitment to a “zero tolerance to fraud and corruption policy”.

This report also tells the story of multiple failures and weaknesses in anti-corruption systems, from the reckless support of the EIB and the Italian public bank Cassa Depositi e Prestiti (CDP) to the inaction of the European Anti-Fraud Office (OLAF).

It documents multiple cases of conflicts of interests and entanglement between the public and the private spheres in what we refer to as the “public-private combo”. Indeed, the Veneto system has demonstrated a systemic state capture feature in the way that relationships between all public institutions and private entities were structured in order to benefit the interests of a few.

Unveiling the mechanisms of debt creation and public guarantees that led to state capture in the case of Veneto system, the report identifies among its causes a dangerous “investment rush” that increasingly fosters accelerated decision making processes, projects selection and, ultimately, European financing. The Veneto system is concrete evidence that without an adequate assessment of their economic, environmental and social implications, mega infrastructure projects may lead to sheer disaster.