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The Court of Auditors denounces mismanagement in city-owned companies

by Marco Ludovico

The Court of Auditors has resumed its alarm on the mismanagement of city-owned companies. According to prosecutors who oversee the accounts of local governments, these companies manage too much money and often do so in the absence of adequate oversight.

In his last report as President of the Court of Auditors, Raffaele Squitieri, denounced the 'mountains' of money paid even when the companies are in surplus, the scant or nonexistent oversight and the “bad configuration of financial relations” between companies and the local authorities that own them.

In Italy there are more than eight thousand city-owned and local government-owned companies operating in several fields, from waste management to water services to public transport. Prime Minister Matteo Renzi has announced his plan to cut the number of these companies to one thousand.

The irregularities are so widespread that they raise a grounded suspicion, the Court points out, especially in light of week’s investigation of the Rome public prosecutor’s office on the capital city’s Mafia-style crime organization. This inquest has revealed links between companies owned by the city of Rome, and criminal trafficking involving politicians and businessmen well known nationwide.

The Court of Auditors’s analysis points out many dubious transactions regarding the financial management of local government-owned companies. For example, the allocation of ordinary and extraordinary transfers of state resources, which are not always justified. Sometimes, the accountant judiciary says, “the major disbursements go to cover losses or to restore the capital fallen below the legal limit.”

However, it is seldom investigated whether the losses are caused by “an economic, physiological or unexpected event or if they are due to a haphazard financial management of public resources, as in the case of Rome.”

For instance, even companies with a positive balance sheet have been subsidized with public money, as in the case of Roma Metropolitane. In 2012 this company, which manages the constructions of the Rome underground’s new lines, has registered a net profit of €1.9 million, but, compared to a production value of €327 million, total grants amounted to €344,445,290. In other words, they got €17 million more then they should have.

The case of Ama - the city-owned company that manages Rome’s garbage disposal - is photographed as follows for the year 2012: no profit, losses for €16.64million, and a value of production of €752.38 million. Ama was supposed to get €1.036 billion for the public services negotiated with the city government, but the total grants amounted to €1.058 billion.