A five month-long investigation by Banca d'Italia, the central bank of Italy, into the activities of Genoa-based Banca Carige, one of the country's largest banking organisations, has raised doubts over the amount of money loaned to Ligurian fresh produce giant GF Group and, more significantly, the long-term future of the company's financing.
According to the investigation's findings, reported widely in the Italian press over the past week, Carige offered too much easy credit to customers including GF Group over the four years from 2009 to 2012, apparently failing in the process to address a growing problem with so-called 'bad debt' that saw write-offs increase from €99m in 2009 to €118m in 2011, and equating to 17 per cent of all loans extended last year.
The report also found that GF Group's owners, the Orsero family, were among a number of 'friends' who had 'received favourable treatment' from the bank during the period in question, allegedly benefiting from 'a bias that led to excessive support being extended to a limited number of positions, often linked to shareholder trust members – who were granted loans worth more than a billion euros'.
GF Group's managing director, Raffaella Orsero, was nominated vice-president of Cassa Risparmio di Savona, a subsidiary of Gruppo Carige, in 2012.
As Genoese newspaper Il Secolo XIX reported, in 2012 GF Group was said to have loans from Carige worth a total of more than €108m, but in fact that sum is now reckoned to be closer to €171m. Crucially, Bank of Italy suggested Carige had calculated the losses made on those loans at €737,000, but insisted that in fact the losses should have been almost €19m.
The Italian fresh produce company, which recently launched its own premium brand Fratelli Orsero following a widely reported split with long-term multinational partner Fresh Del Monte, has spent the past couple of years carrying out a major review and reorganisation of Fruttital, its core trading business based in Albenga, near Genoa.
According to observers within the Italian fresh produce trade, the news that GF Group has apparently been struggling to turn a healthy profit over the past few years (it is reported to have anticipated a loss of €50m last year) but continued to receive favourable loans in the same period has raised a few eyebrows.
'It's a shame that a company reorganisation like the one undertaken just two years ago only happened in a period of crisis for general consumption levels,' Rolando Drahorad wrote on his Qui Frutta blog.'The marketing techniques used and the capital invested should have achieved a different outcome. A lot of work and many changes will be needed.'
