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Shouts and applause
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Today, on the Champs-Elysees, fashion chain H&M are opening their flagship store.
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“Countdown 6-5-4”
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With the enthusiastic and carefully selected employees ready to go, this set-piece event is well rehearsed.
The Swedish brand have spent fifty million euros on this new shop.
But the party is spoilt. Fifty employees - scared for their jobs - have arrived to protest.
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Employee with a flag
“We have a red carpet so what more could anyone want. That’s the perfect set-up for a strike.”
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Employee with a speakerphone
“Today the CEO is here. That’s great - we’ll talk to him.”
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Employee into the speakerphone: “Hello, hello, hello”.
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The protesters chant
“H&M, poverty!”
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Among the protesters is Djemina Minaoui. She was one of the first employees hired when the company arrived in France.
She does not work in this brand new store, but in a warehouse to the north of Paris. It’s role is to keep H&M’s shops filled with clothes.
But she has learnt that it won’t be her warehouse which supplies the Champs-Elysees store.
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Question: Will you be delivering to this store?
Interview with (ITW) Djemina: “Not at all. It will be Belgium, we don’t run this shop. They’ve taken all the big Parisian shops away from us.
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Yet the warehouse in which Djemina works is just 18 kilometres from the Champs-Elysees, here in the town of Le Bourget.
Its employees fear it will be closed down.
Because from now on lorries from Belgium will make the journey every day to deliver clothes to the Paris stores.
249 kilometres away…in the heart of the Walloon region, construction has just finished on H&M’s huge new logistics centre. It’s this warehouse that scares the workers in France. The last straw for the French unions is that H&M were given a significant European grant to move to this region of high unemployment.
Can EU grants help multi-nationals to profit from relocating their workforce? Who’s in charge of these grants?
CONTEXT
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Over seven months we have followed the movement of these colossal European grants – whose budget is largely unknown to the public. 350 billion euros taken from taxes paid by European citizens.
But does the EU really control how these billions are spent?
//Title: EU Grants: The Great Swindle
//BEGINNING
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The suburbs north of Paris, 6am. Like every other day of the week Djemina Minaoui is off to work at the H&M warehouse in Le Bourget. But she is wary. This warehouse was built ten years ago and she and her colleagues are wondering what they are going to do in light of the new centre that has opened in Ghlin, Belgium.
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ITW “We had a meeting with our director. We asked him if the opening of the centre in Ghlin will have an impact on our warehouse and he said no. But we worry, of course, and people are questioning what will happen.”
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We were not permitted to film inside the warehouse. Since it stopped supplying the big Paris stores, the centre in Le Bourget has lost a large part of its work.
Worried, the staff meet regularly. They have allowed us to film but wish to remain anonymous, for fear of the management finding out.
One employee has filmed inside the centre using a mobile phone. Empty shelves are clearly visible and there are fewer and fewer clothes.
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Djemina: “There are no boxes… every day it gets worse and worse. It gets more and more empty. It’s worrying. This is not normal for October. I’ve been here for 13 years and I’ve never seen it like this before.”
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We managed to get hold of one of H&M’s internal reports: it shows that Le Bourget has lost half of its workload. As a result, where a year ago this centre sorted and delivered 7 million 865 thousand clothes per week, that figure has recently dropped to 3 million 857 thousand items.
Djemina’s colleague is convinced that the new centre in Belgium is a direct threat.
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Anonymous person in red: “The possibility of closure is obvious. The other centre will open at the end of the year and can handle one and a half times the work of here. It’s had heavy investment from both Europe and the Walloon region. Here it’s been several years since we’ve had any investment at all.”
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He found an online job advert posted by H&M Belgium. It invites applications for the position of Group Leader and Head of Logistics. It is a position that currently exists in France.
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Person in red:
“The business moves to Ghlin at the end of 2010, so clearly they are recruiting for Ghlin.”
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So could it be that H&M is moving its workforce to Belgium with EU support?
It took us several weeks to obtain from the European Commission the amount of money given to H&M. We found out that it is as much as 5 million 970 thousand euros – directly financed from taxes paid by EU citizens.
This is on top of the healthy €1.6 billion net profit made by the company itself in the last year.
How can the Swedish company justify using public money? For over a month we asked for an interview with the heads of H&M.
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Journalist: “Hello we’ve heard that some people here are very concerned about the future, we would like to find someone who can give us some answers.”
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Person in a white shirt
“There is a press office.”
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The press office sent us to the Swedish headquarters.
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Journalist’s question:
“Hello, we’re enquiring about the warehouse in Le Bourget, and the employees who are scared for their jobs.
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Man 1
“We are aware of this problem but I don’t have all the facts at hand to give you the exact information right now.”
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Finally, we had to settle for this email:
H&M can confirm that it received European grants relating to the construction of the new centre in Belgium. But the company denies that the warehouse at Le Bourget will close, even though the job of supplying the eight large Paris stores has been removed.
It is, say H&M, to allow the French warehouse to “improve its profitability”. Strangely, we are told nothing more than that.
In Belgium, this is the man who wrote H&M’s 6 million euro cheque. He is Walloon’s Minister for Economy.
“Hello”
As with the American company that is visiting today, Jean Claude Marcourt did all he could to ensure H&M came to this region of high unemployment.
It would be illegal for H&M to directly move the French jobs to Belgium. In such circumstances the Minister would be forced to give the grants back to the EU.
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ITW MARCOURT
Question:
Couldn’t H&M be tempted to close the centre in France that is similarly dedicated to logistics? What would you say in such an event? Some people think that you are relocating.
Marcourt’s reply:
“You talk of relocation but we have just learnt of the closure of a La Redoute warehouse in Dotigni on the french border because of streamlining, so I would argue that it works both ways. H&M has indicated that it would like to have a European centre of distribution. Clearly this may have negative effects, but now we me must wait for the facts.”
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The Belgian official understands perfectly the competition for jobs with France; and he’s even ready to use European grants to tip the balance in his favour.
CANARIES TRANSITION
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As with the Walloon region in Belgium, 169 other regions in Europe use these vital grants for their development. Each region chooses how to spend the money itself.
It is a pyramid system that is only lightly controlled by Brussels, as we will see.
By looking deep within the EU records, we discovered that 23 million euros-worth of grants had been given to a poor region of Spain. Amazingly however, the money was used to construct luxury hotels.
We went to the Canary Islands, an archipelago some way off the coast of Africa.
MUSIC PAUSE
On this piece of Spain, unemployment is at a record level of 32%.
Lanzarote, one of the islands of the archipelago, is a chunk of volcanic land burnt by the sun. Its only possible industry: mass tourism that has been largely financed by the European Union.
The Princess Yaiza has five stars. Opened in 2002, it received four million euros from Europe.
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Man 2
TRANSLATION JAVIER SUAREZ
“Hello, good morning.”
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Its manager Javier Suarez pampers his clients, who come from all over Europe, and he is very proud of his establishment.
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AMBIENCE
“Hello, have a good day.”
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A little stream flows inside a 6-metre tall greenhouse, with a botanic garden; and luxury suites of 220-metres squared.
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TRANS JAVIER SUAREZ
“This is our most beautiful terrace with an unparalleled view of Playa Blanca.”
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Question:
And how much does it cost per night?
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TRANS JAVIER SUAREZ
“This suite costs between €2000 and $3000 per night.”
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But the biggest investment went into the huge bathing area within the hotel grounds, because there it’s good weather all year round.
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TRANS JAVIER SUAREZ
“These are the two pools reserved for children, there’s a small pool and a bubble pool. In total the hotel has 3-4-5-6-7… we have ten swimming pools.
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The manager may have trouble counting the pools, but he has no difficulty counting the clients. Each tourist spends an average of 200 euros a day, making this hotel one of the most profitable on the island. Last year its turnover was more than 25 million euros. Yet Mr Suarez’s hotel received 4 million euros in grants, more than anywhere else on the island.
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Question:
Some people say that these European funds are being given out without rules or control.
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TRANS JAVIER SUAREZ
We had an obligation to create 150 jobs, whereas we now actually employ 400 people. So we have more than fulfilled our side of the agreement for using EU funds.
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Whether the EU grants were well invested is uncertain … especially because this huge hotel could be demolished within months.
The Princess Yaiza has been condemned as illegal by the Spanish authorities. The hotel’s greedy developer added two extra floors beyond the agreed size, contravening the island’s strict urban planning regulations.
AMBIENCE “Bamos a la playa”
But the manager cannot begin to imagine his hotel being demolished. As far as he is concerned it’s too late for that.
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TRANS JAVIER SUAREZ
Imagine if you built a house. You live in it, and two years later a man arrives and tells you to knock it down. You would ask the same question: why didn’t you stop me from building it in the first place?
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It’s not just this hotel – 24 others are threatened with demolition. The developers aimed too high: this one built 100 rooms too many; another did not give access to the beach, so that tourists are forced to do some climbing in order to bathe.
Little by little, certain developers have transformed this little fishing village into a tourist factory, with little or no respect for planning laws. Because of its exceptional wildlife, Lanzarote is ultra protected as a Unesco nature reserve.
A total of 23 million euros in EU funds was therefore given to these hotels… and has contributed to the damage of this natural wonder.
Ezechiel Navio is the head of the ecological association that fought against the construction of these illegal hotels. He took us to a hotel that was abandoned five years ago. It is the single biggest waste of EU funds on the island.
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Man 3
TRANS EZECHIEL NAVIO
“The building work was frozen by the Canary Island courts for failing to respect Lanzarote’s planning laws. It was us who made the complaint and, finally, obtained the revocation of the building permit. As you can see, today it is like a desert, a ghost town, a nuclear test site.”
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At the very first sign of trouble, the developer left the island, having taken a total of 4 million euros. The proof of that lies in this public document published in Spain’s official record.
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Question:
Where did the money go?
TRANS EZECHIEL NAVIO
“You’ll have to ask the developers! It’s an enormous waste of money; money that belongs to all Europeans. This money encouraged property speculation. The grants helped developers to build without risk. Because if you do something illegal with someone else’s money and there turns out to be a problem, you’ve lost nothing.”
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If the authorities don’t order the demolition of these illegal sites, the island could lose its UNESCO status.
So why did the local government use European money to finance these projects while relinquishing control over them? How was it that these funds were given to the developers?
Saul Garcia is an investigative journalist in Lanzarote. He has uncovered a vast system of corruption, and at its heart are the European funds.
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Man 4
TRANS SAUL GARCIA
“There have been more than 40 arrests. Of those imprisoned you’ll find a local government chief, political advisers, advisers to the mayor and the most important developers on the island, three of whom were sent to prison. Everyone knows someone in prison because of this.”
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Among those incarcerated is Juan Francisco Rosa, the developer responsible for the Princesa Yaiza, which received 4 million euros from Europe. He paid bribes to this man, the local mayor, in order to obtain building permits quickly, and above all, without any local government control.
TRANSITION TO ITALY
In the face of corruption on such a scandalous scale, Brussels demanded that Spain repay the grants. 19 out of 23 million euros have so far been returned. But sanctions such as this are rare. We have discovered much worse examples of public monies being misappropriated, to which Europe has turned a blind eye.
In one case 400 million euros was handed out to develop one of the poorest regions in Europe, but the money ended up in the pockets… of the south Italian mafia.
In Calabria, at the toe of the Italian boot, Brussels paid out 400 million euros for the construction of a motorway that would link up all of southern Italy. The EU allocated so much money to the project because the site is enormous – an architectural challenge that must cut through mountains and valleys.
Everyone in the region celebrated the announcement of the motorway’s construction, but none more so than the mafia.
Because this region is home to the Ndrangheta, the most feared mafia clan in Italy.
One man is at the head of the fight against crime. Colonel Papaleo is the director of the special anti-mafia forces.
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Man 5
ITW Papaleo
“It’s the most powerful criminal organisation in Italy. Their principal activities are drug trafficking, arms smuggling, and extortion – most notably from public sector work sites.
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For the Calabrian mafia, the motorway project was a windfall. After years of inter-clan war, this motorway project brought several rival families to the same table for the first time.
The Italian police secretly-filmed this important meeting…it was in this restaurant that the clan heads came to sign a pact of non-aggression.
SUBTITLED
“The territory belongs to us all, we are all together. “
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The outcome was good. The clan heads hit upon a simple way of dividing the spoils.
SUBTITLED
“We shall work together, we shall be united.”
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ITW Papaleo
“The clans divided up the entire motorway into different sections. They laid the ground for extortion. Each family had its slice of the cake… one piece for family A, another for family B.”
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The police have been able to draw a precise map outlining each clan’s share. The first clan took the first 55 kilometres, the second took the following 87 kilometres and so on over the remaining 300 kilometres.
The mafia had set themselves a target: take 12 million euros of European funds. It is one of the biggest cases of extortion that Italy has ever known.
Gaetano Saffiotti is their best known victim. Threatened with death, he lives under 24-hour protection. He manages a large and important construction business that bid, and won, a significant part of the motorway contract.
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Man 6
ITW Saffiotti
“This contract was very important for me. There isn’t much work here and this would keep me going for a long time.”
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But very quickly the mafia contacted him, demanding huge sums of money.
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ITW Saffiotti
“They went to my employees and threatened them with weapons. They forced one to burn his lorry, and they burnt other on-site equipment. Things couldn’t go on like that.”
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Exhausted by the threats of the Ndrangheta, Gaetano Saffiotti decided to film the mafia’s racketeering, secretly installing surveillance cameras in his office. Images like this are very rare. Each time, the businessman hands over envelopes containing between 1000 and 3000 euros. There were hundreds of meetings of this type.
In all, Saffiotti paid more than 300 000 euros.
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ITW Saffiotti
“There are government taxes, and there are mafia taxes.”
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Thanks to these videos, the Italian police were able to arrest 43 people.
But in going against the clan, Gaetano Saffiotti had to leave his old life behind.
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ITW Saffiotti
“My friends have dropped me. I’m isolated, like if I had the plague, as though I am now considered a traitor.”
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The 43 people arrested because of his witness testimony are in prison awaiting trial. In all the mafia is thought to have taken more than 12 million euros of EU funds.
As for the motorway, while it was meant to be finished two years ago, it has suffered from severe delays.
To this day, Italy has not reimbursed a single penny to the EU.
But how can the EU ignore this? Does it have the means to control where the money goes?
We went to Brussels to meet with the person in charge of the European fraud investigations unit. It’s called the European Anti-Fraud Office, and its lack of resources leaves it largely powerless.
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Question:
What can be done to control all these EU grants?
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Man 7
ITW Olaf
“My challenge is to be as effective as possible. But I only have 20 inspectors to allocate to structural funds and only 10 people to help them retrieve the EU grants and do all the financial investigating.”
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So, is it simply a question of a lack of manpower? Not quite. In the European parliament one right-wing German MEP is fighting back. She regularly criticises the Commission about this enormous waste.
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Woman 1
In parliament: “It saddens me that the hemicycle is so empty today, but in a way it’s for the best because it would be even sadder for our fellow citizens to participate in such a farce.”
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Tirelessly, this German MEP denounces an EU that won’t admit to a problem; that won’t take sanctions against the worst exploitations of the funding system.
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Ingeborg Grassle
“Some countries do all they can to block investigations by the EU. Member states who have no interest in getting to the bottom of these frauds, and against whom these sanctions would be taken. 93% of investigations undertaken by the EU end up in the waste paper basket. So the investigations unit is not effective because the investigations lead nowhere. This suggests that we are willing to tolerate criminality and I think that is truly unacceptable.”
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Europe, therefore, lacks the political will.
Our investigation did find one European grant that had been put to legal use by saving a French business from closure.
In the north of France, Christian Thomas and Michel Trabuc consider EU grants as a salvation. These two metal engineers go back a long time. Former employees of Metaleurope, they went through the crises of the noughties. They shared a dream: to create a business that would allow them to employ former colleagues who had lost their jobs. Theirs is a highly specialist business.
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Man 8
“Basically we process used electronic boards. So we’re talking about things like this. You find these boards in so many different things. A hairdryer has a board. So, in here for example, we have gold, and if you look at all the welding here all these little white points contain tin.”
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Because of all these precious materials, an electronic board from a television can be worth as much as 2000 euros. Electronic waste is a goldmine.
But before they can harvest this rich seam, they have to invest in expensive equipment and find 20 million euros.
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Ambience: “There’s 176g of gold in this specimen.”
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But when they started looking for investment they found that no-one wanted to lend them any money. Finally they got the funds they needed, thanks to these two men.
Their mission: to attract as many businesses as possible to the region of North Pas-de-Calais. In order to do this, they researched all available grants.
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“Hello, how are you?”
“Very well, and you?”
“Hello, Francois.”
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Today they have come along to check on the company’s work…all of which takes place in this huge hangar.
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LIVE : Mechanical area
“So here we’re setting up filter. This machine costs 1 million euros and is for doing the sampling. Over here is the preparation area.”
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Thanks to this help, Christian and Michel received their first 500 000 euros in European aid. These grants are called FEDER.
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ITW Man 9
“Without doubt the FEDER grant helped us to get the bank loans we needed. It gave the banks confidence. Banks often need reassuring. So the FEDER gave them the confidence to get involved.”
Question: Is this a worthwhile investment?
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ITW Man 10
“Oh yes, of course, you can see that it’s a highly innovative process. This business will create 35 jobs in its first phase. We’ve already created 20 and it will be 35 by the end of the year. It’s really important to understand that this industry is ready for rapid development.”
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Question: And in your wildest dreams how many jobs do you think you can create?
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Man 8
“I wouldn’t be surprised if, within five years, we’ll have 200 or 250 workers here.
Man 10
“Exactly, we’ll be on a different scale.”
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With an extra 250 jobs in this area, the local councillor will be rejoicing. Because with a 13% unemployment rate the North Pas-de-Calais is struggling to recover from its industrial past.
It is currently the French region that receives the most European aid. And thanks to these funds, the region estimates the creation of 17,000 jobs.