UK bus company Terravision battles bankruptcy case in Italy

"Destination Italy" is the slogan coined by prime minister Enrico Letta to attract foreign investment. For Terravision, a UK bus and tourism company battling to compete in the Italian airport transfer sector, the title is rather apt.

If, on flying into Rome, the prime minister were to forego his official limousine and take a €4 bus into town instead, he might experience firsthand the problems of doing business in Italy, as Terravision fights a long-running turf war over low-cost airport transport.

Fabbio Petroni, Italian founder and chief executive of UK-based Terravision, says: "We need a revolution in Italy. We need to reset everything to zero and start again. Speaking as an Italian, this system is a disgrace," he says.

A lawsuit, that began as a complaint by a local competitor and was taken up by Rome's public prosecutor, alleges that Terravision's local operator Alivision, which employs 80 people, is bankrupt and should be closed down.

Alivision was accused by the public prosecutor last November of owing €3.5m to Equitalia, the government's debt collection agency, and €2m in relation to a separate bankruptcy case settled in court last February. Alivision rebutted the claims and the prosecution last month revised the debt claims down to a total of €177,000, which the company also contests. The next hearing is due this month.

Terravision has bought advertising space in national newspapers to defend its position, calling it a "most peculiar" case of alleged bankruptcy. It has also posted court documents online.

"I am at a loss as to how foreign companies can do business in Italy," says Yakuta Rajabali, vice-president of Terravision.

Terravision says Alivision has an annual turnover of €10m and cash resources of €4m - and not a single creditor requests its bankruptcy.

According to court documents provided by Terravision, the case against Alivision was initiated in 2011 by a complaint to the Rome public prosecutor's office by a lawyer acting on behalf of Societa Italiana Trasport (SIT), a direct competitor. SIT accused its rival of not conforming with transport regulations.

The prosecutors appointed Luciano Bologna, an expert on public services at Rome's La Sapienza university, as an independent consultant to examine Alivision. In his report filed to the prosecutors in June 2012, Mr Bologna writes that he suspects that Terravision and Alivision were engaged in fraud through the buying and selling of indebted companies to avoid payment of several million euros owed in debts and social security contributions.

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Contacted by telephone for comment, Mr Bologna told the Financial Times: "I have nothing to say." According to media reports, his trial continues and he has denied the charges.

A lawyer for rival SIT said the company could not comment on the ongoing court case involving Alivision.

Mr Petroni says Italy has the most difficult business environment of the eight European countries in which Terravision operates airport transfer services, citing the 18 months it took to get a licence in Milan and three years for Rome's Ciampino airport. In the UK the process took 56 days.

In one incident in 2008, Rome police impounded the company's entire fleet of buses, boarding vehicles and ordering off passengers. Terravision won damages in court in 2010 against the city council over the police seizure.

In Italy, if you apply for a bus service licence the authorities have to ask others if they mind, Mr Petroni says with a laugh.

Mr Petroni founded Terravision after being dismissed in 2002 from his position as chairman of Trambus, then Rome's main public transport operator which accused him of misappropriating funds. He was cleared after a long court battle.

The World Bank's annual Ease of Doing Business survey for 2014 ranked Italy at 65th out of 189 economies. In the "enforcing contracts" category it ranks 103rd, and 52nd for "protecting investors".

A study by the OECD last June titled "What makes civil justice effective?" found Italy to have the slowest court system of almost 40 jurisdictions examined in 2010. The average length of a civil dispute going through all three instances, including two levels of appeal, ranged from 368 days in Switzerland to almost eight years in Italy.

Il Fatto, an independent Italian daily, reported this month on the case of Chiara Schettini, a former judge in Rome on trial in Perugia on charges of corruption and embezzlement. In an article unrelated to the Terravision case, Il Fatto quoted Ms Schettini as alleging in her deposition to prosecutors that Rome's civil bankruptcy court was itself undermined by corruption.

The court did not respond to requests for comment.

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