U.S.-based Caddell Construction has formally committed to pay €30.9 million (approximately $35.2 million) in connection with an investigation by Italian authorities into alleged labor exploitation and tax fraud at the construction site for the new U.S. consulate in Milan. The commitment was detailed in a legal document reviewed by Reuters.
The investigation, led by the Milan prosecutor’s office, focuses on allegations of illegal subcontracting practices involving the employment of workers at the high-profile construction project. Prosecutors allege that a network of subcontractors and shell companies were used to hire workers, primarily non-EU citizens, who were then underpaid. The probe also centers on claims of significant tax and social security contribution evasion connected to this system.
According to the document, Caddell Construction, the primary contractor for the U.S. State Department on the project, agreed to deposit the funds to cover the taxes and social security payments that prosecutors claim were unpaid by the subcontractors. This payment is part of a process to address the financial liabilities identified in the ongoing investigation.
Italian authorities placed the construction project under special judicial administration in March to ensure oversight and compliance with labor laws while work continues. This legal measure allows an independent administrator, appointed by the court, to manage the company’s activities related to the specific contract to prevent further alleged illicit conduct.
The investigation reportedly involves several subcontracting firms and individuals. The core of the allegations, as outlined by prosecutors, is a system where workers were formally employed by one company but were actually managed and directed by another, obscuring the true employment relationship and facilitating the evasion of fiscal responsibilities.
In a previous statement, the U.S. State Department confirmed its awareness of the investigation and stated it was monitoring the situation closely. A department spokesperson emphasized the expectation that all its contractors abide by local laws and regulations. Caddell Construction has also previously stated it is cooperating fully with Italian authorities.
The construction of the new U.S. consulate in Milan is a major diplomatic infrastructure project. The legal proceedings and the financial commitment from Caddell Construction mark a significant development in the investigation, which remains active. No formal charges against specific individuals or the primary contractor have been announced publicly in relation to the payment commitment.
