Malta has been slapped with a fine of nearly €1 million by the European Union for having hoarded sugar prior to its accession in 2004, although this amount is considerably lower than that earlier contemplated.

It is the first time that the island has been fined by the EU for some breach of its rules.

Originally, Malta risked being fined more than €10 million. Sources close to the European Commission said that according to preliminary figures compiled by the Commission in November 2004, Malta had allegedly imported 20,400 tonnes of extra sugar, sparking suspicions that this was done as a speculative measure.

But following months of negotiations headed by the permanent representation in Brussels, the amount of surplus stock was established at only 2,452 tonnes, so that the fine was reduced to €1.2 million.

It was then cut by an extra 25 per cent following further negotiations and will now amount to €918,580, to be paid in four instalments over the next four years.

Before the May 2004 enlargement, as with previous enlargements, new member states had to take measures to prevent operators building up speculative stocks of sugar and benefiting from the fact that the EU sugar price was three times world market levels. This was also laid down in their accession treaty.

During the negotiations, the Maltese government argued that no sugar hoarding took place as there was no reason for it since sugar prices for consumers remained the same after accession.

The European Commission yesterday announced the fine to be paid by five of its 10 new member states over their former sugar-hoarding practices.

The other four are Estonia, Cyprus, Latvia and Slovakia, which were given a much higher fine than Malta because they had stocked up much more sugar. Together they will have to cough up almost €56 million.