Corruption, including bribery, raises the costs and risks of doing business. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law. Corruption and organized crime are significant impediments to investment and economic growth in parts of Italy and cost the country an estimated €60 billion annually in wasted public resources. Successive Italian governments have been engaged in the fight against corruption
Legislative Approaches to Corruption
In October 2012, the Italian parliament passed an anti-corruption law promoting transparency in public administration and prohibiting persons found guilty of serious crimes from holding public office. The law also provides for the appointment of an Anti-Corruption High Commissioner to head the new National Anti-Corruption Authority (ANAC – previously known as CiVIT), which is responsible for adopting a public administration anti-corruption plan; monitoring its implementation; recommending measures to be taken by other agencies; and conducting inspections and investigations in conjunction with the financial police. The legislation included stiffer penalties for those convicted of bribery-related offenses, protective measures for whistleblowers, and requirements for greater transparency in public contracts. It also prohibits anyone convicted of a serious crime from holding certain public administration positions. In March 2014, Prime Minister Renzi nominated respected prosecutor Raffaele Cantone, already a national figure for his courageous anti-mafia work, to head ANAC. In January 2016 the Italian Senate gave final approval to a law reforming public contracts. The law strengthens ANAC’s powers to police public contracting and attempts to address some of the inefficiencies that may lead to delays and corruption in public works projects (limiting appeals, making it harder to change a project once it is already underway, and facilitating direct payment of smaller companies by the public administration).
In 2014, Italy’s anti-money laundering laws specifically enhanced due-diligence procedures for politically exposed persons, defined as any person who has been entrusted with important political functions, as well as the immediate family members of these individuals. (This encompasses anyone from the head of state to members of the executive body in State-owned companies.) The law does not apply to members of political parties who are not serving in a public role. While anti-corruption laws and trials garner headlines, they have been only somewhat effective in stopping corruption. Italy has improved in Transparency International’s Corruption Perceptions Index each year since 2012, though it still ranks behind 29 European countries.
Recent Corruption Cases in Italy
In 2014 and 2015 a number of officials were arrested on corruption charges related to Milan Expo. This scandal rose to a high level, with the Minister of Transport Maurizio Lupi eventually forced to resign due to allegations of his involvement in corrupt contract distribution. In 2015, there was a continuation of a major public sub-contracting scandal in Rome known as Mafia Capitale, which exposed not only public corruption but ties between organized crime groups and government officials. In November 2015, 46 individuals were placed on trial in connection with Mafia Capitale, the second-largest corruption trial in Italy’s history. The services affected by the Mafia Capitale corruption scandal ranged from recycling to providing food and shelter for refugees. As of January 2016, four individuals had been convicted of corruption with sentences ranging from one year and ten months to two years and four months.
Impact on Private Companies
It is important for U.S. companies, irrespective of their size, to assess the business climate in the market in which they will be operating or investing, and to have effective compliance programs or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the anticorruption laws of both the foreign country and the United States in order to comply with them and, where appropriate, they should seek the advice of legal counsel. Relevant Italian laws include Italian legislative decree No. 231 of 08/06/2001, No. 146 of 16/03/2006, No. 81 of 09/04/2008 and No. 190 of 06/11/2012. According to Italian law a private party who is unlawfully induced to give or promise money or other advantage to a public officer or person charged with a public service commits an offence. It is likewise an offence for a person to take advantage of his or her relationship with a public officer for the purpose of receiving or promising money or other kind of economic advantage.
In order to avoid liability, Italian companies and foreign companies operating in Italy must demonstrate that they have put into place adequate organizational, management and control structures to detect and prevent corruption. These structures are described as the organizational model in Articles 6 &7 of legislative decree 231/2001. Business associations also encourage such measures. For example, the by-laws of Italy’s main business association (Confindustria) require it to expel members found to be paying protection money and to assist those in reporting extortion attempts to authorities.
While the U.S. Embassy has not received specific complaints of corruption from U.S. companies operating in Italy, commercial and economic officers are familiar with high profile cases that may impact U.S. companies (such as the corruption allegations linked to Milan Expo (see above). The Embassy has received requests for assistance by companies facing a lack of transparency and complicated bureaucracy, particularly in the sphere of government procurement and specifically in the aerospace industry. There have not been any reports of government failure to protect NGOs that investigate corruption (such as Transparency International Italy).
U.S. Foreign Corrupt Practices Act
In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to foreign public officials for the purpose of obtaining or retaining business for or with, or directing business to, any person. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. For more detailed information on the FCPA, see the FCPA Lay-Person’s Guide at: http://www.justice.gov/criminal/fraud/fcpa/.
It is U.S. Government policy to promote good governance, including host country implementation and enforcement of anti-corruption laws and policies pursuant to their obligations under international agreements. Since enactment of the FCPA, the United States has been instrumental to the expansion of the international framework to fight corruption. Several significant components of this framework are the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Antibribery Convention), the United Nations Convention against Corruption (UN Convention), the Inter-American Convention against Corruption (OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a growing list of U.S. free trade agreements. Italy is party to the OECD Antibribery Convention and the UN Convention, and has signed and ratified both the Civil and Criminal Law Conventions on Corruption within the Council of Europe. However, Italy has not yet ratified the COE’s additional protocol on corruption. Italy also works to counter corruption through various international bodies suck as the International Chambers of Commerce, International Business Leaders Forum, International Association of Anti-Corruption Authorities, and the G20 Anti-Corruption Working Group. Italy also has local branches/networks of the Global Organization of Parliamentarians Against Corruption, Transparency International, and UN Global Compact. Generally all countries prohibit the bribery and solicitation of their public officials.
OECD Antibribery Convention
The OECD Antibribery Convention entered into force in February 1999. As of April 2016, there are 41 parties to the Convention including the United States (see http://www.oecd.org/daf/anti-bribery/WGBRatificationStatus.pdf ). Major exporters China and India are not parties, although the U.S. Government strongly endorses their eventual accession to the Convention. The Convention obligates the Parties to criminalize bribery of foreign public officials in the conduct of international business. The United States meets its international obligations under the OECD Antibribery Convention through the U.S. FCPA. Italy ratified the 1997 OECD Convention on Combating Bribery and implemented its provisions in September 2001.
The UN Anticorruption Convention entered into force on December 14, 2005, and there are 178 states and signatories to it as of December 2015 (see http://www.unodc.org/unodc/en/treaties/CAC/signatories.html). The UN Convention is the first global comprehensive international anticorruption agreement. The UN Convention requires countries to establish criminal and other offences to cover a wide range of acts of corruption. The UN Convention goes beyond previous anticorruption instruments, covering a broad range of issues ranging from basic forms of corruption such as bribery and solicitation, embezzlement, trading in influence to the concealment and laundering of the proceeds of corruption. The Convention contains transnational business bribery provisions that are functionally similar to those in the OECD Antibribery Convention and contains provisions on private sector auditing and books and records requirements. Other provisions address matters such as prevention, international cooperation, and asset recovery. Italy enacted the United Nations Convention against Corruption in 2009.
Council of Europe Criminal Law and Civil Law Conventions
Many European countries are parties to either the Council of Europe (CoE) Criminal Law Convention on Corruption, the Civil Law Convention, or both. The Criminal Law Convention requires criminalization of a wide range of national and transnational conduct, including bribery, money-laundering, and account offenses. It also incorporates provisions on liability of legal persons and witness protection. The Civil Law Convention includes provisions on compensation for damage relating to corrupt acts, whistleblower protection, and validity of contracts, inter alia. The Group of States against Corruption (GRECO) was established in 1999 by the CoE to monitor compliance with these and related anti-corruption standards. Currently, GRECO comprises 49 member States (48 European countries and the United States). As of January 2015, the Criminal Law Convention has 50 parties and the Civil Law Convention has 42. Italy is a party to both. (See http://www.coe.int/t/dghl/monitoring/greco/default_en.asp.)
Free Trade Agreements
While it is U.S. Government policy to include anticorruption provisions in free trade agreements (FTAs) that it negotiates with its trading partners, the anticorruption provisions have evolved over time. The most recent FTAs negotiated now require trading partners to criminalize “active bribery” of public officials (offering bribes to any public official must be made a criminal offense, both domestically and trans-nationally) as well as domestic “passive bribery” (solicitation of a bribe by a domestic official). All U.S. FTAs may be found at the U.S. Trade Representative Website: http://www.ustr.gov/trade-agreements/free-trade-agreements. Italy does not have an FTA with the U.S.
U.S. firms should familiarize themselves with local anticorruption laws. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel. Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials, and prohibit their officials from soliciting bribes under domestic laws. Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions discussed above.
Corruption is punishable under Italian law. Italian criminal law provides sentencing guidelines and grants the presiding judge discretion to impose the sentence consistent with the guidelines. Most corruption in recent years has involved government procurement or bribes to tax authorities. Bribes are not considered deductible business expenses under Italian tax law.
Assistance for U.S. Businesses
The U.S. Department of Commerce offers services to aid U.S. businesses seeking to address business-related corruption issues. For example, the U.S. and Foreign Commercial Service provide services that may assist U.S. companies in conducting their due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas. The U.S. Foreign and Commercial Service can be reached directly through its offices in major U.S. and foreign cities, or through its Website at www.trade.gov/cs.
The Departments of Commerce and State provide worldwide support for qualified U.S. companies bidding on foreign government contracts through the Commerce Department’s Advocacy Center and State’s Office of Commercial and Business Affairs. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel and through the Department of Commerce Trade Compliance Center “Report a Trade Barrier” Website at http://tcc.export.gov/Report_a_Barrier/index.asp.
Guidance on the U.S. FCPA
The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals to request a statement of the Justice Department’s present enforcement intentions under the anti-bribery provisions of the FCPA regarding any proposed business conduct. The details of the opinion procedure are available on DOJ’s Fraud Section Website at www.justice.gov/criminal/fraud/fcpa. Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general guidance to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the Chief Counsel for International Commerce, U.S. Department of Commerce Website at https://ogc.commerce.gov/collection/office-chief-counsel-international-commerce . More general information on the FCPA is available at the Websites listed below.
Some useful resources for individuals and companies regarding combating corruption in global markets include the following:
Information about the U.S. Foreign Corrupt Practices Act (FCPA), including the Lay-Person’s Guide to the FCPA, is available at the U.S. Department of Justice’s Website at: http://www.justice.gov/criminal/fraud/fcpa.
Information about the OECD Antibribery Convention including links to national implementing legislation and country monitoring reports is available at: http://www.oecd.org/corruption/oecdantibriberyconvention.htm . See also new Antibribery Recommendation and Good Practice Guidance Annex for companies: http://www.oecd.org/daf/anti-bribery/oecdantibriberyrecommendation2009.htm and http://www.oecd.org/daf/anti-bribery/44884389.pdf .
General information about anticorruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce Website: http://2010-2014.commerce.gov/os/ogc/transparency-and-anti-bribery-initiatives .
Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 167 countries and territories around the world. The CPI is available at: http://www.transparency.org/cpi2015. In the 2015 CPI report, TI placed Italy in 61st position (an improvement of eight places) alongside Lesotho, Montenegro, Senegal and South Africa. While highly publicized anti-corruption enforcement activities have been underway for years, there is general agreement that a high level of corruption limits Italy’s economic growth and ability to attract foreign investment. TI also publishes an annual Global Corruption Report (GCR) which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See http://www.transparency.org/research/gcr.
The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 215 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See http://info.worldbank.org/governance/wgi/index.aspx#home . The World Bank Business Environment and Enterprise Performance Surveys may also be of interest and are available at: http://data.worldbank.org/data-catalog/BEEPS.
The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. See http://www.weforum.org/reports/global-enabling-trade-report-2014 .
Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at http://www.state.gov/g/drl/rls/hrrpt/.
Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 109 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: https://www.globalintegrity.org/research/reports/ .
UN Anticorruption Convention, OECD Convention on Combatting Bribery
Italy has signed and ratified the UN Anticorruption Convention.
Italy has signed and ratified the OECD Convention on Combatting Bribery.
Resources to Report Corruption
Autorità Nazionale Anticorruzione (ANAC)
c/o Galleria Sciarra
Via M. Minghetti, 10 - 00187 Roma
Phone: +39 06 367231
Fax: +39 06 36723274
Whilstleblower hotline phone: +39 02 49520512
Via Vigano 4
21045 Gazzada Schianno (VA)
Transparency International Italia
Via Zamagna 19
20148 Milano – Italy
Phone: +39 02 40093560
Fax: +39 02 406829
Report corruption at: https://alac.transparency.it/#/