On December 18, 2018 the Italian Parliament approved a package of measures aimed to combat public sector corruption and increase scrutiny and transparency requirements with regards to private and corporate contributions to political parties and foundations.
The so-called “bribe destroyer” (spazzacorotti) bill was approved in the Chamber of Deputies by 304 votes to 106 after months of intense discussions. A brainchild of the anti-establishment 5-Star Movement, the proposed measures represent an important step in the country’s fight against corruption and follow anti-corruption laws approved in 2012, 2014 and 2015.
Italy has placed 54th in 2017’s Corruption Perceptions Index (CPI) with a score of 50 out of 100 points, one of the lowest in EU. With the estimated annual cost of circa 13% of GDP, corruption remains a huge problem yet to be solved. The author of the bill, Minister of Justice Alfonso Bonafede, has already hailed it as a “revolution in the fight against corruption.”
Amendments to the Criminal Code (Codice Penale, CP)
art. 9 and 10 CP: in certain cases, the requirement for the request of either Minister of Justice or the offended party as a criterion of admissibility for private-to-public corruption offenses. including those provided in the articles 317, 318, 319, 319-bis, 319-ter, 319-quater, 320, 321, 322, 322-bis, and 346-bis CP has been eliminated. This amendment has a corresponding implication for corporate sector, as these provisions are referred to in the article 4 of the Legislative Decree 231 (responsibility of the entity established in Italy for offenses committed abroad).
art. 158 and 159 CP: from 01/01/2020 the statute of limitations will be frozen at the end of the judgement at first instance, so that the appeals process can continue. In this way, the time limits on the prosecution will be loosened to allow the cases to arrive at a definitive verdict. In 2016, 145,637 cases fell by the wayside after hitting the time out.
art. 317-bis CP: anyone convicted of corruption and sentenced to more than two years in prison will never be able to hold public office or seek a state contract again. Those convicted of corruption crimes carrying sentences of less than two years will be shut out of public business for five to seven years.
art. 318 CP: increased penalties for cases of “improper” bribery for the exercise of public official’s functions (from three to eight years of imprisonment for a public official).
art. 646 CP: increased penalties for embezzlement (from two to five years of imprisonment with a fine of 1,000 to 3,000 euros,).
art. 322-bis CP: the definition of foreign public official has been extended to include persons who perform functions or activities equivalent to those of public officials and persons in charge of a public service in international public organizations; members of international parliamentary assemblies or international or supranational organizations, and judges and officials of international courts.
art. 346-bis CP: provides for important changes with regards to undue trading in influence. The scope of the article has been extended to include the cases when a potential mediator only claims to be able to exercise undue influence on a public official, a person in charge of public service or one of the persons referred to in art. 322-bis CP (foreign public official) in relation to the exercise of his/her functions or powers. In other words, art. 346-bis CP aims to punish prodromal conduct with respect to corruptive arrangements that may involve a public official on whose determinations one would want to illicitly influence.
art. 323-ter. CP: anyone who committed a bribery offense provided in the articles 318, 319, 319-ter, 319-quater, 320, 321, 322-bis, 353, 353-bis e 354 se CP can benefit from the newly introduced non-punishment clause in case he/she makes a voluntary disclosure and provides useful and concrete information to secure the evidence of the crime and to identify other offenders involved. To qualify for non-punishment, the disclosure should be made before the offender becomes aware of the investigation being carried out with regards to the committed offence and not later than four months from the date of the offense.
Amendments to the Civil Code (Codice Civile, CC)
With regards to private-to-private bribery, art. 2635 CC (corruption between individuals) and art. 2635-bis CC (inducement to bribery) were amended: the offended party’s official request/claim will no longer be necessary to prosecute directors, general managers and executives entrusted with the preparation of the company’s accounting documents, as well as statutory auditors and liquidators for the offenses pursuant to the referred articles.
Amendments to the Legislative Decree no. 231 of June 8, 2001 (Regulations governing the administrative liability of legal persons, companies and associations including those without legal status)
Under the amended section 25 paragraph 1 of the Decree, the company/legal entity is now punishable with a fine of up to 200 quotas in the case of trading in influence pursuant to art. 346-bis CP. The amount of a quota ranges from a minimum of EUR250 to a maximum of EUR1,549.
As provided by the amendments to section 25 paragraph 5, the restraining measures for legal entities have been significantly increased taking into consideration whether a wrongdoing was committed by an individual holding a managing position (those who hold functions of representation, administration or management of the entity or of an organizational unit with financial and functional autonomy as well as those who exercise, even de facto, the management and control of such units) or individuals who are under their direction and/or supervision: for the former the restraining measures will now have a duration of four to seven years, whereas for the latter of two to four years. With this new perspective the regulator aims to recognize the crucial role of ethical leadership in organizations.
At the same time, the importance of an effective compliance and ethics program has been also acknowledged. According to the newly introduced section 25 paragraph 5-bis, in case the entity actively collaborates during the investigation to secure the evidence of the crime, to identify other offenders involved, to ensure the seizure of the transferred amounts/other benefits, and has eliminated the organizational deficiencies that led to the crime through the adoption and implementation of a compliance and ethics program (Modello) to prevent further crimes of the kind to occur before the verdict at the first instance, the restraining sanctions will have the duration of two years maximum.
Amendments to the Legislative Decree no. 146 of March 16, 2006
Although it has been 15 years since Italy signed the UNCAC, it is only now that the bill will provide for the use of an undercover investigator for corruption offences, which the Convention requires. The provision is introduced by amending the Decree which rectified another important international treaty, the United Nations Convention against Transnational Organized Crime (UNTOC).
Political parties funding provisions
The bill provides for the increased transparency requirements with regards to political parties funding – now donations with the annual value equivalent to 500 euros or more will have to be fully disclosed. The requirement applies to individuals, organization, foreign companies subject to tax obligations in Italy, elected/government representatives, treasurers of political parties, as well as foundations, associations and committees affiliated with political parties and movements.
The bill prohibits political parties and movements to receive contributions in a form of money, other benefits, services and/or other forms of support from governments or public bodies of foreign states, or from legal entities established in a foreign country.
In case of a violation, penalties not lower than three times and no more than five times the value of the contributions, benefits or other forms of financial support received are envisaged.
The bill is undoubtedly an important step toward a more comprehensive anti-bribery regime, particularly with regards to combating corruption in public administration. It will, of course, take time to assess its actual impact on the business climate in the country. The President of the Italian Republic is expected to sign and promulgate the bill in the forthcoming weeks. It’s already clear, however, that many companies operating in Italy will have to revisit and update their compliance and ethics programs with a focus on integrity in government relations, as well as robust due diligence procedures.
Vera Cherepanova, FCCA, CIA, MSc (pictured above), has more than 10 years’ experience as a compliance officer. She’s the founder of Studio Etica, a boutique consultancy that provides advice on corporate ethics and compliance programs to companies around the world. She speaks English, French, Italian, and Russian. She can be contacted here.