COMANDO GENERALE DELLA GUARDIA DI FINANZA

THE GUARDIA DI FINANZA AT A EUROPEAN PARLIAMENT BUDGETARY CONTROL COMMITTEE HEARING

On 19 April 2005, the Head of II Division, General Command of the Guardia di Finanza, Brigadier-General Walter Cretella Lombardo was interviewed by the European Parliament’s Budgetary Control Committee at a hearing chaired by Szabolcs Fazakas, MEP.

The Guardia di Finanza gave a presentation on its organisation and operations, focusing in particular on international cooperation at European and global levels to safeguard Italy’s and the European Union's financial interests.

Great emphasis was placed on the close collaboration and cooperation between the Guardia di Finanza and all the Community institutions, first and foremost with the European Anti-Fraud Office (OLAF), with whom, it was pointed out, the Guardia di Finanza had enjoyed a close and fruitful working relationship and partnership stretching back for over fifteen years.

The Chairman, Mr Fazakas, and the other MEPs attending the hearing were able to examine new projects aimed at stepping up the fight against international fraud, money-laundering, counterfeiting and the financing of terrorism.

The MEPs were extremely interested, asking a large number of follow-up questions regarding training, ongoing projects and investigative techniques.

At the end, the whole Committee formally thanked the delegation for the work done by the Guardia di Finanza, which was described by the MEP Paulo CASACA as an “exemplary model” of an economic and financial police force for the European Union.

GENERAL COMMAND OF THE GUARDIA DI FINANZA II DIVISION

Presentation by Brigadier-General Walter Cretella Lombardo to the European Parliament (Budgetary Control Committee)

Brussels, 19 April 2005

1. The origins of the Guardia di Finanza The Guardia di Finanza is the oldest police force in Italy.

Its origins date back to 5 October 1774, when the King of Sardinia, Vittorio Amedeo III, decided to create a lightly-armed force called the Legione Truppe Leggere specifically to monitor financial matters as well as to defend the country’s borders.

From the outset the Guardia di Finanza was conceived of as a force that would defend the country by monitoring its borders from both a military and a financial point of view.

The name Guardia di Finanza more accurately reflects the force’s tasks, which were extended to cover all matters of taxation. It was coined in 1881, at the same time as the force was declared to be an integral part of Italy’s armed forces.

2. The force’s role and tasks The Guardia di Finanza is therefore a special police force responsible for economic and financial matters. It reports directly to the Ministry of Economic and Financial Affairs. Organised on military lines, it is an integral part of the State’s armed forces and police force.

Its tasks are set out in Regulatory Act No 189 of 1959, which distinguishes between primary duties and collective tasks. The former include:

a. preventing, investigating and prosecuting tax evasion and financial offences;

b. enforcing provisions of a political or economic nature;

c. patrolling the seas in its financial police role.

Its collective tasks include:

a. maintaining public order and security;

b. defending the country’s frontiers.

Its primary mission of combating tax evasion has been extended to cover all forms of unlawful activity detrimental to the State and European Union budgets (financial offences) and to lawful economic activity (economic offences). This gradual development was recognised in Act of Delegation No 78/2000 on the restructuring of the police force. It modified and added to the Guardia di Finanza’s duties, requiring the force to perform the “duties of an economic and financial police force to safeguard the national and European Union budgets.”

The Act clearly set out the Guardia di Finanza’s primary area of operations in relation to other police bodies, giving it exclusive and unitary investigative powers to safeguard national and Community interests.

Legislative Order No 68/2001 completed the reform. It implemented Act No 78/2000 and confirmed:

a. the Guardia di Finanza’s mission as the police force with general powers regarding all economic and financial matters;

b. that the Guardia di Finanza reports directly to the Ministry of Economic and Financial Affairs;

c. the extension of its legal powers regarding taxation matters to all aspects of economic and financial police operations;

d. the exclusive power of the Guardia di Finanza, in its function as the economic and financial police force, to patrol the seas;

e. that the Guardia di Finanza may promote and develop international cooperation with its counterparts abroad to combat economic and financial offences.

3. The Guardia di Finanza’s mission The institutional mission assigned to the Guardia di Finanza can be seen as having a dual thrust. Its core mission is to act as an economic and financial police force, but it is also required to perform collective institutional tasks.

Its tasks as an economic and financial police force are twofold:

a. financial: to safeguard European Union, State and local authority revenue and expenditure and to combat national and international tax evasion, money-laundering and all other forms of financial crime, including those involving intellectual property; b. economic: to ensure the smooth functioning of markets and compliance with competition rules. This includes combating any infiltration or manipulation by criminal organisations of the markets for capital, goods and services.

Its collective tasks relate to:

a. public security;

b. defending the country’s frontiers.

4. International cooperation The defining features of the end of the twentieth and beginning of the twenty-first centuries have been the globalisation of markets and European integration, events that have lead to the development of a single economic area that has proved a fertile breeding ground for many types of fraud.

To combat the problems created because transnational economic and financial crime, in particular, has moved up a gear, it has been necessary to improve international cooperation on operations and intelligence.

A major factor in terms of international cooperation is the impetus provided by the Community bodies involved in the fight against fraud against the Community in the most general sense - the threat to Community budget revenue and expenditure - and the fight against transnational economic and financial crime.

A key role has been played by OLAF, with which the Guardia di Finanza has always worked closely together, a collaboration that has produced extremely impressive results.

To further enhance cooperation, the Guardia di Finanza has responded to express requests from the European Commission and/or OLAF by seconding or assigning a number of its officers to its departments responsible for the abovementioned sectors.

It should not be forgotten that the Guardia di Finanza’s positive response to these requests has been at some expense to Italy and the Guardia di Finanza itself, depriving both sets of administrators of skilled human resources. However, the Guardia di Finanza is aware that seconding its own staff to Community institutions is a necessary duty and contribution to the European project. It also recognises that this policy has created a form of operational osmosis between Italian and Community anti-fraud bodies, which in turn has considerably increased the effectiveness of the fight against these dangerous criminal activities, with results on the international stage that have earned widespread recognition.

The officers can be seen in terms of their status.

Guardia di Finanza officers have been working for the European Commission, in particular, as:

• Community officials;

• temporary agents;

• national experts on secondment;

• pre-accession advisers under the PHARE programme.

Guardia di Finanza officers are also working with Europol in The Hague.

A project to second 12 officers as Guardia di Finanza experts to twelve Italian bilateral and multilateral diplomatic representations is nearing completion. The project includes the secondment of an officer to the Italian Permanent Representation to the European Union in Brussels.

The Guardia di Finanza has also seconded liaison officers to other major institutions.

Six officers who have passed Community competitions are employed at:

• the European Anti-Fraud Office (4 officers);

• DG Competition (1 officer);

• DG Agriculture and Rural Development (1 officer).

The three temporary agents are working at the European Anti-Fraud Office (OLAF). To avoid any misunderstandings, it should be pointed out that investigative independence (or, perhaps more accurately, the obligation to respect the law) is almost part of the DNA of all members of the Guardia di Finanza, who are used to working both for the administrative hierarchy that runs the force and for criminal or financial judicial authorities when conducting police investigations.

This commitment is sealed by the oath of allegiance to the Constitution, Article 11 of which requires them to respect the Treaties, and strict respect for the law (and the supremacy of Community Regulations as legislative instruments is well-known) and to perform all the duties incumbent on a person of their status (permanent or temporary) with discipline and honour.

The special legal status of members of the Guardia di Finanza has made it easy to accept that Guardia di Finanza officers on secondment, or assigned to Community institutions, like those seconded to other independent authorities, are subject to the rules set out in the Staff Regulations of Officials and Conditions of Employment of Other Servants of the European Communities.

What this means is that they must perform their duties and conduct themselves in such a manner as to serve only the Communities, without asking for or taking instructions from any government, authority, organisation or person outside the institution they are working for. They must continue to maintain their independence and avoid situations that may be incompatible with their status.

Owing to their special legal status Guardia di Finanza officers are increasingly in demand and highly esteemed by the European Anti- Fraud Office (OLAF), which enjoys special independence to enable it to perform its unique investigative function within and outside the Community institutions.

It is with a certain pride that the Guardia di Finanza has noted the interest in its legal status and organisation shown by various Community institutions and by Member States, particularly some of the new Member States which are basing their efforts to strengthen their own anti-fraud organisations on the structure of the Guardia di Finanza.

Lastly, the Guardia di Finanza has four national experts working for the Commission:

• two at the Taxation and Customs Union DG (TAXUD); • one at DG Budget;

• one at the European Anti-Fraud Office.

While nominally with the Guardia di Finanza for administrative purposes, the national experts on secondment work for the Commission fulltime.

One senior officer is acting as a coordinator and contact person on the ground for a pre-accession twinning project with Turkey under the PHARE programme that is looking to step up the fight against money- laundering.

One project nearing completion is worthy of a special mention. It involves seconding officers to Italian diplomatic representations as Guardia di Finanza experts.

Legislative Order No 68/2001 required the Guardia di Finanza to encourage and develop forms of cooperation with its counterparts abroad on operations to combat financial and economic offences and safeguard the national and European Union budgets. The secondment of the 12 officers is one of the ways indicated in the Order to put this principle into practice.

The foreign representations were chosen by means of an analysis matrix which examined crime trends in and exchanges of information with each of the foreign countries, as well as geopolitical and economic factors.

It must be pointed out that the matrix is a dynamic instrument and can be regularly updated. As a consequence there may be variations in the list of representations chosen.

Guardia di Finanza experts are already working at the Italian embassy in the United States and Switzerland, and also - as stated above – at the Italian Permanent Representation to the European Union.

Officers will shortly be taking up posts at the embassies in Belgrade, Vienna and London and at the Italian Permanent Representation to the OECD in Paris. Another officer will be seconded to the Far East, probably to the People’s Republic of China.

The necessary procedures are also being started to second officers to a further four representations, probably Panama City, Ankara, Moscow and Dubai. In addition to the experts on secondment, liaison officers have also been sent to places of strategic importance.

We currently have liaison officers in Vienna, at the Italian Permanent Representation to the United Nations (the position will shortly be transformed into an “expert” post), at the WCO’s Regional Intelligence Liaison Office for Western Europe, which is located at the German Zollkriminalamt offices in Cologne, and at the Southeast Europe Cooperative Initiative Centre (SECI) in Bucharest.

The Guardia di Finanza is also involved in international initiatives organised by the United Nations.

In particular, the force is assisting the UNMIK mission in Kosovo. Staff deployed in the region include a senior officer who is Deputy Head of the Financial Intelligence Unit and is responsible for monitoring financial flows relating to criminal activities in Kosovo.

The Financial Investigation Unit, which is staffed solely by Guardia di Finanza officers under an agreement between the Italian Government and the United Nations, has proved particularly effective.

In the fight against corruption and economic and financial crime it has the power to conduct financial inspections of public bodies and companies and any authorities or companies receiving funds from the Kosovo Consolidated Budget (KCB).

Its remit also extends to criminal investigations where financial offences have been committed in public bodies or companies financed with public money.

The growing interest of the United Nations in the Guardia di Finanza’s structure has led to the decision to second a Guardia di Finanza General as liaison officer at the Italian Permanent Representation to the United Nations in New York in a few weeks' time, following recent agreements between the force and the Italian Ministry of Foreign Affairs.

The aim is to coordinate the growing number of initiatives in which we are involved in loco and ensure that our diplomatic mission at the United Nations and the UN itself can draw on top-level expertise for peace-building, post-conflict reconstruction and institution-building projects.

Lastly, mention should be made of the Guardia di Finanza’s involvement in international operations to combat the financing of terrorism. After 9/11 there was a realisation that to get to grips with terrorism it was essential to uncover and block its sources of finance, as this was seen as one of the most immediate ways of stemming any flood of terrorist attacks.

Italy took steps in this direction, creating new operational structures and bolstering its legislative arsenal. Decree Act No 353/2001 was adopted and subsequently repealed following the entry into force of a series of new instruments designed to put a stop to the funding of terrorism and implement Council Regulation (EC) No 467/2001 and Council Regulation (EC) No 2580/2001, which gave the European Union independent powers to identify of the recipients of the funds and adopt more rigorous control and enforcement measures.

This strategy increases the importance of specialist Guardia di Finanza units operating in the sector conducting: a. checks on assets, with a view to the seizure and confiscation of the proceeds of crime; b. operations to combat money-laundering, in the form of administrative checks and criminal investigation department operations.