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Anti-Corruption

Italy: Trends & Developments Fabio Cagnola, Filippo Ferri, Riccardo Lucev and Silvia Martina Cagnola & Associati Studio Legale

practiceguides.chambers.com 2021 ITALY Trends and Developments

Trends and Developments Contributed by: Fabio Cagnola, Filippo Ferri, Riccardo Lucev and Silvia Martina Cagnola & Associati Studio Legale see p.6

Anti-corruption Regulation and the Approach of the In recent times, the fight against corruption has focused on new Criminal Courts: All that Glitters Is Not Gold horizons: from so-called academic corruption (ie, corruption General outlook among university professors in order to get chairs, publications, Corruption is usually considered as an old die-hard disease of etc) to corruption in the pharmaceutical corporations’ field; Italian society, which dates back to the beginning of the past from international corruption to private corruption. century at least. This is why the Italian Code of Criminal Law (introduced in 1930 and still in force) has always provided a In a nutshell, when we deal with Italian anti-corruption regula- wide and substantial regulation of crimes against the public tion, we deal with a constantly moving and changing juridical administration, and why such regulation has been subjected issue, with both old-time roots and innovative perspectives, to a number of legislative reforms across the years. In recent always in the framework of a severe and rigid court practice. times, the regulation of crimes against the public administra- tion has been consistently strengthened. Today, crimes such as Changes in legislation bribery, bid-rigging and others are among the criminal offences Corruption and bribery crimes are regulated in the Second Title punished with the highest penalties in the field of white-collar of the Second Book of the Italian Criminal Code. Such regula- crimes in Italy. Moreover, the regulation of corruption has been tion is made up of two parts: crimes of public officials against the amended through the extension of criminal law provisions public administration and crimes of private citizens against the originally introduced to fight organised crime (as in mafia-type public administration. The regulation in question went through organisations). several changes over the years starting from 1990, 60 years after the publication of the Italian Criminal Code in the 1930 King- The approach of the prosecutors’ offices has also changed over dom of Italy Official Gazette of Laws and Decrees. The aim of the years. The evolution of the prosecutors’ approach can be cat- the said changes was to adjust the criminal provisions to fit the egorised in terms of a constant, progressive aggression towards new social and economic trends and, therefore, to effectively corruption in all fields of society. In the course of the 20th cen- punish those behaviours which had a large impact on the state, tury, the fight against corruption was basically limited to the by ensuring the correct functioning and fairness of the Italian ambit of public administration (for instance, bribery of public public administration compared to international and European officials, as employees of public bodies). At the end of the 20th public administrations. century, there came a turning point with the so-called “hands- clean operation”, carried out by the Prosecutor’s Office of Milan, The first relevant amendment came into force with Law 86/1990. that literally destroyed a large part of Italian political parties, This law introduced new provisions into the Italian Criminal leading to the end of a historical phase of Italian politics. At that Code: Section 316-bis (crime of embezzlement against the point in time, the paradigm of anti-corruption changed forever: Italian state) and Section 319-ter (crime of bribery in judicial the execution of extensive investigative activities (in the form of actions). Amendments in several sections, already in force in massive wire taps and cross-border investigations) and the strik- the ambit of crimes against the public administration, were also ing use (in many cases, the abuse) of pre-trial detention finally introduced. managed to obtain both confessions from the defendants and accusations against other individuals that left a deep scar in the After the 1995 PFI Convention (on the protection ofcommu- Italian legal framework (and in the social framework as well), nities’ financial interests), in 2000 the Italian legislature intro- which is still far from healing. From that moment on, a frac- duced Section 316-ter into the Italian Criminal Code: the crime ture took place between, on the one hand, the need to properly of misappropriation of funds to the detriment of the state (or prosecute corruption – which, as a matter of fact, dramatically other public entities or the EU). affected Italy – and the need to act in compliance with the Rule of Law and the fundamental right to defence. Later on, in 2012 a new law (Law 190/2012) introduced further modifications, such as, increasing the period of detention set out for crimes of bribery.

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The latter law also introduced a new provision: Section 319-qua- shaken the Italian academic world in the domain of tax law, ter, wrongful inducement to give or promise any utility, and also because the judicial authority has opted to ban precaution- the crime of unlawful illicit influences. Furthermore, this law ary measures during the preliminary investigations, in order to amended Section 2635 of the Italian Civil Code, now named prevent the reiteration of the alleged crimes. The trend has been commercial (private) bribery, which can be both active and set and other prosecution offices have also started dealing with passive. similar allegations: this is the case, for example, of the Catania Prosecution Office, which started a criminal investigation for The reform at hand also introduced amendments to Legislative academic corruption in 2019. Decree 231/2001, the law that defines the liability of a legal enti- ty for a crime perpetrated by an individual within the company. Another area under the frequent attention of the judicial authority is that of the “Pharma corruption” cases, ie, a num- Section 318 of the Italian Criminal Code was also modified ber of criminal investigations based on the allegation that big by providing that, in this form of bribery (so-called, “proper pharmaceutical companies would have paid or offered benefits bribery”), public officials do not have to perform a specific act to doctors or other key decision-makers in the health sector in related to their office – the crime will also be considered com- exchange for support of their drugs, both by choosing them in mitted when public officials make themselves available to pri- the everyday care of patients and by supporting them in the vate interests in exchange for money or other utilities (without bureaucracy for obtaining authorisation for commerce in Italy. the perpetration of a specific act). Notable cases are criminal investigations underway before the Prosecution Office of Parma, which contain references – again After the 2012 reform, another important change occurred – to the fact that the professors involved in the investigation in 2015, with Law No 69, which greatly increased the time of would have used their powers to attribute academic positions custodial sentence of the criminal provisions for bribery and or research grants. corruption set out in the Italian Criminal Code. For instance, detention provided for the crime of misappropriation, com- And in 2020, we go back... to the future. It’s been 28 years since mitted by public officials, of money or other goods available the explosion of the hands-clean case, and Milan has again to them due to their office or service (Section 314 of the Italian become caput mundi of corruption investigation cases with a Criminal Code), was set from four years up to ten years and six new shocking investigation revealed last June: the “ATM case”, months (instead of the previous penalty range of from four up ATM being the public transport company of the municipality to ten years). of Milan. Many people were arrested and put in jail or under house arrest in execution of a preventative measure to address In 2019 the legislature approved Law No 3/2019, which intro- an alleged system of corruption involving a key employee of duced new paragraphs into already existing criminal provisions the ATM company and many representatives of huge hi-tech and amended some of the existing ones. For instance, the crime corporations, who were interested in joining public tenders for of corruption for the exercise of a function, pursuant to Sec- work on the Milan underground lines and in obtaining help tion 318 of the Italian Criminal Code, is now punished with a and support to win these tenders. Even if it is not as wide as custodial sentence ranging from three years up to eight years the hands-clean case, the ATM investigation – still underway (instead of the previous penalty of from one up to six years’ and far from over – has again shaken one of the city of Milan’s imprisonment). fundamental institutions.

Relevant developments in court law The portrait above clearly shows the – still – unhealthy state of Corruption in Italy is not only a long-term problem, but also the Italian system in terms of the fight against domestic corrup- the subject of important criminal investigations. Aside from the tion. New broad investigations of corruption arise every year, historical case of hands clean in the 1990s, new criminal inves- with huge scandals in the press, and it seems that the prosecu- tigations are based on allegations of corruption that have been tion offices find bribes in every corner. However, on the other committed in totally new ways. side of the coin, it must also be remembered that criminal pro- ceedings are a matter of guarantees and presumption of inno- This is the case, for example, in the “academic corruption” cence: none of the cases mentioned above has reached a final investigation started by the Prosecution Office of Florence in verdict yet, and it is definitely too soon to draw conclusions on 2017. According to the allegations, many Italian professors of the correctness and historical impact of these investigations. tax law have illegally exchanged favours in the attribution of Fighting corruption also means being able to understand what roles, publications etc to their collaborators. This is an extreme- corruption is not, and this requires time (and final judgments). ly wide criminal investigation, still underway, that has deeply

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International co-operation Furthermore, the co-operation between the member states is Corruption is a “transnational phenomenon that affects all achieved with the European Investigation Order (EIO), an effec- societies and economies, making international co-operation tive tool of judiciary assistance in the criminal law field between essential to prevent and control it”. These are the words of one member states. On the EU’s side, this tool was introduced by EU of the milestones in the worldwide effort to prevent and fight Directive No 2014/41/UE and was then implemented in Italy corruption: the United Nations Convention Against Corrup- through Legislative Decree No 108/2017. The EIO is a deci- tion (UNCAC), which was adopted by the General Assembly of sion issued or validated by a national judicial authority that is the United Nations on 31 October 2003 at the United Nations forwarded to the judicial authority of another member state so Headquarters in New York and came into force on 14 December that investigations provided by that Decree can be carried out. 2005. Italy and 186 other states signed and ratified UNCAC. Additionally, co-operation is carried out by EU member states UNCAC has played a key role over the years in worldwide anti- through the mutual recognition of conviction judgments to cus- corruption efforts, and among its objectives (which include the todial sentences and their transfer to another member state (EU prevention, investigation and prosecution of corruption, and Framework Decision 2008/909/GAI enforced with Legislative the freezing, seizure, confiscation and return of the proceeds of Decree No 161/2010). bribery and corruption offences), a crucial one is to “promote, facilitate and support international co-operation and techni- Trends for the future cal assistance in the prevention of and fight against corrup- A first trend for the future is the increasing importance of inter- tion, including in asset recovery”. UNCAC addresses this in its nal corporate investigations in anti-corruption related matters. Fourth Chapter. In the latest cases of criminal proceedings regarding bribery crimes, the role of corporate internal investigations has become UNCAC advocates that state parties should co-operate in crimi- crucial, especially when the criminal proceedings involve mul- nal matters, as for instance in the extradition of an individual; tinational companies. When the prosecutor challenges a bribe in the case of the transfer of a sentenced person; in affording inside a company, the latter is immediately called upon to decide mutual legal assistance in investigations, prosecutions and judi- whether to initiate an internal investigation aimed at ascertain- cial proceedings; and also by promoting co-operation between ing the alleged illicit conduct enacted by its employees. law enforcement agencies and relevant private entities. The situation at hand – which is absolutely ordinary in the On the European level, these principles were also applied, start- Anglo-Saxon world – is indeed peculiar in Italy. Such peculiarity ing with the Treaties of Maastricht, Amsterdam and Lisbon, and arises from the fact that the Italian legal framework does not set the creation of a European judiciary space. out any kind of self-reporting or non-prosecution, or deferred prosecution, agreement. The great obstacle is represented by With the Schengen Agreement and the abolition of the borders the fact that prosecution, according to the Italian constitution, between the European member states, the European legislature is mandatory. Hence, the scenario is very different from the introduced a number of provisions to counterbalance the issues one possible – for instance – in the USA or in the UK: the com- related to the safety of member states as a consequence of the pany cannot perform an internal anti-corruption investigation free movement of people between them: judiciary assistance in order to avoid prosecution, but just in order to mitigate the in the criminal law field, the application of the ne bis in idem potential damage arising from criminal proceedings. principle, extradition and the transfer of criminal judgments. An important innovation concerned the creation of the Schen- To expand, when the company is served with a notice from gen Information System with the aim to guarantee – through a the prosecutor’s office revealing the existence of a criminal case reporting system – that some people could not freely circulate regarding corruption counts, it is strongly advisable for the between the borders. company itself to start an internal investigation (the final report of which could then be filed with the prosecutor’s office). By Among the tools for co-operation between European member doing so, the company may be able to prove the implementation states, a key role is played by the European arrest warrant, intro- of an effective organisational model pursuant to Law 231/2001 duced by the EU Council Framework Decision on 13 June 2002. (liability of legal entities), which is necessary in order to avoid In Italy, this Decision was implemented by Law No 69/2005 and criminal sanctions, or to mitigate them. In many recent cases, provides that the European arrest warrant is a judiciary decision after having conducted an internal investigation and having issued by a member state in view of the arrest and surrender filed a final report, the company has reached a convenient plea of an individual, on the part of another member state, for the bargain agreement with the prosecutor’s office. purposes of prosecution or enforcement of a sentence.

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Hence, since Italy does not provide for a non-prosecution agree- The seizure and confiscation of assets can be ordered when ment or deferred prosecution agreement, internal investigations there are “sufficient clues” that such assets are the proceeds of have become essential in the management of corruption inves- a crime. In such case, it is up to the defendant to demonstrate tigations conducted by the judicial authority. the legitimate provenance of the assets. This is an obvious case of reversal of the burden of proof. Moreover, seizure and con- A second trend of the future is represented by the application of fiscation can also be applied to assets owned by third parties, prevention measures to corruption matters. In the Italian legal which can reasonably be attributed to the defendant (eg, assets framework, talking about the “recovery of criminal property” owned by relatives). Another focal point is the procedural one. does not mean only talking about traditional and ordinary Prevention measures are not applied in the ambit of ordinary recovery measures, such as freezing and confiscation. The Ital- criminal proceedings, but in the ambit of a parallel procedure, ian legal system sets forth another extraordinary legal category: with extremely limited defensive guaranties. the category of prevention measures. The European Court of Human Rights has issued several rul- In a nutshell, prevention measures are extraordinary precau- ings, stating that the Italian prevention measures legal frame- tionary measures. They were originally introduced by the Italian work is not in line with the fundamental principles of the Rule legislature as anti-mafia legal instruments. Patrimonial preven- of Law and of the right to a fair trial. tion measures, such as the anticipated seizure and confiscation of assets, were introduced in 1982. The particularity of preven- Having said that, it should be highlighted that Italy’s prevention tion measures is the fact that they can be issued on the mere measures have recently been amended. In 2017, Law 161 carried assumption of the apparent, social danger of the defendant. This out a deep legislative reform of the so-called “anti-mafia code”. is a crucial point, since such pre-condition – the “social danger The reform extended the possibility to apply personal and patri- of the defendant” – leaves a lot of discretional power to the monial prevention measures against people under investigation judge in deciding whether the prevention measure should be in relation to crimes against the public administration (such as, issued or not. bribery, corruption in public contracts, etc).

Through the years, prevention measures have been constantly The Italian legal doctrine has hardly criticised this reform: with and progressively extended in the ambit of their application by the extension of prevention measures to the crimes against the Italian legislature. the public administration, the Italian legislature expresses the concept that the mafia and corruption are the same thing and, consequently, they should legally be treated in the same way.

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Cagnola & Associati Studio Legale was established in July participated in some of the most relevant national and inter- 2016 in Milan and provides legal assistance throughout Italy. national trials in these fields. The firm is composed of 15 staff, The firm specialises in corporate criminal law, tax criminal law, among whom are lawyers who have gained considerable expe- environmental criminal law, banking and financial criminal rience providing advisory services as well as legal defence to law, corporate and bankruptcy criminal law, anti-corruption both individuals and corporate international clients in crimi- and anti-money laundering, and its expert team of lawyers has nal proceedings.

Authors

Fabio Cagnola has been practising for Filippo Ferri became a partner of the firm more than 30 years in the field of in 2017, having practised business crime white-collar crime. In 2016 he founded for almost ten years. Filippo focuses on Cagnola & Associati, having previously white-collar crime but also has extensive practised as a criminal lawyer and as a experience in both litigation and advisory partner in a major criminal law firm in activities. He has provided legal assistance Milan. He has provided legal assistance to to individuals and multinational many major multinational companies throughout Italy and companies throughout Italy, working on prominent criminal has acted in the most prominent criminal cases in the cases as well as cross-border investigations. Filippo white-collar crime area, representing individuals and collaborates with the chair of criminal procedural law at the multinational corporations, as well as major credit Catholic University in Milan, and also regularly participates, institutions, both foreign and domestic. In January 2009 he either as speaker or as chairman, in many Italian and became a member of the IBA Business Crime Committee, of international seminars and conferences on white-collar crime. which he served as co-chair between 2015 and 2016. He He has been a speaker at the Cambridge International regularly participates, either as speaker or as chairman, in Symposium on Economic Crime since 2017, and is a Italian and international seminars and conferences focused on long-standing member of the IBA. topics relevant to white-collar crime.

Riccardo Lucev joined the firm in 2018 as Silvia Martina is a criminal lawyer and a specialist in white-collar criminal law mid-associate at Cagnola & Associati, and with experience in providing legal advice has been at the firm since it was founded during judicial and extrajudicial cases. He in 2016. She is a consultant in advanced is a member of the Milan Bar Association criminal procedural law at Universita’ degli and has wide experience in most areas of Studi in Milan. Silvia is particularly criminal law, with a particular focus on knowledgeable in the field of tax, financial and banking criminal law, medical malpractice administrative liability for corporate offences, and has assisted and corporate criminal liability under Legislative Decree No clients in both judicial and extrajudicial matters. She 231/2001. Since 2015 he has taught criminal and criminal collaborates with the Anti-Corruption Committee of the IBA, procedural law at Accademia Lex Iuris, which prepares and recently worked on the first submission to the United students for admission to the Italian Bar. In May 2018 he was Nations Special Session of the General Assembly against appointed vice-director of an esteemed Italian law review. Corruption regarding how to prevent bribery and corruption, and how to achieve convictions. She is a member of the Milan Bar Association.

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Cagnola & Associati Studio Legale Via Conservatorio, 15 20122 Milan Italy

Tel: +39 02 3598 8008 Fax: +39 02 4070 1597 Email: [email protected] Web: www.cagnolaeassociati.it

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