Guest Post. Corruption Victims: Law and Practice in Italy, Russia, other European States

Earlier this month, I asked readers for help on a UNODC project examining the compensation of corruption victims.  UNCAC article 35 requires states parties to ensure those injured by “an act of corruption” can initiate “legal proceedings. . . to obtain compensation.” In 2017, the UN Office on Drugs and Crime reported that virtually all 187 convention parties say their laws permit those injured by corruption to bring an action to recover damages. Yet few cases appear to have been brought.  The project seeks answers to three questions: Are there really few cases? If so, why? And what can be done to increase the number?

My thanks to the several readers who replied.  Thanks especially to Mjriana Visentin. An Italian lawyer with a Master’s Degree from the International Anticorruption Academy, Mjriana has been working on human rights and anticorruption for several years, most recently in Russia. She was kind enough to respond to my query with a thoughtful analysis reflecting both her experience representing victims of human rights abuses and corruption in Russia – categories which often overlap in practice – and current law on recovery of damages for corruption in Italy, other European states, and the European Court of Human Rights.  A valuable contribution to the global discussion on corruption victim compensation, it is below.  

Probably it would be useful to differentiate between types of corruption before discussing if victims did (or could) claim compensation.  If we are talking for example of extortion by a public official, I think that an analysis of the national case law will likely show a large number of individuals who were granted victim status and sought compensation.  [Editor’s note: a point I had not appreciated. I have subsequently learned that upon a conviction for extortion in Sri Lanka, defendants reportedly are required to return the bribe to the victim.  Example cases solicited from there or other jurisdictions.

As for other types of corruption, the situation may be more blurred.

Reviewing the laws of a number of European state members, I have seen that corruption still tends to be framed either as a victimless crime or crime against the state. This affects the view that potential victims have of themselves.

Corruption as a crime against the state

Portugal

Portugal is one of the few countries that has expressly acknowledged that any person can be deemed an “offended person” in criminal proceedings involving corruption. As explained in a guide for crime victims by the Association for Support or Crime Victims (Associação Portuguesa de Apoio à Vítima), citizens are entitled to offended person status not only for crimes against their person, assault, robbery, and so forth but for trafficking in influence, personal favouritism practiced by official, corruption, embezzlement, economic participation in business, abuse of power and fraud in obtaining or diverting a subsidy. Other countries are still trying to address the competition/coexistence between government’s rights to compensation and victims’ rights to compensation.

Italy

In Italy, corruption is still framed in the criminal code as a crime against the state (pubblica amministrazione) and usually only the state can be granted victim status in criminal proceedings because it suffered a damage to its reputation or to its impartiality and efficiency. The rationale is that granting victim status to private individuals would “amount to acknowledging that the state, which by its nature acts for the protection of the public interest, is ineffective in pursuing it on behalf of its citizens.”

The Supreme Court has ruled that in bribery cases individuals cannot claim victim status nor can they claim compensation for damages (These cases are discussed here).

In other cases, individuals are not granted victim status but can claim damages as civil claimants. For example, in the Lodo Mondadori affair in Italy, lawyers for the Berlusconi family were convicted for having bribed a judge to rule in their favor in a dispute with another company (CIR) for the acquisition of controlling shares in a publishing house. After their conviction, CIR lodge a civil claim for damages and was awarded 490 million Euro for “economic damages stemming from loss of opportunity of an impartial tribunal.”

However, granting   victim (person offesa) rather than civil claimant status may be particularly important in terms of outcomes as only “offended persons” have several procedural rights during the criminal investigation stage, such as lodging an objection to the termination of the investigation, thus increasing the chances that criminal proceedings for corruption will reach the trial stage. In general, the existence of effective victims’ rights strengthens the independence of prosecutors which is of relevance in corruption investigations.

It seems however that Italian legislation and case law tend to limit the cases where individuals can be granted victim status. In case of abuse of office, an individual could claim victim status only if the abuse intentionally caused him an unfair damage (danno ingiusto) but not if it merely provided some unfair advantage (favouritism) to third parties. The rationale behind this approach is that citizens have a generic interest in equal treatment before the law that does not translate into a protected right. In this case, only the state can claim a violation of its impartiality (the public interest to equal treatment of individuals).

In case of procurement corruption, bidders can claim victim status if there was an interference in tenders due to the violation of their right that tenders are carried out fairly and in line with principles of free competition. However according to existing literature while unsuccessful bidders have the right to claim compensation for “loss of chances” (besides direct losses), the burden of proof is so high that it is extremely difficult obtain compensation.

Finally, another obstacle to compensation may be connected to the interpretation of extortion. The line between victim of corruption and parties to corruption may be blurred depending on local circumstances. 

Italian law for example distinguishes between:

a) extortion – where a public official has “forced” an individual to pay a bribe (or similar), in which case the individual is considered a victim and has a right to compensation

b) inducement to corruption – in which case he will not be considered a victim (will risk between 15 days and three years of imprisonment). Until some years ago the person who had been induced to pay a bribe was considered a victim under Italian law. GRECO requested a change in legislation to treat these persons as parties to a corrupt deal and not victims. However, even following legislative amendments in 2012 to bring Italian legislation in compliance with such requirements, the case law is still unclear as to the distinction between extortion and inducement.

Russia

In countries with high levels of corruption the distinction between bribery and extortion may not be clear either.

In Russia for example, in situations that would be considered by an outside observer as “inducement to corruption,” or bribery, entrepreneurs may in fact have little choice. Businesses who refuse to pay bribes or “patronage” may become the target of commissioned criminal prosecutions and targeted inspections. Sometimes bribery turns into extortion and businesses may be unwilling to report. According to a survey we carried out in the framework of a Council of Europe project on Protection of Entrepreneurs against corrupt practices, all respondents who stated that they had reported corruption also stated that they had not received compensation for the damages suffered. In most cases companies that were victims of corruption went bankrupt. Russia has not signed the Council of Europe Civil Law convention on corruption yet and it appears that existing compensation mechanisms are not effective.

In one case I represented before the European Court of Human Rights,  the Court found that the Russian authorities had illegally  and arbitrarily seized the entirety of my client’s, (Elena Shapiro, a Russian-Israeli businesswoman) assets for over 13 years.

My client was accused of having carried out poor-quality fire-retardant works through her companies, for having operated through illegal licenses, and for having acquired the property of a few flats with funds of a regional fire security agency. In fact, expert appraisals of the quality of the works had been commissioned by the investigators two years after the expiry of the validity of the fire retardant substance; the licenses had been declared illegal on the basis of two decrees that never entered into legal force, and my client submitted bank statements proving that she had purchased the flats with her own assets. The investigators refused to adjoin to the case file any of the exculpatory evidence she submitted and seized the entirety of  her assets for a value  of fifty million US dollars, twenty times higher the alleged damages. Damages that in fact had never been claimed by the alleged victims.

The investigator have also retained the entirety of Ms. Shapiro and her companies’ documentation since 2006, denying her access to exculpatory evidence and to all the financial documentation that would allow to calculate the damages suffered because of the theft, disappearance and destruction of her seized assets throughout the investigation. The European Court had declared these seizures arbitrary as they “did not pursue any legitimate aim”.  Ms. Shapiro has also repeatedly requested to have her case referred to a court for an examination of the merits of the accusations against her to prove her innocence, but the investigators have suspended the proceedings, and, under Russian law, there is no maximum duration for the suspension which can last of the entire life of an accused person. In the absence (and impossibility) of a trial, finally proving her innocence and seeking damages, is not possible. Besides this, before and during the investigation Ms. Shapiro has been repeatedly contacted by unknown individuals asking her to sell her assets, which she has refused and regularly reported.

In 2016 Ms. Shapiro learnt that one of the investigators who had ordered the seizure of her assets had  ben arrested on corruption charges. The criminal proceedings established that he was a member of an organised criminal group within the investigative committee where bribes were received and extorted for the opening and closing of criminal cases for economic crimes. He eventually agreed to cooperate with the investigators and obtained a reduced sentence (5.5 years of prison and no confiscation measures) in exchange for incriminating statements against his colleagues. The proceedings were held behind closed doors. The plea bargain procedure likely prevented the further investigation of other possible episodes of extortion and abuse of office although it appears that such modus operandi was systematic.

My client, Elena Shapiro, submitted several petitions asking that an investigation is opened also in respect of the possible involvement of the same individual in the disappearance/misappropriation of her seized assets for a value of several million rubles. All her petitions were ignored.

Companies as victims of corruption committed by employees.

Another obstacle to compensation of victims of corruption may exist when a company or association claims victim status in corruption proceedings against its members/employees. Sometimes these requests can be abusive, as victim status grants insight into an ongoing investigation, so prosecutors may opt to reject these requests. It may be useful to issue guidelines to clarify when victim status can be claimed by a company/association.

Two examples: FIFA has repeatedly sought victim status in criminal proceedings against its former managers (here). The Swiss federal prosecution office recently denied FIFA status of party in the criminal proceedings against Infantino and former Swiss Attorney General Michael Lauber. FIFA had claimed that the investigation opened against its president had damaged its reputation and was seeking access to the case file. Judgment of the federal Court (in German) is available here. News in French and English on the case are available here and here)  

Similarly, in Spain so called accion popular (collective action/claim) can be used to start proceedings against corrupt individuals and seek compensation.  Newspapers have described it as key to the success of important corruption investigations such as the ERES, Gurtel and Bankia cases. However, the use of accion popular has caused some controversy as, according to some press reports, it has been abused to provide undue access to information on pending criminal investigation into corruption (for example, the Partido Popular allegedly sought to use the procedural rights of accion popular to gain insights into the Gurtel case to defend its members who were accused of corruption). Legislative reforms that would exclude political parties and trade unions from seeking victim/claimant status in acciones populares have been object of discussion already for a number of years (here).

Victims of corruption as victims of human rights violations

A final consideration, based on my experience as a human rights lawyer, is that individuals may be more accustomed to frame themselves as victims of human rights violations, rather than as victims of corruption. I have reviewed the case law of the European Court on Human Rights involving corruption. Below are examples of how victims of corruption have framed their claims as human rights violations and sought compensation. Corruption is secondary and becomes relevant only at the execution stage of the ECtHR judgment where the monitoring body has occasionally required respondent states also to carry an investigation into the underlying corruption

Di Sarno v Italy: procurement corruption for waste management leading to trash being left on the street of Naples for years. Victims claimed violation of their right to a clean environment (Art. 8 ECHR on the right to private life). Compensation granted. Corruption was taken in consideration only at the execution stage where the Italian government committed to secure supervision of waste management and initiated a number of investigations.

Rantsev v Cyprus and Russia: human traffickers bribing police officers and murdering a trafficked woman. Lack of police investigation into the murder. Victim claimed violation of right to life. Granted Compensation. Corruption was taken in consideration only at a subsequent stage of the monitoring over the execution of the ECtHR judgment and where the Cyprus authorities opened an investigation into the two police officers.

Gusinsky v Russia: applicant detained in order to force him to sell his company. European Court found violation of art 5 (right to liberty) and 18 (restrictions of convention rights should not be applied for any purposes other than those for which they have been prescribed). Compensation granted.

Cases of judicial corruption are usually treated as violations of the right to an impartial tribunal.

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