The Corruption of Italian Democracy: Russian Influence Over Italy’s League

Italy’s largest far-right policy, La Lega (“the League”), has long had close ties with Putin’s regime in Russia. The League’s leader, Matteo Salvini, has been a vocal supporter of Putin for years (see also here, here, and here), and in 2017 the League signed a formal cooperation agreement with Putin’s United Russia party. Even before then, the League (then known as Lega Nord, the “Northern League”) often advocated within Italy and the EU for Russian interests. Notably, while the EU imposed sanctions on Russia after Russia’s illegal annexation of Crimea in 2014, the League opposed sanctions and tried (unsuccessfully) to upend the solidarity necessary to keep EU sanction in place. That opposition to sanctions only intensified after the 2017 cooperation agreement: At a 2018 conference in Moscow, Salvini—then Italy’s Interior Minister–insisted that Italy would work “day and night” to repeal the 2014 sanctions. Salvini’s efforts proved unsuccessful, as he was unable to convince his coalition partners to change Italy’s stance. But the Kremlin still benefitted from the League’s vocal opposition to sanctions, as it showed that Russia wasn’t isolated diplomatically and that the West is internally divided.

The League’s long history of cooperation with Moscow could be chalked up to shared ideology and policy goals. But it appears that corruption, not policy, might explain why the party is so close with Putin.

Continue reading

NGOs Call Italian Judiciary to Account for Not Enforcing the Antibribery Law

The Italian judiciary is threatening to upset the global norm against bribing officials of another nation.  As party to both the OECD Antibribery Convention and the UN Convention Against Corruption, Italy is obliged to sanction Italian companies and nationals that bribe the public servants of other nations.  Yet despite overwhelming evidence that oil and gas giant Eni S.p.A, the country’s largest company, bribed Nigerian officials to secure a lucrative oil block, a Milan trial court recently acquitted Eni and codefendant Royal Dutch (decision here.)

Acknowledging the prosecution had presented strong circumstantial evidence of bribery — what it termed “conduct implementing the agreement” to pay Nigerian officials in return for “the unlawful act of the public official” — the court nonetheless held this was not enough. Following earlier appeals court decisions in foreign bribery cases, it ruled the prosecution must also show an actual “agreement between clearly identified parties” Hence, it concluded, “even the proof of the bribe or the unlawfulness of the act committed by the official” is not enough to warrant conviction.

Officials from the U.S. Department of Justice and Germany’s Ministry of Justice will shortly review Italy’s compliance with its obligations under the OECD Antibribery Convention. The Italian NGO ReCommon, Nigeria’s Human and Environmental Agenda, and Corner House from the United Kingdom have prepared this thorough and damning critique of the decision in the ENI case and earlier ones where Italian courts have held that absent an express agreement to pay a bribe to a foreign official, defendants must be acquitted.

As the three NGOs explain in their analysis, those negotiating the OECD Convention recognized that requiring the prosecution to show an express agreement to bribe set an impossibly high hurdle. They settled instead on allowing courts to infer an agreement from the surrounding circumstances, circumstances such as those the prosecution presented in the ENI-Shell case. Indeed, American courts long ago recognized that requiring the prosecution to produce an express, written agreement to pay a bribe rendered the antibribery law a nullity.

Continue reading

South African Court Slaps Down Attack on Corruption Prosecutor

Early Wednesday a South African judge ruled that former President Jacob Zuma’s attacks on the prosecutor leading the case him were baseless and that Zuma’s trial on corruption charges proceed forthwith. Zuma had claimed prosecutor William Downer’s conduct in pursuing the case was so egregious — running the gamut from the commission of serious crimes, to breaches of ethics, to intimations of racial animus — that the charges against him must be dismissed. Or, at the least, Downer be removed from the case and trial therefore delayed indefinitely while a new prosecutor was found.  

In seeing through Zuma’s desperate attempt to derail the case, and standing up to the still powerful former president, Judge Piet Koen provided a model judges everywhere should follow.  When Zuma raised the unfounded, scurrilous attacks on the prosecutor, Koen ordered they be aired without delay.  Upon sifting through the evidence, he promptly issued a scholarly 109-page opinion finding that not one of the allegations withstood scrutiny and that there was therefore no basis to find Downer was not a fair-minded, independent prosecutor and hence no reason Zuma would not receive a fair trial if Downer remained on the case.

Today’s 61-page decision came in response to that earlier decision. Zuma had requested that the trial be halted while he appealed it.  In again a scholarly and carefully written decision, Koen knocked down the legal arguments offered in support of an appeal while reiterating the absence of any facts showing Downer guilty of misconduct or bias.

Zuma has done his best to pressure the judge into throwing out or delaying the case, with hundreds of supporters crowding into the courthouse and surrounding grounds at his every appearance to let their views be known and with some issuing not so veiled threats against the judge. Koen could have easily caved, finding merit to the claims or a way to put off the trial for months if not years.

That he did not and that he instead set the trial for this April stands in marked contrast to the way attacks on Nigerian, Zambian, and Italian prosecutors have been handled (here, here, and here). Rather than standing up for them, judges, justice ministry officials, and even fellow prosecutors stood aside after the attacks were launched with some collaborating with the attackers. If corrupt officials and their accomplices are to face justice, Judge Koen’s response must become the standard when those prosecuting them come under attack.  

Highway Robbery: Preventing Corruption in U.S. Infrastructure Investment

Last November, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), a $1.2 trillion package that earmarks $110 billion for repairing and rebuilding roads and bridges. This is the single largest investment in U.S. roads and bridges since the construction of the interstate highway system in the mid twentieth century. And though it is a federal project, much of the money will be distributed to state governments, which will determine how best to use the money to address their infrastructure needs. As state governments receive the IIJA money, we can expect the states to launch a public tender frenzy.

In all the extensive discussion and debate over the IIJA, there has been relatively little focus on the corruption risks inherent in this sort of spending program—even in an affluent, reasonably well-governed country like the United States. After all, corruption in large construction projects, and infrastructure projects like roadbuilding in particular, is all too common. Unfortunately, the IIJA’s design exacerbates rather than reduces these corruption risks. While it is too late to address those flaws in the statute, there are some measures that the federal government can and should adopt now to mitigate the inherent corruption risks. Continue reading

Italy: Safe Haven for Bribe Payers?

That a nation with the third-largest economy in the European Union and the eighth-largest in the world would be countenancing bribery in today’s world seems beyond the pale. Yet an analysis of recent case law and record of convictions shows just that.  Done by the Italian NGO ReCommon and submitted on a confidential basis to the OECD’s Working Group on Bribery, it concludes that it is “nigh on impossible to obtain a conviction in Italy for international corruption.”  

The group’s conclusion rests not only on Italy’s dismal record of convictions of Italian companies and nationals for bribing foreign public officials, but decisions in three recent cases. All raise a virtually insurmountable hurdle to a conviction for bribery. In any case. No matter whether the bribe-taker is an official of a foreign government or of the Italian government. In all three, courts have ruled that to prove bribery, the prosecution must show there was an express agreement to bribe.

In today’s world, just how many businesses send a letter to an official saying “I will pay you X in return for your providing the company Y”? As an American Supreme Court justice observed some 40 years ago, were the law to impose such a requirement, it could be easily frustrated “by knowing winks and nods.” Yet an express agreement to bribe is exactly what Italian judges now demand to convict bribe-takers and payors. Why has the Italian judiciary, historically one of the most renowned in the civil law world, decided to frustrate the prosecution of bribery cases?

Italy’s compliance with the OECD Antibribery Convention will shortly be reviewed by peer nations. It simply cannot be found in compliance so long as its courts require an express agreement to bribe to find defendants guilty. The OECD reviewers should follow ReCommon’s analysis, which in the public interest is revealed here, and condemn the recent turn in Italian law making the nation a safe haven for bribery.

The Weaponization of Anticorruption Law: Why Italy’s Legge Severino Must Be Reformed

Back in 2012, the Italian legislature passed an anticorruption statute known as the Legge Severino. This law institutes a six year prohibition on holding elected office for politicians with felony convictions carrying sentences over two years. If convicted on an “abuse of power” charge, the prohibition on officeholding is extended to eight years. The law, which was enacted in part to effectuate Article Six of the United Nation’s Convention Against Corruption, was hailed at the time as a positive step on the road to a less corrupt Italy. (Famously, this provision initially barred Silvio Berlusconi from office after he was sentenced to four years in prison for tax evasion.) The logic behind passing laws of this sort (which also exist elsewhere) is fairly clear, especially in a country like Italy which has struggled with endemic political corruption: intuitively, those who have abused the public trust by committing serious criminal offenses should not be allowed to hold elected office.

But a recent case in Calabria, involving Domenico “Mimmo” Lucano, the former mayor of the town of Riace, highlights problems with the law—in particular, how the law can be weaponized to take down politicians who are fighting corruption and organized crime. Continue reading

Corruption’s War on the Law

“Corruption’s War on the Law” is the headline on an article Project Syndicate just published. There former French magistrate and corruption fighter Eva Joly recounts the fate of those who have dared to confront powerful networks of corrupt officials and those who corrupt them.  Maltese investigative journalist Daphne Caruana Galizia was murdered by accomplices of those she was investigating. So was Rwandan anti-corruption lawyer Gustave Makonene. So too was Brazilian anticorruption activist Marcelo Miguel D’Elia.

After a second attempt on his life, Nuhu Ribadu, first chair of Nigeria’s Economic and Financial Crimes Commission, the country’s premier anticorruption agency, famously remarked:

“When you fight corruption, it fights back.”

In her article, Mme. Joly, who received numerous threats for investigating and ultimately convicting senior French officials for corruption, explains that violence is just one way corruption “fights back.”  The most recent head of Nigeria’s EFCC was arrested and detained on trumped up charges of corruption. Ibrahim Magu has been suspended from office pending further proceedings, proceedings unlikely to be held this century.

At the same, Nigerian anticorruption activist Lanre Suraju is, as this blog reported last week, being charged with “cyberstalking” for circulating documents from a court case that implicate associates of the current Attorney General in a the massive OPL-245 corruption scandal. This form of intimidation, which Nigerians have dubbed “lawfare,” has now been exported to Europe. Italian prosecutors are being subjected to both criminal charges and administrative action for having the nerve to prosecute one of Italy’s largest companies for foreign bribery (here).

President Biden has declared the global fight against corruption to be a national priority, and he will shortly host a democracy summit where Brazil, Italy, Malta, Nigeria, and Rwanda will be represented at the highest level. Might he remind them which side of the fight they should be on?

Why Italy Should Not Prioritize Anticorruption in Spending Covid Recovery Funds

The Covid-19 pandemic has been an economic disaster as well as a public health disaster, and massive public spending will be needed to promote recovery. In Europe, the EU is projected to spend up to €1.8 trillion on pandemic recovery. One of the biggest recipients of these EU funds will be Italy, the EU’s hardest-hit member state. Currently, Italy is poised to receive €123 billion in loans and €69 billion in grants between now and 2026. Provision of these funds has already started; the first tranche of €25 billion arrived this past June. This funding will support Italy’s Covid recovery plan, known as the Piano Nazionale di Ripresa e Resilienza (PNRR), which—in the name of territorial cohesion—will allocate 40% of the funds to the Italian south.

If history is any guide, a massive amount of that money will be misallocated, misspent, or outright stolen by corrupt public officials colluding with organized crime groups. The mafias have a long history of bribing Italian officials for lucrative public contracts. Between 2014 and 2020, Italy received €77 billion from the EU for use in structural and investment funds; 60% of those funds were “fraudulently requested or obtained,” often by organized crime, with the 85% of that fraud occurring in the South. Much of the fraud occurs when illegitimate companies request funds in the form of loans and grants; the companies either don’t exist or are liquidated upon receipt of the funds.  

But we needn’t look only to history: Italy’s three most powerful crime syndicates—Cosa Nostra in Sicily, the Camorra in Campania, and the ‘Ndrangheta in Calabria—are already bribing Covid response officials, winning fraudulent contracts, and plundering businesses in receipt of PNRR funds. As the EU money pours in, we can expect that these mafia groups will use their corrupt networks to siphon off a staggering percentage of the EU Covid relief funding.

What should European policymakers do in response? It’s tempting to insist—as anticorruption activists have in this and other contexts—that the EU and Prime Minister Mario Draghi’s government adopt enhanced oversight and transparency measures, to better ensure that funds are spent appropriately. But that would be a mistake. Right now, the priority must be on promoting a swift economic recovery. Attaching burdensome anticorruption requirements to the public spending needed to support that recovery will slow the process down too much. This is, I realize, a bitter pill to swallow. Many readers will instinctively resist the idea that the EU and the Italian government might bankroll Italy’s most powerful mafias (to the tune of up to €200 billion). But if Italy is to recover from the economic effects of the Covid-19 pandemic, the priority must be the swift delivery of recovery funds, even if this means that much of the money will be intercepted by the mafia.

Continue reading

Is Italy Backtracking on the Fight Against Foreign Bribery?

Press reports, informed commentary, and the recent acquittal of ENI and Royal Dutch Shell despite overwhelming evidence they bribed Nigerian officials provide alarming evidence that Italy’s commitment to curbing foreign bribery is waning.

That commitment was never that strong to begin with. Although bound by the OECD Antibribery Convention to investigate and prosecute foreign bribery cases, in 2011 the OECD Working Group on Bribery found Italy had done little to comply. In the decade since ratifying the convention, only a few dozen cases had been brought, almost all against individuals for small-time bribery, and most had ended in acquittals. This dismal record was not surprising, the Working Group observed, given no one had been trained on how to investigate foreign bribery cases, and no public prosecutor’s office specialized in such cases.

The one bright spot the Working Group found was the Milan office of the public prosecutor.  It had aggressively pursued foreign bribery cases, opening by far the lion’s share of cases, including all those where a corporation was involved. Its future is now in doubt.

Continue reading

Guest Post: Corporate Criminal Liability and Corruption in Italy — Early Findings from an Ongoing Research Project

In Italy, as in many other countries, little data is available to evaluate the effect of the corporate liability regime — on deterring corporate crime and on the companies themselves. A research project supported by the Milan-based Fondazione Centro Nazionale di Prevenzione e Difesa Sociale (the National Center for Social Protection and Defense Foundation or CNPDS) has set out to fill the void. Coordinated by Professors Stefano Manacorda and Francesco Centonze, the project has enlisted Italian judicial institutions and the private sector in the collection of empirical data.

For the first time the Ministry of Justice, the Office of the General Public Prosecutor of the Supreme Court of Cassation, and two business associations, — Confindustria, which represents more than 150,000 Italian companies, and Assonime, representing the Italian companies listed on the Italian stock market, — are collaborating to gather information on the impact of a law.  Below Marco Colacurci of the Università della Campania and Pierpaolo Astorina of the Università di Bergamo, two assistant Professors involved in the project, explain the data they are gathering and summarize what they have learned so far about corporate liability for corruption.

Their findings will likely be of great interest not only to GAB readers but to the OECD, which will soon assess Italy’s compliance with the Anti-Bribery Convention. Thanks to Professors Colacurci and Astorina for sharing their work with GAB and to Professor Stefano Manacorda for facilitating it.

Twenty years have passed since Italy introduced liability for companies (the liability is formally administrative but modelled on the criminal features). Possible reforms to the legislation are now a matter of intense debate.. Anniversaries indeed represent valuable occasions to reflect on what works and what does not, and the same goes for Legislative Decree n. 231/2001. Conferences and seminars are underway in Italy both to celebrate the law that introduced the direct liability of corporations for crimes committed by individuals acting for them, and, at the same time, to highlight the critiques that have emerged over the years.

These latter have several aspects, such as the under-use of international standards in the creation and judicial evaluation of compliance programs, the intense discretionary powers of public prosecutors and criminal judges, the lack of recognition of pretrial diversion mechanisms apt to stimulate effective forms of corporate cooperation, the failure to consider the size and organizational complexity of companies, and the list could go on.

Most of all, and despite the growing attention which scholars (and law firms) have been directing towards liability over the last two decades, the praxis seems to show that prosecutions for corporate crimes are rare. Consequently, judgments too are rare, and decisions acknowledging the adequacy of the compliance programs adopted by indicted companies are scarce. This could reflect a degree of indifference in this area, on the part of the public prosecutors’ offices or, alternatively, could be interpreted as a sign of the preventive effects of the Decree 231.

Continue reading