Italy Adopts New Anti-Corruption Law

The new law was initially proposed by former Prime Minister Silvio Berlusconi in May 2010. See Directorate General of Human Rights and Legal Affairs Directorate of Monitoring, Council of Europe Group of States Against Corruption, “Compliance/Report on Italy” at 4 (May 27, 2011), www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Italy_EN.pdf. Current Prime Minister Mario Monti submitted the law to a confidence vote to speed its passage through both houses of Italy's parliament. Prime Minister Monti indicated that the reforms were required to encourage foreign investment and to enhance the country's reputation following the Berlusconi-related scandals that have engulfed Italy during the past year, most notably the Oct. 26, 2012 conviction of Berlusconi for tax fraud. See Sarah Delaney, “Italy Lawmakers Approve Anti-Corruption Legislation,” Los Angeles Times (Oct. 31, 2012), http://articles.latimes.com/2012/oct/31/world/la-fg-italy-corruption-20121101.

The law incorporates changes recommended by the Organization for Economic Cooperation and Development (OECD) Working Group on Bribery and the Council of Europe Group of States Against Corruption. See Transparency International Italia, “Corruption Is Not an Inevitable Fate but a Cultural Dress” (Oct. 31, 2012), http://blog.transparency.org/wp-content/uploads/2012/10/CS_approvazione_ING.pdf. It builds on Italy's prior anti-corruption measures, both by augmenting existing provisions and by enacting new measures. (Italy is a party to the OECD's Anti-Bribery Convention (ratified Sept. 29, 2000), the UN's Convention Against Transnational Organized Crime (ratified Aug. 2, 2006), the UN's Convention Against Corruption (ratified Oct. 5, 2009), and the EU's Anti-Corruption Convention (ratified Sept. 29, 2000). Italy previously enacted its commitments under these international agreements in its domestic laws. Under Italian law, bribery of public officials is outlawed under Articles 318-322 of the Italian Criminal Code. Article 322-bis criminalizes bribery of foreign officials. Under these provisions, bribery of an official for acts in breach of official duties can be penalized with up to five years of imprisonment.)

What It Means

The newly created NACA is provided with greater investigatory and supervisory powers than those of the existing anti-corruption agency, the Commission for the Evaluation, Transparency and Integrity of the Administration. 4434-B, note 1, supra at Art. 1(2), (3). Under the new law, NACA is authorized to implement a National Anti Corruption Plan developed by the Department of Public Service. Id. at Art. 1(2)(b), (g). NACA is required to provide an annual report to Parliament concerning anti-corruption initiatives. Id.

Regional and local government administrations are also required to develop plans to fight corruption that conform to the National Anti-Corruption Plan. Id. at Art. 1(5), (6). Public institutions must also name anti-corruption managers responsible for creating annual anti-corruption plans. Id. at Art. 1(7). The plans must identify areas prone to corruption, provide training to staff, and ensure adequate compliance monitoring. Id. at Art. 1(9). The anti-corruption managers of public institutions can be liable for failures that result in losses due to corruption unless an appropriate anti-corruption plan has been implemented and monitored. Id. at Art. 1(12). The new law also requires greater transparency of public institutions: budgets, details of public works project costs, and salaries of senior officers must be made publicly available on the Internet. Id. at Art. 3(1), (2).

Under the new scheme, an extra category of crimes has been added to the Criminal Code for corruption in the private sector. Id at Art. 19(1), Art. 20(1). The current anti-corruption law proscribes only conduct between private citizens when dealing with public bodies. See Delaney, supra. Under the new law, private corruption causing harm (regardless of whether there is any involvement of a public body) is punishable by one to three years in prison, with sentences doubled for corruption involving publicly listed companies. 4434-B, note 1, supra at Art. 20(1). It also limits influence peddling, requiring greater disclosure from lobbyists, and adding a crime for the “illegal traffic of influence.” Id. at Art. 19(1)(r).

Prison sentences under the new law are increased for convictions for corruption, bribe demands, embezzlement, and abuse of office. Id. at Art. 19(1). In addition, anyone who has been convicted of a corruption-related crime is ineligible to run for public office. Id. at Art. 17. Finally, the new law also adds protections for public sector whistleblowers: Whistleblowers are guaranteed anonymity and protection from retaliation. Id. at Art. 12.

Turning Opinions Around

The new law comes at a time when Italy has increased its anti-corruption enforcement efforts, yet struggles to shake the perception that its efforts are less than adequate. Anti-bribery enforcement has increased in Italy in recent years, with 32 cases brought in 2011 as compared with 18 cases brought in 2010. See Transparency International, “Exporting Corruption? Country Enforcement of the OECD Anti-Bribery Convention, Progress Report 2012″ at 9 (Sept. 6, 2012) www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_convention; see also OECD Working Group on Bribery, “Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Italy” at 7 (Dec. 16 2011), www.oecd.org/dataoecd/59/47/49377261.pdf.

Despite these efforts, Italy continues to be perceived as lagging behind many of its peers in anti-corruption efforts and in the perceived acceptance of corruption in the country's culture. According to Transparency International's 2011 Corruption Perceptions Index, Italy ranks 69th out of 183 countries surveyed. Transparency International, “Corruptions Perceptions Index 2011″ at 4 (2011) http://cpi.transparency.org/cpi2011/results.This perception is derived, in part, from the lack of fines and penalties imposed in the majority of cases initiated. Of the 60 cases brought through December 2011, punishments were imposed against only three legal persons and nine individuals, all through settlements (“patteggiamento”). International Bar Association, “Italy Country Brief 2012″ at 3 (2012), www.ibanet.org/Document/Default.aspx?DocumentUid=DDE48C04-E58B-46CC-8139-B82ED8F3F965. According to the OECD's Working Group on Bribery Phase 3 Report, issued in December 2011, numerous cases are dismissed because of statute of limitations problems, owing to the length of the investigations, and the difficulty in countering the frequently-asserted defense of extortion (“concussione”). Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Italy, note 11, supra at 10-13.

Nevertheless, the law may mark the beginning of a new era of Italian anti-corruption enforcement. The OECD Working Group on Bribery Phase 3 Report called on Italy to provide increased enforcement resources, enact laws mandating greater transparency, and implement whistleblower protections. Id. at 50-53. All of these initiatives are embodied in Italy's new anti-corruption law.'

Conclusion

It is too soon to tell how these measures will be implemented in practice, but the law is a step forward for Italian anti-corruption enforcement efforts and suggests that Italy may be entering a more aggressive phase of enforcement. As such, companies operating in Italy, as well as companies subject to the FCPA and UK Bribery Act, should pay particular attention to the new law's compliance requirements and ensure that they are following best compliance practices.

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Sean Hecker is a partner and Gregory P. Copeland is an associate in the New York office of Debevoise & Plimpton LLP. They are members of the Litigation Department and the White Collar Litigation Practice Group. Michael A. Janson is an Attorney Advisor at the Federal Communications Commission in Washington, DC. The opinions expressed herein are those of the authors alone and do not necessarily represent the views of the Federal Communications Commission, its Commissioners or its staff.

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On Nov. 8, 2012, Italy enacted new anti-corruption legislation, joining other countries, including China, Russia and the United Kingdom, that have recently implemented strong anti-corruption measures. Disposizioni per la prevenzione e la repressione della corruzione e dell'illegalit' nella pubblica amministrazione (“Provisions for the prevention and combating of corruption and illegality in public administration”) (C. 4434-B), http://www.camera.it/_dati/leg16/lavori/stampati/pdf/16PDL0064270.pdf%20'[Italian].

Development of New Law

Approved by overwhelming majorities in the Italian Parliament, the new anti-corruption law provides for the creation of an agency, the National Anti-Corruption Authority (NACA), to coordinate anti-corruption efforts, as well as numerous other measures, including increased penalties for corruption and whistleblower protections. C. 4434-B, note 1, supra at Art. 1(2), 3, 12, 19(1).The strength and scope of the new anti-corruption law's provisions may initiate a more active era of anti-corruption enforcement in both the public and private sectors in Italy, a country previously not viewed as a leader in such efforts.

The new law was initially proposed by former Prime Minister Silvio Berlusconi in May 2010. See Directorate General of Human Rights and Legal Affairs Directorate of Monitoring, Council of Europe Group of States Against Corruption, “Compliance/Report on Italy” at 4 (May 27, 2011), www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Italy_EN.pdf. Current Prime Minister Mario Monti submitted the law to a confidence vote to speed its passage through both houses of Italy's parliament. Prime Minister Monti indicated that the reforms were required to encourage foreign investment and to enhance the country's reputation following the Berlusconi-related scandals that have engulfed Italy during the past year, most notably the Oct. 26, 2012 conviction of Berlusconi for tax fraud. See Sarah Delaney, “Italy Lawmakers Approve Anti-Corruption Legislation,” Los Angeles Times (Oct. 31, 2012), http://articles.latimes.com/2012/oct/31/world/la-fg-italy-corruption-20121101.

The law incorporates changes recommended by the Organization for Economic Cooperation and Development (OECD) Working Group on Bribery and the Council of Europe Group of States Against Corruption. See Transparency International Italia, “Corruption Is Not an Inevitable Fate but a Cultural Dress” (Oct. 31, 2012), http://blog.transparency.org/wp-content/uploads/2012/10/CS_approvazione_ING.pdf. It builds on Italy's prior anti-corruption measures, both by augmenting existing provisions and by enacting new measures. (Italy is a party to the OECD's Anti-Bribery Convention (ratified Sept. 29, 2000), the UN's Convention Against Transnational Organized Crime (ratified Aug. 2, 2006), the UN's Convention Against Corruption (ratified Oct. 5, 2009), and the EU's Anti-Corruption Convention (ratified Sept. 29, 2000). Italy previously enacted its commitments under these international agreements in its domestic laws. Under Italian law, bribery of public officials is outlawed under Articles 318-322 of the Italian Criminal Code. Article 322-bis criminalizes bribery of foreign officials. Under these provisions, bribery of an official for acts in breach of official duties can be penalized with up to five years of imprisonment.)

What It Means

The newly created NACA is provided with greater investigatory and supervisory powers than those of the existing anti-corruption agency, the Commission for the Evaluation, Transparency and Integrity of the Administration. 4434-B, note 1, supra at Art. 1(2), (3). Under the new law, NACA is authorized to implement a National Anti Corruption Plan developed by the Department of Public Service. Id. at Art. 1(2)(b), (g). NACA is required to provide an annual report to Parliament concerning anti-corruption initiatives. Id.

Regional and local government administrations are also required to develop plans to fight corruption that conform to the National Anti-Corruption Plan. Id. at Art. 1(5), (6). Public institutions must also name anti-corruption managers responsible for creating annual anti-corruption plans. Id. at Art. 1(7). The plans must identify areas prone to corruption, provide training to staff, and ensure adequate compliance monitoring. Id. at Art. 1(9). The anti-corruption managers of public institutions can be liable for failures that result in losses due to corruption unless an appropriate anti-corruption plan has been implemented and monitored. Id. at Art. 1(12). The new law also requires greater transparency of public institutions: budgets, details of public works project costs, and salaries of senior officers must be made publicly available on the Internet. Id. at Art. 3(1), (2).

Under the new scheme, an extra category of crimes has been added to the Criminal Code for corruption in the private sector. Id at Art. 19(1), Art. 20(1). The current anti-corruption law proscribes only conduct between private citizens when dealing with public bodies. See Delaney, supra. Under the new law, private corruption causing harm (regardless of whether there is any involvement of a public body) is punishable by one to three years in prison, with sentences doubled for corruption involving publicly listed companies. 4434-B, note 1, supra at Art. 20(1). It also limits influence peddling, requiring greater disclosure from lobbyists, and adding a crime for the “illegal traffic of influence.” Id. at Art. 19(1)(r).

Prison sentences under the new law are increased for convictions for corruption, bribe demands, embezzlement, and abuse of office. Id. at Art. 19(1). In addition, anyone who has been convicted of a corruption-related crime is ineligible to run for public office. Id. at Art. 17. Finally, the new law also adds protections for public sector whistleblowers: Whistleblowers are guaranteed anonymity and protection from retaliation. Id. at Art. 12.

Turning Opinions Around

The new law comes at a time when Italy has increased its anti-corruption enforcement efforts, yet struggles to shake the perception that its efforts are less than adequate. Anti-bribery enforcement has increased in Italy in recent years, with 32 cases brought in 2011 as compared with 18 cases brought in 2010. See Transparency International, “Exporting Corruption? Country Enforcement of the OECD Anti-Bribery Convention, Progress Report 2012″ at 9 (Sept. 6, 2012) www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_convention; see also OECD Working Group on Bribery, “Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Italy” at 7 (Dec. 16 2011), www.oecd.org/dataoecd/59/47/49377261.pdf.

Despite these efforts, Italy continues to be perceived as lagging behind many of its peers in anti-corruption efforts and in the perceived acceptance of corruption in the country's culture. According to Transparency International's 2011 Corruption Perceptions Index, Italy ranks 69th out of 183 countries surveyed. Transparency International, “Corruptions Perceptions Index 2011″ at 4 (2011) http://cpi.transparency.org/cpi2011/results.This perception is derived, in part, from the lack of fines and penalties imposed in the majority of cases initiated. Of the 60 cases brought through December 2011, punishments were imposed against only three legal persons and nine individuals, all through settlements (“patteggiamento”). International Bar Association, “Italy Country Brief 2012″ at 3 (2012), www.ibanet.org/Document/Default.aspx?DocumentUid=DDE48C04-E58B-46CC-8139-B82ED8F3F965. According to the OECD's Working Group on Bribery Phase 3 Report, issued in December 2011, numerous cases are dismissed because of statute of limitations problems, owing to the length of the investigations, and the difficulty in countering the frequently-asserted defense of extortion (“concussione”). Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Italy, note 11, supra at 10-13.

Nevertheless, the law may mark the beginning of a new era of Italian anti-corruption enforcement. The OECD Working Group on Bribery Phase 3 Report called on Italy to provide increased enforcement resources, enact laws mandating greater transparency, and implement whistleblower protections. Id. at 50-53. All of these initiatives are embodied in Italy's new anti-corruption law.'

Conclusion

It is too soon to tell how these measures will be implemented in practice, but the law is a step forward for Italian anti-corruption enforcement efforts and suggests that Italy may be entering a more aggressive phase of enforcement. As such, companies operating in Italy, as well as companies subject to the FCPA and UK Bribery Act, should pay particular attention to the new law's compliance requirements and ensure that they are following best compliance practices.

'

Sean Hecker is a partner and Gregory P. Copeland is an associate in the New York office of Debevoise & Plimpton LLP. They are members of the Litigation Department and the White Collar Litigation Practice Group. Michael A. Janson is an Attorney Advisor at the Federal Communications Commission in Washington, DC. The opinions expressed herein are those of the authors alone and do not necessarily represent the views of the Federal Communications Commission, its Commissioners or its staff.

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