Anti-Corruption in Italy

By  Aurelio Giovannelli*Roberto Cursano* and Enrico Maria Mancuso* (Baker McKenzie Milan

1.      Domestic bribery (private to public)

1.1       Legal framework

Private-to-public bribery offenses are governed by Sections 317, 318, 319, 319-quarter, 320, 321 and 322 of the Italian Criminal Code (ICC).

1.2       Definition of bribery 

Italian law criminalizes both “active bribery,” namely the conduct of a person who corrupts or tries to corrupt a public official, and “passive bribery,” namely the conduct of the corrupted public official.

“Bribery” is defined as offering, promising, requesting or receiving, or accepting a promise to receive money or other advantages for the public official to perform his or her functions (Section 318 of the ICC) or for the public official to omit or delay, or having omitted or delayed, an act relating to his or her office, or to act or having acted in breach of his or her official duties (“proper bribery” – see Section 319 of the ICC).

The meaning of “advantages” with respect to bribery offenses is very broad and includes any advantage for the recipient of any kind, material or moral, pecuniary or not.

The Supreme Court, in a series of judgments, has affirmed that in order to constitute corruption, the offer or the commitment to offer money or other advantages must be suitable to achieve the purpose of the crime, that is, suitable to improperly influence the performance of the public official’s duties. This must be evaluated having regard to objective and subjective situations, such as the type or amount of the compensation paid and the economic position of the beneficiary of the payment, which must be such as to determine the likely possibility that the beneficiary is influenced by the offer and is induced to accept it to perform his or her duties.

In case the private party is forced by the public official to give or promise a bribe, this conduct constitutes the offense of “extortion by a public official” (concussion – see Section 317 of the ICC), for which only the public official is held criminally liable, with the private party being the victim of the crime.

However, following the recent reform of Italian anti-corruption legislation, a new offense has been introduced – that of “unlawful inducement to give or promise money or other benefits” (see Section 319-quarter of the ICC), which punishes the public official who, by abusing his or her position or authority, induces a person to give or promise unduly to him or her or a third person money or other benefits. In such a case, the private party who gives or promises money or other benefits is punished as well (although the penalty applicable to the private party is less severe than the one for the public official).

Finally, the less serious offense of “inducement to bribery” (see Section 322 of the ICC) occurs when a private party offers or promises undue money or other advantages to a public official and the offer or promise is not accepted, or when the public official solicits an undue promise or giving of money or other advantages that is not carried out by the private party.

1.3       Definition of public official

The definition of “public official” under the ICC is quite broad and includes any individual who performs a public function, “either legislative, judicial or administrative” (see Section 357, Paragraph 1 of the ICC). For the same criminal purposes, “an administrative function is public if it is regulated by public law provisions and by acts of a public authority, and is characterized by the forming and manifestation of the public administration’s will or by a procedure involving an authority’s powers or powers to certify” (see Section 357, Paragraph 2 of the ICC). Examples of “public officials” are members of the Parliament, regional councillors, judges and their consultants, public notaries and police officers.

Under Italian Criminal law, bribery offenses apply to public officials as well as to persons in charge of a public service (incaricato di pubblico servizio), which are those who, under any title, perform a public service, namely, “an activity governed by the same forms as the public function, but characterized by the lack of its typical powers, and with the exclusion of simple ordinary tasks and merely material work” (see Section 358 of the ICC). Examples of “persons in charge of a public service” are state and public administration employees lacking the typical powers of a public authority, such as electricity and gas men, security guards and the manager of a public landfill.

1.4       Consequences of bribery

(a)        For the individuals involved

A public official may be punished with imprisonment from one year to six years in the case of bribery for the exercise of his or her functions (see Section 318 of the ICC), and with imprisonment from six years to 10 years in the case of proper bribery (see Section 319 of the ICC).

The penalties described are reduced by not more than one-third in the case of bribery of persons in charge of a public service.

The briber faces the same criminal consequences as the public official or the person in charge of a public service to whom he or she gives, offers or promises money or any other undue advantage.

(b)       For the company/legal entity

Under Section 25 of Legislative Decree No. 231, dated 8 June 2001 (“Decree 231”), the company is punishable with the following:

  • A fine of up to 200 quotas in the case of bribery of a public official for the exercise of his or her functions under Section 318 of the ICC
  • A fine from 200 to 600 quotas in the case of proper bribery under Section 319 of the ICC

The amount of a quota ranges from a minimum of EUR 258 to a maximum of EUR 1,549.

The following restraining measures may also be applied to the company:

  • Temporary suspension from conducting business
  • Suspension or revocation of any authorizations, licenses or permits held by the legal entity with respect to the business unit connected with the crime
  • Prohibition from negotiating and entering into contracts with public administration entities, except for contracts relating to public services
  • Exclusion from subsidies and contributions, or revocation of any subsidy and contribution already granted to the company
  • Prohibition from advertising the company’s goods and/or services

Restraining measures may also be applied to the company as a pre-judgment remedy under certain circumstances.

1.5       Political contributions

The regulation concerning private contributions to political parties has been recently amended by Law Decree No. 149/2013.

According to this decree, private contributions to political parties are allowed under the following restrictions:

  • A natural person cannot donate money or contribute goods or services in favour of a single political party, in any form and in any way provided, even through a third person or controlled companies, for a total amount exceeding EUR 100,000 per year. Such limits do not apply to legacies to political parties.
  • A legal entity / company cannot donate money or contribute goods or services, in any form and in any way provided, in favour of political parties for an amount exceeding EUR 100,000 per year. Such restriction does not apply to transfers of money or of capital in general between political parties.

Donations have to be made through a bank or post office or by any method that ensures their traceability.

Violations of the regulation concerning limits and modalities of private contributions to political parties are sanctioned with administrative fines.

Additionally, under Section 7 of Law No. 195, dated 2 May 1974, as recently amended by Law No. 96, dated 6 July 2012, private companies cannot, in any manner, directly or indirectly, finance or give contributions to any politician and political party, including their political-organizational structures and parliamentary groups, unless such financing/contributions have been deliberated on by the relevant managing body and duly registered in the balance sheet. The violation of this provision is punishable with imprisonment from six months up to four years and a fine of up to three times the amounts paid in breach of the law.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

Italian criminal law does not expressly prohibit or restrict the giving of gifts, travel expenses, meals or entertainment to public officials or persons in charge of a public service. However, those expenses may represent “undue advantage,” the giving/offering/promising or receiving/accepting of which is forbidden by the ICC.Italian law also does not expressly provide for currency limits generally applicable to gifts and hospitality. However, according to case law, gifts of small value (modico valore) are not per se prohibited as they do not fall within the scope of anti-bribery offenses. Small- value gifts may be relevant under anti-bribery law in cases where they are offered and/or received repeatedly and in certain specific circumstances (for example, there is a pending negotiation between the parties, or a business decision is imminent).

The amount of this “small value” is not expressly set by law. Some guidance on this aspect may be found in Italian case law.

Additionally, the Italian government recently enacted a regulation with a code of conduct for public employees (Presidential Decree no. 62 of 16 April 2013), which provides that a public employee shall not accept, for himself or herself or for others, gifts or other advantages. However, an exception exists for public officials where the following conditions are met:

(a) The gratuities do not exceed the value of EUR 150. Lower limits to gratuities may be provided by the internal code of ethics of each public entity.

(b) Such gratuities present no inducement and are given only for courtesy purposes.

As general principles, the following seem worth noting:

  • The repeated offering/receiving of gifts and hospitality (i.e., to the benefit of the same person or provided on a regular basis) should generally be discouraged, irrespective of their value.
  • Gifts and hospitality, even of small value, should be discouraged in the context of pending negotiations, tenders or imminent business decisions between the parties and in general, in the event that under concrete circumstances, they may be capable of persuading the beneficiary to do or not do something in breach of the latter’s duties.

2.      Domestic bribery (private to private)

2.1       Legal framework

The offense of private-to-private bribery is provided for under Section 2635 of the Italian Civil Code.

2.2       Definition of private bribery

Section 2635 of the Italian Civil Code, as recently amended, introduces the offense of “corruption between private parties,” which punishes the directors, general managers, executives entrusted with the preparation of the company’s accounting documents, statutory auditors, liquidators or anyone subjected to their direction or supervision who, as a consequence of the giving or promising of money or other advantage, for their own or others’ benefit, perform or omit to perform actions in violation of the obligations pertaining to their office or of their duty of loyalty, causing harm to their company.

In such a case, the person who gives or promises money or other advantages to the subjects indicated above is also punished

2.3       Consequences of private-to-private bribery

(a)        For the individuals involved

Pursuant to Section 2635 of the Italian Civil Code, directors, general managers and executives entrusted with the preparation of the company’s accounting documents, as well as statutory auditors and liquidators, may be charged with imprisonment from one year to three years.The penalty for offenses committed by anyone subject to the direction or supervision of the above individuals is imprisonment for up to one year and six months.

The person who gives or promises money or other advantages to the subjects indicated above faces the same criminal consequences as the corrupted individual.

(b)        For the company/legal entity
The company/entity that the person who gives or promises money or other advantages to the subjects set forth in Section 2635 of the Italian Civil Code belongs to may be held liable, pursuant to Decree 231.

Under Section 25-ter of Decree 231, the company/entity is punishable with a fine from 200 to 400 quotas.

In case the company/entity obtained a considerable profit as a result of the commission of the crime, the pecuniary sanction is increased by one-third.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

Italian criminal law does not expressly prohibit or restrict the giving of gifts, travel expenses, meals or entertainment to private persons. However, those expenses may represent undue advantage, the giving/offering/promising or receiving/accepting of which is forbidden by the ICC.

Italian law also does not expressly provide for currency limits generally applicable to gifts and hospitality. However, according to case law, gifts of small value (modico valore) are not per se prohibited as they do not fall within the scope of anti-bribery offenses. Small- value gifts may be relevant under the anti-bribery law in cases where they are offered and/or received repeatedly and in certain specific circumstances (for example, there is a pending negotiation between the parties or a business decision is imminent).

The amount of this small value is not expressly set by law. Some guidance on this aspect may be found in Italian case law.

Additionally, the Italian government recently enacted a regulation with a code of conduct for public employees (Presidential Decree no. 62 of 16 April 2013), which provides that a public employee shall not accept, for himself or herself or for others, gifts or other advantages.

However, as an exception, public officials are allowed to accept gifts or other advantages provided that the following conditions are met:
(a)         The gratuities do not exceed the value of EUR 150.

(b)        Such gratuities present no inducement and are given only for courtesy purposes.

As general principles, the following seem worth noting:

  • The repeated offering/receiving of gifts and hospitality (i.e., to the benefit of the same person or provided on a regular basis) should generally be discouraged, irrespective of their value.
  • Gifts and hospitality, even of small value, should be discouraged in the context of pending negotiations, tenders or imminent business decisions between the parties and in general, in the event that, under concrete circumstances, they may be capable of persuading the beneficiary to do or not do something in breach of the latter’s duties.

3.      Corruption of foreign public officials

3.1       Legal framework

Corruption of foreign officials is regulated under Section 322-bis of the ICC.

3.2       Definition of corruption of foreign public officials

Section 322-bis of the ICC extends the scope of (domestic) bribery offenses to include bribery of public officials in EU institutions or EU member states. Therefore, with respect to EU public officials, the general definition of corruption of a public official, as follows, remains valid:

Bribery: This refers to the offer, promise, request or receipt, or acceptance of the promise to receive money or other advantages for the public official to perform his or her functions (see Section 318 of the ICC), or for the public official to omit or delay, or having omitted or delayed, an act relating to his or her office, or to act or having acted in breach of his or her official duties (proper bribery – see Section 319 of the ICC)..

Italian law also criminalizes the bribery of non-EU foreign public officials, that is, public officials not working in EU institutions or bodies, or not performing a public function in an EU member state.

However, with respect to non-EU foreign public officials, only active bribery is punished, namely the offering or promising of money or other advantages for the foreign public official to perform his or her functions (see Section 318 of the ICC) or for the foreign public official to omit or delay, or having omitted or delayed, an act relating to his or her office or to act or having acted in breach of his or her official duties (proper bribery – see Section 319 of the ICC), provided that:

  1. the offense is committed in order to obtain an undue advantage in the framework of an international business transaction; or
  2. the offense is perpetrated for the purpose of obtaining or maintaining a business or financial activity.

In this case, the non-EU foreign public official is not punished under Italian law.

3.3       Definition of foreign public official

Pursuant to Section 322-bis of the ICC, bribery offenses apply to the following categories:

  • Members of the European Commission, of the European Parliament, of the European Court of Justice and of the European Court of Auditors
  • Officials and agents hired by contract pursuant to the Staff Regulations of European Officials or to the Conditions of Employment regarding European agents
  • Persons delegated by the member states or by any public or private entity at the European Union, who perform functions equivalent to those performed by officials and agents of the European Union
  • Members and employees of entities instituted pursuant to the Treaties establishing the European Union
  • Those who, in the context of the other member states of the European Union, perform functions or activities equivalent to those performed by Italian public officials and persons in charge of a public service
  • Judges, prosecutors, deputy prosecutors, officials and agents of the International Criminal Court; the persons delegated by the States Parties to the Treaty establishing the International Criminal Court who perform functions equivalent to those performed by the officers or agents of the Court itself, and members and employees of entities instituted pursuant to the Treaty establishing the International Criminal Court.

All of the abovementioned subjects are considered “public officials” if they perform functions corresponding to those performed by (domestic) public officials, or “persons in charge of public services” in all the other cases.

“Non-EU foreign public officials” are all persons performing functions or activities corresponding to those performed by (domestic) public officials and persons in charge of a public service in non-EU states or public international organizations.

For the definition of “public official” and “person in charge of a public service” under Italian law, see Section 1.3.

3.4       Consequences of corruption of foreign public officials

(a)        For the individuals involved

As far as bribery relating to EU foreign public officials is concerned, the official may be punished with imprisonment from one year to six years in the case of bribery for the exercise of his or her functions (see Section 318 of the ICC), and with imprisonment from six years to 10 years in the case of proper bribery.

The abovementioned sanctions are reduced by not more than one-third when the corrupted individual performs functions and activities corresponding to those performed by persons in charge of a public service under Italian law.

The briber faces the same criminal consequences as the EU foreign public official/person in charge of a public service to whom he or she gives, offers or promises money or any other undue advantage.

As to bribery of non-EU foreign public officials, only the briber may be punished, with imprisonment from one year to six years in the case of bribery for the exercise of his or her functions (see Section 318 of the ICC), and with imprisonment from six years to 10 years in the case of proper bribery.

The abovementioned sanctions are reduced by not more than one-third when the corrupt individual performs functions and activities corresponding to those performed by persons in charge of a public service under Italian law.

In this case, the non-EU foreign public official/person in charge of a public service may not be punished under Italian law.

(b)       For the legal entity

Under Section 25 of Decree 231, the company may be punished with any of the following:

  • A fine of up to 200 quotas in the case of bribery of a foreign public official for the exercise of his or her functions under Section 318 of the ICC
  • A fine from 200 to 600 quotas, when proper bribery is committed

The following restraining measures may be also applied to the company:

  • Temporary suspension from conducting business
  • Suspension or revocation of any authorizations, licenses or permits held by the legal entity with respect to the business unit connected with the crime
  • Prohibition from negotiating and entering into contracts with public administration entities, except for contracts relating to public services
  • Exclusion from subsidies and contributions, or revocation of any subsidy and contribution already granted to the company
  • Prohibition from advertising the company’s goods and/or services

Restraining measures could be applied to the company even as a pre- judgment remedy under certain circumstances.

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

Italian criminal law does not expressly prohibit or restrict the giving of gifts, travel expenses, meals or entertainment to foreign public officials or foreign persons in charge of a public service. However, those expenses may represent undue advantage, the giving/offering/promising or receiving/accepting of which is forbidden by the ICC.

Italian law also does not expressly provide for currency limits generally applicable to gifts and hospitality. However, according to case law, gifts of small value (modico valore) are not per se prohibited as they do not fall within the scope of anti-bribery offenses. Small- value gifts may be relevant under the anti-bribery law in cases where they are offered and/or received repeatedly and in certain specific circumstances (for example, there is a pending negotiation between the parties or a business decision is imminent).

The amount of this small value is not expressly set by law. Some guidance on this aspect may be found in Italian case law.
Additionally, the Italian government recently enacted a regulation with a code of conduct for public employees (Presidential Decree no. 62 of 16 April 2013), which provides that a public employee shall not accept, for himself or herself or others, gifts or other advantages.
However, the public official is, as an exception, allowed to accept gifts or other advantages, provided the following conditions are met:

(a)         The gratuities do not exceed the value of EUR 150.

(b)        Such gratuities present no inducement and are given only for courtesy purposes.

As general principles, the following seem worth noting:

  • The repeated offering/receiving of gifts and hospitality (i.e., to the benefit of the same person or provided on a regular basis) should generally be discouraged, irrespective of their value.
  • Gifts and hospitality, even of small value, should be discouraged in the context of pending negotiations, tenders or imminent business decisions between the parties and in general, in the event that, under concrete circumstances, they may be capable of persuading the beneficiary to do or not do something in breach of the latter’s duties..

4.      Facilitation payments

The ICC does not recognize so-called facilitation payments. Therefore, cash payments or offers/promises of other economic advantages to public officials are very likely to be considered acts of corruption.

5.      Compliance programs

5.1       Value of a compliance program to mitigate/eliminate the criminal liability of legal entities

Companies may be held directly liable for certain crimes listed under Decree 231 that are committed on behalf of, or for the benefit of, the company by individuals who have operational and/or representative authority. This category includes: (i) individuals who represent or manage the company or any relevant autonomous business unit or de facto manage and control the company (“Representatives”); and (ii) individuals who are subject to the direction and supervision of the Representatives.

A company’s liability under Decree 231 is assessed by the criminal judge in the same trial for the prosecution of the individual who allegedly committed the crime, and the sanctions set forth by Decree 231 are usually applied to the company by the same criminal court’s decision upon the request of the public prosecutor.

The relevant courts may apply, among others, the following relevant sanctions:

  • Temporary suspension from conducting business
  • Suspension or revocation of any authorizations, licenses or permits held by the legal entity with respect to the business unit connected with the crime
  • Prohibition from negotiating and entering into contracts with public administration entities, except for contracts relating to public services
  • Pecuniary fines quantified as quotas and ranging from a minimum of 100 quotas to a maximum of 1,000 quotas; since the amount of each quota ranges from a minimum of EUR 258 to a maximum of EUR 1,549, pursuant to Decree 231, the relevant Courts may therefore apply pecuniary fines ranging from a minimum of EUR 25,800 to a maximum of EUR 1,549,000.

Companies may avoid the risk of incurring liability pursuant to Decree 231, provided they adopt an effective compliance program, that is, a Model of Organisation, Management and Control that is able to prevent and detect the commission of crimes (the “Model”), and ensure that the Model and related internal procedures are actually implemented. Therefore, the Model, if correctly implemented and constantly updated, would have the effect of exempting the company from liability arising from crimes committed by its Representatives.

5.2       Absence of a compliance program as a crime

The Italian Criminal Code does not treat the absence of a compliance program (i.e., the Model) as a crime. However, companies that have not implemented a Model will not be able to benefit from the mentioned exemption from liability.

 5.3       Elements of a compliance program

According to the relevant case law, industry codes and best practices, an effective Model must: (i) identify the risk activities or areas of activities within the company’s business; (ii) identify the modalities for handling financial resources suitable to prevent the commission of crimes; (iii) provide for specific protocols (policies) aimed at the formation and implementation of the company’s decisions with respect to the prevention of potential crimes; (iv) provide for the appointment of a monitoring body (Organo di Vigilanza e Controllo), with autonomous powers of control, in charge of monitoring the implementation of the Model and updating the Model; and (v) provide for mandatory notices and informational obligations to the monitoring body. Moreover, after the adoption of the Model, the latter must be provided to each company manager, employee and representative, and the monitoring body must constantly oversee the proper application of the Model.

Provided that the above conditions are met, the company can benefit from the exemption from liability by demonstrating that whoever perpetrated a corruption-related crime did so by fraudulently violating or circumventing the company’s Model.

6.      Regulator with jurisdiction to prosecute corruption

The Italian legal system does not have a specific regulator with exclusive jurisdiction to prosecute corruption cases. Any public prosecutor may start a corruption investigation.

 


Studio Professionale Associato a Baker McKenzie
Viale di Villa Massimo 57 00161 Rome
Italy

Aurelio Giovannelli

International partner of Baker & McKenzie since 1989, Aurelio Giovannelli assists Italian and foreign clients in various industries in organizing and managing internal investigations, setting up compliance programs, and developing and implementing risk assessment functions, codes of conduct and whistle blowing tools. Aurelio is former chair of the Firm’s EMEA Compliance Steering Committee and is a current member of its Global and EMEA Compliance Steering Committees.

aurelio.giovannelli@bakermckenzie.com

Tel: +39 06 44 063 239

Studio Professionale Associato a Baker McKenzie
Viale di Villa Massimo 57 00161 Rome
Italy

Roberto Cursano

Roberto Cursano regularly advises on pharmaceutical and healthcare law, administrative and public procurement law, and litigation before the administrative courts. Over the course of his practice, he has successfully assisted several multinational companies in regulatory and compliance matters and in setting up internal compliance programs in line with Italian anti- corruption law (Legislative Decree 231/2001).

roberto.cursano@bakermckenzie.com

Tel: +39 06 44 06 3241

Studio Professionale Associato a Baker McKenzie
Piazza Meda, 3
Milan 20121
Italy

Enrico Maria Mancuso

Enrico Maria Mancuso’s practice focuses on the area of dispute resolution in criminal matters. He also regularly assists domestic and foreign clients on various aspects of corporate criminal law, compliance issues, bribery and corruption.

Enrico has experience in tax crimes, health and safety issues related to criminal proceedings, bankruptcy, and environmental compliance and offenses. Throughout his career, he has defended several companies and individuals in major litigation cases.

enricomaria.mancuso@bakermckenzie.com

Tel: +39 02 76231 461