What major changes are introduced by this new law?
The recent Italian Anti-Corruption Law (Law No. 190 which entered into force on November 28, 2012) imports new concepts and instruments into the Italian legal system for the prevention of the crime of corruption. This law expands the definition of the crime of corruption, increases penalties and strengthens requirements for transparency and disclosure within the public sector.
The law modifies the crimes of corruption as follows: (i) It expands the scope of the crime of corruption of public officials, since the crime is related not only to a specific lawful act but, more generally, to the exercise of public functions and powers; (ii) It introduces new crimes: (a) the crime of “illicit trafficking in influence”, which punishes any private individual who profits from an existing relationship with a public official, by giving or promising money or any other undue advantage, in consideration of the illicit influence of the public official, or to reimburse the official for the commission of an act in breach of official duties, or for the omission or the delay of an act which is due; and (b) the crime of “improper induction to give or promise an undue benefit”, which punishes both the official who induces an individual to give or promise money or any other benefit, and the individual; (iii) It increases the penalties for certain crimes of public corruption (e.g. the crime of corruption in the exercise of public functions is now punished with imprisonment from one to five years, increased from the previous law’s six months to three years); (iv) It expands the scope of the crime of private corruption, including not only the individual potentially punishable, but also persons working under the company’s senior management’s direction or control; (v) It extends the criminal liability of corporations pursuant to Italian Legislative Decree No. 231 of 2001 to (a) the crime of inducing to give or promise money or any undue advantage, and (b) to the crime of private corruption. Additionally, the new law introduces “white lists”, which are special lists of suppliers, providers of services and construction businesses compliant with anti-mafia legislation and working in specific sectors that are particularly exposed to the risk of mafia infiltration (e.g. the shipping of garbage). These white lists are to be drawn up and maintained by Italian Prefects. The new Italian Anti-Corruption Law also introduces relevant changes to the public sector, as follows: (i) The introduction of a new authority, the “National Anti-Corruption Authority”, with investigative and remedial powers (e.g. of adoption of standards, measures, and guidelines to be applied by public officials); (ii) The implementation of a “National Anti-Corruption Plan”, which includes both a risk assessment, aimed at identifying the areas at risk within public offices, and a gap analysis, to determine and improve the appropriate instruments to reduce and prevent the risk of corruption; (iii) The introduction of measures to protect public employees from direct and/or indirect discrimination when reporting wrongdoings related to their activity within the public administration (i.e. whistleblowing).
What impact does the new law have on foreign companies doing business in Italy?
Foreign companies doing business in Italy need to take the new Italian Anti-Corruption Law into consideration since it may apply to them as much as it does to Italian companies. Italian Criminal Law provides that (i) all crimes committed in the territory of Italy are punishable under Italian law, even if they have been committed by a foreign person or entity, and (ii) crimes are deemed to have been committed in the territory of Italy when the criminal action was performed in Italy, or when the damages resulting from the criminal action were suffered in Italy. Under Italian Criminal Corporate Law (Legislative Decree No. 231 of 2001, “Law 231”) a company shall be considered criminally liable when (i) the top management of the company, or (ii) the company’s employees commit, for the benefit of the company, certain criminal offences listed in Law 231 (e.g. the crimes of public and private corruption). Under Law 231, a company can be exonerated from liability in the following cases: (i) where the individual offenders have acted solely in their own interest and not in the interest of the company; and (ii) where the company can prove that it has adopted effective and specific internal compliance measures (i.e. that they have implemented effective internal control systems for the purpose of preventing offences, before any offence was committed, by an adequate internal compliance program tailored to the characteristics of the company and setting up a compliance office with independent initiative and inspection powers). Since the new Law on Anti-Corruption expands the criminal liability of corporations pursuant to Law 231 in regard to the crimes of (a) improper induction to give or promise money or any benefit and of (b) private corruption, foreign companies doing business in Italy should (i) conduct a risk assessment aimed at identifying the existence of any business areas at risk of the new crimes of corruption and identify any areas for improvement, if necessary; (ii) update their organizational model accordingly (e.g. to include the new crimes in the list of the crime to be prevented; to implement specific protocols and policies tailored to prevent the new crimes); (iii) evaluate whether the new Italian rules concerning the “white lists” mentioned above could be applicable to their business—and, if necessary, take steps to ensure they are compliant with the new requirements; (iv) prior to interacting with Italian companies and/or Italian public administrations, verify that they are compliant with the new Anti-Corruption Law.
What major differences are there between the Italian law and the UKBA, FCPA (for example, regarding extraterritoriality, ‘failure to prevent bribery’?)
The main differences between the Italian Anti-Corruption Law and the UKBA, FCPA are related to the crimes and the conduct that are punished, the individuals potentially involved, the extraterritorial application and the applicable penalties. While Italian Law and the UKBA punish the bribery of domestic and foreign officials as well as private bribery, the FCPA punishes only the bribery of foreign officials. As for the people involved, as illustrated above, Italian law prohibits any bribes to a foreign official and/or to a domestic official, as well as to the general directors and managers of a private company and to the persons under the direction or control of the company’s senior management. In contrast, under the FCPA only bribes to a foreign official, to obtain or retain business, are prohibited. On the other hand, the UKBA prohibits bribes paid to any person performing a relevant function (not limited to foreign officials) to induce them to act improperly. In regard to territorial application and jurisdiction, as stated above, Law 231 applies to Italian legal entities, conducting their business in Italy and abroad (unless the State where the offense occurred commences legal proceedings against them). Nonetheless, it could also entail liability for foreign entities, due to the fact that under the Italian Criminal Code all crimes committed in the territory of Italy are punishable under Italian law, even if they have been committed by a foreign person or entity. As noted above, a crime is considered to have been committed in Italy when only the damages resulting from the criminal action were suffered in Italy. – In contrast to the approach taken by Italian law, the FCPA applies only to US companies and citizens, foreign companies listed on the US stock exchange or any person acting while in the US. The UKBA has a broader application, since it is applicable to private citizens, wherever located, to individuals with a “close connection” to the UK (e.g. individuals ordinarily resident in the UK) and to corporations that do business in the UK regardless of where the acts or omissions which form part of the offense take place. – Finally, there are relevant differences with regard to potential penalties. In addition to fines and imprisonment (the amount and length of which is different in each system) Law 231, FCPA and UKBA provide their own additional anti-corruption instrument. For example, Law 231 permits under certain conditions the seizure of the amount paid or profit resulting from the offence as well as disqualifying sanctions; the FCPA provides for conditional, deferred, or non-prosecution agreements and corporate monitors.
How will authorities detect and reward companies with exemplary compliance programs/initiatives?
There are several benefits for companies that adopt and implement internal programs tailored to their specific characteristics and in compliance with anti-corruption laws. First, the companies can be exonerated from liability under Law 231 if they prove that they have established and implemented effective internal control systems for the purposes of preventing offences, before the offence was committed. Secondly, companies can adopt and implement an effective compliance program, as remedial action in order to prevent similar offences in the future. This will reduce the company’s exposure to monetary fines and disqualifying sanctions. Authorities monitor companies and gather relevant information to prevent bribery occurring through public sources, through the investigative powers prescribed by the criminal system, as well as the information and documents made available by the Chamber of Commerce. National and international authorities regularly cooperate among themselves in order to prevent bribery. Moreover, as mentioned above, the National Anti-Corruption Authority, recently introduced by Italian Anti-Corruption Law for the public sector, has investigative powers, such as the power to request from the public administration information and documents relating to any public office. Government and non-governmental institutions periodically conduct studies to identify the companies that have adopted internal programs in compliance with anti-corruption law. For example, Transparency International regularly monitors the websites of companies in order to prepare a list of “more ethical” companies.
Interview given to Alexandra Almy with the contribution of Marilena Hyeraci, Associate at the Litigation Department of Paul Hastings Milan.
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