Italy Implements New Anti-Corruption Law

March 26th, 2019

The drumbeat of stronger, newer anti-corruption statutes continues across the world, and now Italy has joined the march with an overhaul of its anti-corruption law. Compliance officers with operations in Italy should take note and ensure that their compliance programs will keep pace with what the new law requires.

Italian lawmakers adopted the statute — nicknamed the spazzacorrottilaw, which colorfully translates as “the bribe destroyer”—in December. It went into effect at the end of January.

Foremost, the spazzacorrotti law tries to hold public officials within Italy more accountable for misconduct which translates to longer jail sentences, longer bans from holding other public office, and a longer statute of limitations for crimes. That’s not surprising. According to the Corruption Perception Index, Italy ranks among the most corrupt countries in Europe, and anti-corruption is a key issue for Italy’s largest political party, the Five-Star Movement.

Still, the law also introduced numerous measures to hold companies more accountable for offering bribes. For example, it establishes corporate criminal liability for offering bribes to government officials and creates sanctions such as fines or bans from bidding on future government contracts.

The law also includes enticements for companies to cooperate with Italian law enforcementinvestigating corruption allegations. For example, if the company cooperates in an investigation, helps to find evidence that implicates individual wrongdoers, and remediates its weaknesses, the company can be subject to shorter penalty periods.

(For the record, the spazzacorrotti law does not address whistleblower hotlines or anti-retaliation protections for whistleblowers; those issues were addressed in a separate law Italy enacted in 2017).

Preparing for Compliance

In many ways, the spazzacorrotti law is nothing new to compliance officers within global corporations. What the statute requires them to do within Italy, many companies have already been doing to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, or other anti-corruption statutes that have been driving corporate compliance efforts for years.

So, the question isn’t whether corporations need to build any newcapabilities into their existing compliance programs; they don’t. Rather, compliance officers will need to assure that their operations in Italy understand the spazzacorrotti law’s significance, and that the compliance program effectively guides employees to fulfill those duties.

So, for example:

  • Training may need to change, to incorporate the law and what it means for employees working in Italy;
  • Messages from executive leadership may need to change,to stress the importance of taking anti-corruption procedures seriously;
  • Investigation protocols may need to change,if Italian regulators begin inquiring about potential misconduct more often.

Compliance officers should also consider that the penalties for public officials convicted of corruption have increased sharply: longer prison terms, larger fines, and even potentially lifetime bans from future public service. At the same time, the law also introduces a “non-punishment clause” to lessen those punishments if the suspect voluntarily reports the misconduct before an investigation begins.

As a practical matter, that means public officials accepting bribes from a company will have more incentive to turn against the company — and therefore put the company in prosecutors’ crosshairs. So the enforcement risk for corporations will increasethanks to the spazzacorrotti law, because it offers more inducements for the corrupt officials to speak up.

The good news is that Italy’s new anti-corruption law largely conforms to what global corporations have seen elsewhere for years: establishing criminal corporate liability, but also giving companies an exit ramp from prosecution that rests on voluntary disclosure, cooperation, and remediation of compliance program weaknesses.

The challenge for compliance officers will be to ensure that its training, messaging, and business procedures in Italy take the spazzacorrotti law seriously, since the more cozy, “wink wink, nod nod” attitudes about public corruption are clearly something the Italian government now wants to end.