Investigations trends/developments
Tax evasion, tax credits fraud, various frauds related to EU and national funding, and money laundering were at the forefront of criminal investigations by authorities. Business sectors targeted included health, construction, retail, transportation, distribution, sport and logistics.
The authorities enhanced the application of measures aimed at dismantling criminal organizations’ infiltration of legitimate businesses, including monitorships and seizures.
Authorities have increasingly resorted to jurisdictional prevention and monitoring measures to fight the exploitation of labor in companies regardless of any connection with criminal organizations.
Italy scored 56 points out of 100 on the 2022 Corruption Perceptions Index reported by Transparency International and corruption remained one of the main focuses of white-collar crime investigations in 2023. Authorities adopted more proactive and preventive measures to combat corruption, such as strengthening transparency, accountability, and integrity systems, promoting whistleblowing and civil society participation, and imposing sanctions and seizures, including disqualifying sanctions levied against companies.
Law reforms impacting corporate criminal liability
New whistleblowing rules
The EU Whistleblowing Directive was implemented in Italy in 2023. Public and private entities must implement whistleblowing channels for employees and other stakeholders for reporting concerns regarding legal or regulatory compliance and/or for reporting suspected wrongdoing or unlawful or unethical conduct.
The duty applies to private entities that:
- in the last year, employed an average of at least 50 employees; or
- adopted an Organizational, Management and Control Model under the Legislative Decree 231/2001 (which is the Italian law that provides for the quasi-criminal corporate liability of corporations); or
- operate in specific and identified sectors, eg, financial services.
A whistleblower is also able to report to the ANAC (the Italian National Anti-corruption Authority) and to the mass media.
Specific penalties apply for a failure to adopt whistleblowing channels or to follow up on reports.
The new whistleblowing regime creates a more favorable and secure environment for potential whistleblowers, who may be more willing and confident to come forward and disclose wrongdoing. This is likely to result in more internal and external investigations.
New criminal offences triggering corporate criminal liability
Italy has always recognized civil and administrative liability for companies, but until 2001 did not provide for corporate criminal liability. Since 2001 corporate criminal liability is triggered if criminal offences included in a compulsory list have been committed by persons holding representative, administrative or managerial positions in a company, or by persons working under their control or on its behalf, provided that these persons have committed the crimes at least ‘also’ in the interests, or for the benefit, of the company.
In 2023 these new criminal offenses were added to the list:
- ‘Bid rigging’ which punishes anyone who obstructs or displaces tenderers with violence or threats, or with gifts, promises, collusion or other fraudulent means, or who prevents or disrupts tendering procedures.
- ‘Obstruction in the selection of a contractor’ which punishes anyone who, with violence or threats, or with gifts, promises, collusion or other fraudulent means, attempts to frustrate a public authority’s selection procedure and criteria in advance of a public tender being launched.
- ‘Fraudulent transfer of value’ punishes conduct aimed at hiding assets to frustrate law enforcement or concealing criminal property or stolen goods.
These additions are part of wider reforms, starting in 2021, which introduced corporate criminal offences of fraud in public procurement, undue use and falsification of payment instruments other than cash and computer fraud aggravated by the transfer of money or other value, including virtual currency.
A number of the new offenses relate to the tender processes, so we expect to see an increase in investigations associated with public contracts.
The introduction of more predicate offences suggests that companies adopting an Organization Management and Control Model under Legislative Decree 231/2001 should review their internal control and risk management systems to ensure that their Model 231/2001 is adequate and updated.
Internal investigations – key considerations
The new rules on whistleblowing will impact on internal investigations. Internal investigators are likely to have to deal with more reports, as well as the potential risks of retaliation, discrimination, or defamation against whistleblowers. Companies will need to adopt specific procedures for receiving, managing, and verifying whistleblowing reports, as well as ensuring the confidentiality and protection of whistleblowers.
The need to investigate reports may require the involvement of external resources and the adoption of corrective action to strengthen internal controls.
Under Italian law, legal privilege only applies to an internal investigation if a lawyer has been formally appointed and certain criteria and formalities provided for by the Italian Code of Criminal Procedure are met.
Cross-border coordinated investigation and enforcement activity
Since its establishment in 2021, the European Public Prosecutor’s Office (EPPO) has conducted various investigations across the EU and about 30 of them have been referred to Italian courts. EPPO’s investigative activity has been focused on VAT-related offences in several areas, including electronic devices and technologies, and other fraud on public funds, including agricultural funding fraud, as well as ties to organized crime.
For example:
- At the request of EPPO in Milan, there was an investigation into a large VAT fraud scheme involving a complex network of companies established in several EU countries, with estimated damage of approximately EUR50m, involving small electronic devices.
- Another VAT fraud scheme, with estimated damage of at least EUR53 million, involving VoIP (Voice over Intranet Protocol), a technology that allows users to make voice calls via the intranet. The case involved companies in the Czech Republic, Germany, Italy, Romania, Switzerland and the UK.
