CORPORATE LIABILITIES AS A CONSEQUENCE OF CRIMINAL OFFENCES IN ITALY: LEGISLATIVE DECREE NO. 231/2001

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1 CORPORATE LIABILITIES AS A CONSEQUENCE OF CRIMINAL OFFENCES IN ITALY: LEGISLATIVE DECREE NO. 231/2001 Rossella Torraca The article highlights the Italian legislation which has introduced for the first time in this Country the companies criminal liability. Legislative Decree no. 231/2001 provides also the companies with a list of crimes sourcing such liability. Such a list is subject to periodic updates and supplements. So far, around 100 crimes have been included in the list. The Italian legislator has also established that the companies should develop a set of compliance programs with reference to the activities specifically carried out in order to prevent the commission of the relevant crimes listed in the law which may originate the liability of the companies. These compliance programs must be described in a specific report (which should also be available on the web site of each company for visibility) called Model of Organization, Management and Control of the Company, which should be publicized to the benefit of the Company s employees, managers and collaborators. A Supervisory Body should be appointed by the Company in order to control, incentivize and update such Model of Organization, Management and Control. The full compliance to the provisions set forth in the Model of Organization, Management and Control and to the specific programs implemented by the Company may help the Company to avoid being involved in criminal proceedings triggered against the author of the crimes or, at least, to prove its non-involvement in the commission of the crime. INTRODUCTION I. THE RELEVANT CRIMES II. SUBJECTIVE AND OBJECTIVE REQUIREMENTS OF THE LIABILITY PURSUANT TO LEGISLATIVE DECREE NO. 231/ III. MODEL OF ORGANIZATION, MANAGEMENT AND CONTROL IV. EXEMPTION FROM LIABILITIES V. THE SUPERVISORY BODY VI. CODE OF CONDUCT CONCLUSION Attorney at Law at the Milan Bar, associate at MCM Avvocati, Via A. Appiani n. 2, Milan, Italy. Expert in corporate law and compliance, in particular in the fields of data protection law and corporate liabilities. 616 doi: / /

2 2015 LEGISLATIVE DECREE NO. 231/ INTRODUCTION The Legislative Decree no. 231/2001 (hereinafter indicated as Decree ) has introduced for the first time in Italy a liability, referred to companies, which is essentially criminal 1, occurring when the company s directors, managers or employees commit any of the typical crimes provided for by the law in the exclusive interest or for the benefit of the company. The aim of the Italian legislator was to adapt the Italian legislation concerning the liability of legal entities to certain international conventions previously signed by the Italian State 2 and to introduce an important innovation in the Italian legal system. Such liability is assessed by the criminal judge and triggered by an investigation carried out by the public prosecutor. The consequences of a conviction of the company may be extremely serious; in fact, the criminal judge may condemn the company to: administrative fines: The Decree provides that for each criminal offense is always applied a fine. This system of fines counts no precedent in the Italian legal system, as is based on an assignment by units : Each unit corresponds to a given amount, pursuant to section 10 paragraph 3 of the Decree, ranging from a minimum of to a maximum of 1, This fine, therefore, is applied to units in a number no less than one hundred and no more than one thousand. For each type of crime the legislator has provided an appropriate financial fine, which, in most cases, is included among a minimum value and a maximum value, and therefore the actual value of the fine will be each time determined by a free assessment of the judge. prohibition sanctions: section 9 paragraph 2 of the Decree provides 1 However, a debate over the legal nature of companies liability is still ongoing: according to an earlier case law, grounding on the nomen juris used by the legislator in the Legislative Decree no. 231/2001, the liability of the entities should be classified as administrative liability ; while according to other authors, the new type of corporate liability, even if nominally administrative, hides essentially a criminal nature. It is important to highlight that also a third court precedents orientation has developed: according to which, the Legislative Decree no. 231/2001 intended to introduce in the Italian legal system a third category of responsibility, called semi-criminal or criminaladministrative, which combines both the essential features of the criminal justice system and those of the administrative system. 2 In particular: Brussels Convention dated July 26th, 1995 on the protection of financial interests; Brussels Convention dated May 26th, 1997 for fighting bribery and corruption of public officials both of the European Community and of the Member States; OECD Convention dated December 17th, 1997 for fighting bribery and corruption of the foreign public officials in international business transactions. As will be explained below, the Italian legislator has ratified, with the Law no. 146/2006, the Convention and the protocols of the United Nations Convention against the organized transnational crime adopted by the General Assembly on November 15th, 2000 and on May 31st, 2001.

3 618 US-CHINA LAW REVIEW Vol. 12: 616 for the following prohibition sanctions: a. the prohibition to carry out the corporate activities and core businesses of the company; b. the suspension or revocation of permits, licenses or authorizations whereby they are linked to the committed criminal offense; c. the ban to contract with Government and Public Authorities, except for the performance of a public service; e. the exclusion from benefits, loans, grants or subsidies and the possible revocation of those already granted; f. the ban to advertise goods or services. Without doubts, such prohibitive sanctions have a heavy impact on the activities and the economy of a company, being able to cause, sometimes, even the termination of the company. Prohibitive sanctions can be applied for no less than three months and no more than two years and can vary based upon each type of criminal offense. Prohibitive sanctions concern the specific activity to which the criminal offense committed by the legal entity relates. The choice of the type of sanction to be applied is left to the judge discretional assessment. seizure: pursuant to section 19 of the Decree, company s conviction implies always the seizure of the price or of the profit which is originated by the offense, if it cannot be safely returned by the company to the damaged party without causing prejudice, however, to the rights acquired by third parties in good faith. If is not be possible to enforce a seizure of the price or of the profit of the criminal offense, the judge can impose the seizure for equivalent, which means that money, goods or other assets having an equivalent value of the price or profit of the offense are seized. publication of the conviction on national newspapers. The Decree suggests to the companies how to remove and/or mitigate the risks of commission of criminal offenses associated with this kind of liability: The company is required to enforce a set of compliance programs with reference to the activities carried out during its life in order to prevent that criminal offenses may be committed by employees, managers, persons in charge of specific duties and/or collaborators. The way suggested by the law is the adoption of the Model of Organization, Management and Control. I. THE RELEVANT CRIMES The crimes actually listed in the Decree giving rise to the Company s liability are: Crimes against Public Administration (such as, bribery and

4 2015 LEGISLATIVE DECREE NO. 231/ corruption) (section 24/25); Computer crimes and unlawful process of data (section 24 bis); Racket crimes (such as, mafia) (section 24 ter); Crimes against public faith (such as, use of false banknotes) (section 25-bis); Crimes against market and trade (such as, use of fraud in trade relationships) (section 25 bis 1.); Corporate crimes (such as, bribery involving individuals) (section 25-ter); Terrorism (art. 25 quater); Crimes of mutilation of female sexual organs (section 25 quater1); Crimes against individuals (such as, homicide, injuries ext.) (section 25 quinquies); Market abuse (such as, abuse of preferential information) (section 25 sexties); Crimes in violation of the rules for the protection of workers on the workplace (section 25 septies); Fencing, laundering, use of money, goods, benefits of illicit origin (section 25 octies); Copyright s infringement (section 25 nonies); Inducing not to render declarations or to render false declarations to the judicial authorities (section 25 decies); Environmental crimes (section 25 undecies); Use of extra-ue workers whose residence permit is irregular (section 25 duodecies); Transnational crimes (such as, traffic of immigrants) The following two kinds of crimes are particularly important: 1. Crimes against Public Administration (sections 24/25): These sections of the Decree include various crimes involving the relationship with Public Authorities, such as: PUBLIC BRIBERY (sections of the Italian Criminal Code): Consisting in the offence to offer, promise or give a bribe (money or other benefits) to a public officer in order to carry out, omit or delay typical duties of his job (PROPER BRIBARY) or in order to carry out activities opposed with respect to his duties (IMPROPER BRIBARY). 2. Corporate crimes (section 25-ter): this section includes many crimes; Law no. 190/2012 has also introduced in the Decree the offence of PRIVATE BRIBERY. PRIVATE BRIBERY (section 2635 of the Italian Civil Code): Consisting in the offence to offer, promise or give a bribe (money or other

5 620 US-CHINA LAW REVIEW Vol. 12: 616 benefits) to directors, managers, persons in charge of the drafting of financial reports, auditors and liquidator and/or persons under their direction and control in order to carry out activities in violation of their contractual duties, damaging their company or to omit to perform their duties. II. SUBJECTIVE AND OBJECTIVE REQUIREMENTS OF THE LIABILITY PURSUANT TO LEGISLATIVE DECREE NO. 231/2001 The liability pursuant to the Decree arises when persons in any way connected with the company commit any of the typical criminal offenses listed in the law only if such crime has been committed in the exclusive interest or to the exclusive benefit of the company. Not anybody committing one of these crimes is likely to directly involve the company s liability: In fact, only two kinds of persons are relevant pursuant to the Decree (Subjective requirement): Top managers (i.e. legal representatives, directors, managers); persons subject to the direction or control of the above mentioned top managers. The Company s liability shall be added to the (personal) criminal liability of each person who commits the offence. However, the company s liability is autonomous with respect to the personal criminal responsibility of the author of the crime. Moreover, the commission of the criminal offences will be relevant only if the above mentioned persons commit such offenses in the exclusive interest or for the exclusive benefit of the company (Objective requirement). Consequently, the company s liability is excluded if the criminal offence has been committed in the exclusive interest of the author of the crime or if the offence does not produce any kind of advantage in favor of the company. Summarizing, the company is liable if the offence: has been committed in the exclusive interest or for the benefit of the company; has been committed directly or supported indirectly by the top management of the company; is caused specifically by organizational inefficiencies; is made possible by compliant programs which are unsuitable; is due to a non-fraudulent avoidance of the compliance programs. III. MODEL OF ORGANIZATION, MANAGEMENT AND CONTROL The Model of Organization, Management and Control (hereinafter indicated as the Model ) is the tool allowing companies to remove and/or

6 2015 LEGISLATIVE DECREE NO. 231/ mitigate the risks of commission of criminal offences giving rise to their liability. For preventing and avoiding their liability, companies must: highlight the areas of risk connected to the specific core business of the company and stress clearly the typical activities carried out which may be considered risky with reference to the provisions set forth in the Decree; formalize in a report (paper and/or digital) and ensure a comprehensive set of compliance procedures and control activities which have the scope of reducing the risk of commission of the relevant crimes; ensure that employees, top managers, external collaborators have full knowledge of the criminal consequences arising out from the commission of the criminal offences for themselves and for the company. The efficiency of Model is always tested ex post by the criminal court. In order to be effectively functional and useful for combating the commission of the criminal offences relevant under the Decree, the Model should: Indentify the risky activities with reference to the relevant crimes Provide tools to minimize the occasions of risk Implement specific measures of prevention of such crimes Identify procedures of financial management in order to minimize and/or prevent the commission of crimes Provide the supervisory body with all the necessary information Implement a disciplinary system for ensuring the compliance with the Model Be reviewed on a regular basis and in particular if any violation was discovered or made any change in the company s organization, business or in the laws. IV. EXEMPTION FROM LIABILITIES The Decree, however, sets forth two kind of exemption from the companies liability depending on who is the author of the criminal offenses: differences are highlighted with reference to top managers and to persons subject to the top manager s control : The company may not be liable for the criminal offence committed by top managers if: has adopted a Model suitable for preventing such crimes; has appointed an independent supervisory body with effective authority to control the implementation of the Model and to ensure the full

7 622 US-CHINA LAW REVIEW Vol. 12: 616 compliance with it; Who committed the crime has fraudulently violated the Model; The supervision has been efficient and has never been omitted. The company, instead, may not be liable for the crime committed by a person who is subject to the top manager s control if before the commission of the crime has adopted and effectively implemented a Model suitable for preventing the crime which has been effectively committed. V. THE SUPERVISORY BODY An important role is assigned to the supervisory body (hereinafter indicated as Supervisory Body ). This Body may be composed by one or more members. Usually for companies of great dimensions, for holding companies or for companies which operate in particular markets (such as, companies which have frequent relationship with government and public authorities or which participate to public tenders), it is advised to appoint at least three members. The members may be employees, collaborators or external professionals who have specific expertise and knowledge in such matter (in most cases these members are lawyers, accountants, advisors). The Supervisory Body is appointed by the board of directors and the appointment of each member of the Supervisory Body usually last for two or three years. The Supervisory Body has the main scope to enforce and make effective the provisions set forth in the Model of the company. In order to perform its duties, the Supervisory Body refers to a member of the board on a regular basis and to the board of directors and the statutory auditors at least every 6 months. The Supervisory Body must have autonomy, independence, efficiency and continuity. Moreover it must have specific powers of initiative and control. From an operational point of view, the Supervisory Body should disseminate the Model among all the employees of the company and all the external collaborators and suppliers, contractors and/or sub-contractors which have any kind of relationship with the company. In order to effectively enforce the provisions set forth in the Decree, the Supervisory Body supervises all the activities carried out by the company. This supervision is extremely important in order to prevent the commission of criminal offenses. In fact, the Supervisory Body is required to monitor continuously the risks associated with the activities carried out by the company and to update the relevant information in its possession. In the event criminal offenses have been committed, the Supervisory Body has the duty to assess the violations. Moreover, the Supervisory Body must

8 2015 LEGISLATIVE DECREE NO. 231/ report the shortcomings of the Model and the required changes to the board of directors of the company. VI. CODE OF CONDUCT The code of conduct is an important annex to the Model of the company: it is an official document which may include the full set of obligations, duties and responsibilities of the managers and the employees of the company and it is approved by the board of directors and publicized through the company. This code has the scope to recommend, promote or prohibit to the managers and employees certain behaviors and to set forth specific sanctions proportioned to each violation. CONCLUSION This paper has examined the structure and the main features of the Italian Legislation regarding the company liabilities arising out from a specific set of criminal offenses. The result of this examination shows that companies should be made aware that the commission of at least one of the offenses listed in the Decree may give rise to a substantial criminal liability which may cause in the worst case the termination of its activities or of the company. Having said this, companies should invest time and money to implement an efficient set of compliance measures, codified into the Model which may help preventing in each area of activities carried out the risk of commission of the relevant crimes, fixing specific rules to be followed and strictly respected. Companies may also take in consideration the necessity to appoint the Supervisory Body for implementing, controlling and updating the Model and for developing among the employees, managers and collaborators of the company the culture of the prevention of crimes. The reason of the introduction of such specific regulation in the Italian legislation has to be found in the fact that in Italy some of the relevant crimes set forth in the Decree (such as, bribery and corruption) are unfortunately very common among the companies and the Italian State has decided to strongly contrast the bad behaviors of companies to make business. Under this perspective, it is important to consider the Model as a dynamic document, which should actively be implemented in every level of the company and updated when necessary in order to be always compliant with the new provisions of the Law, and not as a static piece of paper to be kept and forgot in a desk drawer.