COMING REFORM OF CORPORATE CRIMINAL LIABILITY IN ITALY IN AN INTERNATIONAL CONTEXT: WILL THERE BE DPAS?

20 December 2021
Thanks to Eleonora Vita for collaborating on this articleIn 2021, the European Union (the “EU”) allocated substantial sums to jumpstart the economy, and it also strengthened its regulations precisely to ensure that these sums of money are spent transparently as a way of safeguarding the market.

Along with the Procurement Directive 2014/25/EU and Directive 2019/1937 (the “Whistleblowing Directive,” which Italy has not yet implemented), the newly launched European Public Prosecutor’s Office (the “EPPO”) will be involved. The office will change the landscape considerably. The EPPO was designed to combat crimes affecting the EU financial interests listed in Directive 2017/1371 (the “PIF Directive”).

The EU relies on application of those rules for money to be spent wisely. Therefore, companies, that are major players should be aware of increasing risks and ready to cope with crises.

Companies may also play an active role in fostering transparency by introducing whistleblowing systems and cooperating with the authorities in case of internal investigations to uncover malpractice and unlawful conduct.

Cooperative behavior is incentivized by legal mechanisms, such as deferred prosecution agreements (“DPAs”) that allow companies to seek out-of-court solutions intended to resolve matters without full court proceedings, based on agreements negotiated with the prosecuting authority.

DPAs serve as mutually beneficial arrangements. They save on judicial resources and allow companies to avoid convictions while participating in their own rehabilitation.

The international scenario

The United States has been using this tool since the 1990s, so it has an established and structured practice. In the wake of the success of DPAs in the United States, countries such as the United Kingdom and France have adopted these types of regulations. Specifically, in these countries, DPAs are accessible only to companies and only for certain types of crimes, i.e., bribery and money laundering.

At the EU level, the EPPO has recently been looking at DPAs. As a brief reminder, the EPPO works on two levels: the central level run by the European chief prosecutor along with 22 European prosecutors (the “College of Prosecutors”) in Luxembourg and the national level run by 22 European delegated prosecutors, who conduct investigations and bring prosecutions before the national courts.[1]

Interestingly, the EPPO provides application of a simplified prosecution procedure where applicable national law allows DPAs. A chamber (a permanent chamber consists of a chairperson, i.e., the chief prosecutor, a deputy, or a European delegated prosecutor, and two European delegated prosecutors as permanent members) must give its approval for application of a DPA.

Likewise, since the Whistleblowing Directive requires a company to investigate if it receives a report, a company in a state whose legislation provides DPAs may be encouraged to cooperate with the authorities and report detection directly to them.

Even more recently, the Organization for Economic Co-operation and Development (the “OECD”) revised its “Recommendation for further combating bribery of foreign public officials in international business transactions” as of November 26.[2] In this regard, the OECD recommends that member countries consider using DPA-style mechanisms to resolve matters.

In short, many institutions are pushing toward solutions such as DPAs to encourage companies to engage in virtuous behavior.

What about Italy?

Currently, Italy does not provide the possibility of DPAs. However, Italian Minister of Justice Marta Cartabia has announced that corporate criminal law (Legislative Decree no. 231/2001) will be undergoing significant changes.[3] One of the most interesting developments that may change companies’ approach to corporate criminal liability and compliance concerns is precisely the opportunity to introduce DPA-style mechanisms or exemptions from liability based on cooperative behavior. This welcome development can also be considered in the light of the recent developments mentioned above.

As a step in this direction, the 2019–2020 Report on the activities of the Public Prosecutor’s Office of Milan merits mention. Indeed, among other issues, the office recommends including exemption from liability if the investigated company takes remedial action and cooperates with the investigation.[4]

At present, in cases of bribery and corruption only, timely cooperation with the investigations of the public prosecutor and the adoption of compliance programs, in addition to actions that mitigate the consequences of the crime, lead only to reduction of disqualification sanctions for a company.

The introduction in Italy of DPA-style mechanisms could be an opportunity to change how companies and professionals deal with corporate criminal liability issues, requiring proactive rather than reactive crisis management strategies.

[1] For more information regarding the EPPO structure, please refer to our article: https://portolano.it/newsletter/portolano-cavallo-inform-litigation-arbitration/the-european-public-prosecutors-office-at-a-glance-.

[2] See https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0378#mainText.

[3] Several areas of intervention are likely to be discussed, for more information please refer to our article: https://portolano.it/newsletter/portolano-cavallo-inform-compliance/recent-developments-in-corporate-criminal-liability.

[4] See https://www.procura.milano.giustizia.it/files/BRS_Procura_19-20.pdf.

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