Cracking down on corporate crime in Italy.

• Published date: 22 September 2016
• Author: Ruggiero, Rosa Anna
• Date: 22 September 2016

I. ITALIAN LAW NO LONGER TIED TO THE DOGMA SOCIETAS DELINQUERE NON POTEST: LEGISLATIVE DECREE No. 231, 2001

With the implementation of Legislative Decree No. 231 on June 8th, 2001 (L.D. No. 231/2001), Italy aligned itself with other European countries (France, the United Kingdom, Holland, Denmark, Portugal, Ireland, Sweden, Finland), which already provided for the liability of corporate entities responsible for committing certain crimes. (1) The previous gap in legislation had created serious implications at an international level, especially in light of the objective of fostering cooperation in the AFSJ (Area of Freedom, Security and Justice in the European Union) through, for example, the progressive alignment of Member States' legislation. These implications were amplified by the fact that corporate crime was increasing more rapidly than crimes committed by individuals, with manifestations that often transcended national borders. In this context, Art. 11 of Law No. 300, issued on September 29th, 2000, provided for an explicit delegation to the Government to regulate the administrative responsibility of corporate entities, with the intent to conform Italian legislation to the urgent pleas coming from the European Community. (2)

Resistance to introducing corporate responsibility for crimes committed by managers and employees undoubtedly stemmed from the traditional dogma, societas delinquere non potest, generally regarded to be protected in Italy under Art. 27 of the Constitution, according to which criminal liability is personal. This anthropocentric view led to the conclusion that even when the commission of crimes was facilitated by the organizational structure in which the individuals operated, it was only those individuals who took action. (3) Corporate entities could not be held criminally liable for these crimes, they could only be sued in civil court for the damages suffered as a consequence of the crimes. (4)

The provision of Art. 27 does not, however, necessarily lead to the conclusion that corporate entities should be excluded from criminal liability. The principle that criminal responsibility is personal could be understood as a prohibition against the assumption of responsibility for others. (5) From this perspective, and drawing on the "organic theory," according to which the actions of a corporation's officers can be directly attributed to the collective entity, the legal person can be held responsible for the crime itself. (6) In other words, if the corporation can be held responsible for the legal acts of those who carry out work on its behalf, the same should be true for illegal acts. (7) This conclusion is also supported by recent studies on business administration, which, through bestowing the corporation with a more vital image, attribute decisions adopted directly by the corporation and not the individuals who operate within it, thus recognizing that the corporation itself has its own free will. (8)

Nevertheless, for a long time and, in part, still today, (9) Art. 27 has been interpreted, even by the Constitutional Court, (10) as an affirmation of the principle nulla poena sine culpa, which leads to excluding the existence of criminal responsibility if a psychological link cannot be proven between the agent and the fact. (11) Given that criminal liability does not exist when intent cannot be ascertained, corporations would fall outside the criminally reproachable area since it would be impossible to attribute to them a psychological mind-set equating to intent. (12)

Increasingly, due to the rapid growth in corporate crime, a different interpretation of the constitutional principle provided for by Art. 27 is beginning to take hold; crimes are attributed to the agent (collective and/or individual) who is responsible for the illegal conduct, rather than focusing exclusively on the psychological link between the agent and the fact. (13) Hence, when an individual is the mere executor of illegal behavior made possible because of the company policy, or the corporate organization is unable to oppose or prevent this conduct, the corporation can also be held liable. (14)

Along the road moving away from the dogma societas delinquere non potest, however, a further obstacle has been encountered: the same Art. 27, which establishes personhood as a precondition for criminal responsibility, affirms that the sentence issued must have a re-educational purpose. (15) It is outside the scope of this paper to evaluate the practical application of this objective in a nation such as Italy, in which sentences--if and when served --seem to be merely retributive in the majority of cases and offer few chances for the criminal to be rehabilitated. However, many have observed that a rehabilitative purpose only works if the recipient of the sentence is an individual who can embark on a path of reformation, which is impossible for a collective entity. (16) This position is reinforced by the fact that corporations can change their corporate structure over time, and a sentence could be issued many years after the commission of the crime. (17) This hinders the effectiveness of the reformation process, as far as the organization and the management of the entity can significantly change from the moment of the decision to that of the concrete application of sanction.

The principle that criminal liability requires personhood undoubtedly gives rise to various considerations. Nevertheless, even this argument, which appears to exclude corporations from criminal liability, can be overcome. In fact, the effect of time passing between the commission of the crime and the delivery of the sentence undermines the objective of reformation even when the recipient of a sentence is an individual who, similarly, could be a completely different person many years after the fact. Paradoxically, even more so for corporations and for all the reasons that will be explained henceforth, the mere prospect of being convicted can push companies onto a virtuous path and be instrumental in bringing them back to the market with a renewed respect for legality. (18)

II. NATURE OF THE LIABILITY

The trend of moving away from the dogma societas delinquere non potest, which previously resulted in excluding corporations from criminal liability, has not received unanimous consensus. (19) When L.D. No. 231 was introduced in 2001, it became necessary to classify corporate liability resulting from crimes committed within the organization or illegal conduct from which the corporation benefited. The Italian Legislature preferred to opt for an ambiguous solution, utilizing the expression responsabilita degli end per gli illeciti amministrativi dipendenti da reato [corporate liability for administrative violations hinging on crime]. In other words, the conduct attributable to the entity is an administrative violation that is derived from crimes committed by individuals who operate within the organization.

The "231" system, therefore, is aimed at tackling corporate crime, which can manifest itself in different forms. There are cases in which corporations are intrinsically illegal insofar as they were created for the purpose of dedicating themselves to crime; others that pursue, not as an exclusive objective, but predominantly, the commission of crimes; and finally, corporations for which criminally illegal conduct is among the risks they are willing to take in order to make a profit. (20) L.D. No. 231/2001 seems to target legal persons that fall into the last category, largely because one of the Legislature's objectives is to bring the entity back into compliance with the law. (21) This is an aim that can be realistically pursued only when corporations have the potential to organize themselves differently. This includes cases in which criminal activity is part of the prevailing company policy, without constituting the corporation's exclusive purpose, and in cases in which the crimes are attributable to an organizational shortcoming or lack of oversight.

Returning to the vexata quaestio of the nature of the liability, especially in the aftermath of L.D. No. 231/2001, Italian scholars were divided into two very different positions. (22) Those who supported the criminal nature of the liability (23) were opposed by those who favored complying with the legislative terminology and, therefore, concluded that the liability was inherently administrative. (24) There were also those who claimed that L.D. No. 231/2001 introduced a tertium genus (25): a hybrid between criminal and administrative responsibility.

The nomenclature did not generate interest purely for speculative reasons. The decision to classify the liability as criminal, administrative or mixed resulted in serious consequences. Only by recognizing the criminal nature of the responsibility can all the protections and guarantees, which characterize the criminal system, be extended to corporations. Otherwise, it is necessary to refer to the principles created for the administrative violation outlined in Law n. 689 introduced on November 24th, 1981, which undoubtedly offers fewer and less stringent safeguards to protect the accused. (26)

It must be noted, however, that what is written in the statute is not always a reliable ally to define the nature of the liability. As the European Court of Human Rights (ECtHR) explains, cases can fall within the area of criminal liability even when they are not classified as such under national law. (27) Member States often categorize illegal acts which are substantially criminal in nature as administrative violations in order to deny the defendant greater safeguards. (28) In these cases, the Court, verifying the applicability of fair trial rights protected by Art. 6 of the European Convention of Human Rights (ECHR), decided it was not bound to the nomen juris established by the national Legislaure: the ECtHR determined the criminal nature of illegal acts even when they were not...