Introduction
Facts
Supreme Court decision
The Supreme Court recently held that Article 25(5) of Law 231/01 allows a judge to issue a pre-judgment order that prohibits a company from carrying on business if the company's managers are alleged to have committed international bribery under Article 322(2) of the Criminal Code.(1)
When introduced, the law represented a fundamental step towards modernising Italy's criminal law and set out the concept of criminal liability for legal persons (for further details please see "Fraud and criminal liability of legal entities"). This decision sheds useful light on its application.
The company's managers were alleged to have made payments to foreign public officials in order to solicit the award of a number of significant contracts with the foreign country in question.
During the investigation and before trial, the public prosecutor asked the judge to prohibit the company from conducting business with the foreign country.
The Court of Milan dismissed the request on the basis of a literal interpretation of Article 25(4) of the law, which states that in proceedings involving EU institutions or officials, or the officials of a non-EU state (as listed in Article 322(2) of the code), the fine imposed on a company may not be greater than that applicable to the crimes of domestic bribery (ie, bribery without an international dimension) and extortion by a public officer.
Article 25(5) states that common domestic bribery and extortion are punishable by an order disqualifying the company from business. However, the court held that this penalty is unavailable in cases of international bribery. Following the principle that a judge cannot apply provisional remedies against a person (or legal entity) that cannot be enforced when passing sentence, the court rejected the prosecutor's request and did not disqualify the company from doing business abroad.
The prosecutor appealed to the Supreme Court.
The Supreme Court agreed with the principle cited by the Court of Milan; however, it clarified the correct interpretation. The Supreme Court stated that the general legal framework is intended to reinforce the fight against corruption, both nationally and internationally. The court noted the international commitments that Italy has undertaken in recent years, including its ratification of the Organisation for Economic Cooperation and Development Anti-bribery Convention 1997.
The court stated that Article 25(4) of the law refers to Article 322(2) of the code in order to broaden the scope of the crimes mentioned in the preceding parts of those provisions (ie, common domestic corruption and extortion). The reference does not mean that such offences can be punished only by fines.
Moreover, the court held that no other interpretation is available, as an alternative view would entail a difference in the system of penalties for bribery, depending on whether the crime in question was national or international in scope. Such a difference would have no basis in law or logic, given that the criminal circumstances of international offences are not necessarily more or less serious than those of offences without an international dimension.
The court concluded that Article 25(5) provides that a company can be prohibited from carrying on business not only in connection with alleged bribery that is restricted to the Italian territory, but also in cases involving the so-called 'subjective extensions' in Article 322(2) (ie, offences involving EU institutions or officials or the officials of a non-EU state).
Endnotes