Liability can be found, under Legislative Decree No. 31 of 2001, on the part of a holding company for offences committed in connection with the activities of its subsidiaries, provided that a) the person acting on behalf of the holding company acts in concert with the person committing the offence on behalf of the controlled entity; and b) the holding company appears to have obtained a concrete advantage from, or pursued an actual interest by way of, the offence committed in the context of the subsidiary’s activity.
– Supreme Criminal Court, Second Division, No. 52316 of 9 December 2016 –
1. The case at issue
The case on which the Court ruled is one of fraud designed and perpetrated by top managers of the Ilva Group (a renowned Italian iron-and-steel industry group belonging to the Riva family, who controls it through the family holding company, Riva Fire s.p.a.) with a view to obtaining State subsidies. More specifically, between 2008 and 2013, Ilva s.p.a. (the main operational company of the group), through a “financial cycle” involving Ilva s.a. (a Swiss company created ad hoc by the Riva family and only apparently operational), Eufintrade s.a. (a financial company colluded with the Ilva Group) and Banca Intesa (acting as an intermediary between Ilva s.p.a. and Simest s.p.a.), faked the grant of a credit facility in favour of foreign purchasers, which as a matter of fact was not granted, thus obtaining funds from the Italian Ministry of Public Development for Italian exporters eligible for such subsidies. In such a way, the Ilva Group managed to obtain, at the same time, immediate payment for products and the grant of State subsidies. In light of this, the managers of Ilva s.p.a., Ilva s.a., Eufintrade s.a. and Riva Fire s.p.a. were summoned to court under the charge of criminal conspiracy (under Article 416, paragraphs 1 and 2 of the Italian Criminal Code) and aggravated fraud for misappropriation of public funds (under Article 640-bis of the Italian Criminal Code), as was also Riva Fire s.p.a. under the charge of administrative liability arising from fraud, under Article 24, paragraphs 1 and 2 of Legislative Decree No. 231/2001. The first-instance proceedings ended with both the accused and the company being sentenced. The Court of Appeals then confirmed the first- instance judgment. The accused and the company challenged the judgment of appeal before the Supreme Court. As for the company, the grounds of appeal submitted related to, respectively: the first one, the possibility of recognising a predicate offence; the second one, the existence of an interest or advantage of the company; the third, the exclusion of the company’s liability in light of the adoption of the Organisational Model; and the fourth one, the preconditions for seizure. More specifically, in the second ground for appeal, the applicant argued that no liability could be alleged against Riva Fire s.p.a. as the fraud was committed in the interest and to the benefit of Ilva s.p.a. only. The Supreme Court dismissed the appeal on the ground that the contested conducts were adopted and resulted in advantage for Riva Fire s.p.a. too, whose top management was, moreover, the same as at Ilva s.p.a.
2. Administrative liability under Legislative Decree No. 231/2001 within groups of companies
Legislative Decree No. 231/2001 only regulates the case when an individual company is called to account for administrative wrongful acts. Nevertheless, there is no provision on groups of companies, a phenomenon which is, however, particularly significant. The “positive” effects of an offence may indeed impact on companies connected with, or related to, the one to which the wrongdoer belongs. As a further evidence of this, it should moreover be noted that a group’s liability can be found not only at the level of a “vertical” group but also at the level of a “horizontal” group (comprising multiple companies having equal roles) as well as in the context of contingent and temporary companies such as temporary groupings of undertakings and joint ventures. Though, under what conditions can a holding company be held liable in connection with the activity of a subsidiary? Earlier case law was of the opinion that the mere existence of a group’s interest, even if limited to a mere increase of the group’s profitability or value, be a necessary and sufficient condition for alleging administrative liability on the part of a holding company. This view was, however, a matter of controversy: indeed, if administrative liability is based on organisation negligence, no reproach can clearly be made in the absence of negligence on the part of the holding company. By the above judgment, the Supreme Court, definitively overturning the theory of the group’s interest, comes to a solution that appears to be more balanced and respectful of the law, linking the holding company’s liability for offences committed by a subsidiary in the context of the holding’s activity to two basic preconditions. The first precondition is that predicate offences should be committed by the subsidiary in complicity with at least one individual acting on behalf of the holding company, which means that a subjective link should exist between the wrongdoer, linked to the subsidiary, and the holding company. Such precondition is met, for example, when the wrongdoer is a director of both the subsidiary and the holding company or in any event has a managerial role in both companies (e.g. director in one company and CFO in the other one), or in the event that the member of the holding company, although being subjectively linked to the latter only, acted in concert with the member of the subsidiary, contributing to the offence under Article 110 of the Italian Criminal Code. The first precondition is that the offence should be committed also in the interest of the holding company: as already mentioned, the holding company’s interest or advantage cannot be a mere generic group’s interest in an increased profitability or value of the group, but rather a specific and actual interest.