ANALYSIS – A law unto himself?

In May, days prior to his election as prime minister of Italy, Silvio Berlusconi was busy brandishing a New Labour-style contract for his fellow citizens. The document sets out a series of promises to the Italian electorate to be kept during his current five-year mandate. In the event that four out of five goals have not been reached, the 65-year-old politician will stand down at the next election.

Yet one recent legislative step, which The Economist magazine intoned ‘would shame even the voters of a banana republic’, has prompted his political opponents to urge Italians to read the contractual small print.

The parliament’s lower and upper houses recently approved legislation ending the criminal offence of false accounting in private companies.

Anna Finocchiaro, an MP in the ‘la Camera’ (the Commons) for the Democrats of the Left Party, claims the new law puts the onus entirely, and unfairly, on shareholders or creditors to demonstrate loss as a result of alleged fraud.

Under the revamped rules, the time limit in which a person can be charged after an offence has been committed also changes, moving from 15 years to seven years and six months.

Finocchiaro maintains such measures undermine any confidence that has been built up in the Italian banking and business sectors. ‘The greatest damage as a result of this legislative revamp will be to the country’s productivity,’ she warns.

But at the centre of the polemic sits the thorny issue of conflict of interests in political life and the inability of successive governments to resolve any overlap. The incumbent Italian prime minister, his detractors allege, is a very good example of why the legislative void needs to be filled.

As well as the job of leading the country, Berlusconi also controls a vast media empire (TV channels, advertising company and publishing house) in addition to ownership of AC Milan, a ‘Serie A’ (Premier League) football club. The PM-cum-company chairman is also facing criminal charges relating to alleged falsification of accounts in one of his companies. As The Economist pointed out, the false accounting reshuffle means that Berlusconi, whose alleged misdemeanours date from before the seven-year cut-off, would be exempt from prosecution. A request to the Italian Ministry of Justice to expand on this legislative quirk is met with a terse ‘no comment’.

The Milan branch of the Italian association of accountants and auditors, which organised the professions’ national conference this month, is currently pressing for membership of the European Federation of Accountants and Auditors for SMEs. Peter Poulsen, EFAA’s secretary general and a delegate at the congress, maintains that Italian accountancy and auditing bodies cannot be held responsible for the actions of the Rome parliament. However, he hopes the relevant national organisations will be firm in their response to the government measures.

‘The changes to the false accounting laws may become a sticking point for Italians in Europe,’ comments Danish-born Poulsen, ‘because these measures refrain from opening up the debate on the issues of fraud and money-laundering to a wider public.’

But if the false accounting legal revamp is causing unease among European Union members, back home the wave of protest against modifications to laws governing cross-border co-operation in criminal matters has been nothing short of tidal.

In April 1959 Italy, along with other EU states, was a signatory to the European Convention on Mutual Assistance in Criminal Matters – a widely-used protocol which regulates the transfer of evidence for trial purposes from one country to another. Once an Italian judge could request faxed copies of bank statements in Germany from his colleague across the border with a swift telephone call. Now Italian law stipulates that a formal request has to be made through the appropriate government channels.

Evidence gathered in the assigning and the collating countries must converge with Italian law. All documents submitted in evidence must carry a ‘declaration of authenticity’ stamp, for example; uncertified, facsimile documents will no longer be admissible in criminal courts.

Yet under Swiss law (Switzerland implemented the convention in 1967 and signed a bilateral co-operation treaty with Italy in 1998) papers relating to bank accounts are not certified. The possibility of presenting evidence relating to Swiss banks, therefore, is likely to put Italy’s public prosecutors to the test.

The Democrats’ Finocchiaro estimates that some 810 court cases ranging from organised crime to paedophilia offences could now fall by the wayside as a result of the legislative changes. She is quick to point to what she terms the ‘timeliness’ of parliament’s actions – Berlusconi’s pending trials, the MP alleges, rely on evidence from Swiss banks. The government, which enjoys a 100-plus majority in the lower house, maintains it has simply tightened up the evidence-gathering process within the EU and beyond.

The EFAA, Poulsen underlines, is committed to facilitating ‘cross-border co-operation between the individual accountants and auditors within the Federation’. A commitment borne out by the Charter In Support of Fighting Organised Crime signed by the organisation and four other professional bodies (between them representing notaries, lawyers, tax advisers and the Big Five accountancy firms) in July 1999. The standards and guidelines set out in the charter are, he explains, ‘aimed at helping the individual professionals not to be part of – directly or indirectly – any form of organised crime’.

Italy’s Democrats are now calling for a referendum on the judicial co-operation law. In the same week that the legislation made its way onto the country’s statute books the BBC was reporting that Italian police forces were intensifying checks on the financial activities of suspects with alleged links to terrorist groups.

Finocchiaro believes any attempts by Italian magistrates to block assets, within the EU or overseas, will now be hampered by a system which will exacerbate rather than accelerate the legal process.

‘At a time when countries are pulling together to offer the maximum co-operation in terms of identifying bank accounts, etc,’ rounds the MP, ‘the Italian state introduces a law which makes this kind of collaboration much slower and much more difficult.’

Teresa Reilly is a freelance writer based in Italy.

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