Doing Business in Italy? You Have Been Warned…
Monday, February 18, 2013 at 8:03AM
Thomas Fox in ENI, George W. Bush, Gordon Brown, India, Italy, Red Flags, Silvio Berlusconi, dDue Diligence

Former Italian Premier Silvio Berlusconi (Photo courtesy of Wikipedia)Last week, I was discussing a report with fellow compliance practitioner Craig Bloom, that Giuseppe Orsi, President of one of Italy’s largest conglomerates, Finmeccanica, SpA, was arrested under allegations of bribery in Finmeccanica’s sale of twelve helicopters to the Indian Government in 2010.

The Indian Government has suspended the sale pending an investigation into these allegations. It is important to note that the Italian Government owns just over 30% of Finmeccanica. Now, Italian investigators are looking into the company’s dealings in Latin America, Asia, and other EU countries.

Craig, who is fluent in Italian, told me about some of the comments by former Premier Silvio Berlusconi who said that bribes are a necessary part of doing business.

Quoting the Italian newspaper Corriere Della Sera, in an article entitled, “Paying Bribes Abroad A Matter of Necessity”, Berlusconi said “We can no longer compete abroad. We’ve been shooting ourselves in the foot. No one will do business any more with ENI, or ENEL, or Finmeccanica. Bribery exists. It’s pointless to ignore reality. Paying a bribe abroad is a matter of necessity.”

But the former Prime Minister, who is running for reelection, went even further, saying that “Bribery is something that exists and you can’t ignore situations of necessity if you are going to negotiate with third-world countries or certain regimes.”

Imagine former President George W. Bush or former Prime Minister Gordon Brown making similar public statements with regard to the inevitability and persistence of bribery in developing nations.

A compliance practitioner should keep abreast of changes or other information which may indicate a greater risk of bribery and corruption. When the former Prime Minister of a country you are doing business in or with says that bribery is just a requirement of doing business, this puts you on actual notice that something may well be amiss.

The time is now for you to assess your risks, perform more or additional due diligence, monitor and audit your third parties in that country and then train any high risk parties. The same would be true for any joint venture relationships that you might be in with companies from said country. Do not wait, do it now as you have been warned….

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Thomas Fox is a contributing editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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