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Further Reading

Italy - Corruption

Corruption and organized crime are significant impediments to investment and economic growth in Italy. Transparency International's (TI) Corruption Perceptions Index 2008 ranked Italy 55th out of 180 countries evaluated. Among EU states, only Greece, Lithuania, Poland, Romania and Bulgaria scored worse. Moreover, less than 30% of the population believes the government is effective in fighting corruption. In this survey Italians rated their Parliament and political parties as "very corrupt". TI's "Bribe Payer's Index" ranked Italy in the lower third of countries, in the same group as Saudi Arabia, Brazil and Malaysia. Among the countries of Western Europe, Italy came last. The NGO Global Integrity (GI) noted that Italy has very poor mechanisms to fight corruption in public administration and lacks effective law on conflict of interest. GI also found serious weaknesses in the protection of 'whistle-blowers' and in the regulations governing political party financing. Finally, the World Bank in its 2007 "Governance Matters" report found Italy steadily deteriorating in its control of corruption. Among OECD countries only Mexico and Turkey had lower anti-corruption ratings from the World Bank.

Italy ratified the 1997 OECD Convention on Combating Bribery in September 2000. However, with the recent reorganization of the Corruption Commission, it is unclear whether Italy is able to prosecute the bribery of foreign officials, leaving it unable to fulfill its obligations under the convention. Although Italy has signed the United Nations Convention Against Corruption, as of January 2008 it has yet to ratify the document. Corruption is punishable under Italian law. As in all judicial processes, much discretion regarding punishment is left to the presiding judge. Most corruption in the recent past has involved government procurement or bribes to tax authorities. Bribes are not considered deductible business expenses under Italian tax law.

Organized crime is present throughout Italy, but is concentrated in four regions of the south (Sicily, Calabria, Campania, and Puglia). In November 2008, Confesercenti, the Italian confederation of trade, tourism, and service company operators released a report estimating that organized crime (Mafia, Camorra, 'Ndrangheta and Sacra Corona Unita) - is estimated to have a turnover of euros 130bn, with "commercial" activities accounting for euros 92bn, or 6 per cent of Italy's GDP. A February 2009 report by the Eurispes research institute estimated that organized crime accounts for nine percent of Italy's GDP. Numerous potential American investors have expressed concern about organized crime to the U.S. Consulate General in Naples and the Embassy in Rome.

Organized crime is involved in racketeering, loan sharking, drug smuggling, and prostitution. Confesercenti estimates loan sharking accounts for euros 15bn of Mafia income. Narcotics are by far the most profitable activity, traded across Europe and worth euros 59bn. The report underscored recent warnings by anti-Mafia prosecutors that criminal gangs were expanding their activities into trade, tourism, the gaming industry, restaurants, construction, rubbish disposal and the property and health sectors. The report estimated that about 150,000 shopkeepers pay the pizzo, or protection money, to Mafia gangs, amounting to euros 6bn a year. For example, a stall in a food market in Naples has to pay euros 5 - 10 a day, while a Palermo construction site may hand over euros 10,000 a month. According to the press, loan-sharking seems to be increasing as banks have become more reluctant to lend in the current difficult economic environment.

A February 2009 report by the Eurispes research institute estimated that organized crime accounts for nine percent of Italy's GDP. Numerous potential American investors have expressed concern about organized crime to the U.S. Consulate General in Naples. Researchers estimate Italy's underground economy may be equivalent to between 20 and 27 percent of GDP. A great deal of economic activity is kept "underground" to avoid taxation.