Italy - Clean Hands [Mani Pulite]

In the early 1990s the 'Bribesville' scandal resulted in the 'Clean Hands' [Mani Pulite] investigation by Milan prosecutors which led to the collapse of the then-dominant Christian Democrat and Socialist parties. Former Clean Hands prosecutor Antonio Di Pietro later entered politics and created the opposition Italy of Values (IdV) party. Even multiparty systems run risk to suffer from corruption when major parties politicize society and thus take control over important sectors of business and public life. Under such conditions, a change in government might indicate who is 'in' and who is 'out', but might no longer provide voters with an alternative. The case of Italy illustrates this corruption regime. The 'clean hands' investigation in the early 1990s proved that Italian political parties had managed to politicize and control all aspects of public life, from the bureaucracy to public enterprises to civil society. Corrupt exchanges took place no matter which party was in government.

Surely it was evident to everybody that Italy was filled with corruption at the highest levels. The difference between then and now is that since 1992, some legal action has been taken about it. At the end of the 1970s and early 1980s) there was a significant growth of corruption. Italy had never been a pure country but probably there has been an uptake in corruption that started in the 1970s; corruption kept on growing until the 1990's. And it became beyond what the people were accustomed to and could be accommodated to within the economy, it became not just a political, moral and legal problem, but became an economic problem.

Tangentopoli (Italian for bribeville) was the name used to indicate the corruption-based system that dominated Italy until the Mani pulite investigation delivered it a deadly blow in 1992. The term coined by Italian newspapers in the early 1990s to describe the system of widespread political corruption and illegal party financing linked to tangenti ('rake-offs'), which were paid to obtain public contracts. It first came to light in Milan, where in February 1992 the Mani Pulite [Clean Hands] inquiry uncovered a web of corruption in the town's public administration. Originally perceived as a minor scandal involving kickbacks on a cleaning contract, Tangentopoli became a rallying cry for reform, and seriously affected the 1994 Italian elections.

Italy had been in recession since the summer of 1992, and in 1993 various indicators suggested continued weakness. The consumer confidence index (n.s.a.) declined 1.2 percent in December 1992 and registered a cumulative drop of 14.4 percent during 1992. Since 10 February 1993, three cabinet members, including Finance Minister Giovanni Goria, had resigned because of the fallout from the tangentopoli scandal, related to kickbacks paid by business to the parties in return for public contracts.

The Tangentopoli trials of the 1990's drew considerable attention, even outside of Italy, to the extent of corruption there. But there weren't many trials prior to that time, though one had to be blind or deaf not to realize the corruption that was around.

One that had some impact directly on American attitudes and or actions was the collapse of a company called "CIR", a petrochemical company in Sardinia, to which several American banks had made loans thinking that it would be considered a state-owned company and that the Italian government would come to the rescue if the company got into trouble. This was a sham company that really was run by political looters and the Italian state, to the surprise of some, did not come to the rescue when it went "kerplunk." This had tremendous impact. For several years American banks would not make further loans to Italy.

A second instance regards straightforward corruption. Gianni De Michelis was Minister of State Participations, then Minister of Labor. People would complain that he was raising the kickback percentage on contracts that he had control over. Italian business was used to paying a certain amount to their political masters but he raised it. He was especially rapacious.

A third case, which did make the Italian newspapers, a scandal of some note, was a special deal that ENI the Italian State oil company, had made to buy oil from Saudi Arabia, the so-called ENI-Petromin Deal. Petromin was the Petroleum Ministry of Saudi Arabia. It was revealed eventually that 100-plus million dollars had been channeled by Petromin, not to ENI, but to bank accounts in Switzerland which were the under the control of various Italian political forces, in both the Christian Democratic and Socialist parties. The then head of ENI, Mazzanti was forced out of office but this didn't mean that the practice had ended. The affair was probably was exposed because not everybody got paid off and those who didn't share in the loot exposed it. Or maybe knowledge of the payoffs was used as political leverage. But it was big money even by current day standards.

The fourth, the most serious in a sense, that it seemed to represent going beyond a certain level of behavior, involved the repercussions of the failure of the Sindona's banks, and the Bank of Italy's inspection of the Calvi bank, the Banco Ambrosiano. The Bank of Italy failed to rescue either Sindona or the Ambrosiano.

The Ambrosiano was a large bank, but not one of the very largest banks in Italy. It had roots in what in Italy is called "Catholic finance." Most of Italy's big banks had "lay," anti-clerical backgrounds. The Ambrosiano had a Catholic background, and it had connections with the Vatican Bank, the IOR, which happened to have an American Archbishop, Marcinkus, as its president in those days. At any rate, Calvi, like Sindona before him, was a crook who managed to become a banker. He ran all sorts of "Ponzi" type schemes. When the Ambrosiano finally began to crack under the impact of these schemes, and under the Bank of Italy's scrutiny of them, the Bank of Italy refused to rescue it and was ready to let it go into liquidation, just as it had the Sindona banks.

The Bank of Italy's failure to rescue the two "Catholic" bankers enraged certain forces, mostly in the Christian Democratic Party. This was a period (one of the many periods) when Guli Angeredi was Prime Minister. A pair of friendly right-wing magistrates arrested the governor of the Bank of Italy, Carlo Baffi, and one of the deputy director generals, Mario Sarcinelli. Baffi, because of his age (he was nearly 70), was only placed under house arrest. But Sarcinelli was kept in Regina Coeli, the Rome jail, for a couple of weeks. Baffi and Sarcinelli were, incredibly, accused of lack of proper bank supervision. Everybody knew that they were being burned for the very reverse, for not having rescued "pet banks" from their just desserts. It seemed to me to cross the line from mere financial corruption to using the judiciary and police to threaten and harm those who stood in the way of illicit behavior.

A few months after the incarceration of Sarcinelli another transgressive action occurred, the assassination of Ambrosoli, the liquidator of the Sindona banks, who had been appointed by the Bank of Italy, and who had begun also to identify illegalities on the part of Calvi. Ambrosoli's killer was an American mafioso evidently engaged by Sindona or his Mafia friends.

It was incredible that anyone short of Andreotti could have pulled this caper against the Bank of Italy. Baffi resigned as governor at the next general meeting. Sarcinelli eventually left the Bank. Sarcinelli, in a sense, lived happily every after; he has gone on to better jobs since; Baffi, not. They certainly were both ruined at the Bank, and their successors had to live with the memory of this "warning" from the politicians.

That was a case where, unusually, the corruption of the Italian government showed its hand in a really brutal way. There's a small literature about the two crooked bankers, Sindona and Calvi, who had a weird set of connections with parts of the Vatican and the Mafia and with the Christian Democratic Party.

Excessive trial delay complicated the outcome of judicial processes involving "clean hands" investigations of corruption launched in 1991. Public prosecutors uncovered numerous instances of illegal arrangements between businessmen and political figures, including illicit financing of political parties, as well as ties between elected officials and organized crime. Over 1,300 persons were either convicted and sentenced or accepted plea bargains. Those sentenced to prison terms, generally for periods of 3 years, were able to benefit from a legal system that allows alternative punishment for persons whose sentences do not exceed 4 years. Thus few individuals served jail sentences as a result of the trials.

The most sensational cases involved multiple accusations against two former prime ministers, Giulio Andreotti and Silvio Berlusconi. With regard to the latter, two cases ended at the appeals level (following lower court convictions) when judicial delays and maneuvers caused the trials to exceed the statute of limitations. Berlusconi won acquittals in two other appeals cases, however, as well as one at a lower court level, and cited these outcomes as vindication, signifying that the original charges had been an effort by elements in the judiciary to achieve political objectives through prosecutorial means. Milan's chief public prosecutor retorted that Berlusconi's criticisms were aimed at undermining the legitimacy of investigating magistrates.

In the case of (now) senator-for-life Andreotti, prosecutors relied heavily in two separate trials on testimony by turncoat Mafia witnesses ("pentiti"). These trials ended with court criticisms of both the prosecution and defendant. The court stated that prosecutors failed to produce concrete evidence backing up vague and contradictory testimony by the pentiti. Other court observations, which asserted that Andreotti had lied at the trial, fell short of resolving doubts about his conduct.