Introduction

The current year has been characterised by intense legislative activity.

In particular, the “Nordio Reform” (Law No 114/2024), recently entered into force on 25 August 2024, providing for apparently few legislative amendments, which nonetheless are an expression of the government’s willingness to resume the features of the adversarial system aimed at reducing the extensive use of pre-trial measures and ensure the separation between the public prosecutor in charge of the investigations and the judge.

From a substantive perspective, the reform focuses primarily on crimes against the public administration which remain a key point constantly subject to evolution due to the pressure of the European legislation.

Furthermore, the recent tax reform again impacted on the tax offences system, this time with respect to excise duties and indirect taxes. Moreover, in the attempt to curb cyber-attacks, the Italian parliament is focused on enhancing prevention IT measures and providing the prosecutor’s office with adequate investigative tools.

Major concerns arise in relation to the growing phenomenon of illicit exploitation of workers and modern slavery in the supply chains in different areas of business and especially in the fashion industry that is at the centre of the activities of the public prosecutor’s offices.

The Nordio Reform

The Nordio Reform impacts both on the Code of Criminal Procedure and the Criminal Code on the following matters.

Precautionary measures

With reference to the investigation phase, the area most affected by the reform concerns pre-trial precautionary measures. In particular, according to the new regulation, the judge of the preliminary investigation shall perform the interrogation of the suspect before issuing a pre-trial precautionary measure in case of danger of recidivism. Except for the criminal proceedings related to the most serious offences – ie, terrorism and organized crime, such legislative amendment will allow the suspect to anticipate their defensive arguments in compliance with the adversarial principle in order to avoid the restriction of their personal freedom.

Moreover, the reform identifies the collegiate court – instead of a single judge – as the competent authority to issue the pre-trial custody order, to ensure deeper control over the groundings of the decision. However, some authors point out that, with such amendment, the judge of the following phases of the criminal proceedings may be influenced by the decision of the collegiate court and rely on the fact that the plurality of the judges has already ensured an in-depth analysis of the case, in accordance with the adversarial principle.

Wire-tapping activities and disclosure of information concerning criminal proceedings

In addition to the above, the most relevant amendments introduced by the reform are inspired by the urge to fully ensure the confidentiality of private conversations, the data secrecy on personal information of the suspects involved in criminal proceedings and the rights of the individual under investigation who, according to the Constitution, must be considered not guilty until the conviction has become final.

Such provisions establish limitation to both the wire-tapping activity and the disclosure of information concerning ongoing criminal proceedings.

The Nordio Reform broadens the scope of the prohibition of acquisition of any form of communication, even other than correspondence, between the defendants and their lawyer, unless the judicial authority has a justified reason to believe that it is the corpus delicti.

The judicial authority and police officers are obliged to immediately stop wiretapping operations if the conversations or communications are found to be prohibited according to the law. Although such rule might strengthen the right of defence, guaranteed by the Constitution, the effectiveness of this obligation is unclear, since there is no technological device that could ensure the automatic interruption of the activity. 

The second set of provisions aims at enhancing the confidentiality of suspects involved in criminal proceedings through the prohibition of publication of wire-tapped conversations, except when their contents are reported by the judge in a judicial decision or used during a hearing. Furthermore, the judicial authority shall exclude the recordings and the minutes pertaining to third parties unless they are proven relevant for the criminal proceedings.

Appeal trials

Furthermore, in accordance with the aim of simplifying the appeal trials that also inspired the Cartabia reform, the latest legislative amendments provide for certain limitations on the possibility of appealing an acquittal decision by the public prosecutor in relation to offences for which a direct summon to trial is applied.

Offences against the public administration

Primarily, the reform repealed the offence of abuse of office under Article 323 of the Criminal Code which punished, with imprisonment for a period ranging from one to four years, the public officers who intentionally procure for themselves or for others an unfair gain in violation of specific rules provided for by the law or refrain from acting in a situation of a conflict of interest.

In particular, the amendment at issue would limit the so-called defensive bureaucracy or “fear of signing”, without creating a gap in the legislation, since – according to the explanatory memorandum presented to the Italian senate – the enforcement of the illicit conduct committed by public officers and the protection of public interests could be adequately ensured by the disciplinary sanctions and the administrative law remedies.

The offences against the public administration legal framework has been further amended by Decree Law No 92/2024, “Urgent measures on penitentiary, civil and criminal justice and Ministry of Justice personnel”, that introduced a new offence pursuant to Article 314-bis of the Criminal Code that punishes the public officer who intentionally takes an unfair gain for themselves or for others, by using the money or other goods in their possession by reason of their public duties for personal aims. Therefore, the distractive conduct carried out by public officers – previously punished as abuse of office – could still be prosecuted pursuant to Article 314-bis of the Criminal Code.

Moreover, although the new Article 314-bis of the Criminal Code is not expressly mentioned in the list of offences that could trigger corporate vicarious liability pursuant to Legislative Decree No 231/2001, it is included among the offences that could theoretically be committed by members of international courts or international organisations and other foreign officers pursuant to Article 322-bis of the Criminal Code, which is a predicate offence of corporate liability’s law.

Another important milestone of the reform lies in the limitation of punishable conduct under the offence of influence peddling pursuant to Article 346-bis of the Criminal Code.

Such aspect of the reform may be further discussed, due to the recommendations of GRECO (Group of States against Corruption) 2024 Evaluation report named “Fifth evaluation round: Preventing corruption and promoting integrity in central governments (top executive functions) and law enforcement agencies”, according to which Italy should implement rules to prevent crimes in the Public Administration and, in particular, to avoid conflict of interest and guarantee the integrity of the Public Administration.

Whistle-Blowing

Legislative Decree No 24/2023 introduced a new regulation on whistle-blowing, in compliance with EU Directive No 2019/1937 on the protection of individuals reporting infringements of European Union law. The new whistle-blowing legislation required companies that adopted an organisational and control model pursuant to Legislative Decree No 231/2001 or with more than 50 employees to adopt appropriate reporting channels in order to avoid retaliation and discrimination against the whistle-blowers and ensure confidentiality of the reported information.

Meanwhile, ANAC (National Anti-Corruption Authority) implemented an external channel of communication, as set forth by the law, and published its Guidelines on the protection of persons reporting breaches of EU and national laws and setting specific procedures for the submission and management of external reports.

Last June, on the World Whistle-Blower Day 2024, Transparency International Italy published its report on the state-of-the-art of whistle-blowing in Italy, and related activities carried out during 2023: among the major improvements, more than 4,000 legal entities in 2023 co-operated with Transparency in the implementation of a new procedure for handling alerts and in the development of a more recent version of the whistle-blowing platform through which it is possible to start a discussion with whistle-blowers and ensure anonymity.

Furthermore, the document contains a review of the most common illicit conducts reported to ANAC, mainly related to maladministration (40%), procurement and public tenders (13%) and the licensing system (7%) that led to the application of seven sanctions for retaliation. Therefore, specific measures were adopted in order to fully enhance the protection of the persons reporting corruption offences, including an ad hoc alert system for bribery reports (the so-called Anti-corruption Alert) and paralegal support for the witnesses or victims of bribery and other offences against the public administration.

The New Public Contracts Code (Legislative Decree No 36/2003)

The constant focus on the public procurement sector, which is one of the most sensitive areas at risk of crimes against the public administration, led to the approval of the new Public Contracts Code (Legislative Decree No 36/2023, which entered into force on 1 April 2023).

The new Code provides for a systematic regulation of public tenders and, in particular, identifies the grounds for excluding an economic operator from the tender procedure.

Under the new legislation, the automatic exclusion from public tender is granted in case of:

• final conviction for offences such as organised crime, drug trafficking, smuggling, illegal trafficking in waste, offences against the public administration, fraud in public supply, money laundering offences, exploitation of child labour, trafficking in human beings and any other offence resulting in the ban to contracting with the public administration;
• disqualification measures issued against the economic operator pursuant to Legislative Decree No 231/2001; and
• application of the sanction referred to in Article 9, paragraph 2, letter c, of Legislative Decree 231/2001 or other sanctions involving the prohibition of contracting with the public administration.

The exclusion from the public tender procedure may also be imposed if:

• serious infringements on health and safety at workplace regulation, environmental, social and labour obligations occurred in the economic operator’s organisation; and
• the economic operator committed serious professional misconduct to cast doubt on its integrity or reliability that could imply, for instance, the mere ongoing investigation or the application of precautionary measure against a legal entity and its legal representative for offences listed in Legislative Decree No 231/2001 and other serious offences, such as bankruptcy, tax offences, and corporate crimes.

In this regard, the Council of State (with ruling No 6679/2024) recently stated that the beginning of a criminal proceeding against the representatives of a company for illicitly awarding a public contract may be considered sufficient in order to justify the appointment of a special commissioner for the execution of such public contract, regardless of any developments in the criminal case.

Indeed, if the offences committed by the company occurred in the first phase of the execution of the public contract, the lift of the precautionary measure by the judge of the preliminary investigation, as well as the adoption of self-cleaning measures and changes in corporate governance, are irrelevant because the appointment of a special commissioner aims at ensuring the regular execution of the public contract without interference from the criminal proceedings.

Cybersecurity

Another important area of interest in the latest legislative reforms is related to cybersecurity.

Law No 90/2024, entitled “Provisions on Strengthening National Cybersecurity and Cybercrimes” introduced some important amendments in order to strengthen national cybersecurity and to prevent cybercrime and the increasingly frequent attacks on IT systems and databases.

The framework of cybercrimes was redesigned with the tightening of the sanctions against both individuals and legal entities under Legislative Decree No 231/2001 for offences such as abusive access to an IT system or damaging IT information, data and programs, which would be punished with imprisonment for a period ranging from two to eight years in case of aggravating circumstances.

Moreover, the reform introduced an aggravated form of racket under Article 629, paragraph 3, of the Criminal Code carried out through the conduct referred to in Articles 615-ter (abusive access to IT system), 617-quater (illegal interception of IT communications), 617-sexies (falsification, alteration of IT or electronic communications), 635-bis (damage to information, data and computer programs), 635-quater (damage to computer or telematic systems) and 635-quinquies (damage to computer or telematic systems of public interest) of the Criminal Code, which has been included in the list of predicated offences in connection with which the corporate liability pursuant to Legislative Decree No 231/2001 may rise.

In addition to the above, considering the increasing use of more sophisticated encrypted IT systems, the public prosecutor’s offices have been implementing more efficient investigative tools, which have been further strengthened by the new legislation using wiretaps and extending the terms of the preliminary investigation phase.

In this regard, Italian prosecutors issued European Investigation Orders to be provided with the content of communications exchanged through the so-called crypto-phones, already seized and decrypted by the foreign judicial authority in a criminal proceeding pending before it. Moreover, in two recent decisions, the Italian Supreme Court stated that the evidence already gathered by foreign judicial authorities may be lawfully requested and obtained by Italian public prosecutors without prior authorisation from the judge through European investigation orders which are expected to become an even more strategic investigative instrument thanks to the co-operation between states.

Reform of the Customs Consolidated Act

The Italian government approved the draft of legislative decree that outlines the reform of the Customs Consolidated Act and provides for amendments to the related penalty system in relation to smuggling, both from a criminal and administrative perspective.

Moreover, the draft of the Legislative Decree also envisages the expansion of the vicarious corporate criminal liability under Article 25-sexiesdecies of Legislative Decree No 231/2001 of illicit conduct concerning the lack of payment or assessment of excise duties and other indirect production and consumption taxes, already punished under the Excise Duties Consolidated Act (Legislative Decree No 504/1995).

In addition to the sanctions already provided for in the current wording of Legislative Decree No 231/2001, disqualification from exercising the activity and the suspension or revocation of the related authorisations, licences or permits will be applied in case of smuggling and failure to pay taxes or border duties for amounts exceeding EUR100,000.

Tax Offences Amendments

Further legislative amendments set forth by Legislative Decree No 87/2024 introduced significant changes in the tax system both from a criminal and administrative perspective.

With regards to criminal matters, significant interventions were made on the definitions of the Tax Offences Consolidated Act (Legislative Decree No 74/2000), in particular concerning the distinction between non-existent and undue credits for the purpose of the offence of undue compensation under Article 10-quater of Legislative Decree No 74/2000 and on the provisions related to seizure and confiscation and on the offences of failure to pay withholding taxes and VAT under Articles 10-bis and 10-ter of the above-mentioned Legislative Decree.

Moreover, the latest legislative amendments reconsidered the criminal sanctioning system, by introducing an exemption from punishment in case of corporate liquidity crisis and identifying specific criteria for the less serious offence, and introduced some mitigating factors such as the suspension of the trial in order to encourage settlement procedures with the Tax Revenue Agency.

Lastly, according to Article 10-quater, paragraph 2-bis of the Tax Offences Consolidated Act, criminal liability shall be excluded when the entitlement of the credit remains objectively uncertain, also due to the technical nature of its rating.

Investigative Trends

Internal investigations and data protection

The GDPR requires organisations to inform individuals in advance about how their personal data is processed, in a clear and accessible manner, in compliance with the principles of transparency, fairness and accountability.

In this framework, companies may have to face GDPR compliance obligations in conducting an internal investigation or responding to criminal or regulatory investigations.

Meeting these requirements in the context of internal investigations could indeed result in practical challenges if an organisation does not have an effective policy.

Most importantly, in order to be compliant with such regulation, the internal organisational policy shall cover the possible use of employees’ personal data and the control on the business devices used by the employees specifically for internal investigation purposes, especially when the devices are also used for personal reasons. In this regard, companies should also inform employees about the internal procedures and require their explicit acceptance.

Illegal employment and modern slavery

In the last few months, many leading companies in the fashion industry have been involved in criminal proceedings for illicit exploitation of workers in their supply chain and use of illegal and undeclared labour pursuant to Article 603-bis of the Criminal Code.

In particular, according to the public prosecutor’s offices, the multinationals failed to perform adequate controls over the outsourcing of production activities by their suppliers and negligently allowed subcontracting to smaller factories and illegal workshops, which employed foreign workers in violation of labour conditions and health and safety provisions.

Therefore, the multinational companies were placed under monitoring (amministrazione giudiziaria) pursuant to Article 34 of Legislative Decree No 159/2011. In the cases at issue, the judicial administration has been used by the public prosecutors as a method for taking direct action in the companies’ business organisation, enhancing their level of compliance, and avoiding relapse, similarly to the monitorship required by the DPAs in the United States.

In more details, the judicial administration implied the review of the companies’ supply chain and procedures, the analysis of the general terms and condition of the contracts, especially concerning work conditions, and the update of their organisational model pursuant to Legislative Decree No 231/2001 and code of conduct. As a result of the judicial administration’s enforcement measures, the monitored companies had to ensure audits and inspections in the subcontractors’ premises in order to assess the respect of the contractual conditions and the compliance with the health and safety at workplace provisions, to make formal requests for verification of the sub-contracting and to provide for the termination of business relationships, in case of violations or illicit conducts.

As this phenomenon becomes increasingly widespread, last July, the Prefecture of Milan signed the “Memorandum of Understanding on procurement contracts in the field of logistics” to prevent the illegal recruitment and exploitation of labour which has been compared to a new form of “modern slavery”.

The Memorandum establishes a platform for the companies, which ensures trusted information on economic operators in the supply chain, and outlines a reward system for the participating companies (ie,  supply chain certificate, incentive measures), thus becoming the basis for similar agreements in different areas of business.

Upon the initiative of the Court of Milan, following recent events, a special roundtable is drafting a further Prevention Protocol for the fashion sector, which shall identify the red flags of potential labour exploitation to help commissioners control the supply chain and select their contractors or subcontractors and a blacklist of companies that shall be considered at risk, based on judicial experience.

At the same time, the Ministry of Labour and Social Policies recently opened the “Operational Table for the definition of a new strategy to fight ’modern slavery’ and labour exploitation in agriculture” to Third Sector entities, which will remain active until 2025 to allow the implementation of the actions set up in the specific 2020–2022 Three-Year Plan.

ESG and sustainable value chain

The focus on environment and sustainable economy in the supply chain will reasonably increase considering the recent EU regulations and in particular the EU Directive 2022/2464 on Corporate Sustainability Reporting Directive (CSRD) and the more recent EU Directive 2024/1760 on Corporate Sustainability Due Diligence Directive (CS3D) that provide for new rules to promote responsible corporate behaviour throughout global value chains.

The companies with the legal requirements set forth by the CS3D shall perform due diligence to identify and address adverse human rights and environmental impacts in their own operations, those of their subsidiaries and in their chain of activities.

In this regard, companies should disclose the information concerning ESG ratings and include it in the sustainability reporting with caution since, according to the CSRD, they are integrated in the annual managing report, in order to avoid possible sanctions under Legislative Decree No 231/2001 – ie, for false accounting.

Considering the recent decisions that led to the monitoring of multinational companies and the above-mentioned European Directives on Sustainability, Assonime (“Association for Italian Public Companies”) published the document “The Protection of Human Rights in Fashion Supply Chains between Current Risks and New Due Diligence Obligations”, aimed at providing companies operating in the clothing industry with operational compliance guidelines. In the memorandum, Assonime recommends legal entities to identify specific duties of care for sustainability in the Code of Ethics and adopt operational protocols to ensure reputational audits, as well as production methods.