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Confiscation And Asset Recovery: Better Tools To Fight Bribery And Corruption Crime

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Abstract

There is a global trend represented by the widespread application of confiscation of criminal proceeds, particularly those obtained as a result of corruption offences. Focusing on the Italian law, this article tries to address the following three questions: 1) Why are confiscation and asset recovery so important to fight bribery and corruption crime? In other words, what is the legitimate purpose of these measures? In other words, what is the legitimate purpose of these measures? 2) How can confiscation of the proceeds of corruption offences be accomplished? and 3) Are effective confiscation regimes constitutional or do they infringe upon individual rights and liberties? The article concludes that confiscation is a key tool for tackling corruption crime since it reduces the incentive to commit bribery by removing from bribe-givers or bribe-takers the fruits of their illicit acts. However, the “traditional” method of confiscation, which is limited to the property involved in the particular offence for which the defendant was convicted, is inadequate to deprive criminals who engaged in corruption offences of their ill-gotten gains. More powerful instruments, such as extended confiscation or non-conviction-based confiscation, are required for that purpose. These instruments are constitutional as long as they merely put wrongdoers back to the economic position they occupied before committing the crime. Such legal instruments serve as remedial measures and not as punishments, and thus their imposition does not trigger those special safeguards that the Constitution and human rights require for criminal prosecutions.

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Notes

  1. Transparency International ranked Italy 53rd in the 2018 Corruption Perception Index, with a relatively low score of 52 out of 100. If we look at the previous surveys, the results were even worse. For example, in the 2012 Corruption Perception Index, Italy came 72nd with a score of 42. In the European Union as a whole, Italy is always ranked among the bottom few countries, albeit it has been making some little progress over the last years. All data are available at https://www.transparency.org/research/cpi/overview

  2. In 2012, an Anti-Corruption Law (Act no. 190/2012) significantly amended corruption and bribery offences, and enacted potential corruption-enhancing measures: in particular, besides increasing the penalties for most of corruption offences, the law expanded the scope of the offence of “Bribery of public officials” (Article 318 of the Italian Criminal Code – CP), punishing not just the giving of anything of value in order to obtain a specific official act in return, but, more broadly, any kind of payment or gratuity in favour of a public official. Furthermore, it introduced the charges of “Illicit trafficking in influence” (Article 346 bis CP) and “Improper induction to give or promise an undue benefit” (Article 319 quarter CP). Notwithstanding the remarkable efforts by the legislator, all these measures are yet to prove themselves effective in eradicating the rampant corruption that has characterized Italian politics in the past. Additional reforms have therefore been approved in recent years, until the last one of January 2019, the so-called “Spazzacorrotti” (“Bribe Destroyer” Law – Act no. 3/2019). See, for example, Mattarella & Pelissero (eds.), La Legge Anticorruzione (Torino: Giappichelli, 2013); Mongillo, “La Legge ‘Spazzacorrotti’: Ultimo Approdo del Diritto Penale Emergenziale nel Cantiere Permanente dell’Anticorruzione”, DirPenCont, 5 (2019), 231 ff.

  3. A terminological clarification seems appropriate. There are a number of alternative expressions to name the legal instrument that enables law enforcement agencies or judicial authority to take property or money away from someone without compensation as a consequence of a breach of the law (typically the commission of a crime). The term “confiscation” is used in some countries, whereas the term “forfeiture” is used in others. Sometimes the two terms are interchangeable in meaning, but other times they are used to name different legal instruments (this is the case, for instance, in the UK law). The Italian statutes use the term “confisca”. Because of the linguistic similarity between the Italian expression and English one, the term “confiscation” will be mainly used in the present article.

  4. See, for example, Manes, “The Last Imperative of Criminal Policy: Nullum Crimen Sine Confiscatione”, European Criminal Law Review, 6 (2016), 143–148.

  5. Güntert, Gewinnabschöpfung als strafrechtliche Sanktion. Eine Untersuchung zu den Verfallsbestimmungen der §§ 73 bis 73d des Strafgesetzbuches (Köln: Peter Deubner Verlag, 1983), pp. 11–13.

  6. See, for example, Bowles, Faure & Garoupa, “Forfeiture of Illegal Gain: An Economic Perspective”, Oxford Journal of Legal Studies, 25 (2005), 275 ff.)

  7. See Becker, “Crime and Punishment: an Economic Approach”, Journal of Political Economy, 76 (1968), 169–217, and Garoupa, “The Theory of Optimal Law Enforcement”, Journal of Economic Surveys, 11 (1997), 267–295).

  8. Of course, this reasoning suffers from the same weaknesses as the economic analysis of criminal law. Confiscation and asset recovery could actually affect the criminals’ behavior as long as punishment really works as a deterrent. Some empirical studies by German criminologists have raised doubts as to whether confiscation really works in this direction. See the interesting study by Smettan, Kriminelle Bereicherung in Abhängigkeit von Gewinnen, Risiken, Strafen und Moral (Freiburg im Breisgau: 1992), especially pages 184–210.

  9. A number of authors, by contrast, held that confiscation constitutes a form of punishment as well. See, for example, Cassella, Asset Forfeiture Law in the United States 2nd ed. (Huntington: Juris, 2013), p. 3. The author argued that “it cannot be denied that depriving a wrongdoer of the accoutrements of an expensive lifestyle, or the items that gave him the leverage, prestige or wherewithal to commit a criminal act, can serve, in some cases, as a form of punishment or retribution exacted by the criminal justice system.” Probably the most prominent advocate of the idea of asset confiscation as a criminal punishment in Italy is Alessandri, Confisca nel Diritto Penale in Digesto delle Discipline Penalistiche (Torino: UTET, 1989), pp. 44–50.

  10. Recently, the same opinion has been clearly expressed by Castellví Monserrat, “Decomisar sin castigar. Utilidad y legitimidad del decomiso de ganancias”, InDret, 1 (2019), 22.

  11. See, among others, Boucht, The Limits of Asset Confiscation: On the Legitimacy of Extended Appropriation of Criminal Proceeds (Oxford: Hart Publishing, 2017), pp. 98–101, p. 120. Several times the ECtHR has scrutinized confiscation orders in light of Articles 6 (Right to a fair trial) and 7 (No punishment without law) of the Convention, as well as Article 1 of the Protocol 1 (Right to property). The Court case law has been criticized for being both unclear and sometimes inconsistent. See, for example, Ivory, Corruption, Asset Recovery, and the Protection of Property in Public International Law: The Human Rights of Bad Guys (Cambridge: Cambridge University Press, 2014), p. 250 (arguing that “the rationale behind the ECtHR’s classification scheme is obscure, if not incoherent and inconsistent”). Regarding the nature of confiscation orders, the ECtHR held that, despite their label, some of these orders are so punitive in nature as to constitute criminal punishment. The leading case in the field is Welch v the United Kingdom Case no. 17440/90, 9/2/1995, in which a confiscation order was issued following a criminal conviction for drug trafficking. In that case, the English confiscation regime was considered punitive in nature because – among other things – the confiscation targeted all proceeds involved in the crime and was not limited to actual enrichment.

    Similarly, the ECtHR has affirmed several times that the confiscation of the property involved in illegal construction provided by Italian statute (Art. 44 of the decree of the President of Republic n. 380/2001) is punitive in nature and is therefore a “penalty” within the meaning of Article 7 of the Convention. See Sud Fondi v Italy Case no. 75909/01, 20/1/2009, Varvara v Italy Case no. 17475/09, 29/10/2013, and G.I.E.M. S.r.l. and Others v. Italy Case no. 1828/06 and others, 28/6/2016. The ECtHR case law does not actually conflict with our understanding. In fact, the aforementioned Italian statute allows courts to confiscate not only the illegal building, which is the property acquired by committing the crime, but also the whole land where the building has been erected. Therefore, in that particular case, the value of the confiscated property goes far beyond the actual enrichment.

  12. Fried, “Rationalizing Criminal Forfeiture”, J. Crim. Law Criminol., 79 (1988), 333 ff.

  13. Under certain circumstances, courts can confiscate the proceeds of corruption offences even if criminal punishments cannot be imposed because of the statute of limitations (and consequentially the defendant is acquitted). Such a possibility is now provided for by Article 578 bis CP (amended in January 2019). See also Lucci Case no. 31617/2015, 26/06/ 2015 (Corte di cassazione, Sezioni Unite). All Italian case law cited is available at https://www.iusexplorer.it/Dejure/.

  14. Miragliotta Case no. 10280/2007, 25/10/2007 (Corte di cassazione, Sezioni Unite).

  15. See the Commentaries on the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Article 3, re paragraph 3. See Pieth, “Article 3(3)”, in Pieth, Low & Bonucci (eds.), The OECD Convention on Bribery. A Commentary, 2nd ed. (Cambridge: Cambridge University Press, 2014), pp. 312–314.

  16. Regarding this issue, see the analytical report by OECD/The World Bank, Identification and Quantification of the Proceeds of Bribery: Revised edition (OECD Publishing, February 2012). See also Blanco Cordero, “El comiso de ganancias. ¿Brutas o netas?”, Diario La Ley, 7569 (2011), 1631–1649.

  17. See Fisia Italimpianti Case no. 26654/2008, 27/03/2008 (Corte di cassazione, Sezioni Unite).

  18. For this reason, the judgment has been criticized by Italian scholars. See, for example, Mongillo, “La Confisca del Profitto nei Confronti dell’Ente in Cerca d’Identità: Luci e Ombre della Recente Pronuncia delle Sezioni Unite”, Rivista Italiana di Diritto e Procedura Penale, 4 (2008), 1784.

  19. See also Castellví Monserrat, supra note 7, pp. 55–85. Similar Fried, supra note 9, pp. 375–380. By contrast, a different view was expressed, for example, by Blanco Cordero, supra note 13, pp. 1641–1643; Gurulé, “Does «Proceeds» Really Mean «Net Profits»? The Supreme Court’s Efforts to Diminish the Utility of the Federal Money Laundering Statute”, Ave Maria Law Rev., 7 (2008), 355 ff.

  20. A similar criterion is provided by the (new) Section 73d (1) of the German Criminal Code (“Strafgesetzbuch” – StGB). The German statute provides that “in determining the value of what was obtained [by perpetrating the crime], the expenses incurred by the principal or the secondary participant or by other persons shall be deducted. However, it shall not take into account what was spent or used for the commission of the offence or for its preparation, as far as it does not concern the performance in fulfilment of a victim’s claim.”

  21. Cassella, supra note 6, p. 916.

  22. Cassella, “Criminal Forfeiture Procedure in 2006: A Survey of Developments in the Case Law”, Criminal Law Bulletin, 42 (2006), 515.

  23. See Boucht, “Extended Confiscation: Criminal Assets or Criminal Owners?”, in Ligeti and Simonato (eds.), Chasing Criminal Money. Challenges and Perspectives on Asset Recovery (Oxford: Hart Publishing, 2017), pp. 117–119.

  24. See, for example, Panzavolta, “Confiscating Dirty Assets: The Italian Experience”, in King, Walke & Gurulé (eds.), The Palgrave Handbook of Criminal and Terrorism Financing Law (Basingstoke: Palgrave Macmillan, 2018), pp. 502–505.

  25. See Boucht, supra note 8, pp. 30–40. See also Simonato, “Extended Confiscation of Criminal Assets: Limits and Pitfalls of Minimum Harmonisation in the EU”, European Law Review, 41 (2016), 727 ss.

  26. Most European countries have introduced legislation allowing extended confiscation of proceeds of crime. For instance, Section 73a of the German Criminal Code (“Strafgesetzbuch” – StGB) allows for extended powers of confiscation (or Erweiterte Einziehung von Taterträgen). Similarly, Article 127 bis of the Spanish Criminal Code (“Código Penal” – CPS) provides for extended powers of confiscation (or Decomiso ampliado).

  27. See, for example, Boucht, “Extended Confiscation and the Proposed Directive on Freezing and Confiscation of Criminal Proceeds in the EU: On Striking a Balance between Efficiency, Fairness and Legal Certainty”, EJCCL & CJ, 21 (2003), pp. 127–162.

  28. See Panzavolta, supra note 21, pp. 495–502.

  29. See Constitutional Court, Case no. 24/2019, 27/02/2019.

  30. For a more analytical overview of the preventive confiscation requirements, see in the English-written literature Panzavolta & Flor, “A Necessary Evil? The Italian-Criminal System’ of Asset Forfeiture”, in Rui & Sieber (eds.), Non-Conviction-Based Confiscation in Europe. Possibilities and Limitations on Rules Enabling Confiscation without a Criminal Conviction (Berlin: Duncker & Humblot, 2015), pp. 124–126; Maugeri, “The Criminal Sanctions Against the Illicit Proceeds of Criminal Organisations”, NJECL, 3 (2012), 275–278.

  31. See Spinelli Case no. 4880, 26/06/2014 (Corte di cassazione, Sezioni Unite). In particular, the Court held that “dangerousness is a characteristic of the property because of its unlawful acquisition”. The judgment was criticized by Mazzacuva, “The Problematic Nature of Asset Recovery Measure: Recent Developments of the Italian Preventive Confiscation”, in Ligeti & Simonato (eds.), Chasing Criminal Money. Challenges and Perspectives On Asset Recovery (2017), pp. 101–115. The issue relating to the (actual) purpose of Italian preventive confiscation was also addressed by Milone, “On the Borders of Criminal Law. A Tentative Assessment of Italian ‘Non-conviction Based Extended Confiscation”’, NJECL, 8 (2017), pp. 157–163.

  32. Simonato, “Directive 2014/42/EU and Non-Conviction Based Confiscation. A Step Forward on Asset Recovery?”, NJECL, 6 (2015), 213–221.

  33. See, for example, Maugeri, “Mutual Recognition and Confiscation of Assets: An EU Perspective”, in King, Walke & Gurulé (eds.), The Palgrave Handbook of Criminal and Terrorism Financing Law (Basingstoke: Palgrave Macmillan, 2018), pp. 406–407.

  34. See Section 76a (4) StGB which provides for the so-called “erweiterten selbständigen Einziehung” and Article 127 ter CPS which provides for the so-called “decomiso sin condena”.

  35. See Cassella, “The American Perspective on Recovering Criminal Proceeds in Criminal and Non-Conviction Based Proceedings”, in Ligeti and Simonato (eds.), Chasing Criminal Money. Challenges and Perspectives on Asset Recovery (Oxford: Hart Publishing, 2017) pp. 255–268.

  36. The new Regulation replaces the Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence, and Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders.

  37. There is no space here to examine the problem of mutual recognition more extensively. See Maugeri, “The EU Regulation 2018/1805 for the Mutual Recognition of Freezing Measures and Confiscation”, Dir. pen. cont. – Riv. trim., 1 (2019), pp. 34–64.

  38. See, for example, Herpel, “Toward a Constitutional Kleptocracy: Civil Forfeiture in America”, Mich. L. Rrv., 96 (1998), pp. 1923–1926 (who argues that American forfeiture constitutes a punishment and it should trigger the Constitution’s criminal procedure guarantees). In Italian legal literature, concerns were expressed by Maugeri, Le moderne sanzioni patrimoniali tra funzionalità e garantismo (Milano: Giuffrè, 2001), pp. 625 ff.

  39. See the notes titled “How Crime Pays: The Unconstitutionality of Modern Civil Asset Forfeiture as a Tool of Criminal Law Enforcement”, Harv. Law Rev., 131 (2018), p. 2402 (“If the Court were to determine that modern forfeiture practices are punitive, current forfeitures would be unconstitutional to the extent that the proceedings fail to provide the requisite constitutional protections”). A similar statement was made by Viganò, “Riflessioni sullo statuto costituzionale e convenzionale della confisca ‘di prevenzione’ nell’ordinamento italiano”, in Paliero, Viganò, Basile & Gatta (eds.), La pena, ancora. Fra attualità e tradizione – Studi in onore di Emilio Dolcini (Milano: Giuffrè, 2018), p. 901. In contrast, a different opinion was expressed by Nelson, “The Constitutionality of Civil Forfeiture”, Yale Law J., 125 (2016), 2487 ff. Nelson admitted that some forms of punishment (such as death or imprisonment) can be imposed only through proceedings that meet the special procedural protections that the Constitution requires for criminal prosecutions. However, he argues that “centuries of practice support the idea that civil process can be used to declare the loss of property, even when that loss is punitive” (see p. 2455).

  40. See Simonato, “Confiscation and Fundamental Rights across Criminal and Non-Criminal Domains”, ERA Forum, 18 (2017), p. 371 (arguing that safeguards can be diluted, but do not disappear).

  41. Gogitidze v Georgia Case no. 36862/05, 12/05/2015 (ECtHR). All ECtHR case law is available at https://hudoc.echr.coe.int/. It is worth noting that, in the light of Article 1 of the Protocol 1 (Right to property) of the Convention, the ECtHR in several decisions has underlined the importance of various procedural guarantees available in confiscation proceedings. Such guarantees include, inter alia, advance disclosure of the prosecution case (see Grayson and Barnham v. the United Kingdom), as well as the opportunity for the party to adduce documentary and oral evidence (see Butler v. the United Kingdom); the adversarial nature of the confiscation proceedings (see Yildirim v. Italy); a fair chance for the party to rebut the assumption of the criminal character of the assets (see Geerings v. Netherlands); on the whole, whether the applicant was afforded a reasonable opportunity of putting his arguments before the domestic courts. A proper discussion of the procedural safeguards that would be required under Article 1 of the Protocol 1 of the Convention goes far beyond the scope of this article.

  42. German Federal Constitutional Court (BVerfG) Case no. 2 BvR 564/95, 14/01/2004. Available at https://www.bundesverfassungsgericht.de.

  43. Constitutional Court, Case no. 24/2019, 27/02/2019. Available at https://www.cortecostituzionale.it/.

  44. See, for example, Sarah Stillman, “Taken”, The New Yorker, available at https://www.newyorker.com/magazine/2013/08/12/taken. The article appears in the print edition of the August 12&19, 2013, issue, pp. 49–61. See also the horrifying stories reported by Rulli, “Seizing Family Homes from the Innocent: Can the Eighth Amendment Protect Minorities and the Poor from Excessive Punishment in Civil Forfeiture?”, U. Pa. J. Const. L., 19 (2017), 1120–1123, 1134–1138. However, it is worth noting that most of these stories concern the forfeiture of property used to commit, or to facilitate the commission of, crimes (the instrumentalities), and not the confiscation of moneys or assets generated by committing crimes or acquired in return for them (the proceeds).

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  1. Research Fellow, Criminal Law Lecturer, Bocconi University, Via Roentgen 1, Milano, Italy

    Tommaso Trinchera

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Tommaso Trinchera, Research Fellow, Criminal Law Lecturer, Bocconi University, Via Roentgen 1, Milano, Italy. Email: tommaso.trinchera@unibocconi.it. I gratefully acknowledge the invaluable advice and help of professor Francesco Viganò. I also thank Camilla Mostardini, Camillo Di Donato and the anonymous reviewers of this journal for helpful comments at various stages of this article. Any remaining mistakes are my own.

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Trinchera, T. Confiscation And Asset Recovery: Better Tools To Fight Bribery And Corruption Crime. Crim Law Forum 31, 49–79 (2020). https://doi.org/10.1007/s10609-020-09382-1

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