The current scandal of Monte dei Paschi di Siena (MPS), Italy’s third biggest bank, is a good illustration of how a lack of transparency negatively affects the fight against corruption in Italy. In general, ordinary citizens have little means to monitor and evaluate what goes on in either the public or private sectors. This is because there is no legislation guaranteeing citizens access to information, though some of the candidates for the next parliamentary election have committed to include the approval of the Freedom Information Act in the agenda of the parliament.
In the case of the MPS scandal, there is also very little information available on the relationship between political parties and the ‘banking foundations’ that came into being in 1990 and have evolved primarily into what in the United States would be considered political action committees (PACs).
Currently, there are 88 banking foundations in Italy. They are defined as non-profit, private and independent institutions with the aim of pursuing projects on social utility and on promotion of economic development in the country. In reality, most people have no idea what they do because they have no accountability and transparency. The fact that so many banking foundations are linked to political parties has also widened the transparency gap in the financing regulations of both political parties and banking foundations. They simply hide behind the status of a foundation, which has far less obligation to report its activities than a company.
Moreover, if Italian banks fail, they are saved immediately by the state. This decreases the sense of responsibility of the CEO of any bank because they know the state will support the bank. It is interesting to note the former President of the MPS has been also appointed as President of the Italian Banks Association (ABI).
Italy isn’t the only country battling this problem. The Council of Europe has called for a clear law covering foundations to prevent their misuse by political parties. This has been also a key recommendation of the National Integrity System study conducted in Italy: Transparency and accountability of political party financing must be ensured by effective audit systems.
In several international analyses (e.g. Corruption Perceptions Index, Global Corruption Barometer and GRECO, the anti-corruption body of the Council of Europe ), Italy also performs badly with regard to evaluation systems and in areas such as whistleblower protection, how to investigate corruption, and sanctions. In our scoring system for the National Integrity System analysis, Italy couldn’t even manage a passing grade.
The scandal of Monte dei Paschi di Siena can be considered a perfect example not only of a weak evaluation system, but also of the incapacity to deal with and to protect whistleblowers: the story unfolded when an employee of the bank discovered some of the issues related to the scandal and he informed several people within the bank, including the Executive Director, the internal auditor, the risk manager and so on. But nobody acted on his information and in the end he was fired.
Very few banks have internal procedures and regulations for whistleblowing, and none of them has a public procedure for whistleblowing. It is important to note that most private organisations have one in place and it can be considered a strong point in the fight against corruption.
The need to adopt tools to protect those who report offences and to establish a strong evaluation system is fundamental in the fight against corruption, especially in a country where too many people, including a former prime minister, do not consider bribery illegal.