Text
of the minority report of the government bill entitled ‘Norme in materia di
risoluzione di conflitti di interessi’ (Rules governing the resolution of
conflicts of interest) approved by the Italian Senate, 2 June 2002. This report
was delivered to the Senate on 5 June 2002 by Senator. Stefano
Passigli (DS-U).
Details of the legislation
are available in Italian at: http://www.senato.it/leg/14/Bgt/Schede/Ddliter/17010.htm
http://www.senato.it/leg/14/Bgt/Schede/Ddliter/17954.htm
DISTINGUISHED
SENATORS: In order to exhaustively examine the Bill before us we should recall
its background, so that we can ascertain whether it is adequate to solve the
problem it sets out to address.
Modern democracies are based on two fundamental premisses: the key
principle of liberal constitutionalism, namely, the division of powers and the
system of checks and balances; and the essential assumption underlying
democratic thought, namely, the equal political rights of all citizens, and the
majority rule as the logical corollary of that equality. Equality of political
rights and the majority rule are themselves based on confidence in human
rationality, faith in the common man who is assumed to be rational regardless of
social status, financial condition, or educational level, which is the
distinctive sign of the democratic credo. On these bases alone is it possible to
construe the will of the greater part
to be will of the better part, and
accept the 'one person, one vote' formula to be the lynchpin of modern
democracy.
The principle of rationality, however, brings with it an important
consequence in terms of the formation of the popular will. It would be
impossible to suppose that the vote could possibly be a rational act if the
broad agreement it expresses is "manipulated", in other words, if it is based on
distorted information. The ways in which the popular will is formed, in other
words, are one of the crucial factors to be taken into account when assessing
how far a given system is democratic. It is no coincidence that conflict of
interest becomes a particularly urgent issue precisely when - as in Italy's case
- it refers to the power which control over the mass media exerts on the
formation of the popular political will.
Any system claiming to be democratic must therefore ensure that
there is no excessive concentration of power, particularly by ensuring that
economic power and political power are kept sufficiently separate and distinct,
and that the government is able to govern without any contamination of the
public interest by the private interests of those in government. Every
democratic system must also guarantee the unfettered formation of the popular
will, without manipulation by the particular form of power deriving from control
of the mass media.
Viewed in this way, one can easily see why it is that even though the
problem is not only Italy's, the conflict of interest issue has acquired such
prominence in Italy and leading scholars and political commentators in every
country are talking about the Italian "anomaly". No other democratic system exists in
which such a similar concentration of economic, mass media and political power
has been concentrated as it has with the return of the Silvio Berlusconi
government to power, with such a mixture of public interest and private
interests. It is a mixture that has filled the whole of the first year of the
Berlusconi government: its laws, that are changing the definition of such crimes
as false accounting, or the procedures for the acceptability of evidence in
court, or the law on letters rogatory, all of which are enormously relevant to
the Prime Minister's judicial position; actions taken by the government such as
its solution to the Blu case, allowing British Telecom to take over the Mediaset
equity interest at a price which it set at over 1,200 billion lire, for a company losing
50 billion lire a month and which, according to its managing director, runs the
risk of having its accounts taken to court.
How can we fail to see that the British Telecom company acted on the
basis of the solution envisaged by the government to ensure that a State-owned
enterprise, such as Wind, and the Treasury, would have to pay the bill for all
the money paid to the private shareholders, one of which was Mediaset? Even
without mentioning the RAI question or the law of succession, or the legislative
changes that have been made law governing the Supreme Judicial Council (CSM) or
the judicial system itself, there are enough examples to be able to say that
never before have we seen the Executive identifying the public interest with the
private interests of the Prime Minister as we have in the past year. And in
addition to the prosecutions facing the Prime Minister we might also add
Minister Lunardi's conflict of interest, or the fact that there are still
members of the government and the majority coalition occupying sensitive
parliamentary offices who are engaged in professional activities that are so
totally incompatible with their institutional role that they are even prohibited
in the Honourable Frattini's Bill - a Bill which is wholly inadequate to deal
with the phenomenon, and designed not so much to prevent any possible conflict
of interest of the Prime Minister and certain ministers, but rather seems to be
intended to spread a veil of protection over the Prime Minister. This therefore
fully vindicates those who say that this Bill enacts the statutory abolition of
conflict of interest, and is only robust defence of those
interests.
Neither can we say that the people voted to absolve Berlusconi from his
original sin: the public base their vote on a variety of different reasons, and
not only to pronounce on the conflict of interest, as they would do in a
repealing referendum. But there is more: belying what the Prime Minister loves
to claim, the majority of the Italians did not vote for the coalition he heads,
but for the opposition parties. The Centre-Right won in terms of the number of
constituencies it took and lawfully governs because the Opposition parties were
divided. But the opposition parties won more popular votes than the government
coalition did. So there was no electoral absolution.
We have already said that the problem of the conflict of interest exists
in many countries, but that Italy is the most blatant and dangerous
anomaly, because in Italy that conflict is far from being limited purely to
economic power and wealth. By virtue of the power over the media exercised by
the Prime Minister - a monopoly which would really be unseemly to attempt to
deny - this conflict has to do with distorting the ways in which the popular
will of the electorate is formed. And if the system for forming the political
will of the electorate is itself deformed, the very bases of representative
democracy, which includes the elections, emerge compromised and
de-legitimised.
If this is the really crucial problem that we are faced with, we might
rightfully expect the law to promptly and effectively respond to it. But this
has not been the case, not because the Centre-Left did not want to provide a
response to the problem when it was in power, but because every reasonable
proposal it made was attacked using every means at the disposal of the
Centre-Right coalition. A brief reconstruction of what occurred in previous
Parliaments confirms this. The first Bill was submitted, signed by me, in the
summer of 1994; it created numerous cases of incompatibility, including the
incompatibility between government office and the control of companies working
in the mass media. It is therefore wholly misleading and a falsehood to say, as
the Prime Minister has frequently done, that he is the first person to attempt
to legislate on this issue. His proposal came three months later, and its only
purpose was to try to prevent the approval of the Centre-Left's Bill from being
enacted and, according to the opinion requested of distinguished jurists - the
so-called "Three Wise Men" - it replaced the solution to incompatibility with
recourse to a "blind trust", the same "blind trust" whose validity Minister
Frattini and the majority today are denying, but which would still retain its
validity if the trustee were to be left free, if necessary, also to sell the
assets placed in trust, thereby guaranteeing that the trust is really
"blind".
After a discussion lasting several months, the Senate approved my Bill in
July 1995, which was subsequently taken up by the whole of the Centre-Left and
by the Northern League, sanctioning the incompatibility between holding
government office and controlling the media, which could only be resolved by
giving up the media control or by selling it. A sale for which a great deal of
time was granted, because the provisions were only to become effective during
the following Parliament. This was further proof of the lack of any desire to
engage in persecution, and also demonstrates that over the past few weeks our
proposal to have a serious law enacted to become effective only during the next
Parliament was not some far-fetched proposal, but based on a responsible
appraisal of the Prime Minister's position.
The Bill passed by the Senate in July 1995, and laid before the Chamber
of Deputies awaiting the 1996 Finance Act, did not reach the Statute Book
because Parliament was dissolved early. It should be noted that if it had become
law, Mr. Berlusconi would have had six years, before returning to power in 2001,
to organise his business interests and affairs and thereby remove any cause of
conflict. It is really difficult to be able to claim that the Centre-Left had
tried to carry out a "proletarian expropriation" of his property, or any other
nonsense of that kind that we have heard mentioned over the past few years.
Nonsense (or rather deliberate twisting of the truth for propaganda
purposes).
The 13th Parliament is recent history which we do not need to
recall here, except to put the reject the claim that the Centre-Left never
intended to enact the law in order to keep blackmailing Silvio Berlusconi, and
to demonstrate that it was not enacted because of the fierce opposition from the
Centre-Right to any of the solutions proposed.
In the first phase of the Parliament, the Centre-Left coalition set out
to find a solution to the problem on the basis of the institutional findings of
the Joint Committee of both Houses. Since the Centre-Right made sure that this
solution was not forthcoming, as proof that the government of the day had no
intention to persecute anyone and intended to resolve the problem the
Centre-Left coalition voted through the Berlusconi-Frattini Act in the Chamber
of Deputies (we will call it the Frattini I Act) and requested the Senate to
make only two essential amendments to correct the two unacceptable aspects of
the law. For the law made it possible for anyone with a conflict of interests to
create a trust governed by non-Italian law, and thereby avoid paying any capital
gains taxes in the event of a sale. Fininvest would have been able to avoid
paying taxes of over 7,000 billion lire. As the Rapporteur in the Senate, I said
that it was intolerable to allow a member of the government in a state of
conflict of interest to avoid paying taxes for which any other entrepreneur
would have been liable, and that the desire to avoid penalising Silvio
Berlusconi could not be pushed to the point of actually rewarding him with a
massive tax bonus. The law also made the trustee accountable, making him liable
to prosecution, with the result that the trustee would not perform any operation
using the assets in trust that would have denied the very principle of the
trust, namely, the total autonomy of the trustee, an autonomy that we tried to
reinstate. I explained these demands of the Centre-Left coalition to leading
members of Forza Italia, and after the necessary exploration and debate, they
thanked me, but replied that it was absolutely impossible to accept them. Let
no-one therefore accuse us of not having advocated or tried to enact a fair and
viable law. The responsibility for the failure to have the law enacted lies
wholly with the Centre-Right. The Senate's approval, at the end of the
Parliament, of a number of amendments to the text passed by the Chamber of
Deputies was therefore intended by the Centre-Left coalition only to prevent the
Chamber of Deputies text, with its obvious shortcomings, from becoming the
benchmark text for the current Parliament.
I have spoken about the background to the Bill we are examining here and
the problems which it was supposed to solve. I would like to add at once that it
is deliberately and completely inadequate, which confirms that the present
government majority has never intended to really deal with this issue once and
for all. On the contrary, this Bill is a serious retrograde step compared with
previous proposals of the Centre-Right: the proposal of the 'Three Wise
Men', and the Frattini I Bill. Both
these Bills accepted the need to prevent conflict of interest by identifying the
types of status that were incompatible with holding government office. The
reason was the need, that was explicitly accepted by the Three Wise Men, to
prevent any kind of conflict, even potential conflict, because of the
impossibility to control all possible cases of conflict a posteriori and of remedying them a posteriori, particularly considering
that the conflict might arise not only through acts but also through omissions
designed to prevent any changes in vested interests (such as a dominant position
in the television media or the collection of advertising) or to avoid removing
obstacles that would penalise present or future potential competitors (and on
the subject of television, one only has to think of the example of the
allocation of frequencies which previously penalised TMC and today penalises La
7 and Europa 7).
The Prime Minister's vast range of economic interests and his steadfast
intention not to give up control of his television empire, which is a powerful
machine for creating public support; his widely-demonstrated will, even quite
recently, to take action to "normalise" RAI; and, lastly, the state of the
debate on conflict of interest and above all the Olive Tree Coalition's proposal
to adopt the "American model" under which an independent Authority should be
created along the lines of what is done in the United States, with the power to
require ministers, case by case, to sell or to create a blind trust whose
trustee would not be subject to any of the constraints on its administration
that the Centre-Right are advocating. All this must have convinced Prime
Minister Berlusconi of the need to dismiss and ignore the suggestions of his
Three Wise Men, in whom he had pinned his trust for eight years, and even to
throw out the rationale of the Frattini I Bill which he had previously signed,
and in a spectacular U-turn abandon any idea of the incompatibility of status to
which numerous Western democracies subscribe and to push through for the a posteriori examination of individual
acts of government. As we shall be seeing shortly, this is an approach which
makes it possible for the Prime Minister to defend himself very conveniently,
with no real risk of having his dominant position in the mass media challenged.
The government has therefore managed to concoct a bill which is tailor-made to
satisfy the needs of Prime Minister Berlusconi.
Minister Frattini: for many years a famous tailor - Caraceni - used to
ply his trade in Rome; it was said that his mythical cutting skills enabled him
to make even a hunchback look upright: well, Minister Frattini does not wish to
be any less brilliant, and has tried to rival Caraceni. He has created for the
Honourable Berlusconi a legislative suit, tailor-made, which is designed to hide
all his flaws.
This is immediately obvious when one considers that the Bill - today's
Frattini II - by no means gives up the rationale of the incompatibility of
status for all public and private workers, employed or self-employed, all
individual entrepreneurs, all those small and medium businesses in whose
management the entrepreneur plays an active part, all the cottage and family
businesses, and all the members of the liberal profession and tradesmen. The
only exception he makes is for the controlling shareholders of major
corporations, for a tiny, a very tiny, number of people who, while not playing a
direct part in the management bodies of these corporations, and while not
directly performing any acts of management, control the life of the corporation
by appointing the members of the board, approving the balance sheets, deciding
on the distribution of the profits, selecting the senior corporate managers,
laying down its long-term strategies. No-one would certainly wish to deny that
Enrico Cuccia in his day or Agnelli, as "semi-honorary Prime Ministers" or
Silvio Berlusconi who is not even a "mere" honorary Prime Minister, have played
and continue to play this overall role. Formally, they may not be involved in
the actual management of their corporation, but in reality they are its real dominus, the actual entrepreneur. Yet it is only for
these few, these extremely tiny few, individuals that the government's Bill has
abandoned the rationale of incompatibility of status, the logic of preventing
even potential conflict of interest, and entrusts the scrutiny of conflict to
the impossible case-by-case examination of acts of government, the thousands
upon thousands of acts of government, and to a system of penalties of which
Tesauro, the Chairman of the Italian Competition/Antitrust Authority, which is
the main institution responsible for imposing penalties, has had this to say:
"The very powers which are normally exercised by the Competition Authority to
protect competition appear anomalous within the framework of the rules governing
conflict of interest. It would appear in particular to be improper to refer, as
Section 4 does, to the notion of abuse of dominant position... Such a provision
runs the risk of becoming unuseable."
In conclusion, contrary to what the government says, the Bill that we are
examining here by no means gives up the logic of incompatibility of status,
which continues to apply to the whole of the population except to powerful
entrepreneurs for whom a special regime has been invented in open violation (as
Senators Villone and Bassanini will make clear shortly) of the principle of
equality enshrined in Article 3 of the Italian Constitution. Twenty-five million
Italians are, in the government Bill, subject to incompatibility of status,
while the Honourable Silvio Berlusconi is not. The Board of Directors of
Mediaset or Mondadori or of Mediolanum; every employee of Mediaset or Mondadori
or Mediolanum, every journalist working for Mediaset and Mondadori - in other
words all Berlusconi's employees - are subject to the possible incompatibility
of their status. But not Silvio Berlusconi.
Minister Frattini: the cut of the suit does not conceal the hump, and the
Copernican Revolution that you have tried has failed: your law is certainly a
tailor-made suit, but it is so obviously designed for only one person that it is
in open violation of the constitutional principle of the equality of all
citizens before the law.
Even regardless of the important consideration that it is unconstitutional, this Bill
is also unacceptable and ineffective in terms of its own rationale to identify
cases of conflict of interest in relation to government acts. I would like to
quote once again what Chairman Tesauro has said, claiming that the government
Bill contains a "narrow definition of conflict of interest, which requires three
conditions to be met simultaneously: 'a specific effect on the official's own
assets' [...] 'damage to the public interest', and the fact that the measure at
issue 'does not apply to the generality or to whole categories of persons'.
Apart from ascertaining the damage to the public interest," continued Tesauro,
"it is also necessary to show a special and specific impact of a government
measure on the government officer [...] which implies the exclusion of conflict
of interest in respect of acts with the force of law, which are general in scope
by definition."
I see that the soundness of these objections raised by Chairman Tesauro
has led the government to propose a new amendment today, deleting the need for
the act to relate to whole categories of individuals. We now expect the
government to delete the requisite of damage to the public interest - an
extremely vague concept - and the specific effect upon the assets of the
interested party, which is yet another legally imprecise concept which is
susceptible to excessively discretionary interpretations.
But these were not the only objections that were raised by Tesauro in the
course of the hearing before the Constitutional Affairs Committee. He went on to
say that, "We should not overlook the fact that decisions that are able to
favour companies connected with people holding government office need not
necessarily take the form of formal government acts, and can also consist, for
example, in mere inertia".
And he added, "And ascertaining the 'possible specific incidence' of a
government act on the assets of a person holding government office is very
difficult to implement. For the controlling Authority would be required to make
a prior assessment, without specifying which criteria are being used, of the
specific impact of a government measure on the assets of a member of that
government...". Tesauro's conclusion is that "there would therefore be only one
possibility left for acting, namely, through a report submitted to Parliament".
But what political sanction can be expected, Mr Frattini, from a
parliamentary majority which is controlled by the very person whom that majority
is supposed to punish? How can we expect the person controlled to be effectively
capable of controlling his controller? The whole set-up of this law is a
miserable failure. The government majority could certainly rubber-stamp
unanimously, but it still remains logically unsafe, even according to the
unconstitutional logic which underlies it.
That is the state of the Bill as it has been laid before the Senate by
the Chamber of Deputies. And these are some of the main objections that we have
raised against it. We were entitled to expect, quite apart from the repeated
announcements of government readiness, some sign that the government really
intends to introduce changes. But the government has rejected every amendment
tabled by the Opposition, and on the contrary has used them to introduce its own
amendments that have further worsened the law. One such example is the deletion
of Article 2(1)(d) and (2); the reason why it is not considered incompatible for
a government officer to be an active entrepreneur is due to the concern that
Minister Frattini clearly raised in the Committee stage, namely, to protect the
Prime Minister from any possible identification charge in court of being
involved, in his capacity as the controlling shareholder, in entrepreneurial
activities - those very entrepreneurial activities that he himself claims merit
for on every possible occasion. It
is an amendment which strengthens the discriminatory character of the Bill. In
the same way, the fact of having thrown out reference to "mere proprietorship"
is due to the fear that a difference of treatment will be introduced as between
the "mere owner" who merely enjoys the fruits of his assets (for example, by
collecting dividends) but does not actually take part in running the company,
and whose position is compatible with government office, and the controlling
shareholder who exercises all the rights linked to ownership, and by attending
the General Assemblies, electing the corporate officers, approving the financial
statements and so on, acts as the proprietor, exercising his influence over it,
and whose position is clearly incompatible with government office. Far from
being a concession to the Opposition, the fact of having thrown out the
distinction, giving minority shareholders and controlling shareholders an
equivalent status, constitutes a specific rejection of one of the Opposition's
proposals, which, if accepted, would have made it possible for us to issue a
totally different judgement on this Bill. Once again, Minister Frattini, you and
you alone, have made it impossible to attract broad support for a law which,
without being punitive, would have been sound and effective. Your amendments
further shore up the position of the Prime Minister and, as I have already said,
further heighten its features as a law tailor-made ad personam, and its evidently
unconstitutional character.
I have already spoken about the lack of importance given to the parts
dealing with penalties. Actually it was the Chairman of the
Antitrust/Competition Authority who has already done so. Let no one say that the
more stringent statutory penalties vested in the Communications Regulatory
Authority (an Authority that so far has certainly not exactly shone in terms of
its ability to enforce the rules on the par condicio) substantially change the
scope of the government Bill. Let it be remembered, furthermore, that the
present procedures for appointing the members of the Communications Regulatory
Authority do not provide a sufficient guarantee of its independence. And
particularly in a system with the first-past-the-post elections, this
independence could only be guaranteed by a limited parliamentary vote, and by
the appointment of the chairman by the Board from among the people belonging to
particularly authoritative and independent categories, such as former judges of
the Constitutional Court, as we have already proposed.
However, on the subject of a penalty system suffice it to say that it
will only be effective if the unlawful acts that the penalties are supposed to
prevent are carefully defined: if the law carefully avoids defining the most
obvious and evident cases of conflict of interest as unlawful acts to be
punished, such as are those which exist in the case of Prime Minister
Berlusconi, the number of penalties provided is wholly irrelevant. One might
impose harsh punishments on cyclists travelling at one hundred kilometres an
hour in the city streets, but no cyclist is ever likely to reach a hundred
kilometres an hour. And above all, one might make provision for speed limits to
apply only to pedestrians and cyclists, while exempting motorists and leaving
them free to commit offences. And that is just what this law proposes to do,
compounding the damage it will cause by pouring scorn on it; a law which some
people, even today, wish to present to the President of the Republic as being a
substantial improvement on the Bill approved by the Chamber of Deputies. But
that is not the case, Minister Frattini, and you know that very well. That is
not the case, Honourable Senators: the law is substantially, and further,
worsened. If the legal advisors at the Quirinal Palace have eyes to see and ears
to hear, they will certainly not fail to point this out. Unless, that is, they
prefer to go by appearances alone, and exchange a fig leaf for an effective and
satisfactory solution. And at all events, at least spare us the victory anthem
for the benefit of the mass media about respect for the electoral commitment
undertaken by the Honourable Berlusconi to solve his conflict of interest within
100 days. This law does not solve it. What it does do is to sublimate it, and to
raise up around it an impregnable protective defence wall. Impregnable, except
for the fact that the people may repeal it in a referendum, and impregnable save
for the Constitutional Court, that one Court whose composition many in this
government wish to change, not out of their devotion to federalism, but only to
continue their work of dismantling the autonomy and the balance of powers, which
seems to be a distinctive feature of this government's, and this Majority
coalition's, institutional policy. To claim legitimacy for every power based on
the popular vote, as often we hear this majority coalition claiming, is, as I
said at the outset, the very negation of one of the fundamental principles of
liberalism, which is indicative of the fact that it is drifting decidedly in the
direction of a plebiscitary Caesarism, which is always dangerous, and especially
so in a first-past-the-post system, where the winner of the largest number of
seats may often be the side with the fewest votes, as is the case with you,
ladies and gentlemen of the majority coalition, in terms of the popular
vote.
In conclusion, Mr Speaker and Honourable Minister, it is an extremely bad
piece of legislation, aggravated further by the amendments the government has
introduced here in the Senate, unworkable in its substance and in terms of the
penalties it provides, but above all designed not to solve the problem of the
conflict of interest but to wipe out the most blatant example of it: in other
words, it is a law made-to-measure to suit the needs of the Prime Minister,
thereby making it seriously discriminatory, and hence unconstitutional. A law
which any genuinely free Parliament, with an unfettered capacity to judge it,
would refuse to carry. A farcical law, as we have said many times. Although
perhaps, if we were to take full account of the Italian situation and consider
the law to be a pointer to the quality of the political governing class, it is a
law that should not be called a farce, but a tragedy. A law which isolates Italy
from the concert of those liberal democracies that have introduced effective
ways of responding to a conflict of interest, to prevent it, in accordance with
sound public ethics, instead of coming forward with laws like this one, which is
only a crafty means of defending what already exists, only a crafty way of
defending the interests of the person who governs, and defending his own
"particular" case.
Passigli,
Minority Rapporteur