High technical skills are now an essential requirement in a multitude of cases concerning criminal proceedings, such as events related to crimes to protect health and safety in the workplace, environmental crimes or even corporate and bankruptcy crimes. In this context, “scientific knowledge” is utterly crucial for all the figures involved, from lawyers to prosecutors, to judges.

Having to deal with issues that are very technical and far from legal competence per se puts criminal law operators in the condition of expanding their culture and training. They also have to rely on additional specialists for specific subjects, appointing them as experts or partisan consultants during trials.

And it is precisely the confrontation between legal professionals and “technical” experts – through the hearings of the latter and the acquisition of their reports – that has generated a complex debate on the role of scientific evidence in law.

What does scientific proof in the judicial field mean?

Recently we have published an article about the Supervisory Body, which is responsible for monitoring and possibly updating the 231 Organizational Model for administrative liability under the Legislative Decree 231/2001.

This update will generally depend on any regulatory or organizational changes in the company. However, it should also follow recent adjustments and extensions relating to tax offenses, i.e., violations of tax regulations with possible criminal relevance for the entity.

A few notes on tax crimes

The main types of tax crimes include fraudulent declarations of non-existent transactions through invoices or other documents; unfaithful declarations and omitted tax returns; tax evasions; concealment or destruction of accounting documents; failure to pay certified withholdings or VAT and undue compensation.

In 2019, the tax offenses reform (Legislative Decree no. 124/2019) extended the 231 liability to the criminal-tax area by expanding the so-called “predicate offenses”. Inevitably, the companies felt the necessity to update their organizational models.

The reason is that this change leads to a review of the risk areas that the MOG 231 already took into consideration, such as:

• Supplier management, including the demonstration of their ability to guarantee performance and their inclusion in the supply chain logic.
• Customer management, including supply chain management and verification of correspondence between invoice holders and service recipients.
• The link between accounting, financial statements and tax determination.
• The qualification of concluded transactions even when they are not reflected in invoices or similar documents.

We should also note that the Legislative Decree no.75, July 14, 2020, has transposed the EU directive no. 2017/1371, i.e., the so-called P.I.F. (Financial Interest Protection) relating to the rules for the fight against frauds affecting the EU’s financial interests by criminal law. This implementation further extended the administrative liability of entities regarding tax offenses.

The fundamental characteristics of the administrative liability of entities

The fundamental characteristics of the companies’ administrative liability are expressed by the Legislative Decree 231/2001. The Decree configures liability in all those circumstances in which a person belonging to the entity commits one of the predicate offenses. Such offenses include those listed in article 24 and subsequent of the Decree itself (i.e., undue receipt of funds, fraud against the State or a public body or for the achievement of public funds and IT fraud against the State or a public body; extortion and corruption, attempted crimes).

It will always have to be verified that the crime or harmful event is indeed attributable to the company. In this sense, reference will be made to the objective or subjective criteria for indictment in Article 5 of the Decree.

The objective criterion of indictment indicates that the administrative responsibility of the tax offense is attributable to the company if the crime was committed by a person who is part of the company’s organizational structure in such a way as to generate an interest that benefits the organization itself. In this case, interest means the purpose of the criminal conduct, while the benefit is the material profit from the crime.

The subjective criterion of indictment relates to the qualifications of the subjects who can commit the offense: top managers or subordinates. Top managers are those who perform management, administration, or representation roles in the company or in a part of the company that has managerial and financial autonomy. Typical examples include managing and non-managing directors, members of the management or supervisory board; employee directors and general managers. On the other hand, subordinate subjects are individuals who are always subjected to the top management’s control.

This is an important distinction since if the person – senior or subordinate – has committed the crime for a personal or third-party purpose, no responsibility can fall on the company. The same principle will also apply if the company can prove that it has adopted and implemented an effective organizational model, supervised by a specific body with control and initiative powers and that the crime was committed by circumventing the MOG.

Tax offenses presupposed of liability according to art. 25 quinquiesdecies 

We should also dedicate some clarifications to Law 159/2019, which introduced article no. 25 quinquiesdecies. The scope of this article was then extended by Legislative Decree 75/2020.

This is a highly noteworthy text since it establishes the administrative responsibility of the companies for some criminal offenses indicated and governed by the Legislative Decree 74/2020.

These predicate offenses include, in particular:

• Fraudulent declaration using invoices or other documents for non-existent operations, for example to obtain tax savings.
• Fraudulent declaration through other devices, such as, for example, false documents aimed at tax evasion.
• Issuance of invoices or other documents for non-existent transactions, so as to allow other companies to evade taxes.
• Concealment or destruction of accounting documents in such a way as to make it impossible to reconstruct the company’s turnover effectively.
• Fraudulent evasion of tax payment, exemplified by the dispersion of corporate assets capable of generating fraudulent savings for the company.

To these crimes we must add those committed in the context of fraudulent cross-border systems with the aim of evading value-added tax for a total amount of at least ten million euros:

• Unfaithful declaration, for example, by falsifying the declaration for value added tax to obtain savings.
• Failure to declare, for example, for the purposes of value added tax.
• Undue compensation, for example, through the production of false documents to benefit from undue or even non-existent credits.

Based on what we just stated, reconsidering the 231 Organizational Model and its update become essential operations.

It is highly recommended to adopt a MOG 231 specifically oriented to the prevention of tax crimes, moreover in complete consistency with the spirit of the same Decree Law 231/2001, which provides for the identification of the risks-offenses and the possibility of choosing which of them to prevent through an adequate Organizational Model.

The necessary steps to adapt the 231 Organizational Models to tax offenses 

To adapt their 231 Models, companies will have to act according to four main guidelines:

1. By analyzing the fiscal history of the company and evaluating the validity of the existing compliance models.
2. By mapping the processes and sensitive activities at the risk of tax crimes.
3. By analyzing, evaluating and developing an adequate Internal Control System.
4. By updating the Organizational Model 231 and implementing it promptly.

In conclusion, the constant adaptation of the 231 Organizational Model with particular attention to tax crimes is to be considered a fundamental activity in the overall and practical improvement of the Internal Control and Risk Management System. The MOG is an opportunity to review the organization’s internal processes critically and objectively, with broad-spectrum objectives of improving their effectiveness and efficiency thanks to the formalization of increasingly advanced procedures and protocols. It is also useful to enhance the company’s transparency and reputation towards all its stakeholders.

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In general terms, we define the Supervisory Body as the authority responsible for supervising the liability of entities in the context of crimes committed to benefit the entities themselves. The Body’s role is to monitor and verify the compliance and effectiveness of the 231 Organizational Model, report any deficiencies, anomalies and violations or update the Model if necessary. For these reasons, this authority is paramount in the Model itself and the requirements compliance programs. 

It’s important to remind you that the 231 Organizational Model (Also called MOG 231) is a business management system that aims to identify all the operating procedures developed by the company to decrease the risk of crimes in the organization’s interest. 

The benefits of such models are numerous: the first is to excuse from penalties provided by Legislative Decree 231/2001 and to allow significant savings on costs deriving from any legal fees. In addition to that, it gives new possible business opportunities, as various public entities and companies require their suppliers to be equipped with MOG 231, and also greater control over internal processes at risk of crime. 

In addition to the functions listed above, the Supervisory Body is also responsible for the following tasks: 

• Propose adaptations of the Model, i.e., following changes in the company’s activity structure or according to the regulatory framework.
• Supervise and control the recipients’ observance and effective implementation of the MOG 231. 
• Manage and monitor information and training initiatives to spread knowledge and understanding of MOG 231 by its recipients.
• Manage and control the information received concerning the functioning of the Model.
• Identify activities at risk of crime.
• Provide controls aimed at preventing crimes.
• Identify methods to manage the financial resources that are necessary to stop or prevent crimes.
• Introduce adequate disciplinary systems to sanction failure to comply with the measures provided by MOG 231.

The requirements of the Supervisory Body 

In all its activities, the Supervisory Body must show attributes of independence, autonomy, continuity of action and professionalism. 

Autonomy and independence are necessary to exclude any admixture or coincidence between the controller and the controlled. For this reason, the Body must never be responsible for corporate operational tasks in areas at risk of “predicate offenses.”

Continuity of action is essential to ensure constant control over activities that are, so to speak, “sensitive” (i.e., at risk of crime), and the uninterrupted monitoring of the Model, which must be in line with corporate and regulatory developments. 

Finally, professionalism relates to two different competencies that members of the Body must always show: on the one hand, that of a juridical-criminal nature (especially relating to predicate offenses and the provisions of Legislative Decree 231/2001); on the other hand, technical-inspection knowledge, as it is essential for analyzing company systems. 

Appointment and composition of the Supervisory Body 

In the case of a small entity, Article 5, paragraph 4 of the Legislative Decree 231/2001 (“Discipline of the administrative liability of corporate body, companies and associations, including those without legal status, under Article 11 of Law no. 300 – September 29, 2000) states that the Supervisory Body may coincide with the administrative body of the company itself.

Generally, the Supervisory Body is appointed by the Board of Directors or, alternatively, by the entity’s Sole Director. However, it’s also essential to specify that our legal system does not dictate rigorous conditions regarding how the Body must be composed. Therefore, it may be monocratic (i.e., with only one member) or collective (i.e., with multiple subjects). The subjects of a collective Supervisory Body can be internal and external to the company, and their office will have a duration of three or five years – except for any subsequent renewal.

It is easy to understand that the composition of the Supervisory Body will depend on many factors: the entity’s size, type of activity, and organizational complexity. However, what will always be pivotal is to guarantee the burden of supervision and the effectiveness of controls. 

Sometimes, the presence of external members in the Supervisory Body proves to be the most effective solution to ensure the autonomy of activities, while that of internal members has the benefit of providing more in-depth knowledge of company dynamics. 

In its guidelines, Confindustria indicates a Supervisory Body with a monocratic composition as the most effective for micro and small enterprises, while the collective type is considered most suitable for medium or large organizations.

Finally, it is worth noting that, if the company has a board of statutory auditors, they may be in charge of supervising the adoption of the MOG 231. 

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The Legislative Decree n. 231/2001, which introduced the “regulation of the administrative liability of legal persons, companies and associations, including those without legal personality, under article 11 of Law n.300, September 29, 2000”, turns twenty.

It’s a crucial anniversary because this legislation has allowed the Italian legal system to overcome the principle of “societas delinquere non potest”, that is, “a company cannot commit a crime”.

Although the Legislative Decree n. 231/2001 was initially applied only to some willful crimes, over time, the legislator has expanded its range of action by including further “predicate offenses”, i.e., the types of offenses that can cause the body’s liability. To date, this particular category includes about five hundred heterogeneous offenses, such as crimes against the Public Administration (the first to be introduced), corporate and environmental crimes, crimes related to accidents at work, IT crimes and, more recently, tax crimes.

The extension of the applicability of the Legislative Decree n. 231/2001 has sensitized companies – especially those of medium-large size – to implement efficient internal compliance systems resulting from adopting specific Organizational Models. The latter must be constantly updated while appointing the Supervisory Body guarantees the verification of the application by the model’s recipients, as well as the model’s adequacy and effectiveness.

Organizational Models: a valuable tool for avoiding the responsibilities of a crime under the Legislative Decree n. 231/2001

Companies that adopt Organizational Models have an essential tool at their disposal to avoid liability for a crime according to the Legislative Decree n. 231/2001. Several cases addressed by the jurisprudence and ending with the acquittal of the company precisely because its Organizational Model was valid confirm such a thesis. However, this is a topic that we will discuss more thoroughly in the future.

It is also important to point out that Confindustria recently published its updated guidelines regarding the creation of Organizational Models, hoping to “inspire companies in the construction of their model and, for the jurisprudence, to enhance the organizational efforts made by the companies to align themselves with the provisions of the Decree 231.”

The aforementioned Supervisory Body actively deals with the Legislative Decree n. 231/2001, which is why more and more medium-large companies are equipping themselves with such entity, in view of the growing attention the case law shows in relation to the Body’s centrality in internal control systems.

More specifically, the Supervisory Body receives the so-called “information flows” from the various corporate functions. It then sends the reports to the top management, the Board of Directors and the Board of Statutory Advisors. Hence, the Supervisory Body provides these entities with a constantly updated representation of the state of health of the corporate control system.

It is also worth reporting a recent sentence by the Court of Milan on the well-known Monte dei Paschi di Siena case, which saw the bank’s Chairman and Chief Executive Officer being convicted of false corporate communications and stock manipulation. The fine was 800 thousand euros.

The court was unequivocal regarding the liability of the entity, explaining that, in the analyzed timeframe, “the Supervisory Body, despite having penetrating powers of initiative and control, […] substantially omitted the necessary investigations (which were functional to the prevention of repeated and undisturbed crimes), despite the relevance of the issue as per the inspections of the Bank of Italy (of which the SB was aware) and has even risen to judicial challenge blaming BMPS[…]”

And again: “The Supervisory Body witnessed the events passively, limiting itself to insignificant acknowledgments, in the spiraling of events (from the alarming press reports to the judicial debacle) that a more prudent exercise of control would have averted. Thus, unfortunately, it was not and all that remains is to detect the body’s omitted (or at least insufficient) supervision, which founds the organizational fault referred to in article 6, Legislative Decree n. 231/2001.”

This sentence again confirms the centrality of the Supervisory Body in monitoring and verifying the adequacy and effectiveness of the corporate compliance system.

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