Supply Side
Fresh Public Contracts Corruption Scandal Hits Italy

Italian police are investigating claims of corruption involving several large public projects and Milan’s Expo 2015 World Fair. Four people were arrested on March 16, including one former ministry official. A BBC article states that 51 others – including politicians – have been put under investigation.

The contracts involved are worth a total of €25 billion, including sections of Italy’s multi-billion euro high-speed TAV rail line. Suspicions began over contracts to build part of the TAV rail line near Florence, and led to further investigations involving motorway contracts and this year’s Expo fair. Bribes were allegedly taken for contracts to build the Italian Pavilion for the Expo fair, which was also the centre of a corruption scandal last year.

Arrests took place in Milan and Rome this week, while Italian police also conducted raids in homes and offices across the country as part of their investigation. One of those detained was named as Ercole Incalza, who formerly held a senior position in the public works department of the Transport and Infrastructure Ministry and served under seven governments. Italian businessman Stefano Perotti was also arrested, having allegedly paid Incalza for public contracts. A Reuters article says that one of those arrested allegedly helped arrange a work contract for the son of Transport Minister Maurizio Lupi. The minister denied the accusation.

According to an article in Missoulian, senior special operations policeman Mario Parente told a news conference that the system set up by the four suspects inflated the price of public projects by up to 40 percent. The arrests come just days after Italian Prime Minister, Matteo Renzi, visited the location of the Expo fair to deliver a speech on its May 1 opening. In his speech he expressed his hope that the opening would be “up to the standard of Italy’s image,” according to an article in The Guardian.

Italy has struggled to eradicate corruption in recent years. Just last December Public Spend Matters wrote about a similar crackdown on alleged corruption in Rome in which 37 people were arrested. Yet again, the allegations related to the awarding of a number of contracts for public services.  Just last month, the EU opened a fraud investigation into a high-speed line between Lyon and Turin, which is currently under construction. However, the head of TELT, which will build part of the France-Italy TAV line, said that the project would be protected from corruption partly because it was supervised by French and European as well as Italian authorities.

Italy is ranked 69th in Transparency International’s 2014 Corruption Perceptions Index, joint last in the European Union along with Bulgaria, Greece and Romania. The recent allegations have been unearthed just as a long-delayed bill to combat corruption faces opposition in the Senate. The latest scandal will no doubt fuel calls to clean up Italy’s entire system of public infrastructure procurement.