Bosses put Italy's corruption bill at €300bn

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Italy remains way behind similar countries in terms of its success in controlling corruption. Corruption photo: Shutterstock
13:28 CET+01:00
Italy would be €300 billion better off if it had acted decisively against corruption in the wake of the "tangentopoli" scandal of the early 1990s, according to an eye-opening new report from the country's bosses.

Employers organization Confindustria said the failure to implement effective measures to stamp out endemic bribery and kickbacks in public and business life has acted as a costly restraint on growth without which the economy could be nearly a fifth bigger than it now is.

In a report titled "Corruption: Deadweight on Development," Confindustria's in-house think-tank CSC attempts to quantify the impact of the ultimately ineffective response to the vast system of corruption that was uncovered in 1992 and known as tangentopoli. The "clean hands" investigation into tangentopoli led at one point to the indictment of half the country's lawmakers. 

Although the probe led to many arrests, convictions and several suicides among prominent business and political figures, Italy remains way behind similar countries in terms of its success in controlling corruption, according to every international survey on the subject.

That has a major impact on the country's economic growth, most significantly because of its negative influence on inward investment, CSC director Luca Paolazzi said.

"If the measures taken after 'clean hands' had been sufficient to reduce our ranking in the (World Bank's) Control of Corruption Index to equal with France, we calculate that would have boosted GDP by 0.8 percent a year," the report said.

"Over the last 22 years, the cumulative impact of that would have been an economy that is 19 percent bigger than it is now - the equivalent to nearly €300 billion of extra output, or around €5,000 per person."

France is currently 26th on the COC Index, which ranks 210 countries and territories from the least to the most corrupt. Italy is 90th on the list.

Mafia Capitale

The problem of corruption in public life has dominated headlines for the last two weeks after prosecutors in Rome revealed they were investigating a mafia-style network of crooked businessmen and politicians surrounding Rome's city hall including a former mayor with links to the far right.

Paolazzi does not believe however that the "Mafia Capitale" scandal will add to the burden on Italy's recession-bound economy. "It may well increase the perception of Italy as a corrupt country, but it is not the perception that reduces economic potential, it is the corruption itself," he told AFP.

"Mafia Capitale has revealed corruption that was already there and which economic decision-makers were already aware of."

Nonetheless, Confindustria intends to become a civil party to the investigation on the grounds that its law-abiding members have suffered from what the scandal has done to the image of Italian businesses.

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In a parallel report on Italy's economic outlook, the CSC said 2014 was coming to an end with turmoil in financial markets offset by encouraging signs for the global economy.

Falling oil prices, the euro's return to its 15-year average value against the dollar, a pick-up in world trade and low interest rates will help Italy return to growth in 2015, the think-tank said, predicting an expansion of 0.5 percent next year and 1.1 percent in 2016.

The CSC warned however that this gentle recovery after three consecutive years of economic contraction would not be sufficient to significantly reduce unemployment, which it sees remaining above 12 percent of the workforce into 2016.

It noted that the high jobless rate and uncertainty about the economic outlook was continuing to weigh heavily on consumer sentiment with Italy's high rate of domestic saving expected to continue rising over the coming year.

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