Bribery is an everyday taxing affair (February 1996)
This is part one of a two part series in which I will try to shed light on two judicial proceedings now in course in Italy which involve former Prime Minister Silvio Berlusconi and the public prosecuter who led the team of magistrates in the Clean Hands trials.
Two bandits enter an office and shout, “Stop everything! This is a robbery!” An office employee exclaims, “Thank goodness. I thought it was the government tax auditors!” This joke told by Italian media magnate Silvio Berlusconi immediately following the opening session of the court proceedings which see him as protagonist with charges against him for bribery and corruption of public officers illustrates not only the former Prime Minister’s ability to keep his sense of humor during moments of great duress, but describes in a nutshell the nightmarish fear of anyone who happens to have his own business in this country.
The task of tax auditing in Italy is assigned to a branch of the military called the Guardia di Finanza. One of the most inauspicious things that can happen to a person in business in Italy, is to be paid a visit by these gentlemen. The experience is so traumatic as to render Berlusconi’s unlikely joke, perfectly plausible. After all, a band of bandits will take whatever money that happens to be on hand at the moment, and then leave. And it is highly improbable that they will come back again once they have left. With the Guardia di Finanza, you know when they come, but you never know when they will leave. And you can most conceivably be certain that they will return.
The worst thing about their presence is that one must be cunning enough to determine just what type of representative of the state one has before him, for there is a strict and certain dichotomy that defines the category. There are those of such unbending moral standard that the very hint of an arrangement, or gift, or bribe, however you prefer to call it, is your immediate guarantee to a heavy fine and prison sentence. And there are those who have a totally flexible basis upon which they interpret the country’s tax laws, according to what you are willing to offer for such elasticity.
This, of course, is not to mention the fastidious aspect of their presence in itself. With the time and patience they take at wallowing over every figure, and with most of your files and archives inaccessible to the employees who need them in order to go on conducting business as usual, it is easy to imagine the economic havoc that is caused by their mere ubiety.
Then, there is the ambiguous aspect of the tax laws themselves. The unclarity may be due to two different factors. There are laws which are written with such vagueness as to allow for a extremely wide and often contradictory interpretation of their meaning and application. And there are laws, which may be quite simple in their wording and obvious in their definition, but which are practically annulled by other laws that may be just as simple, but totally contradictory to the first. Even the most moral and willfully law abiding citizen in Italy cannot help but break the law, when the laws are in such contradiction to themselves. Even for professionals in the field the laws are open to question. If you were to present your books to a new accountant there is a great likelihood that he would find the evaluations of your usual accountant totally disputable. And they are probably both equally right and equally wrong. It depends on how the tax auditors decide to give meaning to the word of the law.
Given all of that, even if one accepts the premise that Silvio Berlusconi did offer money to the Guardia di Finanza, just who is the real criminal and who the real victim? Should such an act really be considered corruption or bribery of public officials or rather extortion by those same officials? As anyone who has his own business in this country knows (and that means the local neighborhood grocer, the butcher, doctors, travel agents, entrepreneurs, or industrialists), this was the system. When you found yourself confronted by a member of the Guardia di Finanza, of the second type, either you negotiated a “gift” or you were likely to find yourself fined right out of business. The crime may have been as negligible as having quite honestly misplaced a decimal point or your ignorance of the fact that some bureaucratic form had changed, and you were still using the same form you have used for years.
All of what we have said so far has taken for granted the fact that
Silvio Berlusconi himself, knew of and made the decision to make the illegal
payments. However, Mr. Berlusconi claims to have had no knowledge
of such actions. His enemies claim that as head of such an important
company, it was impossible for him not to know. Nonetheless, anyone
with the ability to access the dimensions of a commercial group such as
Fininvest, which has a turnover of 11,000 migliardi $7 billion, and employs
over 24 thousand people, will easily come to the conclusion that it is
just as improbable as it is probable that he was informed of such payoffs,
especially considering how such transactions had become a part of the daily
routine of business.
February 1996
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