A look back to the IMI-SIR bribery and money laundering case – described at the time as “the biggest corruption case in the Italian history”
The IMI-SIR case sheds light on the difficulties to investigate crimes involving complex webs of trusts and offshore companies. The case concerns bribery allegations against a judge in the context of a dispute between an Italian chemical firm, the Società Italiana Resine (SIR) owned at the time by the RovelliBattistella family and the then publicly-owned IMI Credit Institute.
In 1993, the judge Metta had ordered IMI to pay a compensation of over 980 billion lire (equivalent to EUR 510 million) to the owners of SIR for failing to support the company which had led to its collapse. It was confirmed by a court judgment in 2006 that the judge Metta had received one billion lire (equivalent to EUR 520,000) to ensure a judgment favourable to SIR.
The corruption case became known as “the biggest corruption case in the Italian history”, according to the judges at the time. Only the judge Metta and the intermediaries were condemned while the Rovelli son was acquitted due to statute of limitations related to the alleged offences and the widow of the head of the Rovelli family was not found guilty.[1]
However the case did not end there as neither the compensation money nor the proceeds of the bribery could be found. The compensation considered as proceeds of illegal activity by the verdict had been immediately transferred by the Rovelli family to foreign bank accounts and laundered through foreign shell companies and trusts. It is only following the unveiling of the complex network of companies in 2009 that the Rovelli family would finally be convicted for money laundering and the proceeds of the crime recovered by the state.
Trusts constituted an essential piece of the intricate scheme set up to conceal the proceeds of the crime, as reported by prosecutor Mapelli. The scheme initially involved the setting up of a Liechtenstein based trust called Pitara trust. The beneficiary was an Italian resident, the widow of the head of the Rovelli family, and the solicitor Rubino Mensch, an Italian lawyer[2]
The money then moved to Swiss bank accounts linked to Italian intermediaries that had also played a role in the bribery of the judge Metta. Among them, Cesare Previti, former Member of the Parliament and Defence Minister under Berlusconi government was sentenced for corruption to 6-year imprisonment.[3]
In the following years, a myriad of trusts, about 20 were subsequently created outside the EU in order to conceal the remaining proceeds of the crime. Anecdotally, they all had names starting with the initial letters of the Rovelli heirs (Oscar, Felice, Angela, Rita):
- in the Bahamas four trusts were created using city names (Oslo, Frankfurt, Antwerp and Rio),
- in the Cook islands, four others with names of famous mountains (Andes, Fuji, Olympus and Rainer) and
- in another offshore country, four others with names of animals (Antelope, Fox, Ram and Otter).
In most cases, the widow Rovelli was the settlor and the beneficiary of the trust while the accountant Munari would play the role of protector and solicitor, keeping control over the trustees established in offshore jurisdictions outside of the EU.
The latter did not act independently and were asked to sign “blank” suspension letters so as to allow their removal at any point in time.
To add another layer of secrecy, each trust would own in turn investments funds or companies in other offshore countries, sometimes through nominee shares.
This case highlights how offshore trust structures can be abused to shield away the proceeds of illegal activities, obscure the money trail and break the path between the beneficial owner and the assets.
If applicable at the time, current and proposed new European rules would not have been of any help to identify the beneficial owners of the trusts involved in the case since they were all based outside the EU and managed by non-EU resident trustees and although the true beneficial owners were resident in the EU.
Such case serves to illustrate the worrying diagnostic made by Italy in its National Risk Assessment about the growing misuse of trusts “for illegal purposes, in particular for tax crimes, money laundering, bankruptcy, market abuse and concealment of illegal assets of organised crime”.[4]
Foot notes:
- Mapelli W. and G. Santucci, La democrazia dei corrotti, 2012, BUR Rizzoli, page 253
- Mapelli W. and G. Santucci, La democrazia dei corrotti, 2012, BUR Rizzoli, page 261
- Mapelli W. and G. Santucci, La democrazia dei corrotti, 2012, BUR Rizzoli, page 251-3 and Cassazione (Italian Supreme Court) verdict of the 4/5/2006
Ministry of Finance, Committee on Financial Security, National Analysis of Money Laundering and Terrorist Financing Risks, 2014, page 26
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