Bosses put Italy's corruption at 300b euro

Italy would be 300 billion euros ($A449.98 billion) better off if it had acted decisively against corruption at the time of a major scandal two decades ago, according to an eye-opening new report from the country's business bosses.

Employers organisation Confindustria said the failure to implement effective measures to stamp out endemic bribery and kickbacks in public and business life had 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 "tangentopoli" a vast system of corruption uncovered in 1992.

The resulting "clean hands" investigation led to the indictment of half the country's lawmakers, many convictions and several suicides among prominent business and political figures.

But 22 years later, Italy remains way behind comparable 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 (gross domestic product) by 0.8 per cent a year," he said.

"The cumulative impact of that would have been an economy that is 19 per cent bigger than it is now -- the equivalent to nearly 300 billion euros of extra output, or around 5,000 euros per person."

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

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.

A former Rome policeman on Tuesday said he had uncovered evidence of similar networks in the 1990s but it had never been followed up.

"Rome didn't want to accept it had a mafia. A watered-down version of what we had found reached the prosecutor, the investigative team was disbanded and the case was shelved," said Gaetano Pascale, now an academic criminologist.

"It is several mafia groups operating, rather than one umbrella organisation (like the Sicilian Mafia)," Pascale added.

According to the Confindustria report, organised crime is only one factor behind high corruption levels in Italy: a dysfunctional judicial system and administration, the poor quality of the country's lawmakers and a culture of only trusting family and close friends are also to blame.

Paolazzi does not believe the "Mafia Capitale" scandal in Rome will make things worse.

"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.

In a parallel report on Italy's economic outlook, the CSC said 2014 was coming to an end with some encouraging signs for the global economy.

Falling oil prices, the euro's return to its 15-year average value against the US dollar, a pick-up in world trade and low interest rates will help the economy grow 0.5 per cent in 2015 and 1.1 per cent in 2016.