Corruption in a Paternalistic Democracy: Lessons from Italy for Latin America
In its recent history, Italy combined democracy with high levels of corruption and illegal campaign financing. Corruption in Italy is not new, but by the time of the recent "Clean Hands" prosecutions it had reached the highest echelons of government and was pervasive in all business-government dealings.' In spite of overall good economic performance, the Italian combination of corruption with what we will call "paternalistic democracy" has produced inefficiency, unfairness, and a loss of political legitimacy. We begin by reviewing the special features of the Italian democratic experience, which produced remarkable stability in the face of apparent political fragmentation and in the process created a fertile field for corrupt dealings. With this background, we examine the trial of Sergio Cusani, one of the major cases brought by the Milan prosecutors after they launched their investigation in 1992.2 This case highlights the corrupt workings of Italian business-government relations during the 1990 nationalization of the chemical industry. Since the case of the chemical industry appears to be distinctive only in its scale, the case helps one understand the costs that corruption has imposed on the nation's citi-