Corruption Surrounding the Building of Barriers in Venice, Italy

The former chair of the Venice in Peril Fund wrote a disturbing piece for the September 25 issue of the New York Review of Books about corruption in Venice. This corruption derived largely from a major project:  the building of flood protection barriers, known as MOSE. Although this project was larger than those in most cities, the misuse of funds, the failure to competitively bid, the false invoicing, the nepotism and the cronyism are no different. Similarly, the need for independent oversight is the same whether the project involves the building of a new school, a convention center, a transportation system, or a city dump.

Members of the Consorvio, the contractor, have been charged with (and some have confessed to) buying the support of "anyone they thought would further their cause." The founder of the Consorvio, who resigned a year ago after investigators found that he had made illegal payments, has said "that it was he who was behind the system of buying support and influence and granting contracts without an open bidding process."

The head of a major component of the Consorvio has exposed the existence of a slush fund containing billions of euros "provided through false invoicing," with the surplus going into bank accounts abroad. The Consorvio "employed sons and daughters, ... topped up salaries, paid for holidays and lavish parties. Its influence made itself felt in every aspect of Venetian life as it subsidized publishing, backed exhibitions, ... financed the Fenice opera house," and helped the local cardinal found a theological university. All with taxpayer funds.

Estimates of how much money was misspent on the project range from one to three billion euros (about 20% more in U.S. dollars). Payments included about one million euros a year to the president of the region in which Venice sits, and 400-500,000 euros to the Venice mayor's campaign. Payments were also allegedly made to individuals in the national ministry of finance, to keep the money coming.

The two most recent heads of the local agency assigned to supervise the Consorvio's work have been charged with taking money from the Consorvio, as well. One of the them is quoted as saying that a Consorvio executive "said he would give me 200,000 euros a year until the end of my mandate and a few million euros thereafter. I was rather embarrassed but accepted." The Consorvio also hired his daughter and gave work to his brother. The Consorvio was allowed to choose most of the inspectors assigned to its oversee its work.

A UNESCO conference on the future of Venice was even canceled at the last second due to pressure from the Italian government, because it would have discussed problems with the Consorvio's approach and its work.

The project is 80% done, so it would be impossible to stop its completion. Not only have billions of euros been misspent, but the future of one of the most singular cities on earth is still imperiled. Of course, to residents, every town and city is singular. And yet there is far too little independent oversight of large projects, far too little discussion of alternatives and almost no ongoing discussion of how money is being spent (or raised through bond issues), how contracts and subcontracts are being bid, or how to deal with requests for increased funds. This creates a huge temptation to engage in ethical misconduct. Every municipality is potentially another Venice, on the verge of being flooded with ethical misconduct.

Robert Wechsler
Director of Research-Retired, City Ethics

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