INTRODUZIONE ToolKit The management of legality in the development of a renewable energy plant utilizing wind or solar power

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1 INTRODUZIONE ToolKit The management of legality in the development of a renewable energy plant utilizing wind or solar power 1 Prevention of and Fight against Crime 2009 With financial support from the Prevention of and Fight against Crime Programme European Commission Directorate General Home Affaires

2 TABLE OF CONTENTS INTRODUCTION... 3 OBJECTIVES AND AIMS... 6 METHODOLOGICAL PREMISES POLICY AND PRINCIPLES SGRA PLANNING Initial assessment Internal resources External Resources Material resources Organizational procedures Risk management process mapping Critical points in the construction process of renewable energy plants RISK ASSESSMENT Evaluation process Evaluation table INTERNAL CONTROL SYSTEM SB operativity Internal information flows ACTIONS TO MITIGATE THE RISKS BIBLIOGRAPHY...34 Publication within the project S.C.O.R.E.: STOP CRIMES ON RENEWABLES AND ENVIRONMENT JLS/2009/ISEC/AG/101. Funded by the European Union Programme Prevention of and Fight against Crime, coordinated by the Fondazione Culturale Responsabilità Etica (Cultural Foundation for Ethical Responsibility). This work is by Andrea Baranes, Mauro Meggiolaro and Francesco Zoppeddu - Fondazione Culturale Responsabilità Etica. This publication does not in any way reflect the official views of the European Commission. Responsibility for the contents of this publication is solely attributable to the Fondazione Culturale Responsabilità Etica (Cultural Foundation for Ethical Responsibility

3 INTRODUCTION INTRODUZIONE The activity of developing plants for the production of electricity from wind and/or solar power is subject to the risk of potential crimes/criminal offences. The research from the project S.C.O.R.E. 1, based on judiciary investigations, National Anti- Mafia Directorate reports, investigations by journalists, reports from trade associations, industry and environmental groups, have shown how the proliferation of illegal behaviour is closely linked to the economic desirability of the sector. All this has been facilitated by uncertain and sticky legislation and the cumbersome bureaucracy that has not guaranteed specific time frames and conditions for building the plants. Illegal behaviours can involve people within the organization 2 (managers, employees and consultants), people who have a relationship involving a contract or business (partners, suppliers, etc.), can be generated by both direct and indirect involvement in controversial situations and can be found in all stages involved in the development of a plant. During the first construction phase, when the sites are identified and selected, the first critical situations can be encountered: counterfeit documents that aim to change the true data of the findings, falsifying the description of a territory s geomorphologic characteristics (wind and radiation, respectively, wind and photovoltaic), by assigning altered values, in order to favour a specific plot of land. This kind of fraud, involving veritable market distortions, can occur if the company assigns the surveying to third parties without knowing whether or not they are reliable or, where there have been the necessary internal controls to prevent any conflicts of interest, in the case where one s own department is performing the survey. In addition to data on wind and radiation levels, counterfeiting can involve data regarding the distance between plants and residential areas (in particular, in the case of the installation of wind turbines, where predefined distances must be strictly respected), the material distributed at the local authorities planning conference, the distorted description of the flora and fauna in the area that can lead to a violation of the legislation on protected areas and the depletion of natural beauty. 3 The company could then be involved directly or indirectly in cases of illegality in financial management 4 and with other banks, financial institutions and brokerage companies. Funding might come from the European Community, national and regional funds, governed by the Law 488/92, through which the Min- 1 Milano R., Grillo S. Buone Pratiche: Rischi Imprenditoriali nell Accesso al Credito e nella Formazione di Partnership d Impresa Commerciali e Industriali (Best Practices: Risks for Enterprises in access to Credit and in the Formation of Business, Trade and Industrial Partnerships) Banca Popolare Etica, Valore Sociale; Arci Lombardia Il coinvolgimento delle comunità locali nel contrasto all illegalità nei settori ambiente ed energia (The involvement of the local community in combating illegality in the environmental and energy sectors) ; Grillo S. Linee guida per la promozione legale e sostenibile delle rinnovabili nell attività delle amministrazioni pubbliche (Guidelines to promote legality and sustainability in renewable energies in public administration activity) Valore Sociale; Grillo S. Lo sviluppo legale e sostenibile delle rinnovabili: linee guida per le imprese (The legal and sustainable development of renewable energies: guidelines for enterprises) Valore Sociale; Fondazione Culturale Responsabilità Etica Linee guida per le banche e il settore finanziario (Guidelines for the banks and financial sector) ; Zoppeddu F. Prevenire e contrastare l illegalità d impresa. Strumenti per l applicazione delle Best Practices (Preventing and combating illegality in enterprise. Tools for applying Best Practices) Fondazione Culturale Responsabilità Etica; Arci Lomabardia Il coinvolgimento delle comunità locali nel contrasto all illegalità nei settori ambiente ed energia (The involvement of local community in combating illegality in the environmental and energy sectors), Saveria Antiochia Omicron Ecomafie in Italia. Una panoramica (The Eco-Mafia in Italy. An overview) ; Zoppeddu F. Le Infiltrazioni criminali nelle energie rinnovabili: Eolico e Fotovoltaico (Criminal infiltration in renewable energies: Wind and Photovoltaic), FCRE; Grillo S. La tutela della legalità nelle rinnovabili: una sfida per i cittadini, le istituzioni e le imprese (The protection of legality in renewable energy sources: a challenge for citizens, institutions and enterprise) Valore Sociale. 2 We will use the term organization in order to understand the different bodies operating in the field of renewable energy plant development. For the sake of clarity, avoiding unnecessary typos, the term organization can be replaced during the narration by the term enterprise. 3 IV Commissione, Osservatorio socio-economico sulla criminalità Indagine dei rischi di illegalità e penetrazione della criminalità organizzata nel settore dell energia eolica in Italia. (IV Commission, Observatory of social economic crime Investigation of the risk of illegality and infiltration by organized crime in the wind energy sector in Italy.) 4 Penelope N.(2011), Soldi Rubati, Ponte alle Grazie, Milan 3

4 INTRODUCTION istry of Productive Activities finances companies that promote investment programmes in southern Italy, with reductions through capital grants. In order to have the funding in question, the applicant must have guarantees on their creditworthiness. The guarantees are assessed by the instructing bank, and therefore, if the executives are corrupt or corruptible, there may be false assessments that generate the illegal dispensation of a grant. One of the most commonly used illegal methods is the duplication of the bank guarantees and credential letters that are presented in order to obtain more than one grant or loan. 5 There may be cases of illicit accumulation of various forms of incentives, through falsifying the affidavit in which the company certifies that it has not received other forms of public funding. The prohibition on publicly disclosing the names of the renewable energy producers 6 that have benefited from public funding, limits the transparency and social control exercised by local players, encouraging those who want to hide any illegal operations. It is precisely the lack of transparency and traceability that promotes fictitious financial transactions and accounting that can facilitate tax avoidance and tax evasion, transfer pricing 7, fraud and VAT carousel fraud. Reports from the National Anti-Mafia Directorate and the numerous investigations by the judiciary in this regard also confirm the interest of criminal organizations in laundering money, investing proceeds obtained from illegal activities in the lucrative business of developing renewable energy plants. 8 Organised crime has a strong control over the territories where the sector has registered the greatest degree of development. Sicily, Campania, Calabria and Puglia are the areas with the best geomorphologic conditions for the construction of these plants in our country. These are also the regions where the N drangheta, the Cosa Nostra, the Camorra and the Sacra Corona Unita have historical roots, even if, for some decades now, the North has proved to be an interesting area for new business and for the financial aspects connected with the increased possibility of money laundering and integration into the legal economy. 9 Criminal organizations, through methods of intimidation, and corruption involving bribes and extortion, tend to exercise widespread control over the territory where their interests are located, in order to gain a competitive advantage by simplifying and speeding up the purchase of the surface rights, both for land where they intend to build the plant as well as land where third parties have the right of way to connect the plants to the grid. The coercive power of organized crime (intimidation, corruption, and socalled vote trading) may also be exercised over those responsible for issuing permits. The time frames for building a plant in our country are extensive and, very often, the municipalities where the work must be carried out are small and lack the personnel to bear the workload, both in terms of the number of officials and the required professionals. This can create advantageous positions for those responsible for issuing permits and a potential discretion which can foster a lack of transparency fuelled by corrupt practices and behaviours that then, in fact, distort market conditions and condition the competition. As we have seen from the information from the judiciary, there have been cases where some companies that intended to invest in southern regions asked members of organized crime operating in the territory to intervene, in order to speed up authorization procedures and eliminate competition from other companies. 10 In exchange, the construction 5 Ibid footnote 2 6 Legislative Decree 30 June 2003, no. 196 Code on the protection of personal data. 7 Techniques and procedures adopted by multinational enterprises in price formation in the supply of goods and services that intervene between the different bodies of the group, operating in different countries. 8 Annual report on the activities of the National Anti-Mafia Prosecutor and the National Anti-Mafia Directorate, December Court of Auditors report for Zoppeddu F. Le Infiltrazioni criminali nelle energie rinnovabili: Eolico e Fotovoltaico (Criminal infiltration into renewable energy: Wind and Photovoltaic), Fondazione Culturale Responsabilità Etica. 4

5 INTRODUCTION work on the plant is awarded to organized crime, or companies belonging to it or colluding with it, companies that deal with construction, earth-moving and management/maintenance of the plants. Once the construction site is in the hands of organized crime, it will almost certainly violate the rules to ensure the safety of workers and the quality of the work. There will be cases of illegal employment, failure to comply with contractual agreements, illegal waste disposal, failure to recover areas, money laundering, illegal purchases or purchases of counterfeit goods. These practices have been encouraged by people acting as intermediaries between the companies, organized crime and the politicians: the project developer or developer who, through the establishment of an ad hoc company (often a Srl, or limited liability company), does it by obtaining grants and authorizations for the construction of the renewable energy plant. Later he sells it on to the company interested in investing in the project, the turnkey Ltd. (Srl), in exchange for money or the promise of future allocations of building contracts (earth-moving and labour). In order to reduce the risks outlined above and limit all other possible cases of crimes/offences in which the company might be involved, organizations must comply with the legal provisions and play a proactive role in the fight against illegality in the sector. 5

6 OBJECTIVES INTRODUZIONE AND AIMS The introduction of administrative responsibility in bodies and organizations (legal persons, partnerships, associations - including those with no legal personality), through the Legislative Decree 231/2001, makes organizations responsible for offences committed by natural persons or to the advantage of the company itself and may be subject to penalties, including partial or total suspension from carrying on business activities. The Decree calls for organizations to adopt a system to manage a form of administrative responsibility that leads to the most effective measures for preventing, combating and monitoring the activities and processes. Article 6 of the Legislative Decree 231/2001 takes the body s or institution s exoneration from responsibility and leads it to the adoption and effective implementation of a model of organization, management and control/monitoring designed to prevent the execution of the criminal offences referred to in that legislation. In line with these provisions, we decided to structure and propose a useful manual for implementing an administrative responsibility management model for companies involved in the construction of a renewable energy plant (wind/solar). The purpose of this manual will be to prevent and reasonably limit, in the sphere of the offences provided for in Legislative Decree 231/01, the risks associated with the company s operations, aimed at eliminating factors and conditions that could encourage any illegal conduct. The management system should enable organizations to identify critical points in the process, where there might be a potential for crime, assess the risk for the company and, after an appropriate monitoring and control of the entire system, implement the best mitigation actions possible. 6

7 METHODOLOGICAL PREMISES In the text presented below we tried to draft a useful handbook for standardizing a management system for administrative responsibility (SGRA) for the specific process of developing wind and solar farms. Given the specific nature of the sector, in order to facilitate a potential integration of the manual with a wider SGRA, whenever the organization already has or intends to adopt one, we decided to structure the manual relying on the PDCA (Plan-Do-Check -Act) process and methodology. The approach to the processes allows us to highlight the relationships between the stages of the same process and those of different processes and allows for their management with the aim of achieving the administrative non-liability of legal persons and the organization itself. The Deming cycle (PDCA methodology), which is the beginning and basis of any current management model, allows for greater integration between these. Plan Act Do Check The planning phase (Plan) makes it possible to identify and allocate human and material resources in relation to their responsibilities, to define organizational procedures, establish the objectives and the processes for managing the achievement of results in accordance with the policies and purposes of the organization. The implementation phase (Do) makes it possible to evaluate, for each process, the activities that are potentially at risk of crimes/offences in the interest or advantages of the organization and the level of risk of crimes/offences being committed based on the criteria and management methodologies in place; to have the necessary actions for achieving the planned results and the optimization of SGRA; to draft the risk analysis, implementing the processes according to plan. The audit phase (Check) makes it possible to monitor and control processes and/or specific activities according to the needs and the purpose of the system used to determine compliance with parameters and set requirements, in the face of the established objectives. The control also provides for the repetition of the most critical stages of the process, with a view to a continuous improvement in the process. The last phase involves the standardization of the actions planned, implemented and controlled, taking all the necessary measures to mitigate (prevent and/or counteract) the risks related to the commission of crimes/offences as provided for by the Legislative Decree no. 231 / The legal requirements of the Model are directed toward corporate bodies and their members, employees and consultants of the company (such as project workers and temporary workers) whenever involved in large-scale processes, the contractors, suppliers, consultants and members of the Supervisory Board, inasmuch as they do not belong to the categories mentioned above. We will try to determine in all those who work in the name of and on the behalf of the organization, the level of awareness in regard to the risk of violations of the provisions of Legislative Decree no. 231/2001. This manual was drafted on the basis of previous research for the project S.C.O.R.E. 11 which provided the inspiration needed to structure and organize it to be more readily accessible to stakeholders in the sector. Other bibliographical references used for drawing up the manual are the guidelines, codes and general principles (code of ethics, 10th Princi- 11 Ibid footnote 1. 7

8 METHODOLOGICAL INTRODUZIONE PREMISES ple of the UN Global Compact, Anti-Mafia Code for Enterprise, Confindustria Guidelines, Management Models of administrative responsibility, etc.), aimed at preventing, combating and monitoring the risks of illegality. Moreover, we also took into account the provisions of the Legislative Decree 231/2001. We believe that we should point out that this manual does not purport to be exhaustive and complete in the description of the adaptations typical of a management system for administrative responsibility, but that it draws its inspiration from this as a type of supplement. Therefore, it is susceptible to amendments depending on the context and the changes in the activities and objectives of the organization. 8

9 1. POLICY INTRODUZIONE AND PRINCIPLES For the organization that wishes to take action in preventing and combating forms of illegality that may affect the construction of a renewable energy plant on the ground, the first step is to define a clear company policy that complements the broader vision and mission adopted by the company. With the definition of the policy we wish to establish the framework on which the Management sets the tasks and defines the company s objectives. Before defining the strategic objectives, it is necessary to clarify the principles that guide the company s activities and its vision. These are underwritten by Senior Management and formally presented in the management s letter. Company policy Principles Strategic objectives Management s letter Sustainability Legality Transparency The company, in the construction of renewable source energy plants, must comply with the principles of sustainability, legality and transparency. These principles apply to all stages of the development process of a project and their general interpretation can also be applied to other activities. The company is committed to promoting the sustainable development of its activities, taking into account, given the complexity of the operations, not just the economic feasibility but also the social and environmental aspects. The principle of sustainable development is part of a wider context of corporate social responsibility, according to which the company, in order to ensure long-term value, must be able to integrate economic assessments with assessments that include the social and environmental impacts of its activities. These integrations, during the construction, management and decommissioning of a plant, translate into a concrete commitment, on the part of the company, to performing an analysis of the area and its characteristics, the correct use of the materials and resources, with regard for all the people who live and work in the territory. The sustainable development of a project, furthermore, also means that the company takes an approach in preventing any possible damage (environmental, social and economic), and takes precautions in carrying out assessments and operational decisions, as well as taking a participatory approach, aiming to involve all the people with an interest in the project (stakeholders) and its impacts, both positive and negative. The principle of legality assumes that the project will develop in line with those of the international, Community, national and local legal requirements. Given the delays and the cumbersome nature of certain regulations governing the sector, we suggest that this principle be understood in a broad and nonrestrictive way, or that the company adopts, in performing its activities, a proactive behaviour aimed at legality, shedding light on grey areas not protected by clear and certain regulations that mark the boundary between what is required by law and what is instead required by ethics. The transparency of the operations and decisionmaking is central to a sustainable and legal development of the projects. Efficient communication is required to put this tool into practice. This should be directed at the inside of the organization, so that all decisions and transactions are made traceable and verifiable with regard to a responsible person and toward the outside of the organization, so that all stakeholders in the project can participate in the development stage and have all the tools to evaluate and integrate, with their views on the complex choices that the company must face. Having clear principles to follow will be useful to the company in outlining the specific strategic objectives to follow. In fact, the company s strategic objectives will be drafted in line with the principles of sustainability, legality and transparency previously mentioned. In addition, they will be the company s 9

10 1. POLICY AND PRINCIPLES mission, explaining specific points in the commitment to: structuring a legality management system on the renewable energy plant development processes. This system will be integrated into a broader management system; mapping the risks of crime/offences related to the construction, operation, and decommissioning of a plant; - assessing the risks and properly analyzing critical issues, with special attention to arising disputes; structuring a control system for the independent management system, efficient and effective, aimed at continuous improvement; standardizing the actions planned, implemented and monitored; implementing the most effective measures to prevent and combat the risks (mitigation); reducing the social and environmental impacts by applying the best available technologies and best practices during construction, operation and decommissioning of the plants; efficiently using resources and raw materials useful for the construction and operation of the plant; training and educating employees and contractors on legality issues; promoting best practices with partners, suppliers, contractors, and professional and trade associations, etc..; communicating to citizens and institutions the company s management of the administrative responsibility system. The letter from the management will summarize the principles and objectives of the strategic management model on legality adopted by the company. It will be drawn up and signed by senior management in order to emphasize the full support and alignment of the company s management strategies. The letter from the management will be the form of external and formal communication of the company s commitment on legality issues. The letter should be brief and couched in a simple language that can easily be communicated to all persons falling within the scope of the system: organization managers and workers but also the company s suppliers and those doing contract work for the company. In addition, the company s formal commitment will be made public and communicated to all other parties involved in the project and the company s activities: local communities, institutions, etc.. 10

11 2. SGRA PLANNING Planning is the first phase of development of the administrative responsibility management system of (SGRA). There is a very complex phase in which the organization defines the internal and external resources to be allocated to the management model (initial assessment). In particular, senior management has the task of identifying the work team in charge of implementing the model and choosing those responsible for monitoring the efficiency and effectiveness of the model. Furthermore, there is the defining of the organizational procedures required to achieve the planned results and the optimization of SGRA, with a view to continuous improvement and transparency. Lastly, there will be the development of the first phase of the organizational procedures in the management model that provides the mapping of processes at risk, in other words, identifying potential crimes in the phases involved in building a plant. 2.1 Initial Assessment The assessment phase is critical to identifying and immediately making autonomously operational those people involved in the implementation and monitoring of the Model. In fact, the senior management, after defining the policy, becomes committed to allocating resources (internal, external and materials) to help build a management model that will ensure legality in the construction of renewable energy plants. The objectives of the allocation of resources are: - to define the role of the figures responsible for mapping and risk assessment (SGRA Team), control/monitoring of the model, procedures, documentation and reporting to management (Supervisory Board), specifying the roles and assigning responsibilities: internal resources; - deciding the criteria for selection of outside consultants, when internal resources are insufficient for completely and efficiently carrying out the management of the model: outside resources; - establishing the budget and technical tools to be allocated to the SGRA Team and the Supervisory Board to allow them to effectively carry out their functions independent of any conditioning: material resources. Now let us go into detail in regard to the three types of resources (internal, external and material) in order to specify the characteristics and functions, referring to the subsequent future for the analysis of operational activities INTERNAL RESOURCES The Management is a work team - SGRA Team - capable of structuring organizational procedures that will form the Administrative Responsibility Management System. The SGRA team must consist of numbers and professionals that will vary according to the complexity of the project, the business environment and the special needs assessed on a case by case basis by the management. It is provided that the SGRA Team must include the technical and professional skills appropriate to the functions they are to perform. In line with the principle of transparency and for the purposes of full traceability of decisions and operations, a senior person is appointed as the head of the SGRA Team. In our particular case, this person could be the Project Manager for construction of the renewable energy plant. This figure, in fact, for the extent of their general background knowledge and involvement in the project, is well suited to play the role of guarantor of the principles of legality, transparency and sustainability that guide the company s activities. The functions of the SGRA Team are: to define and implement organizational procedures that structure the SGRA; to identify the stages of the process of building a renewable energy plant; to identify possible offences as set out by Legislative Decree no. 231/2001; to perform risk mapping: to identify offences and the difficulties that could arise during the process; to perform risk assessment: assessing the degree of the organization s potential involvement 11

12 2. SGRA PLANNING in the critical points that arise in the risk mapping process; to collect documents and pertinent information; to communicate with the Supervisory Board (SB); to report to management; For the analysis of operations, refer to the paragraphs containing details regarding the specific organizational procedures prescribed by the Model in which the SGRA Team has a leading role: risk mapping, risk assessment, information collection. Supervisory Board The effectiveness of a management model, which aims to prevent and combat the risks arising from illegality, strongly depends on the degree of control and analysis of the correct implementation of the model and the control of the integrity of those people responsible for developing that model. In fact, Article 6 of the Legislative Decree 231/2001, shifts the Body s exoneration from responsibility to the adoption and effective implementation of an model of organization, management and control to prevent the criminal offences covered by that legislation, provided for the establishment of a Supervisory Board (SB) within the organization, specially assigned the task of supervising the functioning and compliance of the organizational model and to be responsible for updating. Therefore, the Management is committed to providing and assisting the SGRA Team Supervisory Board (SB) whose characteristics are: autonomy and independence: the requirements of autonomy and independence are crucial, so that it is not directly involved in management activities that are the subject of its controls; professionalism: the SB must have the technical and professional skills necessary for the functions they perform; continuity of action: the SB must be a structure within the organization, in order to ensure continuity in supervision. The SB must constantly work at supervising and continuously updating the organizational model; confidentiality: the members of the Supervisory Board ensure the confidentiality of information in their possession, particularly if it is related to reports received regarding alleged violations of the Model. In any case, all information in the possession of members of the SB must be handled in accordance with Legislative Decree 196/2003 (Privacy Code). The functions of the Supervisory Board are: to monitor the application of the management model, in relation to the different types of crimes provided for by Legislative Decree 231/2001; to verify the effectiveness of the model and its actual ability to prevent crimes provided for by Legislative Decree 231/2001; to analyze the maintenance over time of the soundness and functionality of the management model; to identify and propose changes and updates in relation to the change in legislation or changing conditions (corporate and context), verifying the transposition in the management model; to periodically check the map of risk areas, in order to adapt it to changes in the activity and/or structure; to carry out regular checks and inspections on specific operations or specific acts carried out within the areas at risk; collect and process relevant information in compliance with the model; conduct internal investigations of alleged violations of the provisions brought to the attention of the SB by specific reports or that have come to the fore during the course of that same monitoring; to inform management on the activities and the implementation of the Model; broad and extensive right of access to company records; right to rely on the support and cooperation of the various departments that may be affected by or involved in monitoring activities. As provided for by Legislative Decree art. 6 para. 4, in relation to the size and where activities undertaken by the organization are not complex, the SB takes the role of managing body (Management- Managing Director). To support the management, 12

13 2. SGRA PLANNING there are provisions for a head of the SB to ensure the effectiveness of the model and to exercise control over the management. For the analysis of the SB operations, we refer to paragraph 4.1, the control/monitoring system EXTERNAL RESOURCES With the wealth of ever-changing variables in this field, the dynamics of the time frames, flexible and often stringent, can highlight some physiological gaps in the SGRA Team. In fact, there may be cases where the team does not have the expert professionals needed to perform research and thorough investigations for identifying and assessing the risk of crimes/offences that might occur at some stage of the process (typically Due Diligence 12 ) or have difficulty creating the right channels of communication between the organization and the network of stakeholders involved in the project 13 ). If one of these conditions occurs, the management of the SGRA Team will be assisted by an external consultant, able to manage the complexity of the scenario described. Usually we are referring to private companies with this type of consultant, companies that have the necessary professionalism and skill to thoroughly investigate and best structure the dialogue between all parties involved, with respect to legality in this sector. The external consultant should be completely independent, professional and experienced. The Management and SGRA Team are in charge of choosing the external consultant that meets the requirements. The Supervisory Board, in coordination with the head of the SGRA Team, exercises control over the functions and activities of the external consultant MATERIAL RESOURCES By material resources we mean the tools required by the SGRA Team and the Supervisory Board to perform all their functions completely, efficiently and effectively. During the initial assessment, the management must establish the budget required to create the entire system for managing legality. Taking into account the fact that the model will have to accompany the renewable energy plant construction project during its complete life cycle (site selection, design, construction, operation and maintenance, waste management and decommissioning) and stages of internal organization (selection and training of employees, etc.) and funding (selection of intermediaries, traceability of transactions, etc..). Economic resources will also ensure the technical tools useful for the mapping and risk assessment contained in the collection and reporting of information regarding strong points. For example, we should mention the technologies that can foster communication and the transparent exchange of information between stakeholders: forums, focus groups, anonymous complaint tools available on the internet, useful software to exchange and store documentation, access to certified company registration, etc Organizational procedures The Management, once the company policy is defined and the necessary resources for the implementation of the model allocated, leaves the SGRA team and the SB the task of managing and controlling the various phases of the management system, while waiting for the final reporting, thanks to which any decisions required to mitigate risk may be 12 For further details, see paragraph Ibid footnote 11 13

14 2. SGRA PLANNING made: preventive and corrective measures, aimed at continuous improvement. For this reason, the organizational procedures for creating the model need to be very clear and well defined, and must be adaptable to the size and complexity of the organization s activities. Legislative Decree 231/2001, art. 6, para. 2, indicates the characteristics for the creation of a model for organization, management and monitoring. In particular, the letter a) expressly states that special attention must be given to the identification of risks: in other words, the analysis of the business environment to highlight where (in which area/sector) and how such events, detrimental to the objectives set out in the Legislative Decree 231/2001, might occur. Therefore, risks related to the various phases that make up the plant building process must be identified. Risk mapping Do Act Risk assessment Control/monitoring system Document collection and reporting to management Risk mitigation actions Plan Do sorting of documents, in order to ensure the transparency and traceability of each operation. If the management system is implemented properly and the Supervisory Board exercised its power to control effectively, the body responsible for the decisions will have all the suitable tools for making the choice of cancelling or reducing to a minimum the risks from illegality, and can promote measures that are appropriate for preventing and combating illegality. 2.3 Risk Mapping Process The SGRA Team proceeds to a detailed analysis of the risks related to the different phases of business processes, verifying and identifying areas that could be affected by potential offences. Therefore: there is the identification of the steps that constitute the process of commissioning and decommissioning a renewable energy plant; the possible offences are identified, as provided for by Legislative Decree 231/2001; the types of offences related to specific activities (critical points in the process) are highlighted; finally, the functions are identified, and because they can be involved in risk management, they must undergo a planned audit. Identification of the phases of the processesses Next, we proceed to the evaluation of these risks, assigning, for each type of risk, the degree to which the crime/offence could affect the company s operations. It also evaluates the level of risk generated by a company s indirect involvement in illegal activities. Through the evaluation of the information available for all stages of the process, again in relation to possible offences, the potential risks can be defined and, as tools for prevention and control may be provided for in addition to those already present in the company. Each step is accompanied by a correct management of information flows, and a precise and accurate Mapping of the processes at risk Identification of possible crimes (former D.Lgs 231/2001) Critical points in the processes The application of this mapping procedure for processes at risk is necessary during: the implementation phase of the Model, in accordance with Legislative Decree 231/2001, inas- 14

15 2. SGRA PLANNING much as it makes up the basis for the definition of objectives and legality programmes, in order to ensure a systematic updating of the risk assessment; whenever a change occurs in the context (for example, regulatory framework), the site (protected areas, region/province, etc.), process (suppliers, contracting companies, etc.) or product (wind turbines, photovoltaic panels, etc.); any review of the system in order to ensure a systematic updating of the risk assessment. The process of construction of a plant can be outlined in the following stages: a) site selection, when suitable sites for building the plant are selected, based on feasibility studies on geomorphology, surveys of radiation/wind, environmental acceptability and the type of ownership; b) design, provides for the submission of detailed plans for the issuing of licenses and permits; c) financing, this is when the plant s return on the investment and incentives and access to credit is assessed; d) the construction, when the plant is built, a job usually entrusted to third-party companies that deal with construction and earth moving; e) management and maintenance of the system, i.e. all the operations necessary to correctly run the plant; f) disposal and waste management that aims to restore the initial conditions of the area and a proper waste disposal; g) internal organization, when internal resources are selected and given responsibility. The relevant offences, pursuant to Legislative Decree 231/2001, in this manual are: 1. The crimes against Public Administration and in the relationships with the Public Administration (art.24; art.25) 1.1 Corruption for an official act or contrary to official duties 1.2 Corruption in judicial proceedings 1.3 Corruption of a person charged with a public service 1.4 Incitement to corruption 1.5 Embezzlement, extortion, bribery and attempted bribery of members of the European Communities and of officials of the European Communities and Foreign States 1.6 Extortion 1.7 Fraud against the State, against other public bodies or the European Union 1.8 Aggravated fraud to obtain public funds 1.9 Embezzlement to the detriment of the State or the European Union 1.10 Misappropriation of funds to the detriment of the State or of the European Union 1.11 Fraud against the State or other public body 2. Organized crime (Article 24-ter) 2.1 Criminal association. 2.2 Conspiracy aimed at the reduction or maintenance in slavery, trafficking in persons, the purchase and sale of slaves and offences relating to infringements of the provisions on illegal immigration in art.12 Legislative Decree 286/

16 2. SGRA PLANNING 2.3 Mafia-type association 2.4 Electoral political Mafia exchange 2.5 Extortion 3. Corporate crimes (Article 25-ter) 3.1 False corporate communications 3.2 False corporate communications to the detriment of shareholders or creditors 3.3 Obstruction of controls and monitoring 3.4 Fictitious capital 3.5 Illegal transactions involving shares or shares of the parent company 3.6 Agiotage 3.7 Failure to disclose a conflict of interest 3.8 Obstacle to the exercise of the functions of public supervisory authorities 4. Offences of market abuse (Article 25-sexies) 4.1 Abuse of privileged information 4.2 Market manipulation 5. Environmental offences (art. 25-undecies) 5.1 Destruction or deterioration of habitat within a protected site 5.2 Management activities for unauthorized waste 5.3 Pollution of the soil, subsoil, surface water or groundwater 5.4 Violation of the reporting requirements, record keeping requirements and forms 5.5 Illegal trafficking of waste (including organized activities ) 5.6 Falsified documents (in the documentation of the waste, in the surveys, in the permissions, etc.). 5.7 Intentional Pollution 5.8 Pollution through negligence 6. Inducement to withhold statements or to make false statements to the court (Article 25-decies) 7. Computer crimes and illegal data (art. 24-bis) 7.1 Falsehood in an electronic document 7.2 Computer fraud of the person who provides certification services for electronic signatures 7.3 Damage to information, data and computer programmes used by the State or other public bodies or public utilities 16

17 2. SGRA PLANNING 7.4 Damage to information, data and computer programmes 8. Receiving, laundering and use of money, goods or assets of illicit origin (Article 25-g) 9. Crimes against industry and commerce (art. 25-bis 1.) 9.1 Obstructing industry or trade 9.2 Fraudulent trading 9.3 Sale of industrial products with misleading signs 9.4 Unlawful competition with threats or violence 9.4 Fraud against national industries 10. Manslaughter and serious or very serious injury committed in violation of safety regulations and the protection of health and safety at work (Article 25 f) 11. Crimes against the person (article 25-d) 12. Employment of third-country nationals staying in the country illegally (art. 25-duodecies) CRITICAL POINTS IN THE CONSTRUCTION PROCESS OF RENEWABLE ENERGY PLANTS Let us see how the different stages of building a renewable energy plant on the ground can be affected by certain phenomena of illegality. In other words, what are the critical issues and potential crimes that we might find and that the organization could be involved in both directly and indirectly. This study aims to be an example of the type of analysis that the company performs in regard to the critical points of the process. We believe that, at the time of implementation, is useful to change and adapt the proposed analysis according to the different situations and contexts in which the company operates. Far from being considered a comprehensive representation, its purpose is to be an example of how to structure the evaluation table that the organization will be able to draw upon. As we will see later, the evaluation table will be useful for immediately perceiving the degree of the potential risks the company could run into in developing a project. As mentioned previously, the proposed development of a renewable energy plant, be it photovoltaic or a wind farm, can be reduced to seven main stages: a) site selection; b) design; c) funding; d) construction; e) management and maintenance; f) disposal and waste management; g) internal organization. Each of these stages may be subject to the risk that, on one or more occasions, evidence of crimes/offences addressed in Legislative Decree 231/2001 may come to the fore. 17

18 2. SGRA PLANNING PROCESS MAIN STAGES CRITICAL POINTS/OPPORTUNITIES FOR CRIME Site selection Design Financing Construction Management and maintenance Waste management and disposal Internal organization - localization - feasibility studies - environmental acceptability - land tenure for the site (privately property, public use, procurement, etc.). - Authorizations and planning permissions - incentives - regional, national and European Community funds - construction/building works: construction, construction equipment, supply of concrete, (partners, procurement) - components (suppliers) - Maintenance and management companies (partners, contracts) - companies that handle the disposal (partners, procurement) - administrators - workers/staff - third party contractors Organized crime offences. Falsified documents. Falsification in the surveys. Depletion of natural areas. Violations of the law on protected areas. Violation of zoning laws and regional guidelines. Intimidation. Crimes against the PA. Corruption. Extortion. Corporate crimes. Offences of market abuse. Corruption, organized crime offences. Offences against the PA. Extortion. Environmental offences Organized crime offences. Money laundering. Corporate crimes. Market abuse. Offences against the PA. Organized crime offences. Extortion. Money laundering. Undeclared work. Safety at work. Environmental crimes. Crimes against industry and commerce. Crimes against the PA Organized crime offences. Corruption. Crimes against industry and commerce. Offences against the PA. Environmental crimes. Environmental crimes. Organized crime offences. Offences against the PA. Conflicts of interest. Corporate crimes. Corruption. Organized crime offences. Offences against the Public Administration. Corporate crimes. 18

19 3. RISK ASSESSMENT TThe implementation phase of the administrative responsibility management model includes assessment of the risk of crime and document management on the part of the SGRA Team, in coordination with the Supervisory Board. This phase is very important because depending on the risk assessment performed by the SGRA Team, all the company s available mitigation mechanisms are activated. The principles of reliability and professionalism, prudence and transparency guide the operations aimed at preventing and combating the risk of crimes/offences. The professionalism of the SGRA Team is found in the effectiveness of the assessment. An assessment or evaluation is effective when it is performed by people who have the technical and professional skills needed to understand the various facets of the phases of the construction process of a plant and when they are based on relevant and complete information. In fact, the team pays special attention to the collection of all information that is useful to properly assess the real and potential risks, generated either by direct involvement or indirect involvement of the company in controversial situations. The principle of prudence must underlie the SGRA Team s assessment. According to this principle it is always better to overestimate the risk of crime by implementing an excess of preventive measures, rather than underestimate it and get involved in a crime/offence or a less serious situation at issue that could result in damage to the company s reputation. The principle of prudence concretely translates into a very careful and thorough assessment that requires all the information needed to evaluate the activity in question. The principle of transparency, in accordance with the principles that guide the administrative responsibility management system as a whole, is useful to ensure the complete traceability of the evaluations. To this end, the team must collect and sort all the documents and information on which evaluation is based and make them all available to the SB which provides for the control and storage of these documents. 3.1 Evaluation Process In this phase, the SGRA Team evaluates the degree of potential involvement of the organization in controversial situations, of possible offences or illegality during the process preceding the construction of a wind or solar power plant that produces electricity. All phases of the process undergo an assessment that takes into account the risks identified during the planning and the offences envisaged by Legislative Decree 231/2001, identified in the risk mapping performed on each phase. As we mentioned above, the assessment is effective and correct if the team has all the necessary information at its disposal. Therefore a structured and effective system for the research and reorganization of the information must be established, because only through the compensation of imbalances in the information can the SGRA Team, correctly evaluating them, provide the degree of risk for each operation. In the case in which complete and transparent information for one or more phases is lacking, the SGRA Team will collect the missing information. The information collection or research is done using due diligence, and through the network of stakeholders. 19

20 3. RISK ASSESSMENT IN-DEPTH INFORMATION 14 The organization that wants to effectively combat illegality must make access to all relevant information a priority in order to prevent, combat and control the risks arising from involvement in unlawful activities. The Anti-Mafia Code for Enterprise 15 pays special attention to the collection of information, in this regard dedicating the paragraph Duties regarding information and knowledge tools for criminal risk. The Code points out that, in order to carry out the preliminary analysis, it is essential to collect the largest possible amount of data required for knowledge of the players in the region. To this end, the organization must implement two particular strategies that include both dialogue with the other stakeholders in the project and professional and extensive research. Illegality in enterprises, whether direct or indirect, generates a range of very complex problems and risks that companies cannot tackle on their own. Therefore, the organization must be able to build around the individual problems (corruption, criminal infiltration, forgery, etc.). A network of stakeholders, be they institutions (Municipality, Mayor or Prefecture and Police etc.), other enterprises and business associations (partners, suppliers, competitors, etc..), community associations or simply ordinary citizens associations, as well as any other public or private body engaged in similar roles in different areas 16, as is also pointed out in paragraph 12 of the Anti-mafia Code. The network of stakeholders has to be adaptable to the context and directed at attempting to prevent and combat the problems. The organization, with its proactive approach, must therefore be quick in creating an efficient organizational structure that encourages communication between the players. The different points of view must be easily expressed and compared and the exchange of information must be transparent. In fact, the company, to understand whether or not there are controversial elements related to partners, suppliers, employees, contractors, professionals, and any other party planning and development that can involve local institutions such as the municipality and the prefecture, the civil society organizations that deal with crime, other companies which have done or intend to do business with the target company. To encourage the creation of an efficient multi-stakeholder network, the company provides all the tools for building and maintaining a dialogue between different stakeholders. The best known and most utilized are the opportunities for meeting and discussion, such as conferences, meetings and round tables. But there are other methods that may be useful for supplementing and giving a more thorough approach to these. For example, they can use questionnaires, interviews with key figures, identified beforehand. Moreover, given the increasing use of computer tools to facilitate communication, making it more accessible and immediate, such tools as forums and focus groups or applications of private networks between individuals should not be excluded, tools that take advantage of the storage offered by external providers (cloud computing), where with a simple upload online confidential documents and interchanges can be shared. In paper form this would be far more difficult. The second strategy is based on professional research and investigation (hereinafter, Due Diligence) aimed at obtaining information to prevent and reduce the risks associated with certain activities. Through extensive research, which goes beyond consultation with other stakeholders, useful information can be gleaned about partners, intermediaries, political affiliations and any criminal infiltration, counterfeiting, etc.. This takes into account the periodic reports, measures or judicial or police documents where available; investigations by labour inspectorates; ISTAT statistics, surveys and processed information from the Chambers of Commerce. Not to mention the news investigations and reports. The company plays a central role during the investigation phase because it has at its disposal very detailed information on the project and as the first party, has the legitimacy to enter into direct contact with business partners and other stakeholders. Having a direct relationship with other stakeholders, the company can request all the information needed to eliminate all the shady veils and make the situation as transparent as possible. Therefore, due diligence can be considered a useful tool for compliance with the recommendations of Legislative Decree 231. In particular, it can help to mitigate the risks related to actual or potential cases of illegal activities in the production of energy from renewable sources. The information gathered as a result of thorough due diligence can be compared and combined with that information collected by the company in relation to the network of stakeholders. 14 For further details, Ibid footnote Anti-Mafia Code. Point 13 (f) 20