Caught Red Handed: Russian Financing Scheme in Italy Highlights Europe’s Vulnerabilities

2019-07-17T12:07:35-04:00
July 12, 2019
Research Assistant, Alliance for Securing Democracy
Research Assistant, Alliance for Securing Democracy
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In February 2019, two Italian investigative journalists made an explosive revelation: Matteo Salvini, leader of the far-right party La Lega and Italian interior minister, had sought financing from the Kremlin to the tune of millions of euros. That claim has now been given a new lease on life by Buzzfeed’s release of the audio recording of a meeting in Moscow that corroborates the February story. In the recording, three Italian men, including Salvini’s close aide Gianluca Savoini, and three Russians can be heard arranging an oil deal that would generate millions of euros for La Lega. The transcript confirms that representatives of Russian interests sought to support La Lega ahead of European elections earlier this year.

Was it legal?

This Moscow meeting occurred on October 18, 2018. At the time, the only limit on foreign funding in Italian elections was that all donations were capped at €100,000. However, La Lega’s coalition partner was pushing a new anti-corruption law that, among other things, completely forbade foreign funding of Italian parties and candidates. In the weeks following the Moscow meeting, nine Lega deputies proposed an amendment that would have removed the ban. The amendment was eventually withdrawn and the anti-corruption law containing the ban on foreign funding was passed in December 2018. But La Lega eventually managed to weaken the restrictions in April 2019. On that occasion, it added a provision in an unrelated economic bill that amended the law so as to exclude “foundations, association and committees” from its scope.

Of course, Salvini and his party have firmly denied any wrongdoing. In particular, La Lega has been keen to distance itself from Savoini, despite glaring evidence of their close proximity. For instance, Savoini’s foundation, the “Lombardy-Russia Cultural Association” is located in the same building as La Lega’s headquarters. And, while there is no conclusive evidence that the discussed oil deal actually went through, the prosecutor’s office in Milan has now opened an investigation into possible charges of “international corruption.”

A Pattern of Interference

In other European countries, gaps in election finance laws have allowed the Russian government to make its contributions legally. In 2016, the French ban on foreign donations to political parties was circumvented when a €9.4 million Russian contribution to far-right Marine Le Pen’s presidential campaign was structured as a loan. In the United Kingdom, the Conservative Party has received hundreds of thousands of pounds in total from shell companies linked to Russian interests and state-affiliated actors, skirting the Electoral Commission, which relies on parties to self-police that the ultimate source of their funds is within the United Kingdom.

The La Lega case is but one of many instances in which Russia has found an eager partner in Europe’s populist right. Also in the United Kingdom, Brexit leader Arron Banks was reportedly offered mining investments by a Kremlin-connected oligarch. And in the Czech Republic, Russian gas firm Lukoil paid off a $1.4 million fine on behalf of presidential advisor Martin Nejedly. 

The La Lega case demonstrates what ASD Senior Fellow Kristine Berzina describes as the opacity of the energy sector and its suitability for concealing illicit foreign contributions. Dominance in the European energy industry offers Russia the opportunity to interfere in Western democracies at multiple stages in the delivery process: using local companies as delivery intermediaries in order to enrich favored local elites, laundering money through energy firms to conduct political financing, and using projects such as Nord Stream 2 to strengthen Russia’s political and economic leverage over European countries.

Russia seeks to take advantage of legal loopholes, and in some cases breaks European and American laws, to pursue its foreign policy goals. That some European populists have shown few qualms in helping them do so represents a major long-term threat to European cohesion. Josh Rudolph notes that some far-right parties are willing to make a Faustian pact with the Kremlin to the detriment of their country’s own interests and sovereignty, allowing “the Westward march of Russian attempts to undermine free democracies.” In response, European and North American policymakers should pinpoint loopholes in financing law to close, and should also be more assiduous in enforcing laws that are already on the books. Government inaction and bureaucratic inertia are cracks in the rule of law that Russia can and will continue to use to its advantage.

The views expressed in GMF publications and commentary are the views of the author alone.