Private Equity – Snapshot & Outlook

Private Equity – Snapshot & Outlook

– In 2017, Private Equity markets continued to reach new record highs with regard to capital commitment, deal valuations and number of active investors. Competition for private investments increased dramatically, largely caused by traditional asset managers shifting significant proportions of their capital into private markets. With easy access to capital and increased competition for deals, Private Equity investors increasingly experience problems to effectively deploy their capital. However, the valuation rally is expected to continue in 2018, introducing new forms of investors, so-called megafunds. –

STATUS QUO – Private Equity markets are booming: Private asset managers raised a record sum of nearly $750 billion globally, extending a cycle that began eight years ago. In addition, less traditional investors such as pension funds or sovereign wealth funds increasingly engage in direct investments in private markets due to a lack of profitable investment opportunities in more traditional asset classes. With more capital available, the total deal volume rose by 14 percent to $1.3 trillion compared to the previous year, reaching almost its record high of $1.4 trillion from 2007. In contrast, deal count dropped for the second year in a row by 8 percent. As a result, the average deal size increased from $126 million in 2016 to $157 million in 2017, a 25 percent increase, mirroring the increased competition among investors.


Furthermore, the Median EBITDA multiple for investments in 2017 exceeded 10x, displaying a significant increase from its previous all-time high of 9.2x in 2016. Despite record valuations, the number of exits fell for the third consecutive year, suggesting that investors believe in further value appreciation of their investments.



High investment performance and superior yields for limited partners attracted new types of investors, ultimately resulting in greater capital commitments and fund size: The latter can be attributed to a large part to the rise of US buyout megafunds, private blind-pool capital vehicles with assets under management (AUM) above $5 billion. The prevailing wisdom has long been that the “law of large numbers” might put a cap on megafund returns, however average returns have outperformed returns of other fund sizes consistently during the last decade. The latter was not only a US phenomenon: The rise of US megafunds was nearly matched in Europe, where several firms successfully closed big new funds totaling $40 billion, and in Asia, where megafunds—previously close to nonexistent— contributed more than $20 billion of the $60 billion raised in 2017.

Besides buyout funds, it appears that other private asset classes constitute increasingly attractive investment opportunities for investors. First, private debt markets are more and more seen as a good alternative to banks and public debt, fueled by all-time low interest rates and investor demand for portfolio diversification. Second, real-estate gained popularity following collective rent rises in major cities. While investors have historically viewed Real Estate as a source of alpha, more and more are coming to see it rather as a source of income. In a world of compressing yields, relatively low-risk assets that produce annual returns of 5 to 7 percent, appeal to many investors. Finally, infrastructure investments remain an attractive alternative for investors. Since 2016, some of the largest general partners have raised record-breaking funds for traditional, brownfield infrastructure strategies.

CHALLENGES – Due to the continuous popularity of Private Equity as an investment vehicle, new challenges have emerged, pressuring the superior profitability of the industry. Higher number of sophisticated investors, ranging from pensions and endowments to family offices, decrease the likelihood for exclusive bidding. Hence, valuations continue to approach artificial highs, which makes it considerably more difficult to reach desired return multiples. This can be mainly attributed to thriving public markets, corporate strategic investors as well as the low-cost debt environment.

The public markets are hot despite some recent wobbles, which has been driving comparables’ valuations to new heights. Furthermore, the low-cost debt environment of the past decade encouraged strategic buyers to open their pocketbooks and quickly expand through acquisitions. In so doing, they are competing directly with Private Equity for deals and pushing multiples even higher. Another factor is the ongoing availability of cheap debt, which is driving up leverage levels for company acquisition, thereby increasing the risk for lenders in case of default. The mere unlimited rise in valuation manifests in fewer investments from general partners, zeroing in on targets where they can still earn an attractive IRR. However, what constitutes ‘attractive’ is undergoing revision, as many firms lower their hurdle rates in response to higher prices. Thus, investors sit on a whopping $1.8 trillion of dry powder in 2017. A continuation of this trend over the coming years would result in a vicious circle for general partners, forcing them to further reduce hurdle rates as well as to deploy capital in situations they otherwise would not.



OUTLOOK – The next years will undoubtedly mark a decisive period for Private Equity as a mainstream asset class. Following the rise of megafunds, we expect to see assets to consolidate at the top of the league table, i.e. private market funds are beginning to concentrate into fewer hands. This trend will be supported by a growing number of co-investments between traditional Private Equity investors and new direct investors such as pension funds.


In addition, funds will aim at bringing more structure and scale into their processes to cope with the changing market environment, innovation and unconventional investment horizons. For example, we currently experience first attempts of next-generation sourcing, which aims at improving sourcing with sophisticated analytics. Funds may be able to automatically match their sourcing activities with investment criteria and their respective perception of industry attractiveness. Besides, we expect to see investors increasingly engage in active management, as digital transformation processes open up new opportunities for value creation, which cannot be realized (at least in the holding period) without major involvement of the investor.

Due to uncertainty about future interest rates and valuation multiples, Private Equity investors will increasingly deviate from average exit periods: On one end, exit cycles for investments purchased at high multiples may decrease to as little as two years, as firms cash in on multiple growth early when they anticipate that multiples will decline. On the other end, Private Equity investors allocate theirs funds to private asset classes generally associated with longer holding periods (e.g. infrastructure, natural resources, and Real Estate) due to their high value creating potential.

In summary, Private Equity will remain one of the most sought-after assets classes experiencing further growth in both number of investors and average deal sizes. However, the future will show whether today’s high valuation levels are reasonable and enable superior exit returns.



Paul Theilig

Felix Schafer



  • McKinsey Global Private Markets Review (2018). The rise and rise of private markets.
  • Pitchbook (2017). European Private Equity Breakdown
  • Bain & Company (2017). Global Private Equity Report

Breakfast with: Federico Tenga, Bitcoin Entrepreneur and Co-Founder at Chainside

Breakfast with: Federico Tenga, Bitcoin Entrepreneur and Co-Founder at Chainside

Breakfast with: Federico Tenga (alumnus MiM ESCP), Bitcoin Entrepreneur and Co-Founder at Chainside.

Federico is an early bitcoin adopter, co-founder at Chainside and consultant for blockchain implementations. In December 2014, he founded the Italian branch of the BEN (Blockchain Education Network) with the aim of spreading the network in the Italian Universities.

Q: First of all, I would like to thank you for taking part in this episode of the ESCP Finance Society’s “Breakfast with” agenda. How did it come to your mind to deepen your knowledge about Bitcoin in 2015? What did your classmates think about it at the time?

Actually the first time I learned about Bitcoin was in 2011, when I was still in high school, but even if I found the concept very interesting at the time I didn’t get passionate about it. Later, in 2013, I finally started studying it, trying to trade it and start with my first projects around Bitcoin. While at university I had many classmates that showed some interest in the topic, but just few decided to try to learn more about it or buy some coins.

Q: What is Chainside and what is your long-term plan?

Chainside’s goal is to make easier the interaction with the blockchain for enterprises, reducing technical barriers with a simple interface that abstracts the complexities of Bitcoin. Right now we are focused on bitcoin payment solutions for merchants, but since differently from some other competitors we built our own technology from scratch, we are able to enable new blockchain use cases according the customers demand. In the long-term, we aim to establish ourself as a leading company in the industry and facilitate the transition to a crypto-based economy.


Q: Why should a firm choose Bitcoin over fiat money? What are the advantages of the former over the latter?

Bitcoin presents multiple advantages, both for people using it as a medium of exchange and for those using it as store of value. A firm accepting Bitcoin payments can benefits from the absence of charge-back related frauds as the settlements of a Bitcoin transaction is some order of magnitude faster than any traditional payment system (just about 10 minutes). Moreover, thanks to its permission-less nature, Bitcoin makes possible financial interaction also with people who do not have access to traditional financial infrastructure, or people who care about their financial privacy and prefer to use a tool not controlled by any centralised entity, increasing the potential customers of a company. Bitcoin has also the advantage to be programmable money, making innovation and automation more effective.

On the other hand, enterprises looking for a superior store of value for them or for their customers will find in Bitcoin an asset with limited and deterministic supply backed by frozen energy, somewhat similar to gold but technically more advanced.


Q: Do you actually believe that Bitcoin is an expression of financial world’s democratization (given that 97% of Bitcoins is held by 4% of the addresses)?

I don’t think that the distribution of wealth is really related to financial democratization. Bitcoin is an expression of permission-less finance, meaning that anybody in the world can have access to advance financial tools without having to deal with the limitations imposed by local regulation. This means that under a financial perspective, people in developed countries won’t be as advantaged as they are today over people in developing countries with poor banking infrastructure.


Q: As of 4 February 2018, the number of existing cryptocurrencies is over 1,512 and still growing. Who will thrive in such a market in the long term and what is the competitive advantage of Bitcoin over the other cryptocurrencies?

Most of those cryptocurrencies out there are already to be considered dead, only few of them actually have a decent transaction volume. In general, I am expecting a consolidation in the coming years, if you think about that the purpose of money is to be the single intermediate good that everybody uses for trading, so with the exception of transition phases when better money substitutes inferior money, people will always converge on using a single currency. This means that there is no space for multiple cryptocurrency in the long term, and the market will converge on the best one, which at the moment seems to be Bitcoin as it has the more stable and battle tested technology and a stronger network effect. Some cryptos claim that their purpose is not to be a currency but something else (e.g. a world computer), so they are not in competition with Bitcoin, but the truth is that they still need a native currency to secure their blockchain, so they will suffer competition anyway.


Q: Do you think it is possible to apply financial theoretical concepts to Bitcoin and cryptocurrencies in general? For example, is it possible to identify the fundamentals of a crypto? If yes, please explain how.

There are fundamentals in crypto, as there is an utility that people consume while using cryptos. When you want to evaluate a cryptocurrency you have to ask yourself “do people have any benefit in using it” and “is it long term sustainable”, which also implies how scalability concerns are being addressed. Bitcoin has already proved to be a good store of value and a useful medium of exchange for a least some niches, and current protocol upgrade proposals create optimism about the future, while most other cryptos are in a phase where they still have to prove themselves to provide some kind of real value to the users and have long term sustainability.


Q: Different investors use different methods to analyse an asset before investing in it. Which method should an investor in Bitcoin use? And if you have ever invested in it, which one did you use?

I studied the technology and tried to see the potential and the limitations. I know it can be hard for people without a technical background to really understand how the technology works, but if you don’t make some effort to study it as much as you can, it becomes very easy to make very expensive mistakes when it comes to investment. Understanding the tech helps you to see what the long term trend can be, while for the short term I consider any kind of trading mostly gambling, so it can be fun but there is no much you can do to systematically outperform the market.


Q: Warren Buffett in an interview to CNBC said: ”I can say almost with certainty that cryptocurrencies will come to a bad end.” In your opinion, are we witnessing the burst of the bubble or a healthy correction?

I believe that corrections are a natural part of a price discovery process, so as an asset gains popularity it is to be expected to have both bull market and bear market phases. The fundamental value of the technology is growing with new protocol upgrades being proposed every week, so I consider the daily price fluctuation just a distraction.


Q: Last question, what is the most important piece of advice you can give to the ESCP students that would like to pursue a career in Fintech industry? What are the most important qualities to succeed?

You need to be willing to go out of your comfort zone and start studying stuff you know nothing about on your own, you can’t be successful in Fintech if you don’t know how the technology works under the woods. You also have to deal with the fact that the university cannot help you in any relevant way to be prepared for the industry, it is a fast changing environment and few people are knowledgeable about these topics, and they usually don’t teach in universities. The good news is that nowadays there is so much information freely available on the Internet, so  you can easily learn a lot alone, but it requires commitment and genuine interest. 


It has been a pleasure to host you at our “Coffee Break”. Thanks again for your time and patience, Mr. Tenga!


Andrea Simoni

ICO is the new IPO?

ICO is the new IPO?

The beginning of 2018 saw another example of the psychological impact of the Bitcoin, Cryptocurrencies, ICO’s and Blockchain on human beings in this period.

In fact, Kodak company, the pioneer in the photography sector announced the Initial Coin Offering (ICO) of KODAKCOIN, to enable photographer to get more protection for the image rights. As a result, the stock soared by more than 400% just after the news.


Kodak was not a darling of Wall Street nor a Company on the headlines of newspapers for innovative initiative, so how can the offering of a digital coin make everyone change idea?

What is a Coin, how is it traded and what are the risks involved? The following addresses those questions and provides an objective framework on the topic, analysing and confronting IPOs with ICOs.

IPO: Initial Public Offering

An IPO, or Initial Public Offering, is the first sale of stock issued by a company to the public. Before it, the public is unable to invest in it, so the company is considered private and involves a relative small number of shareholders in the business. IPOs are the main way to go to widen the range of potential investors from founders, friends and venture capitalists to any individual or institutional investor.

Large firms use this process to raise a great deal of money, allowing the company to grow, expanding their market share and revenues. Private companies have many options to raise capital, such as borrowing, finding additional private investors, or being acquired by another company. But, by far, the IPO option raises the largest sums of money for the company and its early investors.

Obviously, this process has some pros such as the lower cost of capital, the increase in company’s public image, and it finally allows the attraction and retention of the best management. But, as everything, it has also negative aspects as the company is then required to disclose financial, accounting, tax, and other business information so making public and possibly disseminate that information, which can eventually lead to an increase in the risk of legal or regulatory issues and finally requires more time for reporting.

In this process, the prospectus is essential. It is a formal legal document that is required by and filed with the Securities and Exchange Commission that provides details about an IPO. It is issued in order to inform investors about the risks involved with investing in this stock. The information also guards the issuing company against claims that pertinent information was not fully detailed before the investor put money into a security.

In an IPO, we can have two types of investors, the institutional and the retail; the qualified one acting on behalf of an institution such as pension funds, endowment funds, insurance companies, commercial banks, mutual funds and hedge funds. Alternatively, it can be a retail investor and so also individuals. The main difference between those two categories is that, differently from the institutions which can buy shares on the primary market, the retail cannot participate the IPO and can buy the new shares once they are on the secondary market. As a result, some investors are kind of discriminated.

Once the IPO is completed, investors who bought the shares become shareholders, so they are then interested in the risks incurred by the company and the return they can achieve with their investment. Here after you can see the IPOs occurred in 2017 worldwide, but pay attention that this year this market soared compared to the average trend observed in the past years, not in the number but in the average funds raised, passing from 100 million $ in 2014, 94 in 2015 and 95 in 2016 compared to 120 million $ average in 2017, similar to pre crisis level.

total funds

When looking at the returns, investors need to consider both the capital gains, that is an increase in the value of a capital asset that gives it a higher worth than the purchase price and it is not realized until the asset is sold, and the dividend, a distribution of a portion of company’s earnings under the forms of cash, shares or other possible decided by the board of directors.

ICO: Initial Coin Offering

Looking now at the ICOs we can notice a completely different process from the IPOs. In fact, the ICO, the abbreviation of Initial Coin Offering, means that someone offers investors units of a new cryptocurrency or crypto-token in exchange of already existing cryptos like Bitcoin or Ethereum. The underlying technology called Blockchain is about solving problems of traditional money (corruptible, politically biased and opaque). It works with a distributed, cryptographically secured and transparent database. The pros it offers are no central authority in charge of trust, lower transaction costs, an ecosystem simplification, faster transactions, durable and reliable data with process integrity.

The token itself offers the holder access to any platform or service that the developers create in the future with the token. However, as the majority of projects are in development stage, the main scope for holding the token is to speculate on the adoption and the eventual real-world usage of those systems. The benefits of such speculation are the creation of liquidity which enables developers to fund their project and bring it to fruition. The duration of an ICO can be quantified in days or weeks, as opposed to the long time needed in IPOs. Coins and tokens can then be traded on unregulated crypto-exchanges like Poloniex, GDAX or Kraken.

In 2017, there have been 92 ICOs which collectively have raised $3 billion. The following chart is about the ICO market from January to October 2017, showing the amount in million Dollars raised in each month by this process.

ICO market

Just to give you an idea of the situation of last year, here are some of the most successful and so probably followed ICOs of 2017.

top 10

The equivalent for the IPO’s prospectus is the white paper in the ICO, a document explaining in detail the pitch of the future company and platform, describing the technology behind the proposal itself.

It details the commercial, technological and financial figures of a new coin offering and puts it into digestible chunks that the reader can understand.

The majority of ICOs are projects in a very early stage of development and are more similar to ideas or prototypes rather than real businesses.

There is no universally accepted mechanism for the ICO and every company may sell anything they want. Usually, they sell the following: the right of ownership to a certain part of the company’s intellectual property, the right to a percentage of the company’s revenue (dividends), the right of ownership to an internal resource (ex. Virtual values) or something else.

Finally, it is specified which electronic platforms/exchanges/systems are actually ready to exchange company tokens for electronic money. The reputation of each exchange can be used to assume the reliability of each ICO.

The value of coins or tokens lays in potential market and network effect, a phenomenon whereby a good or service becomes more valuable when more people use it. The number of users required for significant network effects is often referred to as critical mass. After the critical mass is attained, the good or service should be able to obtain many new users since its network offers utility. The expected returns can be extremely higher than those in the stock market. As users are also investors, they are more willing to spread the word and encourage the use of the service.

As recognized by the Financial Conduct Authority regulators, ICO participants face abnormal risks as a consequence of being an unregulated space such as the inexistent investor protection from fraud or misleading information and the price volatility of the token.

To sum up, this little table can help better understand the similarities and differences of those two processes.

Stage Later stage Very early stage
Regulation – Prospectus essential

– Heavily regulated

– White Paper needed

– Not regulated

Listing Requirements Yes No
Duration of Offerings 4-6 months on average Depends on length decided

from 30 seconds to 1 month

Access to Offerings Institutional investors only Everyone
Beneficiaries Many Few
Allocation Sophisticated various methods One method
Investor Type Known and “qualified” Not known, anonymous
Utility – Piece of ownership

– Stake for future earnings

– No ownership

– Some stakes for project      revenues others for usage in system


Authors: Lorenzo Bracco and Mario Stopponi





India: A brief analysis of the world’s fastest-growing economy

India: A brief analysis of the world’s fastest-growing economy

We are living really hard times. The fear caused by the growing terrorist activities, the distrust of the stranger induced by rising nationalisms and by a propaganda good at riding the wave of growing frustration, the uncertainty caused by the dissolution of our certainties. Many are the reason that keep investors awake and contribute to the current atmosphere of  anxiety and restlessness.

Nevertheless, there is a safe-haven which seems to be insulated by all these factors and that is living the most prosperous period of its history. A tireless nation that continues its seemingly unstoppable growth process. A bright spot of positive two-digit returns in a world of incredibly low yields.  We are talking of course about India, the fastest-growing large economy in today’s world, whose economy grew at an incredible rate of 7.5% in 2015 – faster than the 6.9% growth observed in China, the former leading emergent economy and currently the third largest economy after the US and EU – and is still expected to grow at 6% in 2020.

Since the Republic constitution in 1950, Indian economy was characterized by heavy state regulation and intervention and by protectionist policies that kept it off from the outside world. In 1991, an acute balance of payments crisis – due particularly to the currency devaluation and the high budget deficit – forced the government, led by Narasimha Rao[1], to liberalize the economy moving toward a free-market and capitalist system.

The large population, the bustling manufacturing sector, the high saving rate and the emphasis on foreign trade and direct investment inflows, contributed to a rapid progress, with an incredible average rate of about 5% GDP growth since then. We can easily see how an investment in the Indian stock market made ten years ago, would have more than doubled our investment. Actually, the chart below compares different stock market indices. We can notice at a glance how both the Sensex and the Nifty (indices of the two Indian stock markets), with an average growth rate of 90%, have considerably outperformed the average of emerging markets (given by the MSCI Emerging Markets Index). Only the S&P500, with a return of 67%, has almost kept up with such huge returns.

STOCK Markets

Since the election of Narendra Modi as prime minister in May 2014 – after a controversial campaign in which the leader of the Bharatiya Janata Party focused on fighting corruption and sustaining economic development – we assisted to a progressive liberalization of the economy, mainly aimed at increasing the attractiveness for foreign businesses. The labor market was deregulated (to make it easier for the employers to hire and fire workers and harder for them to form union), corporate taxes and customs duties were lowered, the wealth tax was abolished, digital infrastructure were built – through to the “Digital India” campaign – and more Foreign Direct Investments (FDI) were allowed in areas like Construction Projects, Cable Networks, Agriculture and Plantation and Air Transportation. The shadow economy has been harshly limited by the demonetization of all ₹500 and ₹1,000 banknotes, in order to crack down the financing of terrorist and illegal activities. A new “Insolvency and Bankruptcy Code” has been issued on May 2016. At last, the huge problem of different taxation between different regions –  past cause of confusion and uncertainty – is being solved as today is under review the single biggest tax reform under the ‘Goods and Services Tax’ or GST bill, whose aim is to create a consistent tax structure across the entire country and one single marketplace.

Moreover, the following initiatives were launched: “Make in India”, to encourage foreign companies to manufacture products in India; “Standup India”, to support entrepreneurship among women and SC and ST communities (Scheduled Castes and Scheduled Tribes); “Startup India”, aimed at promoting bank financing for start-up ventures to encourage entrepreneurship and jobs creation. Large investments have been made in Africa in sector as energy, mining and infrastructure, with the main purpose to reduce the dependence on imported goods such as oil, coal and gold (almost 50% of Indian overall imports).

Furthermore, Modi achieved a drastic reduction of the budgetary deficit – from more than 4% to 3% – at the expense of the funds invested in environmental and social programs as poverty reduction, family, healthcare and education (reduced by almost 15%). As a result, we assisted to an enlargement of inequalities in income distribution[2], mainly because rising inequalities between urban and rural areas.

The economy was spurred even more by the consecutive rate cuts pursued by the Reserve Bank of India, as a response to the preoccupant level of inflation observed at the end of 2013, which reached the peak of 11.5%. The repo rate was lowered from 8% to 6.25% in less than two years.

The measures achieved soon the expected results, boosting the economy (GDP grew at the incredible rate of 7,5% after Modi’s first year as prime minister) and increasing much the attractiveness for foreign companies. The amount of Foreign Direct Investments jumped from $34 billion in 2014 to $44 billion in 2015[3], the unemployment rate dropped to 6.3% in 2016, the time required to start a new business dropped from 33 days to the current 26. Therefore, the IPO activity is expected to rise by more than 40%, while M&A activity should more than double in 2019, above all in sectors as financials, consumer and healthcare. Among the countries with the largest share of FDI inflows to India we can find in first position Singapore, followed by Mauritius Islands and United States. Among the European countries, Netherlands is first in rank, followed by Germany (whose car manufacturers are outsourcing part of the production), UK and France. The main reason behind the huge amount of FDI from Mauritius Islands and Cyprus is the low taxation of these two countries – considered tax heaven – which induced many Europe and US based companies to route their investments into India through these countries, deriving double tax avoidance and tax evasion. By the way, with the renegotiation of the double taxation avoidance agreement (DTAA) with India, this phenomenon is likely to decrease soon.

There are other positive factors behind the Indian growth that justify good expectations. Differently from China, Indian growth has been sustained above all by its internal consumption and a fast-growing middle class[4]. Moreover, we can consider such growth as approximately unleveraged[5]. Therefore, the country can easily increase its debt issuance in the near future, especially considering the high rating of BBB- confirmed by Fitch last summer. Third, the expansion has been demographically propelled. Today, India has still a population growth rate of 1,26%[6], thus by 2050 India’s workforce (people between 15 and 59 years old) is expected to have grown from the current 674 million to a staggering 940 million. On the contrary, China is likely to be facing a shrinking workforce, which will potentially drive up labor costs, undermining its competitiveness against other cheap-labor countries. As a matter of fact, India is already much cheaper with an average hourly rate of only 0,48$ per hour[7], largely due to the very low level of gross domestic product per capita[8]. We have to consider also its people’s ability to speak English and its large pool of computer engineering graduates, which make India a popular destination for outsourcing activities.

As we could see, with the advent of N. Modi as prime minister, many are the initiatives carried forward to increase the attractiveness of India. The results so far are extraordinary and India can really overtake the US as the world’s second largest economy by 2050 according to a recent report published by PricewaterhouseCoopers (PWC).

Nevertheless, many challenges are still ahead. The education sector needs to dramatically improve its quality. Considering the future increase in population, the push to allow more private universities and to allow foreign universities to operate in India will strengthen.

Another crucial point is the delay in the spread of Internet and the smartphones. From this point of view, China has a great advantage against its rival. Since 2013, the Chinese have consistently reported rates of internet and smartphone use that are at least triple that of Indians (71% of Chinese adults report using internet occasionally, against the 21% Indians). The gap is similarly large when it comes to social media use[9].

Much will depend also on the foreign policy that could be pursued under Trump’s presidency, as the US, second largest trading partner of India, count for more than the 15% of Indian exports[10].

Last but not least, the conditions of women are still far by those of civilized countries. Although the Supreme Court of India said that ‘equal pay for equal’ work is an unambiguous constitutional right, the implementation is resulting very difficult[11].

The world is changing fast. Everything seems to be uncertain and unpredictable. One thing is certain, India will not stand by but it will play a leading role.

AUTHOR: Niccolò Ricci

[1] Narasimha Rao was an Indian lawyer and politician who served as the 9th Prime Minister of India, from 1991–1996.

[2] The income inequality reached the worrying level of more than 50% according to the Gini Index. Only China had greater inequality at that time.

[3] An impressive increase of almost 30%! India is currently the first country for FDI after China and US. World Bank Data.

[4] India is ranked 128th according to the Index of Economic Freedom , meaning that the country is less dependent on the external demand and thus more insulated by global evolutions.

[5] Indeed, in 2015 domestic credit to the private sector (percentage of GDP) stood at 52.6 per cent for India, compared to 153.3 per cent for China. Also the government debt is very moderate, with a ratio of roughly 70%.

[6] Well above the rate of China (0,52%) and aligned to those of most African countries, despite the higher degree of development.

[7] “Countries with the cheapest labor”, The Richest. The cheapest country in the world is Madagascar (0.18$ per hour), followed by Bangladesh, Pakistan, Ghana and Vietnam.

[8] India is ranked only 122nd globally (about 6.000$ per person, against an average of 15.000$), World Bank Data.

[9] According to the Spring 2016 Global Attitude Survey, by PEW Research (

[10] China is the largest trading partner of India, followed by USA, United Arab Emirates, Saudi Arabia and Switzerland. Department of Commerce of India.

On the other hand, India is the main counterparty of Buthan, Guinea-Bissau, Nepal and Afghanistan. CIA World Factbook, 2015.

[11] According to the Gender Gap Index 2015, set by the World Economic Forum, India is ranked only 108th. Iceland leads this special rank.

Breakfast with: Maxime Sbaihi, Eurozone Economist at Bloomberg

Breakfast with: Maxime Sbaihi, Eurozone Economist at Bloomberg

Maxime is an economist with a strong educational background (ESCP, MiM 2010). He has many years of working experience in the finance industry, both in Paris and London and across different institutions such as S&P, BNP, CA and Oddo & Cie. He also worked as an adviser for the French Minister for Higher Education and Research.




Q: Before anything else, I would like to thank you for joining the ESCP Europe Finance Society ‘Coffee Break’. Would you like to start by sharing an overview of your professional and academic background?


Maxime: I have been working for nearly 3 years as an economist at Bloomberg in London, covering the euro area. Just before, I was a junior economist at Oddo Securities in Paris. That was my first job after finishing a Masters in international economics from the Paris Dauphine University, which followed a Masters in Management from ESCP Europe completed across the Berlin, Paris and London campuses.

Q: You worked in many different companies: S&P, BNP, Credit Agricole, Oddo & Cie and finally Bloomberg. How did your roles evolve and change? How have these different steps contributed to your professional development?


Maxime: The first three company names you mention were long-term internships. They helped me to refine my career expectations and find the right job, the one allowing me to combine my passion for economics, politics and finance. It took me some time. Internships are precisely made to try until you find your place in the labour market. The companies listed have different cultures, size and origin. Working for them has taught me a lot about my strengths and weakness in a work environment.

Q: Looking at your background you had the opportunity to work with the personal staff of the Minister for Higher Education and Research and in the French embassy of Berlin.
How different was this compared to other corporate jobs?


Maxime: Following the same spirit, I wondered how the public sector looked like from the inside. I enjoyed watching the decision-making process up close and discovered all the political constraints that come with it. Working for the French Embassy’s Economic Affairs in Berlin during the first Greek crisis was an unforgettable experience too. It allowed me to discover the German economic thinking and compare it in real-time to the French one. It’s crucial to understand these cultural differences as they shape the many national reaction functions in the euro area, especially during crisis situations.

Q: Now we would like to leverage from your expertise as Eurozone Economist. Election days in four of Europe’s five largest economies are approaching in the next 12 months. You have recently mentioned “Suddenly, stars could align for the worst”, speaking about the Italian constitutional referendum. Which are the main risks for the Eurozone and for the banking system? Is the fate of Italy’s Economy at risk if Renzi’s Referendum Fails?


Maxime: The main risk for Europe now is a political one. The economy is doing better but euroskpeticism is on the rise and every vote has a Brexit potential. In 2017, there are important general elections the Netherlands, France and Germany. But, before that, the next big vote to watch is the constitutional referendum in Italy in December. Prime Minister Matteo Renzi has brought his mandate into play. Like him or not, he has given Italy some political stability and his departure would leave a dangerous void. In the worst scenario, you might end up having a political crisis on top of an economic slowdown and a banking mess that needs leadership. That’s what I meant when making this warning for the euro-area’s third largest economy.

Q: The ultra-loose monetary policies such as negative interest rates and bond-buying program have started to boost inflation. Do you think these policies were effective so far? Do you expect ECB to announce more stimulus? When do you think QE could eventually be tapered?

Maxime: The monetary policy textbooks have been rewritten since I left university. The environment has completely changed and non-conventional policies are a reaction to that change. Cutting rates isn’t enough anymore and central bankers need to reinvent their toolkit. Of course, using these new tools come with risks but doing nothing is an even bigger risk at the moment. These policies have probably been effective to tame deflationary pressures in Europe.
Our call at Bloomberg Intelligence is that the ECB will add more stimulus in December, in the form of a time extension of the QE program to allow it run beyond the current March 2017 horizon. Only after that can a tapering start being considered. It’s a matter of sequence.


Q: Draghi is constantly asking for a three-pronged approach, combining fiscal and structural reforms to accommodative monetary policies. What is your opinion on the matter?


Maxime: He has long been asking for help. The call for a three-pronged approach you are referring to was made at the IMF meetings a couple of weeks ago. It is clearly a wink to Japan’s three-arrow strategy. His point is that monetary policy alone can’t do the heavy lifting job. Factors such as demography or productivity, for example, are out of their reach of influence. Fiscal policies and structural reforms have also an important role to play here. Central bankers have been saying it for years, so far with little response from other policy-makers…

Q: Thank you very much for sharing your precious insights with us.  Now we would like to ask you some personal questions if you don’t mind: Who is the person that has inspired you the most, as far as your career is concerned?


Maxime: Dany Rodrik. I like the kind of economist he is, with a constant effort made to explain the complexity of the world in simple terms. That’s precisely the challenge today in an ever more interdependent world. Its works on political economy and globalization deserve to be read.

Q: Last question, what is the most important piece of advice you can give to the ESCP students that would like to pursue a career in today’s financial services industry? What are the most important qualities to succeed?

Maxime: Curiosity and passion. A lot of people think and look the same in finance. It’s an industry that has a bad reputation but with many opportunities to change things. Find where your originality lies and make the best use of it. If you struggle to wake up in the morning to go to work, then you probably have the wrong job.

It has been a pleasure to host you at our “Coffee Break”. Thanks again for your time and patience, Mr. Sbaihi!

Luca Cartechini,
Global Head of Markets & AM



Breakfast with: Salvatore Cicu, European Parliament

Breakfast with: Salvatore Cicu, European Parliament

“Breakfast With” is the brand new section of our blog.

Within this part of our newsletter, we would like to interview influential European leaders from fields including Politics, Economics, Science and Technology.

  • Dear Mr. Cicu, first of all many thanks for giving us the opportunity to interview you. Undersecretary at Minister of Treasury and later Defense, Vice President of PDL Deputies at Italian Congress and now Vice Chair for the Delegation for the Arab Peninsula, Member of International trade commission (see TTIP) and Regional Development. What is the next step? 

The committment is focused on working to support and protect our territories and all that economies which embody their productive vocation, valuing under an European perspective the excellence of the regional identity, but also the SMEs which drive the economies. Under that point of view I continue to maintain strong my activity in favor of the islands, Sardinia and Sicily, and of the whole Mediterranean area, which became the strategic epicenter for all the Eurozone. During these days I have been nominated European responsible for the report on the Solidariety Funds allocated to Region Sardinia for the flood of November 2014. Since my duties as a European Member I have been truly committed on giving the maximum priority to that chapter, and today is realizing an additional step in that with necessary concreteness and effort I give to the needs of a territory which is asking revenge, on the economic aspect, infrastructural, and labour

  • As Member of the International Trade Committee, he is deeply involved in the negotiation about TTIP. What does it mean this commercial agreement for EU?

The TTIP is an extraordinary opportunity in terms of economic growth for our enterprises. Under the role of Italian Responsible for the dossier TTIP I have been fighting particularly for the SMEs. The two third of the vacating jobs in the private sector comes from here, which signifies the 85% of the new job assumptions of the last few years. Today we are actually living a positive communication phase which the European productive and industrial forces

  • Don’t you think that European Companies will be weakened by this agreement, especially the ones who operate in the IT market?

There will be no weakening. On both sides of the Atlantic, SMEs are a foundamental source of innovation, creating new products and new services. This is a reality to encourage and to be encouraged. The future of world economies is based on the exchange and it is regulated by specific intercontinental cooperation agreements;

  • How do you think the EU Companies can compete with the U.S. ones that benefit of lower taxes and oil & gas price, lower cost to access to capital markets, higher technology development and human capital?

Let me give you an example. European investments on start-up amount to 7.6 billion dollars against the 38 billion dollars fielded by American venture capitalists and entrepreneurs. A disproportion that forces the startup of the Old Continent to focus their core business on the local and niche markets. This example shows us how still weak we are in a sector so crucial as innovation, so we need a strong investment policy to support SMEs, to give them incentives, based on a qualified human capital. Only in this way we could face the challenges of the world market.

  • What is doing the EPP to make better the agreement?




There are several steps made. Definitely a strong focus of SMEs, through the creation of a special representative committee of the instances, with the aim to strengthen a network of online information to facilitate the participation of local companies in international trade.

In fact, a recent survey suggests that the transatlantic trade is already a source of great benefits for the productive system. In 2012 were 150 000 the SMEs who exported to the US; their share amounts to 28% of total EU exports to the United States.

  • The EU is surrounded by the Chaos: in the East boarders there is the Ukraine issue and in the South the ISIS one. As Vice Chair for the Delegation for the Arab Peninsula, you are experiencing directly the deep changes in the region. What do you think is the better way to manage the economic and politic relationship with the Region?

Although the numbers are high, it is good to contextualize the numbers of migrants who arrive in Europe: in 2015 they were one million, including refugees and migrants, that is, slightly more than 0.1 percent of the European population. There are already 1.3 million Syrian refugees in Lebanon, 20 percent of the population of the country. Proportionately, it is like saying that Europe harbored 150 million refugees. Turkey, the land on which the EU would like to address migrants and refugees, already harbor two million refugees. Regarding the immigration policies there are no quick solutions to keep together the instances of ethics, of the practicability and of the democracy. The crisis of migrants has gone on for so long and, apart from measures to be taken, it won’t be resolved in one or two years. The basic issue is not so much political, but concerns the attitude and perceptions.

My role as Vice President of the Delegation for Relations with the Arabian Peninsula, represents a new frontier of opportunity for Europe, in terms of dialogue and trade with prestigious international markets. This assignment, as an institutional objective, concerns the task of strengthening relations between the European Parliament and the countries of the Arabian Peninsula, both in terms of rights and on the promotion of new bilateral relations between the two continental realities. The EU and the Gulf Cooperation Council, are linked by a cooperation agreement born in 1988, a bond aimed to improve the political stability in a strategically important region on the international level, allowing to expand the scope of economic and technological cooperation with particular reference to the sectors of energy, industry, trade, services, but also agriculture, fisheries, and further investments in the environment.

  • Does it make sense to make business even with Dictators and countries which finance terrorists, according to some speeches of politics and experts?

For what it concerns the core of the EU migration flows’ issue, and in order to face it, the EU must cooperate with the migrants’ birth countries, although sometimes it’s dictatorships. The fact that we cooperate, in the framework of the events concerning Rabat and Khartoum, with some dictatorial regimes does not mean giving them a democratic legitimacy or political. We must work and cooperate together: since we decided to face the human beings’ racket , we can’t ignore that in some of those countries there are the roots of the issue. We need to engage them and make them accountable, but without legitimizing the “regimes”.

  • What should be the role of Italy and EU in the region?

The EU and the Gulf Cooperation Council (GCC), are linked by a cooperation agreement born in 1988, a bond aimed to improve the political stability in a strategically important region on an international level, allowing to expand the scope of economic cooperation with particular reference to the sectors of energy, industry, trade, services, but also agriculture, fisheries, and further investments in the environment. Today, therefore, it is confirmed an important agreement for Europe, in the sign of the internationalization of businesses, cultures and productive use of



resources. Europe will be able to strengthen its role as an economic leader on an intercontinental scale expanding a logic of bilateral agreements capable of building new cooperation flows.

  • What about Libya?

We need to build a partnership, a cooperation system. President Fayez al-Sarraj in this way is showing himself collaborative, especially in terms of quick support to security. The EU should contribute to the training of the Navy and the Libyan Coast Guard, because this is the necessary step to change the mandate of the Operation Sophia, that – operationally launched in July of the last year – since October is in ‘Phase 2A’ and operates in the international sea just beyond of the 12-miles’ line from Libya. We have to patch up security relations that restore livability to the Mediterranean and its businesses.

  • Let’s talk about austerity. Do you think that it is working?

In recent years the United States have been focusing their attention on growth, investment and innovation. On the other hand Europe on austerity, currency, rigor. In economic terms the US are better than eight years ago, while Europe is worse than eight years ago. Austerity is not enough. Actually, the countries that have grown up in Europe did so only because they have breached the deficit rules macroscopically: let’s think about the Cameron’s United Kingdom who financed tax cuts bringing the deficit to 5% or about the Rajoy’s Spain who has accompanied the growth with an average deficit of nearly 6%. The issue concerns not the rules, but rather the economic policy of our Europe.

  • All the Governments and Political Parties which implemented austerity policies have lost electoral support and elections such as in Spain, Portugal and Ireland. Is it time to change the economic strategy of EPP?

The truth is we must return to our citizens, to their real needs, to the economies which live with difficulty. The role of governments should include facilitating the processes of growth and development, not to crush the future. Today it should be rebuilt a corporate mechanism in many parts of Europe. This is the starting point’s reality. Austerity is responsible for delays of which our citizens pay the costs.

  • Anyway the EPP does not have any more the absolute majority in the EU Parliament. Do you think that a “Gross Koalition” similar to the German model, can work with the S&D party?

There are values that can be the core of our dialogues, but it must be made a distinction. The EPP represents the great moderate tradition, family, free enterprise, the firm, reformism, Christian culture. In recent years we have started an important process of renovation with respect to the evolution of modern society; this is the road that lies ahead: innovate to continue to exist, as the voice of European moderates as expression of society that cares about the issue of values.

  • Have you ever thought to come back to work as lawyer?

I always tried to keep alive the bond with my professional activities. Politics, however, is my present, which is a present of creation, contact with people, study and knowledge of societal problems. Politics is a mission, to live humbly and in continuous work. This is the added value that I bring to my work.


Roberto Vacca – Head of Events at ESCP Europe Finance Society

Francesco Maretto – ESCP Europe Student

Breakfast with: Caterina Chinnici, Eurodeputy

Breakfast with: Caterina Chinnici, Eurodeputy

“Breakfast With” is the brand new section of our blog.

Within this part of our newsletter, we would like to interview influential European leaders from fields including Politics, Economics, Science and Technology.

1 – Dear Mrs. Chinnici, first of all many thanks for giving us the opportunity to interview you. As daughter of the Magistrate Rocco Chinnici (brutally assassinated by Mafia in 1983), you and your family know what is the price in being a Civil Servant loyal to the Republic. Do you think that nowadays the Mafia is still powerful such as in 1983? What is changed?


1 – “In my opinion, since then mafia has suffered many serious blows thanks to the work of my father and other great servants of the State. My father’s murder shocked my family, but we took some comfort from the awareness that his commitment was not vain, because he contributed to make Sicily and the whole Italy better places. He was a forerunner of modern anti-mafia. He realized how important sharing information was; he adopted it as his working method, calling Falcone and Borsellino to join, and then built a team that after his death became the well-known anti-mafia pool. He was among the first ones to conduct asset investigations, affirming the principle that gangs were to be hit on the financial aspect. He also used to speak to youth in schools to stimulate a cultural change. Generally speaking, if we look at what was being done in those years and to subsequent developments, unfortunately induced also by many murders, it is clear that thanks to that work, the fight against the mafia has made many steps forward regarding both tools and results. We had a maxi-trial, concluded with convictions for about 2,700 years in prison. The Rognoni-La Torre Law was adopted, introducing the crime of mafia association and asset preventive measures, i.e. freezing and confiscation of criminal organizations’ assets. Coordination mechanisms were established such as the national direction and the national anti-Mafia prosecutor, the contribution of witnesses of justice were regulated, hard prison regime for mafia associates was adopted too. There is a long list of bosses convicted. Now there are many anti-mafia civil society organizations, often led by young people like Addiopizzo. I believe that mafia today is weaker than during the season of the slaughters, but it is hard to say how much weaker. It has certainly changed, putting aside military strategy, trying to infiltrate more and more within the institutions and legal economy, setting his roots even outside Sicily. But for sure we must never let our guard down and, indeed, law enforcement tools at the supranational level must be strengthened, given the cross-border dimension of organized criminal activities”.



2 – What do you think about the law Rognoni – La Torre (Law no. 646 of 1982) – 2011 Legislative Decree no. 159? Does it need to be reviewed?


2 – “The Rognoni-La Torre law has led to a relevant improvement in the fight against organized crime. Both because it allowed to punish the associative link which is the basis of the illegal conduct, and because it gave judges the power to withdraw goods produced or used in illegal activities from criminal organizations. It was a turning point, given that the ultimate purpose of mafia crime is precisely to accumulate as much wealth as possible. Rules are always perfectible and updating them is an ongoing issue, but the provisions of the Rognoni-La Torre Law, then merged into the so called anti-mafia code, still remain a legal pillar for the fight against criminal organizations. There are, however, many suggestions for revising the whole anti-mafia code”.






3 – The Bicameral Committee investigation on the Mafia has called for a review of the anti-mafia code at the meetings on the 21st and 22nd October 2014; how could the standards be improved to be more streamline and clear?


3 – “The need for a revision of legislative Decree 159/2011, the so-called anti-mafia code, has been made manifest shortly after its approval by lawyers, enterprises and civil society. I believe that the aspects to be reviewed are duly considered by the text approved last November by the Chamber of Deputies and then forwarded to the Senate for continuing parliamentary procedure. The text, among other things, provides for: the extension of those who can be reached by measures of prevention as accused of certain crimes and the acceleration of the procedure; it strengthens enlarged seizure; it introduces new cases for confiscation without final conviction; it provides judicial control on companies in case of a real danger of mafia infiltration; it includes provisions aiming to overcome the fragmentation of rules on the administration of assets and to ensure the recovery and the continuity in ruling seized companies. It also provides for a reorganization of the National Agency for confiscated properties, because their reuse for social purposes has always been difficult for many reasons”.




4 – Following 32 years since the law Rognoni – La Torre, the European Parliament has adopted the Directive (EU) 25.2.2014 for the confiscation of property obtained through criminal activity. Will Money laundering abroad and criminal investments suffer a blow with this new law? How should be managed the confiscated properties (equal to around €40 billion only in Italy)?


4 – “In the European Directive 2014/42 we can find several elements coming from Italian experience and legislation. Its approval was certainly a very important step. The introduction of common minimum standards on confiscation, in fact, called on each Member State to harmonize regulation of capital penalties and, consequently, to a broader implementation for the mutual recognition of judicial decisions which is a key element to prevent criminals from taking advantage from the discrepancies between national legal systems. However, it is a starting point, and not a final one. On this issue the EU chose to adopt a progressive approach, because some Member States were concerned about losing their sovereignty, but we need more steps forward. The 2014 Directive adopts a reduced model, not clearly identifying the conditions in which a Member State has to enforce the confiscation order issued by another Member State. Furthermore, it does not allow the confiscation without conviction, except for few residual cases such as the breakout of the accused person. As I have said many times since the beginning of the legislature, this further step, also raised by Italy, would be crucial, and even the LIBE committee of the European Parliament has suggested setting up this mechanism, providing adequate safeguards. I will keep working for that. With regard to the management of confiscated properties, beyond systems’ specificity, there is only one way: goods that are recovered to the community heritage have to be used for the benefit of the community”.





5 – The Organized Criminality is an international issue, but it seems that the International Community does not take it seriously. Some lecturers state that the Italian legislation is the most effective against Mafia. What about Europe? Is it necessary a European public prosecutor?


5 – “The supranational dimension of organized crime is an aspect on that I have always stressed during parliamentary debates. It is true that in some countries, also for historical reasons, this perception is not very strong, but I think that there is growing consciousness in this sense. On the other hand, there is evidence of the involvement of criminal organizations in several cross-border crimes, such as terrorism, migrants smuggling, cybercrime, euro counterfeiting and money laundering. It is a matter of fact that the Italian legislation is at the forefront in this area; it is the logical consequence of having dealt for years with both organized crime and domestic terrorism. The EU is making relevant steps, but still many others have to be made. Starting with a common legal definition of the concept of organized crime, which is still missing. In my opinion, the EU has to enhance the existing tools and strengthen the role of Europol and Eurojust, which should be the main reference points for the cooperation between national authorities. In the future, the European Public Prosecutor, whose necessity I strongly support, will be an additional tool, though its initial competences are planned to be essentially limited to EU frauds. Of course, this is something that is often achieved through organized crime, but a more direct impact on the latter would require extending the European Public Prosecutor’s competence, as envisaged by some proposals on the draft Regulation. I hope that the adoption process will speed up, as I requested to the Slovak Council Presidency during the last hearing in LIBE committee”.





6 – According to “International Consortium of Investigative Journalists” there are more than $32 trillion in tax heaven countries and that the cost of corruption is equal to the 3% of Wordl GDP (according to the World Bank). Is it right stating that fight Organized Criminality is a way to boost the economy? Is it really a financial issue?


6 – “Combating illegality in all its forms is certainly a way to boost the economy. Cross-border tax evasion and avoidance are often achieved through so-called tax havens in the context of organized crime or through aggressive tax planning set up by large multinationals. Tax evasion and avoidance cost Member states of the European Union hundred billion of Euros each year as tax losses, which ultimately means fewer resources to provide services to the community. Moreover, this phenomenon also causes serious market competition distortions. Preventing and combating these acts requires full cooperation between states, mainly when it comes to information exchange. For instance, last February the EU signed a bilateral agreement with the Principality of Monaco agreeing that starting from January 2017 EU competent authorities will have access on data on accounts of non-residents and other relevant information. Moreover, in June, the European Parliament gave the green light to a legislative resolution introducing anti-avoidance measures targeted to a fair and effective taxation system. The resolution established parameters to define a blacklist of tax havens and countries, including EU Members, which distort competition by granting favourable fiscal conditions. Corruption is another major serious threat. As Franco Roberti – Italian anti-mafia prosecutor – has recently pointed out, corruption is a crime against the economy as well as against the public administration, and is nowadays an increasingly integrated element in mafia methods. Even on this issue repressive measures must be accompanied by preventive ones, through upstream dynamic controls and through simpler procedures, including less bureaucratic steps and, thereby, shrinking the areas spaces in which corruption can operate. This point is a pillar of the law reforming public administration which I signed in 2011, when I served as a regional councillor in Sicily”.




7 – The Transparency International report on corruption in the public administration (2015), by analysing and reviewing over 168 countries globally, has revealed that Italy has risen from 69th to 61st place. Despite this, Italy scores (44 out of 100) remains very low, following countries such as Lesotho and Senegal. Do you think that is necessary or the reforms of the new Italian Prime Minister Mr. Renzi have not yet shown their effects?


7 – “I am convinced that measures adopted by Renzi’s government will produce tangible, measurable results in the long term. Especially some of them. Among those included in the anti-corruption law approved just over a year ago, I think the increase from 4 to 6 years of the minimum prescribed imprisonment for bribery committed through acts contrary to official duties is particularly relevant. I would also mention the restoration of punishment with prison for false accounting and its ex officio prosecution, or moreover the obligation to fully pay in advance the price or profit obtained through the offense in case which the offender wishes to bargain. I strongly believe in the idea that informed the 2014 reform of the new National Anti-Corruption Authority chaired by my colleague magistrate Raffaele Cantone who was appointed for the mission of preventing corruption, both within public administration and state owned companies. The objective is to supervise contracts, commissions and any kind of act potentially subject to corruption, but at the same time, it is key to build firm partnership with the administrations to prevent bribery episodes from happening. It is clear that there is still much to do, but the Italian government is very committed to keep working in this direction.”




8 – What do you think to ban for all life from the Public Administration and from the Executive and non – Executive Boards of public and private companies the person (both private and public officials) condemned for corruption or Mafia? What about to link to an increase of the penalties, both penal and administrative, the lost to the right to vote or to be candidate as politic?


8 – “Without going into details about the several solutions proposed in your question, I would like to say that a State should always ensure the credibility of public institutions, and this means also ensuring the integrity of those representing them. It is clear, though, that every attempt should be done within the framework of the principles and rights set out in the Constitution. Depending on the case, it is not always easy to find the right balance in terms of legislation and prepare effective rules which are also able to withstand a potential case of constitutionality, as happened with the Severino law in Italy. Nevertheless, I would like to reiterate the principle: within the constitutional framework, a State must be able to ensure the credibility of its institutions, which otherwise might not have the trust of citizens. Excepting specific requirements related to the exercise of public functions, same parameter can also be applied private sector”.




9 – The countries defined such as “tax heavens” will have to exchange information with the other countries thanks to the G20 resolution. However, the corruption seems to be still an unsolved problem and the creation of digital money such as BitCoin can be used for money laundering or tax evasion purposes. What will be the future challenges?


9 – “The virtual currency systems have not reached widespread dissemination yet but there are already more than 600 kind, accounting for a value of over EUR 5 billion. The European Banking Authority, the ECB and the FBI acknowledged that the Bitcoin is suitable for money laundering purposes. However, some analysts consider this risk more theoretical than practical, given the low number of transactions and the publicity of the ledger. The challenge in this case is the development of a well-calibrated regulation. This is also due to some ambiguity inherent to virtual currency, which not coincidentally analysts consider an hybrid product. In the anti-money laundering guidelines, the US describe Bitcoin as property. Japan qualifies Bitcoin as a commodity, Germany as private money. Until now, the EU did not put forward any specific regulation, but many experts believe the current money laundering legislation is sufficient, pointing as a key-factor a harmonized approach between Member States. I believe that it is necessary to define a streamlined legal framework to ensure that transactions comply with high levels of security without compromising innovation and the benefits that citizens could obtain, like for example the reduction of transaction costs and operating costs for payments. This is the reason why I supported with my vote the resolution that the EP plenary approved in May to request the creation of a task force of experts within the European Commission, tasked with the mission to draft a suitable specific discipline to counter risks associated with these new technologies”.




10 – The Fourth Industrial and Information Revolution is changing deeply the society and the economy. It seems that the customers are more socially conscious preferring the companies that make business ethically and ecologically (see the rise of CSR etc.). Thanks to internet, the citizens can have access to a huge quantity of documents controlling more effectively the PA and politics. How much is important the society in fighting the Organized Criminality?


10 – “Very important. It is a legacy left by my father. Back then he was a pioneer in the dialogue with civil society and with young people to spread the culture of legality. The massive rebellion of consciences which began in response to the 1992 Mafia massacres was also the result of what he had been able to teach in the previous years. I strongly believe myself in the role of civil society, that is why I always try to take my time to meet with school children, to talk to them about justice and legality. I am convinced that young people are healthy carriers of legality, as stated in the slogan of ‘Notte bianca’ cerymone that takes place in Rome every year”.




11 – Last but not least, your Directive on juvenile custody was recently approved. Can you tell us how you achieved this result?


11 – “In this law I have been able to use my knowledge as a magistrate in charge of minors and the good practices existing in the Italian model of juvenile justice process. The law, as part of the road map for the functioning of the European area of justice, paved the path to the European fair trials for children, introducing a set of procedural safeguards that all Member states will have to grant to children involved or suspected in criminal proceedings. The Italian experience has shown that a fair trial tailored to the needs of children decreases recidivism rates because it combines the need to ensure accountability with vulnerabilities and specific needs of minors. The principle of the best interest of the child is at the core of the system and the Directive set out important pillars including the mandatory legal assistance – not always provided by national legislations in the Member States – but also child’s right to an individual assessment, specialized training for both judges and others professionals involved in the proceedings, and even the principle of separate detention from adults. I believe that the application of the new rules will contribute to the social reintegration of children who have experienced problems with the law. The text is the result of a broad debate in which both institutional players and social partners contributed with sensitivity and ideas. These actors were definitely useful during preliminary meetings organized by the Parliament in some Member states. During the following trilateral negotiations with the Commission and Council we had the chance to raise several issues, including the mandatory legal assistance, and in the end we approved a law at European level that I believe we should all be proud of and that represents a great act of maturity in legal and human rights”.

Roberto Vacca – Head of Events at ESCP Europe Finance Society

Valeria Sirigu – Freelance Journalist and Law Expert