Venice is Sinking Under a Tidal Wave of Corruption

Rowers arrive in the Gran Canal as they take part in the Vogalonga, or Long Row, in the Venice lagoon June 8, 2014. REUTERS/Manuel Silvestri

In November 1966 Venice was nearly destroyed by the largest flood in its history. After the flood subsided it was clear to all Venetians that something had to be done to prevent it happening again. It was a question of life or death for La Serenissima.

Yet it took another 20 years for a solution to be found. Or so everyone thought.

In the early 1980s, a consortium of Italy's most powerful construction companies, Consorzio Venezia Nuova (CVN), meaning "New Venice," came up with a grand plan. Known as Mose (Experimental Electromechanical Module) and funded by the Italian government in Rome, it would be the first system of submergible floodgates in the world.

Over the years, Mose continued to forge ahead with its $7.6 billion project. With shareholders such as the Impregilo corporation, a member of the once almighty Fiat group, it seemed sure to succeed. However, everything changed last month when the mayor of Venice, Giorgio Orsoni, was arrested. His alleged crime was to have accepted money for his political campaign from CVN. On the same day, the Italian police arrested 35 others on accusations of corruption, bribery and money laundering. Another 100 or so are still being investigated.

What makes the Venice debacle so much more than just another tale of woe in Italian politics is the significance of Venice throughout the world. Cultural capitals may come and go, but Venice, like Rome, is eternal.

Anna Somers Cocks, former chairwoman of Venice in Peril, an international charity that raises money for conservation projects, believes that the Mose affair is certain to affect the many charities that support Venice.

"It is a tragedy of epic proportions," she says. "Which foreign philanthropist would still be inclined to help Venice in the face of such a large misuse of public funding? At the end of the day, the political corruption is bound to raise doubts even on the scientific soundness of the project."

The spate of arrests point to the misuse of public money through a system of false invoices. Today Venice is in disarray: brawls have broken out in the city council and the government is sending a commissioner to take over the office of mayor. For the first time in living memory, the authority governing the lagoon, the Magistrato alle Acque, has been dissolved by Rome. The only precedent for such drastic action is the occupation of Venice by foreign powers during the 19th century.

For Venetians, who pride themselves on centuries of history dating back to the Venetian republic of the 16th century, this brings shame and disgrace.

All levels of society, high and low, appear to be involved. Even the president of Ente Gondola, Nicola Falconi, who is appointed by the mayor to represent the gondoliers, has been arrested. Meanwhile, the former governor of the Veneto, Giancarlo Galan, a member of parliament for Silvio Berlusconi's Forza Italia party, has been charged as well as several members of the regional council for prime minister Matteo Renzi's centre-left Democratic party. Both left and right are involved.

Two former heads of the Magistrato alle Acque have been arrested. The investigation also involves its judges and auditors. The police appear to be involved, as well. Two former senior members of the finance police, both former members of Italian intelligence, have been charged with spying on prosecutors in exchange for bribes.

Prosecutors also allege that CVN members used slush funds to buy the loyalty of newspapers, academic institutions, football teams and even the Venetian Curia, the religious authority in Venice. Small wonder that the scandal is shaking up Renzi's new government, which is already reeling from the scandal surrounding next year's Expo in Milan. Following accusations of bribery, several former members of parliament and Expo officials have been arrested.

The irony is that Mose had been sold to the Italian taxpayer as the eighth wonder of the world. Other coastal cities, including New York, are studying its state-of-the-art engineering. Last October the mayor accompanied members of CVN to New York to meet Mayor Michael Bloomberg to promote Mose as a valid solution for his city.

So how did it come to this? When Mose began in 1982, officials boasted that it would be completed in 1995, at the cost of $2.1 billion. Thirty years later costs have risen to $7.8 billion and it is unlikely to be operational until 2017.

The problem was that CVN simply had too much power, enjoying a monopoly on both planning and execution of the project. In a telling interview in 2006, a journalist asked CVN'S founder, Giovanni Mazzacurati, why Mose was not subject to public competition. Mazzacurati replied: "Why should it be? Did the Americans ever launch a public bid to go to the moon?"

Prosecutors allege that Mazzacurati presided over a consortium where the original aim of saving Venice seems to have been forgotten amid bungs to political parties and cronies. As one Venetian journalist put it: "We are facing a corrupt network which has, for decades, taken over control of the city."

That corruption was institutional: one of the prosecutors has compared the investigation with that of the "Clean Hands" (Mani Pulite) operation of the early 1990s aimed at Italy's political leaders. The turning point in the investigation was the arrest last July of Mazzacurati and of Pier Luigi Baita, CEO of Mantovani Corp, the largest construction company in the consortium: their confessions triggered the recent wave of arrests.

Having confessed, the mayor is no longer under house arrest. Seeking to absolve himself, he has blamed the illegal campaign contributions on a system put in place by his political party -- Renzi's Democratic party -- and therefore beyond his control.

Whatever the outcome of the investigation, Mose will continue to be controversial. Long before the scandal broke there were doubts about its structure. In 2009 a French engineering company, Principia, questioned the stability of the floodgates in extreme weather.

It was an criticism that Mauro Fabris, the CVN chairman, shrugs off. "It's all jealousy," he says. "I am confident that Mose will be finished by 2017 and as soon as it will be operational, all this storm of polemics will quieten down."

Correction: This article originally referred to Ente Gondola as a cooperative. It is in fact a municipal organisation whose president is appointed by the mayor. The article was edited to correct this.