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Italy's Mafia Thrives In Global Financial Meltdown

FRANCES D'EMILIO   04/25/09 12:19 PM ET   AP

Godfather

NAPLES, Italy — While businesses around the world are hunkering down for survival, the Italian mob is living a golden moment.

Italy's various organized crime syndicates _ often lumped together colloquially as Mafia Inc. _ are gobbling up gas stations, muscling in on supermarket franchises, making loans to cash-starved businesses, taking over trattorias and acquiring buildings in swank neighborhoods in Rome and Milan, investigators say.

These mobsters have lots of what is in short supply for many businesses these days _ liquidity _ as well as centuries-honed expertise in preying on the vulnerable, whose ranks are swelling in the current financial crisis.

It all means the mob is free to sink cash into two areas that lie at the heart of the global meltdown: real estate and credit markets.

The crime syndicates are flush with billions of euros from extortion rackets, drug trafficking and booming sales in fake designer clothing made in China expressly for the Italian mob _ an increasingly lucrative trade as hard-hit consumers search for bargains, prosecutors and police said in recent interviews.

For the mob bosses, the global economic meltdown "is only an advantage," said anti-mafia prosecutor Franco Roberti, in his office in Naples, the chaotic port city that is home to the Camorra, one of the Italy's major crime syndicates.

Italy has scored some spectacular successes in its decades-long fight against the Mafia, capturing top bosses, persuading turncoats to testify, and encouraging ordinary citizens to resist shakedowns.

But the mob keeps growing _ and its drive in recent years to grab chunks of legitimate business is paying off big time in the financial crisis.

In Rome, in the high-rent neighborhoods around the Spanish Steps, Piazza Navona and Trevi Fountain, mobsters are snapping up real estate, anti-Mafia prosecutor Giancarlo Capaldo said in a courthouse interview.

In probes of what Capaldo described as "indications" that mobsters have taken over hotels, restaurants and cafes in Rome, police seized assets of some of these businesses, although the establishments remain open.

"These places are well run because they want to make money," Capaldo said. He declined to identify the establishments because the probe is still being conducted, saying only that "you'll find some of them in tourist guide books."

Capaldo's office also confiscated auto dealerships in Rome from suspected Camorristi or their allies.

"The Camorra makes the money here in the south, but it invests it in legal activities up north," customs and tax police Gen. Giovanni Mainolfi said in his Naples office.

If the mobsters built posh places in the largely undeveloped south "they would stand out, but do it in Milan ... and they blend right in," Mainolfi said.

In an operation code-named "Easy Money," police this year seized a hotel in the exclusive Tuscan sea resort of Punta Ala, as well as a supermarket, two Ferraris, a gas station in the wealthy northern Reggio Emilia region and other properties, altogether totaling euro30 million (about $40 million). All were believed to be owned by the Camorra, flush with drug profits.

The revenues raked in by Italy's crime syndicates would be more than respectable for many a stock market-listed company these days _ although, of course, the mobsters hardly issue annual reports.

The Rome-based Eurispes think tank has estimated that in 2008, "Mafia Inc." earned euro130 billion (then $167 billion), or about 8 percent of Italy's GDP, from its criminal activities, nearly half of that from drug trafficking.

Eurispes, which analyzes social, economic and criminal trends, said loansharking brought in an estimated euro12.6 billion ($17 billion) of that income. It calculated that some 180,000 merchants and other businessmen got their loans, directly or indirectly, through organized crime in Italy.

With much of the world financial crunch making its impact in Italy in the first months of this year, it's too early to tell how much more profit organized crime might make.

Government probes have found that as they launder illicit revenues, mob bosses are increasingly moving their money out of the underdeveloped south where the syndicates are rooted and into affluent central and northern Italy.

In March, Italy's intelligence services warned in a report that rising unemployment and the credit crunch could help crime syndicates tighten their tentacles around vast swaths of the nation's business sector, including supermarkets, real estate and tourism.

A main engine of the mob's recent strength _ the age-old practice of loan-sharking _ is thriving as banks hoard cash, allowing the Mafia to elbow in on legitimate businesses.

The mobsters are poised to "acquire control of businesses in difficulty, especially through their consolidated practice of loan-sharking," as well as to "snap up assets put on the market by enterprises experiencing liquidity crises," the intelligence report said.

The dire predictions seem borne out by businessmen's complaints.

SOS Impresa, an Italian business lobby dedicated to fighting organized crime, estimated in a report late last year that in the Camorra has "multiplied by 10, 100, perhaps 1,000 times, its penetration of the economic and social fabric, stepping up its business presence in our country, in Europe and the world."

In Rome, Camorra men or those in their employ have been spotted hanging out at pawnbrokers' auctions to learn which businesses might be in financial straits, said Carabinieri Lt. Col. Roberto Casagrande. Those businesses would then be approached _ and offered a loan they could scarcely refuse.

The Camorra offers shaky businesses attractive interest rates, calculating that the businesses will end up part of its economic empire if the owner falls behind on payments, Roberti said. The mobsters sometimes leave the original owner as a figurehead to thwart suspicion, police said.

The 'ndrangheta crime syndicate _ based in Calabria, the "toe" of Italy's boot _ is also brazenly taking over struggling businesses and snapping up prime northern Italian property at a bargain during the real estate slowdown, investigators say.

Genoa Mayor Marta Vincinzi told a rally against organized crime in Naples late this spring that Mafia bosses, particularly from the 'ndrangheta, were "gobbling up entire neighborhoods" and pressuring merchants to pay "protection money" in the gritty, northwestern port city.

Investigators believe that flourishing ties with Colombian cocaine cartels have helped the 'ndrangheta to surpass Sicily's Cosa Nostra in international drug dealing.

Cosa Nostra has taken blows in recent years. Longtime fugitive bosses have been captured and a rebellion by island businessmen against paying "protection money" is starting to take root. But the anti-extortion revolt is not widespread enough to significantly reduce the Sicilian Mafia's coffers, the intelligence services' report noted.

Particularly tempting to the mob is Italy's recent explosion of supermarkets, a boon to consumers long frustrated by the often limited hours and selection offered by mom-and-pop stores.

In Sicily last year, authorities seized euro$700 million (then worth $900 million) in assets, including supermarket outlets, from a businessman who was known as the island's "king of supermarkets" and was suspected of letting Cosa Nostra use his businesses to launder money.

Prosecutors in Palermo said the owner's name turned up on handwritten notes scribbled by Bernardo Provenzano, the longtime fugitive "boss of all bosses" who was captured in 2006.

The intelligence services report predicts that mobsters would step up production of counterfeit name-brand goods given consumers' apparently increased appetite for fake designer items. The Eurispes think tank estimated this growing business earned the mob euro6.3 billion ($8.5 billion) last year.

Naples anti-organized crime prosecutor Roberti said the Camorra has pumped up what once was a kind of cottage industry, with crime clan bosses knitting closer ties with mobsters in China, where fake designer clothing, shoes and accessories are now churned out in factories for the mob.

Trafficking in fake designer goods _ which investigators suspect the Camorra is also peddling in the United States, France, Britain and Germany _ is now becoming more profitable for the Neapolitan syndicate that dealing in cocaine and hashish, said Mainolfi, the customs and tax police general.

He has calculated that for every euro it costs to manufacture the counterfeit designer goods, the Camorra earns 10 euros, while for every euro spent to run drug trafficking, it earns six or seven euros.

The fakes, sold in street stalls and clothing shops in the Naples and Rome areas, arrive by the tons in Naples' sprawling, chaotic port, where custom officials manage to check only some 5 percent of the shipping containers being unloaded, Mainolfi said.

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Filed by Nicholas Sabloff  |