Draghi’s immediate concern was the risk to the 260 billion euros ($261 billion) in European Union recovery funds programmed for Italy by 2026. As the mobsters found new ways to making money during the pandemic – focusing on mask production and funeral services – the EU money offers a fat new target.
As Europe faces the dark winter of a joint economic and energy crisis, law enforcement officials and crime experts are raising fresh alarm about mafia groups acquiring default-risk businesses. It’s a problem in southern Europe, but Italy is particularly at risk because small and medium-sized businesses make up around 80% of the economy. Criminal ownership of a business is a nightmare scenario that would undermine the legitimate economy, distorting competition, the rule of law and the social fabric. Worse, it is already happening.
Milan police commissioner Giuseppe Petronzi recently warned of “a military operation” by the southern mafia to infiltrate the north, one of Europe’s wealthiest regions. Recent data suggests that this is not an exaggeration. Italy saw a 9.7 increase in the number of companies being investigated by financial police for suspected mafia activity between March 2020 and February 2021, the latest data available, according to Vittorio Rizzi, deputy director general of the country’s public security. The Rome-based research group Demoskopika estimated that around 4,500 businesses were at risk of mafia infiltrating after the Covid-19 crisis, particularly those in tourism, restaurants and bars.
The risk Italy now faces is a proliferation of what the United Nations Office on Drugs and Crime calls “the mafia entrepreneur”. Italy was the first country where this role was identified more than ten years ago. Specifically, “mafia entrepreneur” typically involves a member of an organized criminal group – with identities concealed by a front company – taking a minority stake in and effective control of a legitimate business. I recently asked Michele Riccardi, deputy director and senior researcher at Transcrime, a Milan-based research center on transnational crime, how bad he thought mafia infiltration of Italian businesses could be. “I can’t imagine it getting any worse than it is,” he replied sullenly.
The cost falls on everyone as mafia-induced business dysfunction can significantly reduce GDP per capita growth, according to a study published in August by a trio of economists at the Bank of Italy.
How then to deal with the deeper penetration of organized crime into legitimate commerce? Big data can help. Transcrime recently signed a three-year agreement with the financial police of Lombardy, the Milan region, to use big data to track abnormal post-pandemic funding requests and oddities in the structure of business acquirers.
The hope is that better computerized analysis will work faster than criminals can insinuate themselves into the company’s system. And removing human involvement can also overcome other barriers to detection, like fear. A local entrepreneur from the Veneto region I spoke to described a wave of small, family-run businesses coming up for sale since the pandemic. “We know who is selling, but we have no idea who is buying. And sometimes it’s better to mind your own business and not ask,” he said, asking not to be named.
Draghi called for community vigilance to defend the legitimate economy. It is commendable. But the looming energy crisis in Europe could very well widen social divisions, creating the kind of fissures that organized crime can crawl through. Enrico Letta, leader of the Democratic Party, second to Giorgia Meloni’s far-right Brothers of Italy, has warned of a “social and economic crisis” to come this winter. It will only push more businesses to the brink. It doesn’t help that Meloni’s campaign stokes fears of a breakdown in law and order. It also doesn’t help that one of Meloni’s allies, disgraced tycoon Silvio Berlusconi, has spent two decades denying allegations of Mafia ties.
Draghi is widely considered to have brought stability to Italy. A renewed concern over the rule of law will only make foreign companies even more reluctant to invest in a sluggish, debt-ridden economy. Unfortunately, this could further expose Italy to the infiltration of organized crime into the fabric of its industry and society.
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