As the banks in Italy increasingly tighten the purse strings the Mafia is stepping further into the economic breach according to a story in today's Washington Post:
"It's a fantastic time for the Mafia. They have the cash," said Antonio Roccuzzo, the author of several books on organized crime. "The Mafia has enormous liquidity. It may be the only Italian 'company' without any cash problem." At a time when businesses most need loans as they struggle with falling sales, rising debt and impending bankruptcy, banks have tightened their lending to them. * * * That is great news for loan sharks. Confesercenti, the national shopkeepers association, estimates that 180,000 businesses recently have turned to them in desperation. Although some shady lenders are freelancers turning profits on others' hard luck, very often the neighborhood tough offering fat rolls of cash is connected to the Mafia, the group said. * * * Many experts say organized crime is already the biggest business in Italy. Now, Fara said, the untaxed underground economy is growing even larger. "Certainly I am worried," he said. "The banking system doesn't work, and the private one that is operating is often managed by organized crime."
Of course, everything has its cost:
The consequences for Italy and its 58 million people are huge, Fara said: "Stronger organized crime means a weaker state." Nino Miceli, an adviser to Confesercenti, said the Mafia's goal is to take over the struggling businesses. When the loans, typically at interest rates in triple digits, are not repaid, the threats of violence begin, and restaurants, grocery stores and bars become the property of criminal gangs. With a burgeoning portfolio of properties and businesses, the Mafia becomes more entrenched in the economy and has more outlets to "clean their money," Miceli said.
In addition to providing juice loans to local cash-strapped businesses, the Mafia and drug cartels further have been providing much-needed liquidity to the international financial markets through the North American and European banks which launder their drug money. Antonio Maria Costa, executive director of the U.N. Office on Drugs and Crime, warns that "cash-rich mafia groups have been channelling funds into banks desperate to survive the global credit crisis":
"Consultations I've had with prosecutors and law-enforcement officials around the world show there is ample evidence that the banking system's illiquidity is providing a unique opportunity for organized crime to launder their money," Costa told Reuters. "Just about every financial centre can be characterised as part of the problem," Costa said in the interview, but declined to name countries or banks involved, saying that was for prosecutors and other law-enforcement bodies to do. * * * "You have the supply -- an organized crime industry with enormous amounts of cash, estimated at $322 billion in 2005, not any more stored in banks -- and the demand, a banking sector strapped for liquidity," said Costa. "This is a supply- and demand-driven situation. Our intuition, based on logic, is now supported by ample evidence." Asked where cases were occurring, he said: "Traditionally, Europe and North America are the places where, as financial centres, most money would be laundered."
Costa further adds: "I insist that the (globalised) crime industry has become so gigantic, destabilizing so many countries, that it is emerging in areas where we have not seen it before. They're buying more than just industry, real estate, elections, power," he said.
Roberto Saviano, author of the international bestseller Gomorrah exposing the Camorra or Neapolitan Mafia, previously has accused the European Union -- and Britain in particular -- of turning a blind eye to the laundering of organized crime drug money.