Sat, Jul 25, 2009 - Page 6 News List

Economic crisis is bonanza for mafia: Bank of Italy chief

THE GUARDIAN , ROME

It may have seemed an incontrovertible fact that the global economic crisis was doing no one any good, but it appears there is an exception — Italy’s central bank governor said the recession could represent a bonanza for the mafia.

Mario Draghi, the head of the Bank of Italy, told the Rome parliament’s anti-mafia commission: “During a recession, firms see their cash flows dry up and watch the market value of their assets fall. Both these phenomena render companies more easily assailable by organized crime.”

The governor highlighted the dangerous possibility that mobsters belonging to Sicily’s Cosa Nostra and the country’s other mafias, anxious to launder “hot” money, could grab stakes in hard-pressed firms at bargain prices. This, he said, could happen without the knowledge of the firm’s executives, but also in some cases with it.

Draghi warned of “the risk that, for personal benefit, or the misconstrued good of the firm, certain executives might opt to accept — or even to search out — funds of dubious provenance.”

Italy’s mafias offer a vast pool of temptingly ready cash. A study two years ago by small businesses federation Confesercenti concluded that their combined annual turnover of 3 billion euros (US$4.3 billion) was bigger than that of any legitimate Italian corporation. Organized crime generated the equivalent of 7 percent of the country’s GDP, the study estimated.

Just how far mobsters have burrowed into the fabric of the Italian economy was underscored on Wednesday when police closed 10 restaurants and bars in Rome, including one of the capital’s most famous haunts, the Cafe de Paris on the Via Veneto. The assets they seized, worth 200 million euros, belonged to one of 100 or more clans that make up the Calabrian mafia, which has grown rich on cocaine trafficking.

The Bank of Italy’s warning prompted another from the employers’ federation, Confindustria.

Antonello Montante, a senior official, said the danger to companies was “dramatic,” adding that many also risked falling prey to loan sharks.

Montante said it was necessary to avoid a situation in which “the only way to find credit is by way of usury.”

“There is a danger of organized crime replacing the banking system,” Montante said.

Confindustria is pressing for measures to ensure that Italian businesses get continued access to credit.

Central bank figures show that the flow of loans to businesses has fallen drastically in the past 18 months. By May, the volume of credit made available to companies of all sizes had shrunk to less than a quarter of what it had been in December 2007.

Partly because of the prevalence of organized crime and partly because of the difficulty of obtaining credit in Italy, loan-sharking is widespread.

Annualized interest rates usually range between 120 percent and 240 percent. Mobsters rarely extend these loans themselves, but often supply usurers with capital — and enforcement muscle.

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