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Monday, 1 February 2010

Flexible Mafia gains in hard times

By Giulia Segreti in Rome
Published: January 27 2010 23:13 | Last updated: January 27 2010 23:13
Italy’s Mafia is adapting well to the economic crisis, boosting output but cutting labour costs and benefiting from the credit crunch in the banking sector, according to a report released by a leading business association.
While Italy’s gross domestic product shrank by 5 per cent last year, organised crime managed to increase turnover by an estimated 3.7 per cent to €135bn ($190bn, £118bn).
“Mafia Inc doesn’t fear or know crisis,” the report said. “During an economic slump, the Mafia’s money, even though it’s dirty, is mouthwatering.”
It is alarming that the “Mafia’s balance sheet grows although there is strong state pressure and an ongoing economic ¬crisis,” said Marco Venturi, chairman of Confesercenti, whose SOS Impresa unit helps enterprises deal with organised crime. The annual “Mafia Inc balance sheet” is based on official reports and its own research.
The mob has flourished during the economic crisis in part because its criminal enterprises are cash-based. Mr Venturi noted a sharp increase in usury, with the Mafia able to charge interest rates of up to 10 per cent a day because of reduced lending by banks. Protection money – pizzo – extorted from about 160,000 shops and enterprises was broadly unchanged, reflecting the difficult times facing the victims.
“With the €24bn turnover of racket and usury activities alone, 200,000 jobs could be created,” he said, noting the loss to the Italian ¬economy.
The report comes at a sensitive moment for Silvio Berlusconi, prime minister. His centre-right government has pointed to the high numbers of arrests of Mafiosi and seizure of their assets to back up its claim to be the toughest on organised crime since Mussolini.
Ministers plan to move their cabinet meeting from Rome to the southern city of Reggio Calabria, a stronghold of the local ’Ndrangheta mob, to demonstrate state resolve not to back down in the face of increased threats.
Commenting on the report, Costantino Garraffa, senator for the opposition Democratic party, said the government risked aiding the Mafia through moves such as a tax amnesty for funds held overseas.
The report – Crime’s Hold on Business – collates the activities of the five main Mafia organisations, estimating they equal about 7 per cent of Italy’s GDP.
Narcotics provides the largest income, estimated at €60bn. “Eco-Mafia” activities, including waste disposal, account for €16bn. Subcontracts, often in construction and the health sector, yield €6.5bn.
Outgoings reveal the Mafia’s flexibility on costs, with its wage bill falling by €500m to €1.2bn. The ability to launder money and move into the real economy is seen in €26bn spent on investments, mostly in construction, trading and tourism. Some €800m was spent on legal fees.
“Mafia Inc is a great entrepreneurial and financial group, with numerous tentacles,” said Lino Busà of SOS Impresa.
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