Italian police swooped on the small Sicilian town of Giardinello this morning to arrest one of the island’s leading gangsters. Officers arrested Salvatore Lo Piccolo, believed to be the successor to Bernardo Provenzano as the Sicilian Mafia's "boss of bosses." Provenzano was arrested in April 2006. Police also seized Lo Piccolo's son and two other henchmen.
The arrests were a triumph for Italian law enforcement. Francesco Forgione, head of parliament's anti-Mafia committee, said, “The Lo Piccolos were involved in restructuring the Mafia after the arrest of Provenzano and are go-betweens with the American Mafia.”
However, a report (available in Italian) from Confesercenti, Italy’s association of small businesses says crime syndicates have never been more powerful—or more profitable. Confesercenti, a small-business association, estimates that organized crime posted aggregate revenues of €90 billion ($128 billion) in 2006, a sum equivalent to 7 percent of Italy's GDP. Confesercenti's researchers calculate that these gangs took in about $106 billion in 2005.
Italy's biggest crime syndicates - the Camorra, the 'Ndragheta, and the Cosa Nostra - have resisted efforts by successive governments, the police and the courts to uproot them. In the 1990s, investigators unearthed a vast corruption conspiracy that revealed links between organized crime and the country's main political parties. Their discoveries triggered a crisis that led to the downfall of Italy's postwar political system.
Gangsters continue to thrive as never before. Loan sharking is their most profitable racket, generating $43 billion a year, followed by racketeering with $14 billion, and about $19 billion in illegal construction, said Confesercenti.
As law enforcement has become more aggressive, organized crime has responded by becoming more sophisticated, and by using complex money-laundering techniques to hide their profits. As a result, said the report, the line between legitimate business and criminal activity has become increasingly blurry. Roger D. Warwick, CPP, and ASIS regional vice president for Italy, says, "The money they are getting from extortion, from drugs, slavery, prostitution, and counterfeiting is all being reinvested in northern Italy and in legitimate businesses."
Organized crime has traditionally preyed on small business and is concentrated in the south, Italy’s poorest and most tradition-bound region. Indeed, the presence of organized crime is one of the factors that has held the region back by discouraging investment and spreading corruption.
In September, Confesercenti launched a campaign against payment of the pizzo, or protection money, with the support of Italy's powerful business federation Confindustria. Businesses in the south supported the campaign enthusiastically at first, but backing started to peter out after they began receiving threats. David Lea, western Europe analyst at London-based Control Risks, said, "the campaign against the pizzo took hold of public imagination but it seems to have completely run out of steam after shopkeepers started to get threatening messages left on their shutters."
Confesercenti says racketeers do not target only small businesses and storekeepers. They have successfully taken aim at big companies doing business in the south by collecting a pizzo of about 3 percent of revenues. Police say that Impregilo, Italy's leading construction company and Condotte, a subsidiary of French giant construction materials Saint-Gobain, both gave in to Mafia extortion to avoid reprisals against projects in the south. Police say a Hilton hotel franchise in Sicily was a mafia front. Investigators also found that Italcementi, the world's fifth largest cement company, was forced to bow to Mafia demands.
A police report filed in a court case against the Mazzagatti clan, part of the Naples-based 'Ndragheta group, stated that "Italcementi set aside its own rules, bore greater costs [and] assumed greater risks that allowed the facilitation of the 'Ndragheta's economic expansion in cement marketing." As a result, the authorities seized assets that included factories, land, and bank accounts worth a total €120 million belonging to the Mazzagatti family. Italcementi angrily denied that it has colluded with the Mafia.
Organized crime flourishes because of Italy’s antiquated law-enforcement and legal systems. A report issued in October by Italy's banking federation said the country suffered the highest number of bank robberies in Europe—1,565 assaults in the first half of 2007—because of a deep-seated culture of impunity. Rates of detection, arrest, and incarceration are lower than elsewhere in Europe. Excessive bureaucracy and an old-fashioned business culture also create ideal conditions for corruption and organized crime.
Confersercenti noted that crime syndicates have become more powerful and harder to combat as they grow in sophistication. It described the emergence of "a new system of economic relations in which the pizzo takes the place of bribery, collusion replaces corruption, which was once an instrument of personal enrichment has today become a system of power.”