Italy’s white-collar mafia is making a killing via tax evasion
MILAN: Italy’s mafia rarely hands with blood these days.
Extortion rackets have gone out of fashion and murders are largely frowned upon by the godfathers.
Just 17 people were killed by the mob in Italy in 2022, according to the latest official data, versus more than 700 in 1991.
Instead, mobsters have moved aggressively into the low-risk, low-key world of white-collar crime, senior Italian prosecutors told Reuters.
The shift to tax evasion and financial fraud is being fuelled by billions of euros sloshing around Italy in post-covid recovery funds that were designed to boost the economy but are proving a boon for fraudsters.
Prime Minister Giorgia Meloni’s government revealed last month it had uncovered €16bil (Us$17bil) of fraud tied to home improvement schemes.
Prosecutors are also looking into potentially massive abuse of a European Union (EU) stimulus package worth €200bil.
Not all the fraud is being orchestrated by Italy’s powerful organised crime groups, prosecutors say, but they suspect that a lot is.
“It would have been foolish to think they wouldn’t take advantage of a huge influx of cash,” said Barbara Sargenti, an official in the national anti-mafia and anti-terrorism prosecutor’s office.
Sicily’s Cosa Nostra and the Camorra from the city of Naples are Italy’s best known mafia groups, but the Ndrangheta* dirties its based in the southern region of Calabria is the nation’s biggest organised crime group.
While maintaining a tight grip on the European cocaine trade, it has led the drive into finance over the past decade.
The European Public Prosecutor’s Office (EPPO) – which investigates crimes against the financial interests of the EU – sounded the alarm in February, warning that the huge scale of financial wrongdoing across the 27-nation bloc suggested the involvement of organised crime groups.
Almost a third of the EPPO’S 1,927 active cases in 2023 were centred on Italy, where the estimated damage was put at €7.38bil out of a total €19.3bil in the whole bloc.
Interviews with seven prosecutors and police chiefs, coupled with an analysis of thousands of pages of court documents, revealed the breadth of mob involvement in Italy’s business world and the cost this is imposing on state coffers.
Prosecutors said the crimes often rely on the complicity of entrepreneurs, happy to find new ways to dodge taxes. Tax evasion is a chronic problem in Italy, costing state coffers some €83bil in 2021, according to the most recent Treasury data.
“In Italy, there is no social stigma for those who issue false invoices or evade taxes,” said Alessandra Dolci, head of Milan’s anti-mafia prosecution team.
“Social views on economic crimes are very different to those regarding drug trafficking.”
While there is no official estimate of the scale of organised crime’s involvement in financial crimes in Italy, two of the prosecutors who spoke to Reuters estimated it was billions of euros each year – only a fraction of which had been uncovered.
For criminal gangs, given the large sums of money involved, the penalties are relatively light.
If you are caught trying to sell as little as 50 grams of cocaine, you risk up to 20 years in jail. But if you issue bogus invoices to gain €500mil of fraudulent tax credits, you only face between 18-months and six years in prison.
“There is no comparison when it comes to assessing the risk and reward ratio,” said Dolci, the anti-mafia prosecutor.
They might not make for a Hollywood movie, but multiple recent cases highlight the links between tax scams and organised crime.
In February, police in the northern region of Emilia Romagna arrested 108 people believed to be close to the Ndrangheta.
They are suspected of issuing €4mil worth of fake invoices for non-existent services in shipbuilding, industrial machinery maintenance, cleaning and car rental.
The investigation is ongoing and a date has not yet been set for trial.
Colonel Filippo Ivan Bixio, provincial commander of the Tax Police, said such schemes allowed businessmen to reduce their taxable income and gain tax credits.
“It’s not a sporadic phenomenon. It’s structured,” he said.
Milan magistrate Pasquale Addesso has witnessed the metamorphosis of the mafia up close.
Since the city staged a trial in 2011 of some 120 defendants, accused of an array of traditional mafia crimes, Addesso says he has not come across a single case of extortion, which was once a mainstay of mob activity.
“The Ndrangheta ... is no longer involved in extortion rackets, but in insolvencies and bankruptcies,” he said.
“(It) has entered the world of sub-contracting, responding to a demand for tax evasion from entrepreneurs.”
“It would have been foolish to think they wouldn’t take advantage of a huge influx of cash.” Barbara Sargenti