Desperate Italians are rich pickings for mafia’s loan sharks

For a desperate businessman drowning in debt and facing the loss of his restaurant, it was an offer he could not refuse. Turned down by the bank, 50-year-old Stefano accepted a loan of €20,000 from shadowy “friends of friends”.

He was able to pay his five employees’ wages and keep afloat his restaurant, in the town of Foggia in the southern region of Puglia.

But two weeks later, the “friends” came back to tell him that with interest, he now owed them €50,000.

It was a textbook mafia operation – one likely to be replicated many times over during the coronavirus pandemic. The economy is predicted to contract by 10 per cent. Thousands of businesses are facing bankruptcy. There will be rich pickings for the loan sharks in Italy’s mafia organisations, from the Camorra in Naples to Cosa Nostra in Sicily and the ’Ndrangheta in Calabria, the toe of the Italian boot.

“The mafia clans know full well that a person who needed to borrow €20,000 has no way of paying them €50,000. It’s an impossible sum, set deliberately high,” said Marcello Cozzi, a Catholic priest who runs a charity helping such victims. “They know he cannot come up with the money. Instead, they are looking to take over his business. Then, they’ll use it to launder money. Often the owner is allowed to stay on as an employee.”

The demand for loans is about to become even higher as the fallout from the pandemic, which has killed more than 32,000 people in Italy, threatens to make thousands jobless. Ordinary Italians are having to forgo rent and mortgage payments just to put food on the table.

“The mafia has been involved in loan-sharking for 20 or 30 years, but right now I have the impression that it is going to explode,” said Father Cozzi, head of the Anti-usury Foundation.

However, unlike many, Stefano did not give up his business. Instead, with Father Cozzi’s help, he contacted the police. He is likely to be in danger when the “friends” who lent the money find out he has gone to the authorities.

“I understood straightaway I had made a huge mistake,” said Stefano, married with two children. “It risked destroying everything I had worked so hard to achieve. I feel ashamed but in the end, I said, ‘enough’.”

“This case is typical,” said Anna Sergi, a criminologist and mafia expert at the University of Essex. “The mafia targets these types of small businesses because sole owners are easy to control. Loansharking is a form of extortion. The point is not to make money from the loan, but to acquire the business by making impossible demands on the repayment.”

Businesses are not only used as a front for laundering illicit revenue from drug trafficking and other criminal activities. They can also lend an air or respectability and normality to the local mafia clan. “The less assuming the business, the better.

There are plenty of mafia bosses who have respectable day jobs. A boss from the ’Ndrangheta in Calabria worked in a laundromat,” said Dr Sergi.

The Italian government’s Covid-19 task force has said the hospitality and tourism sectors are particularly vulnerable. Business owners who refuse or fail to pay the loan sharks risk “broken legs, their dogs having their throats cut, their daughters threatened with rape, being beaten up,” according to Roberto Saviano, whose bestselling book Gomorrah investigated the Camorra in Naples.

“The pandemic and the government’s incapacity to handle it are exposing the entire economic system to a crisis, the extent of which we have not yet comprehended,” he wrote in an essay for La Repubblica.

While other crime is down, in the first three months of this year there was a 10 per cent increase in usury nationwide. In Puglia and Campania, it was up by 15 per cent. A national anti-usury network, the Consulta Nazionale Antiusura, reports that requests for help have doubled in the last two months.

Luciana Lamorgese, the minister of the interior, has appealed to businesses in difficulty not to resort to the mafia but to turn to the state.

Entrepreneurs who reject approaches by the mob and help the police can ask for money from the National Anti-racket Fund.

“We’re trying to speed up the processing of requests so we can give a response to those who find themselves in difficulty,” said Annapaola Porzio, the head of the agency.

“It’s undeniable that the process is slow, at a time when this help can mean the difference between life and death for hundreds of small businesses.”

Earlier this month, police conducted a series of raids and arrested 91 alleged mafiosi, accusing them of targeting companies hit hard by the crisis. The raids were conducted by hundreds of police officers in Palermo, Sicily, as well as in northern Italy – testament to the mob’s interest in Italy’s wealthiest regions.

The suspects, from Sicily’s Cosa Nostra, were accused of extortion, fraud and money laundering.

“Look, we pay cash,” suspects told business owners in intercepted exchanges, said Francesco Lo Voi, the chief prosecutor in Palermo.

The government has pledged a €55billion package to help families and businesses weather the economic storm. But there are complaints the money is slow to arrive.

“In the midst of the pandemic crisis, we have some people who are flush with cash while the state is struggling to help business,” said Dr Sergi.

“If you are a business that had problems before the pandemic, now you are really at the end of the line.

“We saw loan sharking in the 2008 financial crisis and now we are seeing it again. But this time it could be much worse.”

‘They know he cannot come up with the money. Instead, they are looking to take over his business’