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Organized Crime and the Legal Economy
Lessons learned and suggested practices to disrupt the impact of organized crime on the legal economy
Lessons learned and suggested practices to disrupt the impact of organized crime on the legal economy
Naples, 27 April 2016. The Report prepared by UNICRI on "Organized Crime and the Legal Economy" has been presented and discussed today in Naples during a workshop organized by UNICRI, the United States Department of State and the Municipality of Naples.
Among the participants to the meeting: Giovanni Colangelo, Head Prosecutor, Prosecutor Office in Naples; Colombia A. Barrosse, U.S.A Consul General in Naples; Giuseppe Grassi, Financial Police, Central Service for Investigations on Organized Crime; Luigi de Magistris, Mayor of Naples; David Luna and Kristen Larson, Department of State U.S.A.; Franco Roberti, National Antimafia Prosecutor, National Antimafia and Antiterrorism Bureau; and Cindy Smith, Director of UNICRI.
The workshop represented an opportunity to share and discuss the main lessons learned and suggested practices to prevent and mitigate the impact of organized crime on the legal economy, focusing on Italy and other European countries as case studies. The findings included in the Report are based on the analyses of the data and cases provided by the Italian authorities.
Although Illicit markets remain the main source of profit for organized crime groups in Italy, especially the clans of Camorra, ‘Ndrangheta, and Cosa Nostra, there is growing evidence of organized crime’s infiltration in the legal economy. The role of external actors such as lawyers and strawmen in concealing illicit proceeds, as “entry points” in the economic and political sphere and the use of corrupt practices are among the main pillars of the organized crime strategy.
The infiltration into the legal economy can take different forms: direct or indirect control of legal enterprises; the creation of criminal monopolies; and the widely applied illicit access to public and private biddings. From 1983 to 2012 the number of seizure orders has increased from levels below 50 to 500 per year, accounting for the investigation efforts conducted by the Italian authorities but also for the magnitude of the criminal investments and penetration in different sectors.
Out of 12,311 seized properties, residential dwellings form the largest category (approximately 40%), while land properties, both for construction and agriculture, represent approximately 25% of the total number. The proportion of criminal economic penetration into the real estate market is on average equivalent to €22 million for every €100 billion worth of building assets. According to the database of the Italian Agency for Confiscated Assets, a total of 1,708 firms have been seized in Italy from 1983 to 2012.
The more affected sectors are the mining sector, followed by the health and other public services sector, and the constructions sector. Seized firms show an evolution towards more complexity when looking at their geographical location over time. Until the beginning of the 1990s, the bulk of organized crime firms were located in Sicily. Presently more than 95% of seized firms are located in six regions: Sicily, Campania, Lombardy, Calabria, Lazio and Apulia. A considerable number of organized crime firms have also been detected in the North. In particular, Lombardy, Emilia Romagna and Liguria.
The report highlights that regions with deeper criminal penetration perform worse with respect to economic development; and there is a positive association between higher public expenditure in public security and the number of requisition orders. The Southern regions with a long tradition of organized crime presence have the lowest GDP per capita levels and the highest rate of criminal penetration. Strong ties with the local environment, as well as potentially high social returns from investments in the legal economy, probably represent the main raison of attractiveness. In some regions with a relatively high standard of living, such as Lombardy and Lazio the penetration is more recent, and the attractiveness of these regions could be attributed to their role as Italian political and financial powerhouses. In other regions low levels of economic wealth, together with weaker ties, seems not to offer investment opportunities. For other regions instead, good economic performances may act as a deterrent, because there could be less incentives in starting illegal activities whenever the legal economy offers high returns. While maintaining a strict relationship with their territory of origin, endogenous organized crime groups in Italy are intertwined with transnational networks.
Cindy J. Smith, Director of UNICRI said: “We believe that attacking criminal assets, dismantling their networks, discourage connivance, address impunity and improve protection of entrepreneurs are fundamental to undermine organized crime’s power, economic capacity and territorial control. In a world where crime knows no boundaries, international cooperation based on information sharing is crucial. The institutions, in particular the law enforcement and the judiciary, and the civil society must work side by side.The best investment countries can do is the one for development – especially through youth education and employment - and the rule of law. Without the culture of law, resources and alliances the fight against organized crime can not be won."
She added: "This study highlights the vulnerabilities of our economic and social systems. It focuses on Italy but we all are aware that many countries are facing the same threats to their growth, political stability and development. Let me conclude by honouring the memory of those citizens, law enforcement officers and magistrates who died while fighting organized crime. Their legacy may lead and inspire all us."
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Lessons learned and suggested practices to disrupt the impact of organized crime on the legal economy
Naples, 27 April 2016. The Report prepared by UNICRI on "Organized Crime and the Legal Economy" has been presented and discussed today in Naples during a workshop organized by UNICRI, the United States Department of State and the Municipality of Naples.
Among the participants to the meeting: Giovanni Colangelo, Head Prosecutor, Prosecutor Office in Naples; Colombia A. Barrosse, U.S.A Consul General in Naples; Giuseppe Grassi, Financial Police, Central Service for Investigations on Organized Crime; Luigi de Magistris, Mayor of Naples; David Luna and Kristen Larson, Department of State U.S.A.; Franco Roberti, National Antimafia Prosecutor, National Antimafia and Antiterrorism Bureau; and Cindy Smith, Director of UNICRI.
The workshop represented an opportunity to share and discuss the main lessons learned and suggested practices to prevent and mitigate the impact of organized crime on the legal economy, focusing on Italy and other European countries as case studies. The findings included in the Report are based on the analyses of the data and cases provided by the Italian authorities.
Although Illicit markets remain the main source of profit for organized crime groups in Italy, especially the clans of Camorra, ‘Ndrangheta, and Cosa Nostra, there is growing evidence of organized crime’s infiltration in the legal economy. The role of external actors such as lawyers and strawmen in concealing illicit proceeds, as “entry points” in the economic and political sphere and the use of corrupt practices are among the main pillars of the organized crime strategy.
The infiltration into the legal economy can take different forms: direct or indirect control of legal enterprises; the creation of criminal monopolies; and the widely applied illicit access to public and private biddings. From 1983 to 2012 the number of seizure orders has increased from levels below 50 to 500 per year, accounting for the investigation efforts conducted by the Italian authorities but also for the magnitude of the criminal investments and penetration in different sectors.
Out of 12,311 seized properties, residential dwellings form the largest category (approximately 40%), while land properties, both for construction and agriculture, represent approximately 25% of the total number. The proportion of criminal economic penetration into the real estate market is on average equivalent to €22 million for every €100 billion worth of building assets. According to the database of the Italian Agency for Confiscated Assets, a total of 1,708 firms have been seized in Italy from 1983 to 2012.
The more affected sectors are the mining sector, followed by the health and other public services sector, and the constructions sector. Seized firms show an evolution towards more complexity when looking at their geographical location over time. Until the beginning of the 1990s, the bulk of organized crime firms were located in Sicily. Presently more than 95% of seized firms are located in six regions: Sicily, Campania, Lombardy, Calabria, Lazio and Apulia. A considerable number of organized crime firms have also been detected in the North. In particular, Lombardy, Emilia Romagna and Liguria.
The report highlights that regions with deeper criminal penetration perform worse with respect to economic development; and there is a positive association between higher public expenditure in public security and the number of requisition orders. The Southern regions with a long tradition of organized crime presence have the lowest GDP per capita levels and the highest rate of criminal penetration. Strong ties with the local environment, as well as potentially high social returns from investments in the legal economy, probably represent the main raison of attractiveness. In some regions with a relatively high standard of living, such as Lombardy and Lazio the penetration is more recent, and the attractiveness of these regions could be attributed to their role as Italian political and financial powerhouses. In other regions low levels of economic wealth, together with weaker ties, seems not to offer investment opportunities. For other regions instead, good economic performances may act as a deterrent, because there could be less incentives in starting illegal activities whenever the legal economy offers high returns. While maintaining a strict relationship with their territory of origin, endogenous organized crime groups in Italy are intertwined with transnational networks.
Cindy J. Smith, Director of UNICRI said: “We believe that attacking criminal assets, dismantling their networks, discourage connivance, address impunity and improve protection of entrepreneurs are fundamental to undermine organized crime’s power, economic capacity and territorial control. In a world where crime knows no boundaries, international cooperation based on information sharing is crucial. The institutions, in particular the law enforcement and the judiciary, and the civil society must work side by side.The best investment countries can do is the one for development – especially through youth education and employment - and the rule of law. Without the culture of law, resources and alliances the fight against organized crime can not be won."
She added: "This study highlights the vulnerabilities of our economic and social systems. It focuses on Italy but we all are aware that many countries are facing the same threats to their growth, political stability and development. Let me conclude by honouring the memory of those citizens, law enforcement officers and magistrates who died while fighting organized crime. Their legacy may lead and inspire all us."