The 2007 Mafia Inc. Balance Sheet

It looks like it was another very good year for Mafia Inc. in Italy.

With corruption and bribery on the rise almost everywhere the Neo-Liberals got a foot in the door and with the worldwide financial crisis 2008 might turn out to become even better.

With the Neo-Liberal deregulations and the loss of business ethics, new business practices that were just a few years ago considered as criminal and prosecuted as such together with the vacuum created by the loss of values, no wonder bribery and corruption is on the rise, and everybody seems to be doing it not necessarily because they want so, but because they are forced to.

Single persons to get a favor or place someone on an important position, companies to get contracts, and governments on a really, really big scale. And who would be surprised that at the same time these governments have substantially reduced spending and personnel put on fighting corruption and organized crime. Many of them have been relocated to hunt mostly imaginary enemies or support wars around the world.

In other areas sometimes so-called private consultants have been brought in to create the impression of acting, but quite a few of them have links, investments or are otherwise financially interwoven with those they should control. Others have opaque backgrounds or links into shady businesses.

All that, for many, seems not to matter anymore when they don’t know how to pay their next rent or for food, but nobody should claim that if some of these crimes surface further they did not know. We have seen that in the past and laws have been put up to protect people and businesses from such shady practices. All that has been thrown overboard by those who deregulated these areas or turned these laws into toothless tigers.

Our best explanation for such acting by many in governments around the world is that it looks like the wrong incentives have been put up – what do you guess a bureaucrat or politician will do when they are promised to be paid in one year what they earned their whole life before just to look the other way or passing some bills with more loophole than actual regulations. Must have been bad management or overlooking some facts. And nobody to prosecute them left around.

Click on the image below for the link (full size image)

link full size image

I guess this is as far as we want to go today describing the ever more favorable business environment for Mafia Inc.

They have diversified since quite some time into many areas from food trade to health, tourism, infrastructure services and of course banking. And they are also expanding further across country borders. Like one top level figure of the Italian Mafia put it a few months ago – they happily expanded e.g. into Germany as the business environment is so favorable there. Maybe some of the long time rumors in Germany about massive involvement of high ranking local government figures or government agencies into illegal practices, drug trafficking or widespread corruption are true after all. Who knows.

To get a better understanding we have above recreated a 2007 balance sheet of the Italian Mafia Inc. based on a report from SOS Impresa (link below) that has, when published last week, created quite some unrest with many in Italy. The report outlines the activities, networks and business practices of the various groups and regional branches of the Italian Mafia Inc (Camorra, Cosa Nostra, Ndrangheta, Sacra Corona Unita). While some of them have a strong focus on certain lines of business, e.g. the Ndrangheta in Calabria on drug and human trafficking, other groups are further diversified.

There is of course a dark figure with these numbers but even on the level reported by SOS Impresa, Mafia Inc is one of the biggest organizations in Italy, almost 10% of the Italian GDP in 2007. And the numbers are on a steep rise. From EUR 75 billion in 2005, EUR 90 billion in 2006, to EUR 150 billion in 2007. That’s a 100% increase in just 3 years and that with a profit margin of almost 50% . Every bank(ster) would be proud of them. And more-and-more might even work for them, if the recently reported activities by the Japanese Yakuza set a precedent – to hire traders and investment bankers who otherwise might become unemployed directly into their company fronts. Maybe then these forms of investment banking will get a completely new twist – an Uzi twist expanding or eating their way even further into legitimate businesses.

And already now the Italian Mafia is squeezing out about EUR 250 million a day, EUR 10 million per hour, EUR 160 thousand per minute from legitimate business.

More information:
SOS Impresa (in Italian)
The full 2008 Report as PDF (in Italian)

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