Not Quite Hospitable: Behind Blurred Lines, Organized Crime Groups Get A Piece Of Italy’s Tourism Industry

April 28, 2021

By a Biometrica staffer

Organized crime groups have managed to carve out a $2.6 billion cut in Italy’s strong tourism sector, according to a recent report published by Italian think thank Demoskopika. While that revenue is split between three groups, one of them is estimated to account for nearly $1 billion of the $2.6 billion: The notorious Calabria-based ’Ndrangheta, which Interpol describes as “one of the most extensive and powerful criminal organizations in the world.” The other two major regional groups that had a big stake are the Sicilian Cosa Nostra and the Neapolitan Camorra.

These mafia groups typically take control over legitimate businesses so that they can launder money from their illegal enterprises like trafficking of drugs and arms, experts say, according to an article by the Organized Crime And Corruption Reporting Project (OCCRP). Around 4,400 businesses are at risk of mafia infiltration, the OCCRP article said citing Demoskopika, largely for the purpose of money laundering. This problem has only been worsened by the covid-19 pandemic.

The figure — $2.6 billion — is not all that big a deal when you consider its ratio to Italy’s GDP of barely 1%. But it shows that the mafia has managed to gain a significant foothold in the tourism sector, which, in turn, accounts for 13% of the country’s GDP. Italy ranked fifth in the world’s top 10 destinations by international tourist arrivals, according to the UN World Tourism Organization’s (UNWTO) 2018 rankings (published in the 2019 report). France was in the number one spot, followed by Spain, U.S. and China.

Since the covid-19 pandemic began, though, global travel restrictions and repeated border shutdowns have taken a massive toll on tourism sectors across the world, UNWTO said in a statement published on March 31. Global tourist arrivals were down 87% in January 2021, compared with the same period in 2020, as Covid-19’s devastating effects have continued well into this year. Based on current trends, UNWTO expects international tourist arrivals to be down about 85% in the first quarter of 2021 over the same period of 2019: A loss of some 260 million international arrivals when compared to pre-pandemic levels.

In Italy, more than 13% of companies in the tourism sector are at risk of default due to the pandemic, the OCCRP article said citing Demoskopika’s Director Raffaele Rio. That would make them even more vulnerable to the aggressive economic infiltration strategies adopted by organized crime groups in the country. “The mafias try to bend the entrepreneurs with attractive criminal welfare tools capable of guaranteeing business survival,” Rio said, according to the OCCRP. These groups offer to cover soaring debt, give greater financial security through their entry into the business, and then gradually acquiring more and more, until sometimes they even fully control the business. 

“When someone tries to infiltrate, you want to stop him, you close the door or the window to keep him out,” Sergio Nazzaro, an expert on organized crime, who formerly served as spokesman for the president of Italy’s Parliamentary Anti-Mafia Commission told the OCCRP. He was explaining that he doesn’t like the term “infiltration” being used in this case, and said it was a kind of “creeping welfare” instead. When a growing business falls short on funds, it’ll do whatever it takes to stay alive, and that’s when the mafias swoop in, Nazzaro is quoted as saying. They offer support, and maybe even at a discount, but now they have influence over the business. “They can blackmail you, and so on. Eventually they don’t need your money anymore, but they need your flat, or your silence, or whatever else,” he added, the OCCRP article said.

For the mafia, control over legitimate sectors and businesses is crucial because as their revenue from illegal streams increases, their need to find legal entities through which they can launder their money also grows. And these organized crime groups are raking in so much money, that after a point, they won’t just acquire individual businesses. They look to buy into entire industries. “We’re talking full economic empires. Construction, food distribution, you name it. Whatever they want, they take control of. They have so much money they don’t know what to do with it,” Nazzaro said in the OCCRP article.

Take ’Ndrangheta, for instance. Its financial strength is more than that of Deutsche Bank and McDonald’s combined, with an annual turnover of €53bn (£44bn), a study by the Demoskopita in 2013 estimated, according to an article in the Guardian published on April 27. Italy’s largest mafia trial in three decades is underway in the Calabrian city of Lamezia Terme. About 900 witnesses are set to testify against more than 350 defendants, including politicians and officials charged with being members of the ’Ndrangheta the Guardian article from April 27 says.

The Interpol and other law enforcement agencies have joined hands, in fact, to combat the ’Ndrangheta. I-CAN is their three year (2020-2023) initiative bringing together select countries for a new level of multilateral police cooperation to fight the mafia group. “The insidious spread of mafia-type crime poses a unique and urgent threat, as strong family ties and corrupt political and business practices allow it to penetrate all areas of economic life. Driven by power and influence, the ‘Ndrangheta is involved in a wide range of criminal activities, from drug trafficking and money laundering to extortion and the rigging of public contracts. These enormous illegal profits are then reinvested into regular companies, further strengthening the organization’s hold and polluting the legal economy,” the Interpol website says.

Several of the defendants in the trial underway in Calabria will be asked to respond to charges of money laundering over establishing companies in the UK with the alleged purpose of simulating legitimate economic activity, the article adds. That’s the same thing the mafia is doing in its own home country of Italy, too.

Demoskopika said there was a 242% increase in the number of suspicious final transactions coming out of the tourism sector, which may indicate money laundering, in early 2020 alone. And if the tourism industry’s economic crisis deepens, those 4,400 businesses at risk of coming under the influence of Italian organized crime may grow to as many as 33,000, the think thank added. A key factor in combating the mafia’s infiltration will be how Italy manages its economic recovery, according to Nazzaro. If it is not handled correctly, or there’s too much bureaucracy involved, it will end up giving the mafia even more room to swoop in and expand its sphere of control.