Pandemic, corruption and criminal associations
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Rosario Di Legami
Studio Legale Di Legami, Palermo
segreteria@studiolegaledilegami.it
A mafia-type association has no stable political orientation: its orientation changes with the changing of economic and political circumstances. By the same token, a mafia-type association invests its dirty money in the most prosperous economic fields.
In my experience as Judicial Administrator, I have observed that many illegal investments have involved both the public and private sector – from healthcare to supermarkets, from restaurants to hotels – criminal associations attempt to penetrate the legal economy in a chameleon-like way, entering the most prosperous sectors to launder their dirty money.
A state of emergency like the one that Italy and other countries are currently enduring monopolises the public and media’s attention, therefore reducing focus on the risks arising from the illegal business connected to the pandemic.
The Covid-19 pandemic has created a fertile ground for criminal organisations to thrive. First, the Mafia and the Ndrangheta, which have developed a net of relationships across Europe, are profiting from the lack of liquidity in companies, to strengthen their usury business and take over important sectors of the entrepreneurial market.
Criminal organisations typically lend money at very high interest rates and take over business assets when it cannot pay its debts, seizing ownership of the business. In so doing, criminal organisations hit double targets: extending their economic power and laundering their dirty money.
Furthermore, the liquidity injection established by all European governments in the face of the crisis may benefit companies belonging to organised crime or whose administrators are involved in corruption or mafia proceedings, as it may subsidise tax evaders and fraudsters, and even trustees of criminal organisations.
A third vulnerability is the unemployment distress caused by the pandemic. The jobless are allured by criminal associations, which try to enlarge the number of their associates.
Finally, in the current economic system aimed at supporting companies against pandemic, the loose control over the payment of economic bolsters risks the money being used for purposes other than business or to cover tax evasion.
In the anti-corruption landscape, the situation is equally problematic. During the emergency period the system trends to weaken all legality audits. In public procurements processes, all anti-mafia controls are suspended, all the criteria to select contractors can be disregarded, all audits by the control bodies – which must certify the regularity of the contracts – are suspended.
In this situation, it is clear that public officials benefit from a wide and potentially dangerous discretion in selecting contractor, and particularly as public procurement is prone to corruption, which overpowers the objective assessment of the seriousness of the company.
On 9 April 2020, an entrepreneur was arrested for bid rigging and corruption in connection with a public tendering for Covid-19 protective masks for a total amount of €24m.
In this current emergency situation, striking a balance between protecting health, economic recovery, and the enforcement of legality against infiltration of corruption and mafia into legal economy is both critical although highly challenging.
According to eminent Italian judges Di Matteo and Tartaglia in ‘Coronavirus, l’altra epidemia: l’emergenza assist per le mafie’in il fatto quotidiano, on 30 March 2020, the issue could be regulated as follows:
- excluding from financial aid recipients people that have been convicted of organised crime offences, crimes against the public administration, economic and financial crimes;
- avoiding the compensation of all forms of tax evasion through ‘Covid-19 loans’;
- verifying benefits received, through crediting on ‘dedicated’ bank accounts, to ensure that they are adequately disbursed;
- requiring banks to report any suspicious transaction from a received loan;
- only paying a contractor after checking the conformity of the supply to the tender specifications and the economic fairness;
- identifying a single person responsible for loan proceedings, to exclude any room for the principle of ‘no responsibility’ of bureaucracy; and
- seizing assets for a value equivalent to the profits of the crime on arrest of persons charged with corruption offences.
These recommendations, although certainly not sufficient to address the complex issues linked to the Covid-19 emergency in themselves, can nonetheless be used as deterrents to the proliferation of corruption and illicit affairs of organised crime. They illustrate the key role played by the flow of information between public institutions and the private sector. This flow is crucial in a new globalised context in which capital and financial dynamics transcend national borders and guide the criminal structures in an entrepreneurial rationality, which makes them largely immune to judicial actions concerning their individual members.
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