Mafia in crisis?

Many would like to think that widespread extortion of bribes from businesses by organized crime groups is a problem limited to developing countries. Not so. Italy’s notorious Mafia has for decades maintained its grip over enterprises in the southern part of the county. But recently, the economic slowdown affecting business activity also began to take a toll on criminals. It’s hard to sustain any kind of enterprise when the revenue base weakens. And the Mafia is no exception to Econ 101.

You know economic times are tough when even the bad guys are feeling the squeeze. In southern Italy more than three-quarters of all small businesses pay protection money to the Mob. A movement to just say no has been gaining ground, mostly because business owners just can’t afford to pay up anymore. There were street protests this week against the Mafia. And for the first time a restaurant owner has reported the extortion to the police. He named names.

In an NPR interview, that Sicilian restaurant owner, Vincenzo Conticello, describes how the Mafia set out to extract “pizzo,” or protection money, from his venture. “They began by pick-pocketing and damaging the cars of clients,” he says. “Then they cut our electricity, our gas, the water. I didn’t know who was doing this and began to get very worried, extremely anxious.” Then, he got a visit. But unlike most business owners, who gave into intimidation, Conticello talked to the police helping in the arrest of the gangsters who harassed him.

Italy’s most powerful business association, Confindustria, recently announced that it will ban any business from its group that is found paying protection money. This certainly increases the reputational cost of corruption at a time when the monetary burden of protection payments is already very high. But the real key to success is determination of other businesses to resist protection payments. Conticello complains that support from other Palermo business owners has been scant because they resent that he is now off the hook from paying the Mafia while they are not. Resisting extortion is never easy, but only a more unified stance of the business community can change the status quo.