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Europe is changing. Here's how. A reported blog.

Italy: credit dries up so the Mafia steps in

Report claims organized crime has become the main lender to Italy's small and medium sized businesses.
Mafia loansEnlarge
Naples crime boss Michele Zagaria following his arrest last month. That's not likely to put a crimp in Italian organized crime's profitable loan sharking activities as desperate small businesses turn to the mob as Italian banks have switched off the credit pump. (ROBERTO SALOMONE/AFP/Getty Images)

As many as 200,000 businesses may have taken loans from the Mafia to stay in business, according to a report issued by the Italian business organization, Confesercenti, working with the Sicily-based anti-Mafia group SOS Impresa. It claimed that the Mafia had now become Italy's main source of loans to small and medium-sized businesses.

According to the report, organized crime has an annual turnover of 140 billion euros ($178.9 billion) of which 100 billion euros is profit. The liquidity of various criminal groups is now financing Italy's small businesses as banks have stopped lending to them.

 It emphasizes while the loan practices remain extortionate the new loan-sharks don't conform to the old leg-breaking stereotype.

"This is extortion with a clean face," said the report. "Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly."

The report claims 1,800 businesses have been driven out of business recently because of predatory loan practices leading to the loss of tens of thousands of jobs.

Reuters report is here. Italian report is here.

http://www.globalpost.com/dispatches/globalpost-blogs/europa/italy-credit-dries-so-the-mafia-steps