Organised Crime in European Businesses
Ernesto Savona, Michele Riccardi and Giulia Berlusconi (eds.)
London: Routledge, 2016
Subject, Methods, Database:
This edited volume seeks to illuminate the diverse nature and extent of the influence organized criminals exert on legitimate businesses in Italy, Finland, France, the Netherlands, Slovenia, Spain, Sweden, and the United Kingdom.
The book is based on two research projects that were coordinated by the Transcrime institute and funded by the European Union. One project, Organised Crime Portfolio (OCP), investigated the generation, investment and confiscation of illicit proceeds and was carried out in 2012 and 2013. The other project, Assessing the Risk of the Infiltration of Organised Crime in EU Member States' Legitimate Economies (ARIEL), was concluded in 2015 and aimed at identifying the vulnerabilities of legitimate businesses to infiltration by organized crime groups.
The volume contains an introduction and a conclusion, both written by Transcrime director Ernesto Savona, and twelve separate chapters written by a total of 24 authors. The book is organized in five sections, one introductory section that addresses conceptual and methodological issues, three sections with country-specific chapters on the use of legitimate businesses in furtherance of particular criminal practices (trafficking, fraud, and criminal control over territories and markets), and finally a section that discusses research and policy implications.
The two introductory chapters on conceptual and methodological issues are written by Giulia Berlusconi and Michele Riccardi. The country reports on the Netherlands, Slovenia and Spain are grouped in the section on the infiltration of 'legitimate businesses to conceal and facilitate illicit trafficking'. Joras Ferwerda and Brigitte Unger emphasize the attractiveness of the Netherlands for transnational criminals and note that wholesale trade, retail trade and transportation are the sectors most likely to be the target of criminal infiltration. Boštjan Slak, Maja Modic, Katja Eman and Branko Ažman report that in Slovenia, 'bars, restaurants and similar businesses are most often infiltrated and owned by members of organised crime groups' (p. 54). They point out that there is no indication of the use of violence and intimidation in acquiring control over businesses and that criminals 'tend to own and/or manage businesses directly' rather than through straw persons (p. 55). The authors conclude that 'entrepreneurial initiatives are individualistic in nature' (p. 58) and 'the number of identified infiltration cases is relatively small' (p. 55). Jesús Palomo, Jerónimo Márquez and Pilar Laguna present data on the geographical and sectorial distribution of criminal investments in Spain. These data show a concentration in the real estate sector in Madrid and along the southern coast.
The section on the infiltration of 'legitimate businesses to develop fraud schemes' comprises two chapters. Johanna Skinnari, Lars Korsell and Helene Rönnblom assess the situation in Sweden where 'cash-intensive businesses such as hairdressing, beauty salons, cafés and restaurants' (p. 89) are believed to be vulnerable to criminal infiltration, but also currency exchanges, banks, construction companies and businesses in the cleaning and maintenance sector. The authors conclude by highlighting that in the Swedish case 'companies are used primarily as a tool for committing crime' rather than for investment purposes, and that recent developments show 'the use of companies for large-scale frauds and the abuse of the welfare system' (p. 97). David Wall, Yulia Chistyakova and Stefano Bonino, in the chapter on criminal infiltration in the United Kingdom, focus their attention on two types of fraud schemes, car insurance fraud and VAT carousel fraud. In so doing they follow an activity-centered approach and almost inevitably go beyond the 'usual suspects' to also examine a case of VAT fraud where the main figure was a London 'business celebrity' (p. 109). The authors stress that criminal infiltration of the legal economy 'can be sophisticated, international and involve an entirely different group of professional white-collar criminals. This group of criminals would normally fall outside the traditional UK organised crime policing model' (p. 111).
The third set of country reports is grouped in a section entitled 'Infiltrating legitimate businesses to control the territory and influence policy makers' which accounts for the functional diversity of criminal structures. Whereas the preceding two sections examine illegal enterprises that use legitimate businesses in furtherance of profit-oriented crime, this section presents analyses of criminal structures that exercise some form of illegal governance. Michele Riccardi, Cristina Soriani and Valentina Giampietri use data on confiscated assets to investigate mafia infiltration of legitimate businesses in Italy. While considering a variety of motivations for mafiosi to gain influence over businesses, the authors argue that 'infiltration of industries with high territorial specificity (e.g. hotels and restaurants, gas and water supply, construction), as well as public protected sectors, enables mafias to monitor pervasively the territory in which they are active, and to maximise their physical and strategic control' (p. 122). An interesting detail in the overall picture of mafia infiltration is the role of wives and daughters of mafiosi as owners of record of legitimate businesses: 'the percentage of female shareholders within confiscated businesses in 2006-2012 is almost two times higher than that among Italian legitimate companies' (p. 128). In their chapter on France, Michele Riccardi and Diana Camerini distinguish three main types of criminal infiltration: 'occasional laundering, fraud-driven infiltration and mafia-type infiltration' (p. 144), the latter being situated in a context of illicit markets and 'high-level connections with local politicians, public officials and businessmen' (p. 146). Sarianna Petrell and Jarmo Houtsonen conclude the section on territorially based criminal groups with a chapter on outlaw motorcycle gangs and their links to legitimate businesses in Finland. One of the examples the authors present is that of a biker club exerting control in Helsinki's nighttime economy through the provision of security services to nightclubs.
The final section of Organised Crime in European Businesses is devoted to research and policy implications and contains two chapters. John Walker discusses how the impacts of criminal infiltration of the legal economy could be measured, and Lorella Garofalo, based on a review of the academic literature, outlines an approach to the assessment of the risks of criminal infiltration.
In his concluding remarks, Ernesto Savona stresses the complexities of and the difficulties in operationalizing the concept of organized crime infiltration; and he sums up what Organised Crime in European Businesses demonstrates: 'it is not yet possible to generalise variables and their dynamics in a single interpretative model' (p. 211). Apart from the many interesting details the book provides, this is perhaps one of the most important lessons readers will learn: There is no quick and easy way to understanding the criminal infiltration of legitimate businesses in its many cross-sectorial and cross-national ramifications.
Arguably, there are two purist approaches to the study of the link between organized crime and the legal economy, purist in the sense that they entail clearly definable units of analysis: one centered on activities and one centered on individuals. When one looks at organized criminal activities in the realm of business, the focus is not on stereotypical gangsters but on the pervasiveness of certain illegal practices within the legal economy irrespective of who the perpetrators might be. When the focus, instead, is on organized criminals, the relationship between organized crime and the economy is framed in terms of the influence exerted by a defined set of actors, namely individuals who adhere to a criminal lifestyle and derive their income from crime and who for a variety of reasons seek to establish a foothold in legitimate business.
The editors of Organised Crime in European Businesses are leaning towards an actor-centered approach. Their focus is on the infiltration of legitimate businesses by criminal groups. This has a number of implications, first and foremost with respect to the scope and focal point of the discussion. An activity-centered approach would be more encompassing and it would be more likely to capture the most egregious assaults on the functioning and integrity of the market economy. The price-fixing schemes and manipulations of global financial markets, for example, that are carried out in an organized fashion by members of the corporate elite dwarf in scale whatever stereotypical mafiosi and drug traffickers might be able to accomplish. However, this does not mean that a specific focus on stereotypical criminals and their role in the legal economy is without justification. Very much to the contrary, mafiosi, drug traffickers and the like are interesting objects of study, and no study would be complete without considering their presence in the world of business. Furthermore, it seems safe to assume that there is a difference whether criminal actors operating within the legal economy have been socialized in a corporate environment or in the underworld. Both approaches, the activity-centered approach and the actor-centered approach, therefore, are valuable in their own right.
Opting for an actor-centered approach, however, raises important conceptual issues. Who exactly is infiltrating legitimate businesses? In answering this question, the editors and authors of Organised Crime in European Businesses seem to have found themselves in a dilemma. Their starting point is the notion of criminal organizations directly or through intermediaries participating in the decision-making processes of legitimate businesses (pp. 19-20). This is a scenario that seems to best fit the Italian crime landscape where mafia-type associations with defined membership present themselves as clearly delineable objects of study, where the presence of mafiosi in the legal economy is well-established, and where law enforcement agencies systematically collect data that tie these associations to legitimate businesses. The notion of criminal organizations infiltrating the legal economy is more problematic conceptually and methodologically where such clearly delineable organizational entities do not exist. By adopting a broad definition of criminal organizations that includes any criminal structure 'from large organisations to loose networks of collaborating criminals' (p. 17) the editors of Organised Crime in European Businesses acknowledge this problem without really solving it. After reading the instructive introductory chapters by Giulia Berlusconi and Michele Riccardi one is not really surprised to see that the authors of the individual chapters who report on the situation in their respective countries are going in different directions and in some cases adhering only on a rhetorical level to the notion of delineable organizational entities (rather than individual criminals) infiltrating legitimate businesses. In fact, in one chapter, the actor-centered approach is openly criticized (p. 112).
Interestingly, even though Organised Crime in European Businesses advocates an actor-centered approach, there is relatively little interest in exploring what criminal infiltration means for the criminal side. Granted, the book discusses the myriad of motivations criminals might have for exerting influence on the legal economy, but the agent of criminal infiltration largely remains amorphous. In fact, there are at least three different agents of infiltration mentioned in the book: individual criminals, criminal organizations, and, as a third category, 'different criminal groups within the same organisation' (p. 134). In the end one is left wondering, for example, if it matters for the likelihood, nature or scale of criminal infiltration whether 'large organisations' or 'loose networks of collaborating criminals' (p. 17) are involved. Similarly, one could ask what the implications are of categorical differences between criminal structures. Does it matter that the criminal organization in question is an illegal enterprise (i.e. an entrepreneurial criminal structure) or a territorially based mafia group (i.e. a quasi-governmental structure)? It also remains unclear by what criteria the criminal influence that is exerted on legitimate businesses should be 'attributed to the criminal organisation as a whole' (p. 23) rather than to groups within an organization or to individual members. Indeed, often enough when reading Organised Crime in European Businesses it seems that no distinction is made between one or the other. This begs the question to what extent it makes sense at all to examine the infiltration by criminal groups separate from the infiltration by individual criminals more generally. By focusing on individuals rather than groups one would at least have less ambiguous units of analysis. At the same time, one could still incorporate into the model the various direct and indirect ways in which criminal groups can play a role in the infiltration of legitimate businesses.
Organised Crime in European Businesses is a highly informative book. Along with the underlying groundbreaking research projects, the volume marks an important milestone in the study of criminal infiltration of the legal economy in Europe. In many respects it confirms findings from previous research in the United States, for example with respect to the kinds of business sectors that are most prone to infiltration (Anderson 1979; Edelhertz & Overcast 1993). At the same time, it becomes obvious that the situation in Europe is different from the U.S. in that there is no control of legal markets by way of the infiltration of business associations and labor unions (Jacobs 1999; 2006; Reuter 1987). The volume edited by Savona, Riccardi and Berlusconi also highlights how different the situation appears to be within the European Union. Italy clearly stands out in terms of the pervasiveness and scale of criminal infiltration, as well as in terms of the legal and administrative responses to criminal infiltration. The question remains to what extent the different characterizations of the problem across the eight countries considered in this volume are due to empirical differences or rather due to differences in perception, and to what extent a conceptual framework that is so clearly inspired by the Italian discourse on mafia infiltration is applicable in settings outside of Italy.
References & Further Reading:
Anderson, A.G. (1979). The Business of Organized Crime: A Cosa Nostra family. Stanford, CA: Hoover Institution Press.
Edelhertz, H., & Overcast, T.D. (1993). The Business of Organized Crime: An assessment of organized crime business-type activities and their implications for law enforcement. Loomis, CA: The Palmer Press.
Jacobs, J.B. (1999). Gotham Unbound: How New York City was liberated from the grip of organized crime. New York: New York University Press. (read review)
Jacobs, J.B. (2006). Mobsters, Unions, and Feds: The Mafia and the American labor movement. New York: New York University Press.
Reuter, P. (1987). Racketeering in Legitimate Industries: A study in the economics of intimidation. Santa Monica, CA: Rand.
Ruggiero, V. (2000). Crime and Markets: Essays in Anti-Criminology. Oxford: Oxford University Press.
Savona, E.U., & Berlusconi, G. (eds.) (2015). Organized Crime Infiltration of Legitimate Businesses in Europe: A Pilot Project in Five European Countries. Final Report of Project ARIEL - Assessing the Risk of the Infiltration of Organized Crime in EU MSs Legitimate Economies: a Pilot Project in 5 EU Countries. Trento: Transcrime - Università degli Studi di Trento. (PDF)
Savona E.U., & Riccardi, M. (eds.) (2015). From Illegal Markets to Legitimate Businesses: The portfolio of organised crime in Europe. Final Report of Project OCP - Organised Crime Portfolio. Trento: Transcrime - Università degli Studi di Trento. (PDF)
van Duyne, P.C. (2003). Money Laundering Policy: Fears and facts. In: P.C. van Duyne, K. von Lampe, J.L. Newell (eds.), Criminal Finances and Organised Crime in Europe (pp. 67-104). Nijmegen: Wolf Legal.
von Lampe, K. (2015). Big business: scale of operation, organizational size, and the level of integration into the legal economy as key parameters for understanding the development of illegal enterprises. Trends in Organized Crime, 18(4), 2015, 289-310.
von Lampe, K. (2016). Organized Crime: Analyzing Illegal Activities, Criminal Structures, and Extra-legal Governance. Thousand Oaks, CA: Sage. (Chapter 10: Organized Crime and Legitimate Business)
© Klaus von Lampe, all rights reserved.