Bulgaria: An International View

The IHT continued reporting on Bulgaria last week, not with about the country’s mafia and corruption, but about the work of the NGO-niks, researchers and journalists who are crusading against both those country’s afflictions. (The New York Times ran a shorter version of the story the next day.) 

The article was pegged to Bulgaria’s attempts this month to end the European Commission’s funding freeze announced last summer, in light of evidence that European money had been misused or outright embezzled by criminal networks or poor controls.

Journalists, judicial reformers and others weighed in on the problems they face in writing about or researching nefarious activity – beatings with pipes, death threats, phone calls from mobsters and being followed by thugs in black leather jackets. How do they stay safe? In the case of one journalist, two police officers tail him while he works. Another activist takes every chance he can get to speak on television and radio, hoping his high profile will keep him safe. And one opposition politician offered this: “My grandfather used to say that if you’re destined to be kicked by a horse, you’re not going to be kicked by a donkey.”

The same paper offered an editorial on Bulgaria and Romania a few days later:

The thinking was that EU membership would keep them safely out of Russia's orbit. There were also hopes that joining the European political mainstream would accelerate their efforts to rein in organized crime and corruption. The latter was a fairly astounding miscalculation.

What actually happened, as Doreen Carvajal and Stephen Castle have reported in detail in the IHT, was that the prospect of billions in EU subsidies only encouraged the criminals to diversify from smuggling and extortion and to burrow into the political and judicial systems - the better to siphon off EU money.

Carvajal and Castle, of course, haven’t cornered the market on the Bulgaria corruption beat – for some colorful examples of the plundering of EU subsidies, it’s worth taking a look at last weekend’s Daily Telegraph article on the subject.

Croatia: Verdicts in “Indeks” Scandal

Katica Stefinovec and her son Damir were sentenced in Zagreb Friday for arranging to pay €2,000 to enroll Damir in a Zagreb University department for which he did not qualify. The mother received eight months and the son received six. The Stefinovec case is the fifth verdict stemming from a recent bribery scandal at the university’s schools of economics and traffic sciences. Croatia’s anti-organized crime and bribery office has so far questioned 78 suspects and 152 witnesses in the affair, which has tainted professors, students and mediators between the two.

Financial Crisis prompts Bolsters Loan-sharks

From the same Italian business group that brought us the news last year that the mob is the biggest business in Italy comes a new report on the mafia cashing in on the global credit crisis.

The credit crunch has meant some 180,000 business owners with no access to bank loans have had to turn to mafia lenders instead, stated the report from Italian retailers’ confederation Confesercenti, which urged the government to take action to ease the crisis. The Financial Times reports:

Usury is the fastest-growing business for the Mafia, which has long consolidated its hold over local businesses and politicians, especially in the south, by providing “security” of cash flow and jobs  -- at a price.

The Mafia-- in reality diverse criminal groups with different structures, histories and tendencies -- is -estimated to have a turnover of €130bn ($163bn, £109bn), with “commercial” activities accounting for €92bn, or 6 per cent of Italy’s gross domestic product.

Confesercenti estimates usury accounts for €15bn of Mafia income. Narcotics are by far the most profitable activity, traded across Europe and worth €59bn.

The report underscored recent warnings by anti-Mafia prosecutors that criminal gangs were expanding their activities into trade, tourism, the betting industry, restaurants, construction, rubbish disposal and the property and health -sectors. Prosecutors recently told the Financial Times that Europe was seriously underestimating the geographic reach of the Mafia, which extended to Russian oil trading and banks.

The group also outlined the monthly going rates for paying “pizzo,” or protection money, in Naples and Palermo.

In other words, a normal shop in Palermo could be paying up to €500 per month protection, whilst a city-centre, upmarket shop could be paying upwards of €1,000. For a supermarket, the price is higher at €5,000 per month while a Palermo building site could be asked for as much as €10,000 per month.

In all, Confesercenti reckoned that Italian businesses pay €250 million per day in protection money.
 
Stratfor: Sochi Blasts Could Mean Mob War

A man was badly wounded in the Russian resort town of Sochi last week after a can that he’d found on his car exploded, reported online global intelligence clearinghouse Stratfor.

The explosion was the sixth in a line of similar explosions this year in Sochi, which is troubling considering the city’s construction boom stemming from its hosting of the Winter Olympics in six years’ time. Stratfor says a mob struggle is looming between the local gangsters and a political-real estate nexus moving in from Moscow.

Sochi is the site of the 2014 Winter Olympics, and as a result, billions of dollars in improvement and development projects are pouring into the city. Five-star hotels are going up, as are condominiums and other residential buildings, not to mention sports venues. There is major money to be made in the construction sector these days in Sochi and, considering the lagging economy in the rest of Russia due to the financial crisis, Sochi has become that much more attractive to construction companies struggling to stay afloat.