How the mafia is infiltrating Italy’s Covid spending   

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By Prof. Vincenzo Musacchio, an expert in criminal law, organised crime and corruption at the Council of Europe

Italy’s National Recovery and Resilience Plan (PNRR) represents the largest transfer of public resources in the country since the post-war period: the total package allocated to Italy under the Next Generation EU programme exceeds €190 billion in grants and loans, resources earmarked for investment and structural reforms. This exceptional financial scale has transformed the PNRR not only into an economic recovery fund, but also into a potential pool of criminal opportunities. For mafia organisations—Cosa Nostra, ’Ndrangheta, Camorra and the Apulian mafias—the PNRR is perceived as a ‘great banquet’: a resource to be intercepted through strategies of economic penetration and institutional infiltration.

In terms of strategic change, a significant evolution can be observed in the operational methods of criminal organisations. Traditionally relying mainly on violence and direct intimidation to maintain territorial control, the mafias have progressively favoured techniques of corruption, the use of compliant professionals, and sophisticated corporate and financial engineering practices. This transformation entails a reduction in murders and visible violence, offset, however, by an increase in forms of economic and financial crime, which are often more difficult for the authorities to detect and combat.

To clarify the mechanisms employed, it is useful to define certain recurring terms and practices. ‘Corporate engineering’ refers to the creation and management of complex corporate structures—shell companies, trusts, holding companies and subcontracting chains—designed to conceal the true ownership of assets, evade controls and move illicit capital. The tactic of ‘splitting’ involves breaking down a main contract into multiple smaller subcontracts, so that administrative oversight and public inspection become less effective along the chain of works. An apparently ‘clean’ company can thus be awarded the main contract and, through subcontractors and ad hoc shell companies, effectively transfer the execution of the works to firms linked to mafia organisations.

Professionals and public officials

This modus operandi is facilitated by the complicity of professionals (lawyers, accountants, tax advisers) and sometimes public officials who, through fictitious consultancy work, the preparation of falsified financial statements or delays in inspections, facilitate the infiltration process. Investigative studies and institutional reports indicate that the presence of networks of colluding professionals often constitutes the real ‘entry point’ for criminal organisations into the public procurement cycle. In some cases, professional complicity also involves money laundering practices, through the transfer of illicit proceeds to ostensibly legitimate activities.

The mafia’s areas of interest in relation to the PNRR can be grouped into three priority areas, each characterised by specific methods of exploitation:

A) Green transition and waste management: resources allocated to the ecological transition, sustainable waste disposal and the construction of renewable energy plants represent a strategic target. Criminal organisations manage illegal landfills, irregular waste disposal and the installation of wind or solar farms using substandard materials or through subcontracting to compliant firms, thereby reducing costs and maximising profit. Concrete examples include the use of unauthorised waste to cover landfills or the use of substandard solar panels that compromise the lifespan of the installations, with negative repercussions on the environment and public finances.

B) Infrastructure and major construction works: contracts for excavation, earthworks, the supply of concrete and labour management provide fertile ground for monopolistic control of local production chains. Mafia groups can impose subcontractors, exploit undeclared labour and illegal recruitment schemes, and capture significant shares of contracts for the supply of materials, distorting market prices and reducing the quality of the work. The long-standing nature of territorial control in certain regions has demonstrated how the established presence of these organisations allows for systematic manipulation of public procurement.

C) Digitalisation and innovation in public administration: funding for the digital transition and the development of software platforms is vulnerable to fraud through fictitious consultancy arrangements, contracts for software that is never delivered, or the over-invoicing of services. Fraud takes the form of submitting implausible projects, setting up ‘shell’ consultancy firms, and invoicing for services that have been partially performed or not performed at all. This results not only in financial loss but also in a slowdown of administrative modernisation processes.

The geographical distribution of the risk highlights a progressive ‘relocation’ of mafia activities. Whilst historically the phenomenon was concentrated in the South, the PNRR has facilitated its penetration into northern regions as well. In the North, the main objective of mafia enterprises is money laundering: thanks to the liquidity generated by drug trafficking and other illicit activities, organisations acquire struggling businesses or vulnerable sectors of industry, using the incentive schemes and tax credits linked to the PNRR to justify financial flows and bank transfers. In the South, however, strong territorial control persists, facilitating direct access to funds earmarked for agriculture, local infrastructure and the management of labour on construction sites.

The institutional countermeasures adopted by Italy and the European Union, whilst well-intentioned, have so far proved insufficient in the face of the sophistication of criminal practices.

Key tools include:

1) SIAF (Anti-Fraud Information System): an IT platform that cross-references data from national databases with beneficiaries’ financial flows, aimed at identifying anomalies and potential fraud. Despite its technical utility, the system’s effectiveness depends on the quality of the input data, the timeliness of updates and the capacity for coordination between administrations.

2) Anti-Mafia disqualification orders: administrative measures preventing suspected companies from contracting with the public administration. These orders represent a preventive tool of primary importance, but their implementation is sometimes slow and subject to judicial appeals that dilute their immediate impact.

3) European Public Prosecutor’s Office (EPPO): an institution tasked with investigating crimes that harm the financial interests of the European Union, with the power to coordinate cross-border investigations. Its work represents an improvement in the fight against EU fraud; however, the complexity of criminal networks and procedural differences between Member States sometimes hinder swift and effective action.

To strengthen the resilience of the public expenditure system, further measures must be considered: optimisation of ex ante and ex post controls; expansion of the analytical capabilities of anti-fraud platforms through data analytics and artificial intelligence techniques; faster procedures for the adoption of disqualification orders with balanced procedural safeguards; and a strengthening of international cooperation on financial intelligence and the freezing of assets. It is also essential to increase training and rotation for public officials responsible for procurement management, as well as to promote transparency in subcontracting chains through traceability requirements and the publication of contracts.

It is also necessary to take into account possible objections and operational constraints: an excessive tightening of controls may slow down spending and undermine economic recovery objectives; overly intrusive measures risk generating disputes and hindering the participation of legitimate businesses, particularly small and medium-sized enterprises (SMEs), which form the backbone of the Italian production system. Hence the need to balance preventive effectiveness with the timely disbursement of funds, adopting risk-based solutions based on profile assessments and proportionate controls.

Finally, in addition to technical and judicial measures, a socio-cultural response is essential to limit the scope of action of mafia organisations: promoting the rule of law, supporting honest businesses through targeted incentives and protecting workers to combat undeclared work, and strengthening the role of civil society and the media in monitoring the use of public funds.

The problem is not merely economic: mafia infiltration profoundly distorts the functioning of the market, undermines fair competition and jeopardises sustainable development. A mafia-linked enterprise that wins contracts through corruption, social dumping or the use of substandard materials not only deprives the state of funds, but also pollutes the entire economic and social fabric, producing distorting effects that can persist for decades. The challenge of the PNRR therefore lies in combining the need to ‘spend well’ with the imperative to ‘spend legally’, through an integrated, multi-level and cohesive strategy involving national institutions, European authorities and civil society actors.

Vincenzo Musacchio, a lecturer in strategies for combating organised crime and an associate of RIACS in Newark, is known for his commitment to the fight against the mafia and for his training activities in areas relating to the culture of legality. He has taught criminal law at various Italian universities and at the Higher Training School of the Presidency of the Council of Ministers in Rome. He currently runs courses in the United States, teaching anti-mafia investigation techniques to members of the police force, including the New York Metropolitan Police. He is an independent researcher and a full member of the Royal United Services Institute (RUSI) in London’s School of Strategic Studies on Organised Crime. He was a student of Giuliano Vassalli and has collaborated with Antonino Caponnetto. His research focuses on the criminology of mafia organisations and international drug trafficking. He is the architect of educational programmes, such as the ‘Legalità Bene Comune’ project in schools of all levels. He regularly appears on national RAI television programmes such as “Presa Diretta”, “Newsroom” and “Report”, as well as in other national and local media outlets, to comment on mafia and crime-related issues. He has written numerous books and articles on topics relating to criminal law and criminology. In 2019, in Casal di Principe, he was awarded a Special Mention at the “Don Giuseppe Diana” National Prize by the family of the priest murdered by the Camorra. On 27 December 2022, the President of the Republic awarded him the honour of Knight of the Order of Merit of the Italian Republic. His work against the mafia has led to death threats, which have nevertheless not deterred him from his anti-mafia activities.

 

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