- Institutional investors bought private bonds backed by Italy’s most powerful organized crime group in the past three years, according to a Financial Times report.
- Pension funds, hedge funds, family offices, and a private Italian bank bought about 1 billion euros ($1.1 billion) of the debt.
- In one deal, investors bought bonds linked to assets sold by organized criminals who were charged with stealing millions from the European Union.
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Institutional investors bought €1 billion ($1.1 billion) in bonds backed by earnings from organized crime committed by Italy’s most powerful mafia, the Financial Times reported on Wednesday.
The debt was backed by front companies – aiming to conceal illegal activities – that were linked to, and later charged with, working with Southern Italy’s infamous ‘Ndrangheta mafia group.
They were formed out of unpaid bills from companies providing medical services to Italian health authorities.
Italian private bank Banca Generali purchased some of these bonds in consultation with accountancy service group EY, the FT said.
“Banca Generali and Banca Generali Fund Management Luxembourg are getting to know right now of the mentioned bad news,” the bank told the FT.
The bank relied on the notion that the transaction was eligible when it made the purchase, it said.
About €1 billion of these private bonds were purchased between 2015 and 2019, the newspaper said, citing market participants.
Pension funds, hedge funds, and family offices that aimed to generate money from record-low interest rates also invested in these bonds, according to the report.
In another such deal, institutional investors bought bonds tied to assets that were sold by an Italian refugee camp in Calabria.
The camp was run by organized criminals who were prosecuted for stealing millions of euros from the European Union.
The ‘Ndrangheta’s mega empire of money-laundering and drug trafficking has gained less global fame than Italy’s Sicilian mafia.
Its steady rise has made it one of the wealthiest and most dreaded mafias in Italy, the FT said, with Europol estimating its combined turnover at €44 billion ($49 billion) a year.