How illicit mafia proceeds ended up inside legitimate international investment portfolios
Patrick Boyle examines the unsettling discovery that asset-backed securities, purchased by global investors and major institutions, were partially funded by the criminal activities of the Calabrian 'Ndrangheta mafia group.
The financial instruments in question, known as Mafia Bonds, were constructed from unpaid invoices issued by Italian public health authorities. These debts were bundled into asset-backed securities, but the packages were tainted by assets originating from front companies controlled by the 'Ndrangheta organized crime syndicate.
One specific transaction involved assets linked to a Sicilian refugee camp that had been seized by criminals. These individuals were later convicted for the theft of tens of millions of euros in EU funding. The deal, which involved consulting services from EY, highlights a significant breakdown in due diligence, as these high-risk, illicitly-backed assets were sold to global investors, including Banca Generali.
