Sicily's Mafia Said To Pocket A Third Of All Government Transfers

ROME (Dow Jones)--The Sicilian mafia pockets more than a third of all the money allocated by the central government in Rome for public services on the island, according to a study to be presented at the Royal Economic Society's 2012 annual conference.

The report by Guglielmo Barone and Gaia Narciso found that organized crime effectively undermined economic growth and development by manipulating the assignment of public funds aimed at poor and undeveloped areas on the island.

The study found that organized crime took 35% of the funds from contracts awarded by the Italian government to local firms to provide public services in Sicily--as well as other poorer regions in the country.

Sicily's crime syndicates create fictitious firms and encourage corrupt public officials to allocate resources to these companies. Barone and Narciso cite local claims that the modern Costra Nostra is a "new mafia-related bourgeoisie, made of lawyers, notaries, accountants and entrepreneurs."

They argue that similar problems are likely to be found in other poor regions of Europe which receive funds from the European Commission.

Full Story (WSJ)