Confiscation of illegally acquired assets under the "La Torre" law
Premises of the La Torre Iaw
Results of the enforcement of the La Torre Iaw
Possible long-term consequences of the La Torre Iaw
Author: P ARLACCHI
Pages: 91 to 100
Creation Date: 1984/01/01
In 1982, the Italian authorities enacted a new law against the mafia conspiracy, which provided for the seizure and confiscation of property illegally acquired by criminals and their associates. This law is intended to strike at the accumulation of wealth of the mafiosi.which chiefly motivates their criminal activity. According to the established pro cedure, the district attorney or the chief of police are authorized to propose the seizure of property suspected of being derived from crimes, and a court of law decides either to accept or reject such a proposal and, where appropriate, orders the confiscation of illegally acquired assets. Two phenomena were identified, particularly in the southern part of ltaly, which preceded the adoption of this new law: one was the establishment of an illegal sector of the economy with the development of a vast illicit market of drugs, and the other was an increase in the number of mafia firms and entrepreneurs. In some areas of western Sicily, for example at Palermo and Trapani, the income derived from illegal activities is estimated at approximately 15 to 20 per cent of the total gross income; the illicit sale of drugs nation-wide exceeds 10,000 billion lire, according to estimates.
An assessment of the impact of the new law reveals positive results. In four provinces - Calabria, Campania, Lombardy and Sicily property suspected of being derived from crimes was seized on 352 occasions and illegally acquired property was confiscated on 108 occasions during a period of 21 months following the adoption of the new law; 98 per cent of the seizures and all of the confiscations took place in the above-mentioned four provinces.The effective enforcement of the new law is, in the long run, expected to result in a movement from illegal to legal activity; if the risk involved in persisting in illegal activities becomes high enough, it should trigger a tendency towards avoiding involvement in the illegal activities and converting the assets into property shares protected by legal means. A certain tendency towards such "idealization'' and investment in financial affairs rather than in real estate, agriculture and tertiary assets has already been observed. lt is, however, unlikely that the mafia will be inclined to give up easily its profits derived from crime and its power of influence in society, and, consequently, it is expected that the confiscation of the illegally acquired properties will for a long time be the cornerstone of every effective struggle against criminal activity on a large scale.
* The views expressed in this article, and the selection and interpretation of facts, are the responsibility of the author and do not necessarily represent the views of the Italian Government.
On 13 September 1982, the Italian authorities enacted law No. 646, just a few days after the assassination at Palermo of General Dalla Chiesa, who had been sent to Sicily by the Government to fight against the mafia. This law is known to ltalians as the "La Torre law", named after one of its founders, Pio La Torre, a member of Parliament who was also assassinated at Palermo by the mafia five months prior to Dalla Chiesa.
The La Torre law, which represents the most recent anti-mafia regulation of the ltalian State, includes two fundamental innovations:
(a)The introduction in the legal system of a new crime, the mafia conspiracy;
(b)The possibility for the courts to seize and to confiscate the goods of the persons belonging to the mafia conspiracy, as well as of relatives, partners and cohabitants who in the past five years played a "front man" role or cover-up role for the mafia.
With the inclusion of the mafia conspiracy crime in the Italian Penal Code, a serious regulation gap has been filled. In spite of its obvious danger, the mafia conspiracy had not been recognized by the Penal Code as a criminal phenomenon. As a result, many judges had not considered it a criminal association. The provisions contained in article 416 of the Penal Code concerning criminal association were suitable to cope with local and limited phenomena of associated delinquency, but not with organized crime [ [ l] , [ 2] ].
The provisions of the La Torre law with respect to seizure and confiscation of illegally acquired property are based on the updated analyses and knowledge of the modern mafia phenomena. The provisions of this law are intended to deal a blow to the accumulation of wealth by the mafiosi,which is the principal motivating force of the criminal activity on a large scale.
To arrive at the point of confiscation the following procedure has been established : the district attorney or the chief of police requests the police force to make inquiries into the standard of living, the financial status and the possession of property of the individuals who are suspected of belonging to criminal associations. Such investigations are directed to find out whether or not the property of the investigated person has been acquired legally.
If sufficient circumstantial evidence indicates that the suspect's property has been acquired illegally, such property will be proposed for seizure. The proposal for seizure is either accepted or rejected by the court set up to judge such cases, and if such a proposal is accepted, the property is seized.Within a year, the same court must conclude the case and decide either to release the property or to order its definite confiscation.
The premises of the La Torre law should be considered in conjunction with the emergence of two phenomena that modified the Italian economic structure over the past 10- 15 years. The first was the establishment of an illegal sector of the economy which was brought about by the growth of the criminal activities of the Calabrian and Sicilian mafia and by the development of a vast internal illicit market of heavy drugs. As a result, the demand for criminal work increased. Such demand has been readily met by an increased supply of criminal work, favoured by two factors: unemployment among young people and the worsening of the urban situation in the south. While it is not appropriate in this article to elaborate on the most profitable branches of the illegal economy, it should be noted that in some areas of western Sicily, for example at Palermo and Trapani, the income derived from illegal activity is estimated at approximately 15 to 20 per cent of the total gross income, and that the illicit sale of drugs nation-wide exceeds 10,000 billion lire.
The second phenomenon is the increase in the number of mafia firms and the entrepreneurs in the emerging sectors of the economy in the southern peninsula and Sicily. This development has taken place since the early 1970s. In the legitimate business, an increasing number of mafia entrepreneurs have moved into those branches of the economy that are characterized by weak technological and economic entrance barriers, by high profit rates and by high internal competition. Businesses having relations with mafia have managed to achieve particularly remarkable positions in the following market sectors: building trade, motor transport, agriculture, wholesale trade, various types of service activities and tourism. An attempt in Sicily to revise the register of the public contractors in 1980 enabled an estimate to be made of the percentage of owners of building firms with previous criminal records: there were 2,500 such firms out of 6,000, or 42 per cent of the total number for the province [ 3] .
The element that played a crucial role in the expansion of the mafia power in the Italian economy is a very high level of interrelations between the legal and illegal sector of the economy. Labour, capital and methods of organization of the illegal sector have been transferred without great difficulty to the legal sector of the economy with the ordinary economic competition, endowing the mafia firms with an extensive capacity.
Profits obtained from the legal sector of the economy have in turn been reinvested in the further expansion of criminal activities marked by very high entrance costs, such as the production and the distribution of heroin on a large scale. Each of the two sectors has functioned as an additional resource for the other.
Compared with the firms that do not belong to the mafia, one of the most important competitive advantages of mafia firms operating in the legal sector is the greater availability of their financial resources. The money necessary for the ambitious investment programmes conceived and in part accomplished by the mafia businesses during the 1970s and 1980s has not come from the accumulation of profits as in ordinary business firms. The mafia entrepreneur has not saved to obtain goods which he needed, nor has he accumulated goods before starting his production. He invested resources coming from elsewhere besides his personal patrimony. In his case, illegal activity has carried out the function of the banking system.
The impressive growth of the criminal activities of the mafia, which has taken place over the past 15 years at both the national and international levels, has enabled the mafia firms present on the legal markets to have a self financing supply much greater than their own current dimensions and much larger than those of ordinary firms, which have often been suffocated by scarcity of funds and by the consequent subordination to financial capital.
The following few paragraphs present an examination of the impact of the La Torre law on the illegal economy in ltaly during the first 21 months of the enforcement of this law, covering the period from l October 1982 to 30 June 1984. It should be noted that the adoption of this law was followed by very harsh reactions on the part of those individuals whose interests were threatened. During 1983 there was a considerable downturn in the deposits of shares and currency in Sicilian banks. The withdrawal of capital from Sicilian banks was publicly revealed by the Chief Anti-mafia Commissioner; the amount of capital withdrawal was estimated at hundreds of billions of lire. Simultaneously, a strong legal and political counter-campaign was waged against the law. which was accused by the defending counsels of the mafiosiof being unconstitutional and by some local politicians of being "northern" and against Sicilians. ln his report, presented on the occasion of the second anniversary of General Dalla Chiesa,s death, the Chief Antimafia Commissioner made the following comment on reactions to the enforcement of the La Torre law:
"Resistance, sometimes evident, sometimes hidden, was not lacking on the part of . . . individuals, groups and economic environments . . . because they, themselves, being mafiosi,connected or associated with the mafia, were afraid of the positive effects of the enforcement of regulations aimed at revealing and destroying the profits that had been acquired over the years through criminal activity'' [ [ 4] , p. [ 3] ].
In spite of such opposition and resistance, an assessment of the results obtained during the first 21 months of the enforcement of the La Torre law shows that it cannot be defined a failure. Table l shows that in four provinces - Calabria, Campania, Lombardy and Sicily - property of suspicious origin was seized on 352 occasions during that period. The total value of the seized property was estimated at 650 billion lire. In 108 cases, illegally acquired property was confiscated and handed over to the State.
Taking into account the innovation established by the La Torre law within the particularly rigid penal system that existed in Italy and the bulk of economic interests that were affected the enforcement of this law unexpectedly achieved quite positive results; many people had anticipated a reaction of rejection on the part of the legal institutions, who could have chosen to obstruct the enforcement of this law for various reasons in a rather traditional legal culture.
Table 1 indicates, however, that the courts were very selective in deciding whether to accept or reject the proposals to seize the property; the proposals were made by the office of the district attorney and the police. The courts decided to order seizures in 29.7 per cent of the proposals for seizures, and investigations ended in the confiscation of property in only 9.1 percent of the cases. This fact probably implies a need for greater precision in the preliminary investigations and a greater concentration on assets and on criminal activity of larger dimensions.
The analysis of the geographical distribution of the seizures and confiscations carried out in accordance with the La Torre law reveals an other interesting aspect of the enforcement of this law.Table 2 shows that 98 per cent of the seizures were carried out in only four Italian provinces. Three provinces, Calabria, Campania and Sicily, are in the south and Lombardy is in the north of Italy. In the rest of the country, in spite of the recent diffusion of the mafia and the establishment of its "enclaves", as well as its illicit investments and profits in many areas of central and northern Italy, the new law has been substantially ignored by the investigating authorities
In two provinces, Calabria and Lombardy, the law was effectively enforced. The government bodies of these two provinces followed a strategy of using the investigative resources against some of the more consistent criminal proceeds. The power and the prestige of one Calabrian family, the most powerful among mafiosi,was seriously jeopardized by seizures carried out by the local authorities. The seizure orders included the blocking of real estate and firms, the value of which was estimated at approximately 44 billion lire. This amount is estimated to be approximately half of the entire assets that allegedly belong to some 100 members of the mafia group called cosca.
The greatest seizure of illegally acquired assets ever carried out took place in Lombardy in February 1983. In this action, all of the property owned by a Milan-based financial group that was connected to the Sicilian and American mafia was seized. The seizure included companies, hotels, commercial and industrial firms, and banking and real estate deposits, the value of which was estimated at approximately 250 billion lire.
In the light of the analyses that have been carried out, possiblelong-term consequences of the developments in both the legal and illegal sectors of the economy in which the mafia firms operate in Italy can be predicted, and some of the consequences have already become evident. The new law has finally been able to set up a barrier between the legal market and the illegal market. Such a barrier was lacking in the Italian economy, which largely contributed to the competitive success of the firms and entrepreneurs of the mafia. The two markets (illegal and legal) might continue to operate, but under radically different conditions. The supply of additional resources represented by the use of capital and services of the mafia, and other components of the legal economy that originate in criminal activities are likely to be exhausted or reduced to a minimum, and with such a development, more just conditions for competition between mafia firms and other firms in the labour, money and goods markets should be reestablished.
The division between the legal and illegal sectors of the economy is expected to coincide with the establishment of a hierarchy between them. If this law is effectively enforced, one of its effects is expected to be a strong increase in the risk inherent in any illegal business activity, with a consequent downflow from the market of the illicit investments of individuals active in the legal and respectable world of business. Such elements flowed together into the accumulation of the mafia,s wealth during the boom years. Participation, even irregularly or part-time, in mafia activities was made attractive by greater possibilities for economic mobility. Individuals who are prone to enter into such activity are, however, particularly sensitive to the threat of arrest and to the prospect of a clash with the legal system. Furthermore, they have fewer possibilities of defense and of manipulation than the actual mafia entrepreneurs [ 5] . This means that such individuals, unlike the professional criminals who run the increased risk of arrest with lesser intensity than other members of society, will be to a great extent influenced by the effects of the La Torre law. The law can have the most painful consequences for such individuals, forcing them to rely on their own activities and, by accepting their own identity, to make a clearer distinction between the criminal economy and the legal economy, as well as between the mafia entrepreneurs and the world of law-abiding entrepreneurs. Finally, the La Torre law may trigger a tendency among the mafia groups to move into more legitimate activities, a tendency which has not yet been seen among the Italian mafia.
The persistence in illegal activity for long periods of time can be convenient for the mafia entrepreneur only as long as the regularity of the transactions and the security of ownership of property are guaranteed, and the advantages derived from the high profits of illicit production and trafficking are not eliminated. However, it is believed that in a prolonged situation of intense internal conflict caused by an uncertain distribution of markets and authority, and by growing pressure applied by the police and the magistracy, the risks involved in remaining in the illegal market may outweigh the interest to gain profits. Such a situation, in the long run, can help prevent the mafia from becoming more deeply involved in illegal activities and in the economy of the country.
It should be borne in mind that the mafia entrepreneurs, unlike other business entrepreneurs, cannot depend on the security of exchanges and on the rights of property guaranteed by laws and formal institutions. Society does not supply them with the services of law enforcement, such as the police and the courts, who are able to guarantee the respect of the contracts and to impose some essential rules to be followed in the business field. For this reason, the illegal markets operate on the basis of the relationships of trust and fear, of traditions, codes and conventions that have the aim of avoiding the costs of a continuous resort to force, which might result in interruptions in the flow of transactions. Such a situation is characterized by uncertain solutions with the constant danger of failure, which represents one of the most heavy restrictions to the growth of any illegal business activity.
In fact, there is no sense in continuing to reinvest forever in the circuit of the illegal market. Even if the rates of remuneration of invested capital are very high, the risk inherent in the practice of an entrepreneur,s activity, which is not legally protected and which cannot be legally transferred, becomes too high at a certain point, so that it may automatically trigger a tendency towards the conversion of the assets and of the illicit activities into property shares protected by legal means. Therefore, the presence of an effective barrier between the illegal (or semi-legal) circuit and the legal sector of the economy has the following effects : it helps to control the acquisition and the reinvestment of the criminal wealth, and it reduces the amount of goods of illegal origin that become legitimate and that can be passed on by inheritance. The inquiries carried out in the United States of America into property passed on through inheritance by mafia leaders revealed that a surprisingly small amount of goods was inherited by the descendants of such individuals [ 6] . This can perhaps help to explain the tendency among mafia leaders to invest in higher education for their children to enable the children to enter into the respectable world. This was practised by many American mafiosiof the classical period.
The enforcement of the La Torre law is a powerful means of reestablishing the equilibrium of relationships between the legal and illegal sectors of the southern economy. The provisions in this law relating to the seizure and confiscation of assets illegally acquired can have disastrous effects on the security and on the business activities of the mafia entrepreneurs in both the illegal and legal economies.As a result, the recould be a substantial shrinkage of the criminal economy in the entire southern peninsula and elsewhere (particularly with regard to heavy drug trafficking), and there could also be a general movement towards legitimate business activities on the part of mafia firms that operate in the legal markets.
The principal mafia groups should, therefore, be forced to make a rapid transfer of resources from the criminal to the legal sector, even if they are able to pass on to their own descendants the largest amount possible of those resources. A possible trend towards more legal business activity on the partof the mafia families might to a certain extent be explained by the entry of their own descendants into the élite of the normal economy as a result of higher education and marriages with descendants of the more respectable strata of society, factors which seem to have played such an important role in the history of the American mafia [ [ 7] , [ 8] ].
With regard to the mafia in Sicily and Calabria, however, the situation seems to have been somewhat different. The prevailing tendency here seems to have been the practice of a tight status endogamy. According to the author,s research, out of 50 marriages of. members among Sicilian and Calabrian families belonging to the mafia that took place from 1970 to 1980, 35 intermarriages occurred between descendants of those families, whereas 10 women and 5 men from families belonging to the mafia married descendants from families that did not belong to the mafia.
As a result of the La Torre law, there is a certain movement away from illegal activities and in the direction of legal activities and investment in financial affairs rather than in more traditional areas such as real estate, agricultural and tertiary assets. Attention has been drawn to this tendency by magistrates who operate in the most important ltalian financial markets. There are some proposals to modify the La Torre law by putting more emphasis on that part of the proceeds of crime which remain in the form of cash.
It is not likely, however, that such a tendency can be encouraged to the point of provoking a change of identity on the part of the mafia entrepreneurs. The mafiosi will most probably continue to keep their unique social and cultural features. They may not be inclined to give up easily their old territorial power, their intervention in the concrete political and economic life in order to transform themselves into financiers and speculators. The confiscation of the illegally acquired property and profits of crime will, consequently, remain for a long time the cornerstone of every effective struggle against the mafia.
The author wishes to thank Professor S.L.Filice for the translation of this article from ltalian into English.
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