Italy seeks extradition of Australian "Mafia" trio

Three Mafia figures living freely in Australia and labelled ''extremely dangerous'' by Italian authorities have been sentenced in absentia to long jail terms for international drug trafficking.

Fairfax can reveal that Australian men Nicola Ciconte, Vincenzo Medici and Michael Calleja have been convicted and sentenced in absentia in Italy for their role in a plot to smuggle up to 500 kilograms of cocaine into Australia.

Australian and Italian police have received intelligence that the cocaine - which has never been recovered - was meant to be smuggled off the port of Melbourne by corrupt workers and taken via truck to a container yard in Sydney, where some of it was to be hidden in a second truck and driven to Adelaide.

Ciconte, 56, formerly of Victoria but now living on the Gold Coast, was sentenced to 25 years jail last month by a Calabrian court for his role in the conspiracy.

The court heard that Ciconte had, along with a small group of Calabrian Mafia bosses, worked as ''promoters, directors, organisers and financiers'' of a plan to import cocaine provided by the Colombian cartels to Australia between 2002 and 2004.

Medici, 47, of Mildura, and Calleja, 53, of Melbourne, were found to have assisted Ciconte in the plot and were each sentenced to 15 years in jail.

Assistant prosecutor Maria Vittoria De Simone told Fairfax that Italy would be pushing the Australian government to extradite the convicted men.

''We will be strongly pursuing the extradition,''

''These individuals have been convicted of heavy sentences in a huge trial and they are extremely dangerous.''

The revelations of the trio's convictions and sentences highlights a common but mostly untold story of global organised crime investigations, in which suspects often escape justice due to jurisdictional hurdles.

During the Italian police inquiry into Ciconte, Medici and Calleja, the Australian Federal Police launched its own drug trafficking inquiry into the trio.

But key evidence from Italian police, including the testimony of an informer, could not be used in Australian courts and the Commonwealth Director of Public Prosecutions advised the AFP against charging the men.

Before the Australian trio were convicted and sentenced in absentia last month, Italian prosecutors had alleged in court that the men had conducted a trial drug run using an empty shipping container before the actual drug run.

The prosecutors alleged that Ciconte ''maintained contact with associates in Vibo Valentia, supplying the materials for the trial containers in collaboration with Medici, Calleja … who made several trips from Australia to Calabria to determine the details of the shipments and the payments''.

''The ultimate goal for Ciconte, Medici, Calleja … [was] to supply the imported cocaine in the Australian market''.

Ciconte's key contact in Italy was Calabrian mafia boss, Vincenzo Barbieri, who is serving an 18-year sentence for his role in the plot.

Between 2002 and 2004, Italian authorities tapped phone calls between Barbieri in Calabria and Ciconte in Victoria and filmed meetings in Italy between Ciconte and his Australian associates and Barbieri and other Mafia figures.

The trio's sentencing in Italy also highlights the ongoing presence in Australia of the Calabrian mafia, known as the 'Ndrangheta, or Honoured Society, which established deep roots in NSW, Victoria and South Australia through migration during the last century.

Ms De Simone told Fairfax: ''We urge the Australian authorities to remember that 'Ndrangheta … represents an enormous risk for countries far from Italy.

''The 'Ndrangheta is the organisation that runs the international cocaine market. It doesn't do its business in Calabria but around the world. It has infiltrated all economic sectors and it controls voting and political candidates at a national and international level. I urge the Australians not to underestimate this organisation. Otherwise it will be too late.''

Ms De Simone said a request to extradite the trio would be made by Italy's Ministry of Justice to the Australian Attorney-General Nicola Roxon.

When asked about the case, the Attorney-General's department told Fairfax it does not comment on extradition matters.

In a separate case also targeting Australian crime figures with links to the Calabrian mafia, NSW drug trafficker Pasquale Barbaro was last month sentenced to life in prison for his role in organising an importation from Italy.

Tax evasion eating into Italian GDP

More than a quarter of the Italian economy eludes taxation, due to underground and criminal economic activities that push up borrowing costs and discourage investment in the country's most vulnerable regions, a senior Bank of Italy official said Wednesday.

"Knowing an enemy's size and potential to create damage is essential in defining a winning strategy," Anna Tarantola, deputy director-general of the central bank, told the parliamentary anti-mafia committee in Rome.

Her estimate that 27.4% of gross domestic product in the euro zone's third-largest economy is off the books comes at a time when authorities in the region are contemplating steps toward a fiscal union. Italian government officials say they are often reminded by their German counterparts that mutualizing obligations is a political non-starter if burdens aren't properly shouldered.

Late last month the European Commission pressed Italy to take "further determined action" to tackle the scourge of tax evasion. Prime Minister Mario Monti vowed a "tougher stance in the future" on tax dodgers in an interview to Catholic weekly Famiglia Cristiana.

Ms Tarantola cited a Bank of Italy study estimating that 16.5% of Italian GDP was underground and another 10.9% of GDP consisted of criminal activity such as prostitution and drugs.

If the state levied revenue on more than EUR400 billion in unrecorded activity at the 45% tax rate applied to the economy at large, Italy could eliminate its EUR2 trillion in public debt in less than a decade, or halve it to the critical 60%-of-GDP level by 2017.

Italy's heavy sovereign debt load is now 120% of GDP, the same as 20 years ago, even though successive governments have spent more than EUR500 billion less on providing public services than they have taken in taxes over that time, amassing primary budget surpluses more than twice as large as those of larger Germany, said Marco Fortis, an economist at the Milan-based Edison Foundation.

Monti has raised taxes and promised to curb public spending further in an effort to build up Italy's primary budget surplus--a measure that excludes interest payments on outstanding public debt--to above 5% of GDP from around zero in 2011. "That's just inevitable for countries with our kind of large debt load," he said at a recent conference in Florence.

However, the tax-centered fiscal tightening he approved in an emergency budget law shortly after replacing Silvio Berlusconi as prime minister and forming a national emergency government late last year is cramping an already weak economy. Italian GDP is now in its fourth consecutive quarterly contraction, the jobless rate rose in April to an all-time high of 10.2% and the government on Tuesday played down data that suggested tax receipts are behind schedule.

Some Italians, especially labor unions representing workers who are taxed even before they get paid, have called on the government to overhaul its strategy. They have suggested, for example, bigger penalties for tax evasion and introduction of a wealth tax. Tax evasion has helped give Italians an average household wealth eight times greater than disposable income, according to the central bank, a higher level than in Germany, France or the U.S.

Enrico Giovannini, president of the national statistics institute Istat, notes that at 17% of GDP, tax evasion accounts for a third of all private economic activity.

"Tax evasion is a plague," Audit Court President Luigi Giampaolino intoned in his annual report to lawmakers on Tuesday.

Ms Tarantola said the underground economy is also hindering business growth and investment, citing a central bank review of 170,000 companies and 839 banks that found companies pay higher interest rates on loans in areas of the country where fraud is more concentrated. Moreover, those companies are required to offer more collateral to obtain loans and tend to be offered only lines of credit on terms that allow for easy and quick recall, rather than longer-term loans designed to be repaid from the cash flow the funding helps generate, she said.

Banks should pay closer attention to borrowers' balance sheets for signs of criminal infiltration, she said, adding that the state's pilot program of using only designated and monitored bank accounts for all payments related to execution of public works has shown some success.

While local stereotypes suggest tax evasion is particularly rife in southern Italy--where Istat says only 43.3% of adults hold formal jobs--more detailed studies show that the size of both the underground and criminal economies is larger in northern Italian provinces than southern ones, Ms Tarantola said.