Mafia-Linked Bonds Sold to Banca Generali, Other Investors: FT
08 Jul 2020

Italy’s Banca Generali and other investors from around the world purchased bonds partly backed by the illicit proceeds of the ’Ndrangheta mafia group, the Financial Times reported on Tuesday, citing financial and legal documents.

The private bonds stemmed from unpaid invoices owed by Italian public health authorities that were bundled in part with assets created by front companies later deemed to have been operating on behalf of the Calabrian organized crime group, the FT said. One of the private bond deals included assets sold by a Sicilian refugee camp that had been taken over by criminals who were subsequently convicted of stealing tens of millions of EU funds.

Between 2015 and 2019, international investors purchased approximately €1 billion of the bonds, including those apparently backed by the ’Ndrangheta, the FT said.

CFE, a boutique Swiss investment bank, constructed the special purpose vehicle that sold bonds to Banca Generali, according to the report. The Geneva-based firm said that the invoices with criminal links made up a small proportion of the total assets it had handled for Italy’s health sector.

Banca Generali, one of Europe’s largest private banks, said it had been unaware of the problem and had relied on other parties involved in the transaction for anti-money laundering checks.

“Banca Generali and Banca Generali Fund Management Luxembourg are getting to know right now of the mentioned bad news,” the company told the newspaper. It “rel[ied] on the notion that the transaction was eligible when [they] entered the securitised portfolio”.”

EY, which provided consulting services on the Banca Generali-related transaction but was not required to conduct due diligence on the assets themselves, declined to comment for the FT report.

The ’Ndrangheta, which is comprised of hundreds of autonomous clans, is widely considered to be one of the wealthiest and most-feared crime groups in the world, with links to cocaine trafficking, money laundering and other illicit activity.

Read the full report here

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