Thursday, February 26, 2009

Italy police arrest 8 in Mafia wind farms plot

It's not just Italy, in September '08 we had a post "Noble Environmental Power offers 24M shares in IPO (NEPI; WNDY)" that began:

This should be an interesting offering circular. If you recall, Nobel Environmental was one of the wind project developers mentioned in the Aug. 17, 2008 New York Times story "In Rural New York, Windmills Can Bring Whiff of Corruption":

...Last month, Mr. Cuomo subpoenaed two wind companies, Noble Environmental Power, based in Connecticut, and First Wind, based in Massachusetts, seeking a broad range of documents. Both companies say they are cooperating with the attorney general....
From the Associated Press:
Italian police on Tuesday arrested mobsters, businessmen and local politicians who allegedly used corrupt practices and bribes to gain control of a project to build wind farms in Sicily.

Operation "Aeolus," named after the ancient Greek god of winds, netted eight suspects, arrested in the Trapani area of western Sicily, as well as in Salerno on the Italian mainland and in the northern city of Trento.

Police in Trapani said the local Mafia bribed city officials in nearby Mazara del Vallo so the town would invest in wind farms to produce energy.

The project, worth hundreds of millions of euros (dollars), was first devised in 2003 and later uncovered by an investigation that included wiretaps, police said in a statement.

Investigators discovered that luxury cars and thousands of euros in bribes were given to politicians to ensure that a Mafia-backed company won the lucrative public contract....MORE

HT: MasterResource who point out-

...There is, however, a broader reason why the Mafia is more active in the renewables and other politicized businesses than in competitive segments of the market. When the state is involved, it is not just economic reasoning that determines which investments are to be made: Political decision makers do not answer to transparent economic incentives. The greater their arbitrariness, the greater is the temptation of being corrupted.

Corruption has a very high opportunity cost in the private sector—if you make economically unsound decisions, you are likely to be expelled from the market by more efficient competitors; therefore you have a long-term incentive to resist temptation. But if you are a politician, there is no such thing as the long-run: You will try to maximize your own interest as soon as possible, and, because your term will end, you will not bear any cost (except from the relatively low risk of being caught)....