Billions in illegal proceeds smuggled out of Italy to China, police investigation finds
PUBLISHED : Saturday, 06 June, 2015, 5:12am
UPDATED : Saturday, 06 June, 2015, 5:12am
Associated Press in Florence
Chinese labourers questioned at a factory in Prato, Italy. Photo: AP
As Italy's economy was heading off a cliff, police couldn't help but notice that the country's Chinese communities were booming. Luxury cars rolled past Chinese betting parlours and garment factories. Chinese immigrants were buying up Italian coffee bars and real estate. Their prosperity, however, was not reflected in local tax records.
"What do they do with the money?" asked Pietro Suchan, then deputy public prosecutor in Florence. "Do they eat it?"
The answer, after a four-year investigation by Italy's financial police, was no. They discovered that more than €4.5 billion (HK$38.74 billion) - the proceeds of counterfeiting, prostitution, labour exploitation and tax evasion - had been smuggled out of Italy to China in less than four years using a money-transfer service.
Nearly half that money was funnelled through the Bank of China, which earned more than €758,000 in commissions on the transfers, according to Italian investigative documents obtained by the Associated Press.
Beijing, which is seeking Western help in hunting its own economic fugitives, did not cooperate with the investigation, Italian officials said.
Once the money left Italy, it vanished behind China's great legal firewall.
Despite the economic ties between China and the West, inconsistent cooperation, incompatible legal systems and China's secrecy laws have allowed criminals to globalise more effectively than law enforcement - and made it harder for Western companies and courts to put them out of business.
"We did not have the possibility, despite many attempts made, to have an official contact with the judicial authorities and police of China," said Suchan, who oversaw the investigation. "We have discovered 50 per cent of the truth."
China's foreign ministry said in a faxed statement that Chinese authorities knew nothing of the Italian case. "China is always committed to deepening law enforcement cooperation with other countries, jointly cracking down on transnational crimes and punishing criminals," the ministry wrote.
Some of Italy's missing money has been traced to an import-export company owned by the Chinese government. The company, Wenzhou Cereals Oils and Foodstuffs Foreign Trade Corporation, has been accused of repeatedly shipping counterfeit goods. But it has also taken shelter behind China's legal firewall, refusing to respond to a US lawsuit brought by Converse, which says the Wenzhou company sent tens of thousands of fake sneakers to the US and Croatia.
That firewall has also helped counterfeiters use major, state-run Chinese banks as financial shelters on a significant scale. The banks, including the Bank of China, have processed credit card payments for online sales of fake goods and held accounts for counterfeiters.
The Italian case remains stalled as prosecutors try to locate 300 defendants, most of them Chinese. The Bank of China said it had "no clues of the alleged criminal activities underlying the transfers of money".
Lawyers for Money2Money, the financial transfer service, said their clients were not guilty. Prosecutors say they have identified Chinese individuals and companies that received the illicit funds.
