From toxic waste to iGaming

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It is a well known fact that the underworld on the Italian peninsula controls vast stretches of the Italian economy.

Some readers would remember the underworld’s waste-management activity that ended in the sinking of some 42 ships laden with toxic and/or hazardous waste throughout the Mediterranean. This was well known to environmentalists but confirmed during the Palermo maxi-processo, when Mafia turncoat Francesco Fonti gave evidence identifying the location of one such sunken ship, the Kunsky, loaded with 120 barrels of toxic waste, just off the Calabrian coast.

This network of organised environmental crime is so vast that, at one time, it also dumped toxic, hazardous and nuclear waste in Somalia. The warlords in the Somalia civil war were partly financed by the Italian underworld, which supplied them with arms in return for their consent to the dumping of the toxic, hazardous and nuclear waste in Somalia. Rai Tre’s investigative journalist Ilaria Alpi and her cameraman Miran Hrovatin were murdered in Mogadishu after having successfully tracked down the toxic shipments.

In early 2008 it was identified that buffalo mozzarella originating from some 83 dairy farms in an area near Naples was tainted with dioxin. The buffalo were grazing in an area where the Mafia was controlling the dumping of toxic waste  containing dioxin. When ingested through food dioxin can cause birth defects and organ failure in mammals. Large quantities of buffalo mozzarella tainted with dioxin were withdrawn from the market.

Carmine Schiavone, another Mafia turncoat, spilled the beans on more dumping of toxic and hazardous waste by the Mafia in the Naples area, in particular in the area around Casale di Principe. It has been reported that the incidence of cancer in these areas has skyrocketed as a result of the dumping contaminating the water table.

It is estimated that the underworld has garnered some €20 billion a year in the last few years from its illicit dealings in waste. Add to this the billions from its drug dealings, estimated at another €20 billion annually and you can clearly understand the Mafia’s need to launder huge sums of money.

Two specific areas seem to have been selected for this purpose. One such area was an investment in wind-farms in Sicily. Wheeling and dealing in the Sicilian wind farms was a certain Gaetano Buglisi who, for a time, made use of Malta’s fiduciary services by hiding behind their corporate veil. Last February the Italian Courts sentenced him to three years in jail as well as a substantial fine on finding him guilty of tax evasion.

It is within this context that one should try to understand the iGaming saga in Malta.

In the last few days the Malta Gaming Authority (MGA) has suspended the operating licences of a number of iGaming operators. Until the time of writing, six operators have been suspended, namely : Uniq Group Limited (Betuniq), Betsolution4U Limited, Alibaba Casino Limited, Soft Casino Limited,   Fenplay Limited and Soft Bet Limited . The MGA did not act on its own initiative but at the request of Italian law enforcement agencies.

In a press release, the MGA stated these licences had been suspended “further to investigations and arrests carried out by the Italian law enforcement authorities in collaboration with the Maltese police. The MGA is providing full support to the relevant authorities so that Malta’s reputation as a gaming jurisdiction of excellence is kept free from crime and money laundering. The MGA is also alerting counterpart regulators in other EU jurisdictions about this case.”

In a further press release issued on 25 July it was stated  “At the time of application (according to the MGA’s records), in line with standard procedures, all directors, shareholders, senior managers and ultimate beneficiary owners of these companies have been screened through MGA’s systems and protocols, using probity tools and national and international contacts and organisations. This forms part of the probity checks conducted at pre-licensing stage and before the actual business model of the gaming operation in question is screened and other control systems are checked and approved. The licensing process also includes independent audits, such as system and compliance audits which are carried out by approved external auditors.”

It seems that the due diligence carried out in Malta is no match for the underworld. It is possibly a case of amateurs trying to keep professionals in check.

On Thursday, Finance Minister Edward Scicluna stated that a review of due diligence procedures will be undertaken and changes will be put in place if  required. As a start, he should consider embedding complete transparency in iGaming. Hiding the identity of iGaming operators should be discontinued by emending legislation and discontinuing fiduciary services. This corporate veil is unfortunately being used as a tool by the underworld. As a nation we could do better if we make an effort to keep organised crime as far away from Malta’s economic activities as possible. It is pertinent to ask: how many iGaming jobs in Malta depend on Mafia linked operators.

published in The Malta Independent on Sunday, 2 August 2015

On this blog on the same subject one can view the following :

2009 The eco-threat of the Italian Mafia.

2013 On Malta’s Northern doorstep: the Mafia contaminates Southern Italy with millions of tonnes of toxic and nuclear waste.

2013 Ecocide in the Mediterranean. The known consequences so far.

2013 Schiavone’s secrets on eco-mafia operations: when will Malta’s government speak up.

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Dealing with Environmental Crime

published July 9, 2011

 In late 2008, the European Union, through a joint decision of the European Parliament and the Council of Ministers, adopted Directive 99/2008 “on the protection of the environment through criminal law”.

Member states had to implement this directive by not later than December 26, 2010. Malta, together with 11 other EU member states, did not comply. As a result, on June 16, the EU Commission issued a warning to all 12 states to comply within two months.

The EU directive on the protection of the environment through criminal law does not create new environment legislation. It aims to consolidate existing laws through harmonising penalties that should be inflicted as well as by ensuring that these penalties are really a deterrent.

Annex A to the directive lists EU legislation (some 70 directives and regulations) subject to this directive’s provisions. This is wide ranging and includes legislation regulating waste, GMOs, air quality, quality of water for human consumption, use of sewage sludge in agriculture, use and transportation of hazardous materials, protection of water from nitrates originating from agriculture, trade in endangered species and many others.

Within EU structures, the Maltese government opposed provisions of the proposed directive. So it is no surprise that this resistance is also reflected in the implementation process. This gives a new significance to the Maltese government’s declarations on the importance the environment has in its political agenda.

During the discussion stage in the EU structures, representatives of the Malta government expressed a view contrary to the harmonisation of sanctions primarily on the basis of the economic disparity across the EU member states.

The impact assessment produced by the EU on the proposed directive had emphasised that, in the EU, there are three areas that organised crime focuses on to the detriment of the environment. These are illicit trade in ozone depleting substances, illicit hazardous waste treatment and disposal and illicit trade in endangered wildlife species. A study entitled Organised Environmental Crime In EU Member States (2003) quoted by the EU impact assessment also states that 73 per cent of researched environmental crime cases involve corporations or corporate-like structures.

Organised environmental crime, which has a turnover of billions of euros in the EU, can have a devastating effect on the economy. There are various examples which we can draw upon. The case of the contaminated mozzarella in the Naples environs in March 2008 is one such example. Organised crime pocketed substantial landfill charges for the handling of toxic and hazardous waste, which was subsequently dumped in areas that were reserved for the grazing of buffalo. The resulting buffalo mozzarella was contaminated with dioxin. The impacts on the mozzarella industry were substantial.

Proof of the operations of the eco-Mafia has also surfaced some time ago when Francesco Fonti, a Mafia turncoat, took the witness stand against the Calabria Mafia. We do recall information given as to the sinking in the Mediterranean of about 42 ships laden with toxic, hazardous and nuclear waste. One of the said ships has been located and identified off the coast of Reggio Calabria.

This network of organised environmental crime is so vast that, at a time, it also dumped toxic, hazardous and nuclear waste in Somalia. The warlords in the Somalia civil war were financed by the eco-Mafia. They supplied them with arms in return for their consent to the dumping of the toxic, hazardous and nuclear waste. Italian journalists (RaiTre) who had tracked down the shipments were shot and murdered in Mogadishu.

The dumping of toxic, hazardous and nuclear waste in the Mediterranean Sea can have very serious impacts on Malta. It contaminates what’s left of fish stocks but also, depending on the location used for dumping, it can impact Malta’s potable water, 60 per cent of which originates from seawater processed by reverse osmosis plants.

Given these serious impacts I would have expected that the Maltese government would be at the forefront in implementing the directive on environmental crime in order to ensure that issues of cross-border organised environmental crime are adequately tackled. It is indeed very unfortunate that the tools which the EU provides so that Malta can protect its real interests are continuously ignored. One cannot help but ask why.

Law firm Hugo Lepage & Partners, in a comparative study commissioned by the EU Commission and entitled Study On Environmental Crime In The 27 Member States (2007), repeatedly identifies penalties for environmental crime in Malta as being at the lower end of the scale in the EU. The message that gets through is that environmental crime is treated lightly in Malta. Malta is not alone in this respect: it enjoys the company of a small number of other countries.

Environmental crime should be punished through penalties that are effective and proportionate to the environmental damage carried out or envisaged. It is in Malta’s interest that this is done expeditiously.