Italian mafia families have begun using Hong Kong as a base for financial crimes
By Antonio Talia | The Diplomat
There are many “soft spots” in the world: some of them are haunted by organized crime, some others are known to turn sometimes a blind eye to illicit money, and certain individuals are capable of making huge fortunes by connecting the two dots on a map.
But on a summer afternoon in 2012 the Italian investigators listening to a tapped conversation between a ‘Ndrangheta Don and a broker could not believe their ears, because these particular “soft spots” were unimaginably distant, even for men used to investigating criminals with an international attitude. As far as investigators knew, ‘Ndrangheta (pronounced “An-Dran-Gh-Ta”) — the Calabrian version of Cosa Nostra, ranking in the last 20 years as the most powerful Italian crime syndicate — had established connections with Canada and Australia, but never ventured into the Far East.
Or so they thought.
The first man on the phone, Giuseppe Pensabene — aka “The Pope” — was no stranger to the detectives of SCO, a special squad of the Italian police focused on organized crime. Born in 1968 in Montebello Jonico, a tiny village in Italy’s southern region of Calabria and a ‘Ndrangheta stronghold, Pensabene started his criminal career in the early 1980 by joining the Imertis, a “respected family” involved in the so-called “Second ‘Ndrangheta War,” a bloody feud in which almost 500 people were killed between 1985 and 1991.
In 1988, Pensabene moved north and settled in Brianza, the region surrounding Milan and one of Italy’s wealthiest areas. But as every investigator working on Calabrian syndicates might confirm, it seems you can not teach a new trick to an old ‘Ndrangheta mobster: “The Pope” turned into a professional of extortion, drug trafficking, and money laundering. After the spate of arrests known as “Operazione Crimine-Infinito,” in 2010 he was eventually crowned boss of one of Northern Italy’s most notorious organizations.
The second voice on the phone was an Italian-Swiss broker named Emanuele Sangiovanni. As investigators listened in, he said, “This company is good, it guarantees a double shielding… First step is a trust company in Malta, second step is a Hong Kong company, so it’s virtually unreachable for authorities. The administrator is a Hong Kongese architect.”
“How do I do this from Italy?” Pensabene replied.
“You need an attorney, someone you can trust… Or you can reach an agreement and make the guy come here [to Europe], but it’s too expensive, we have to do this in Malta.”
“I’ll take care of it.”
When “The Pope,” Emanuele Sangiovanni, and 38 other people were arrested in 2014 Italian investigators seized goods, apartments, bank accounts, and 39 companies worth dozens of millions of euros. From a tiny office in Brianza with no windows and no toilets, dubbed “il tugurio” (“the shack”), Pensabene and his organization were able to launder several million euros for their Calabrian cousins, working as the financial arm of the southern clans deeply involved in cocaine trafficking.
The investigators never managed to fully identify the “Hong Kongese architect,” but his shell company was not the only clue pointing to a connection between Pensabene and the Far East. Almost 100 percent of the clients requesting Pensabene’s “services” were Calabrian gangs, but a certain invoice attracted the detectives’ attention: a Chinese company named Fengrun International Ltd. It was connected to Pensabene’s shady web through several bank transfers for hundreds of thousands of euros. The key figure in this deal was Giuseppe Vinciguerra, a 40-something Sicilian who connected the Calabrian mobsters with businessmen looking for a safe way to clean their money and provided Pensabene and his partners with many firearms at his disposal after some former deals.
In 2012, according to the SCO, the Pensabene-Vinciguerra joint venture was worth 8.2 million euros ($9.6 million), and the Sicilian had already accomplished a plan to diversify their business targeting new markets and brand new customers: the Chinese.
Vinciguerra had been a person of interest since the end of “Operazione Crimine-Infinito” and his different mobile phones were tapped, regardless of his efforts to switch from one telephone to another on a weekly basis. In December 2011 SCO detectives listened to six conversations between Vinciguerra and a Chinese national dubbed “Michele.”
The two men were discussing several different “deliveries,” “containers,” “parcels,” and “journeys,” referring to bank transfers that might — or might not — be related to Fengrun International Ltd.
On the evening of December 11, Vinciguerra and “Michele” agreed to meet to tie up some loose ends, and the investigators — who were clueless about the true identity of “Michele” — decided to put up a surveillance system around the Sicilian. The next afternoon, a blue Volkswagen Touareg parked side by side with Vinciguerra’s Mercedes SW in the courtyard behind GMB, a company in the whereabouts of Milan the mobsters used as a facade for their activities.
A 30-something-year-old Asian stepped into the Mercedes and the two men spent the next two hours discussing, unaware that police officers hidden at a convenient distance were shooting pictures and tracking their mobiles.
The Volkswagen’s plate number and the phone in the Asian man’s pocket were eventually traced to Chen Sheng, born in 1981 in Zhejiang province, China. The Chinese national, owner of a prosperous waste-disposal company in Milan, had reported the theft of his mobile to the police several months before and the investigators never managed to prove whether he was or was not the same “Michele” in partnership with the Calabrians for a money laundering scheme.
“It is very likely they were the same person but the chances are not 100 percent. Actually, by listening other phone conversations, we cannot confirm that the man discussing in Italian with a Chinese accent with Vinciguerra was always the same person,” says one of the investigators, hinting at a broader audience of Chinese customers for the Calabrians’ “special services.”
Pensabene, Sangiovanni, Vinciguerra, and all the others were found guilty of mafia-type conspiracy, money laundering, loan sharking, extortion, attempted smuggling, possessing of undeclared firearms, and several other felonies. Although the “Asian connection” is still under investigation, it soon turned out they were not the only ‘Ndrangheta wiseguys looking at the Far East for opportunities. Somebody had arrived in Hong Kong long before them.
Like many Calabrian crime stories, these two tales are obliquely intertwined: in December 2014 the Milanese DDA (Direzione Distrettuale Antimafia) arrested 59 people for accusations of various criminal activities. The Martino brothers, Giulio and Vincenzo, are accused of being the leaders of a dangerous organization with legal and illegal interests in many different businesses. Born in Reggio Calabria — the region’s biggest town, and the most plagued by organized crime — both brothers trace the beginning of their criminal career back to the infamous Second War of ‘Ndrangheta.
During this vicious feud for supremacy over the Calabrian gangs — in a time when Reggio Calabria and neighboring villages experienced execution-style murders almost every day for six long years — the Martino brothers were part of the DeStefano family, a name largely synonymous with the quintessential aristocracy of Calabrian crime. In their 20s, Giulio and Vincenzo found themselves battling against a 20-something Giuseppe “Not-Yet-The-Pope” Pensabene, initiated to the mob by DeStefanos’ bitter enemies, the Imerti family.
Now, in 2011, 500 murders and exactly 20 years after the Second War of ‘Ndrangheta ended with a truce between the DeStefanos, the Imertis, and their allies, the Martino brothers were sitting in a bar in Milan face-to-face with their former rival to strike a bargain. What happened?
Both “The Pope” and the Martino brothers had been aware of each others’ presence in Milan for many years, but their paths never crossed until two Milanese businessmen, in financial trouble, asked for the Dons’ help to solve a potential conflict. Cristiano Sala was an entrepreneur whose companies offered many catering services to San Siro Stadium, the arena where A.C. Milan and Inter Milan play soccer every week. And yet, Sala was in dire need of money, and in a desperate effort asked Pensabene’s help to persuade Marco Santulli, another businessman who owed him at least 500 thousand euros, to pay up — by any means. Santulli, knowing that there was a powerful Don behind Sala turned to the Martino brothers for help. The former ‘Ndrangheta enemies had learned their lesson from the previous war in Calabria, and instead of battling again found an appeasement between the concerned parties. That’s how the Martinos met Sala, who eventually started working for them and helped the Calabrese brothers to infiltrate his network of Milanese wealthy entrepreneurs.
After a decade-long conviction for cocaine trafficking, Giulio and Vincenzo Martino became apparently “respectable,” investing in several businesses from construction to car dealers, but in fact they had never quit their old habits: Edmondo Colangelo, one of their henchmen, was caught in the port city of Genoa buying 283 kilograms of cocaine through some Dominican connections, an investment worth millions of euros. It became clear to the investigators who were trying to nail them that the Martinos had kept their huge wealth even during the long years spent in prison through some hidden bank accounts; now these funds were finally back at their disposal.
The financial mind who made this possible was Francesco Longo, an Italian broker established in Switzerland whose role finally came under the spotlight after months of investigations. The Martinos were trying to buy the majority stake of a big hotel on the Riviera, between Italy and France, but to reach their goal they first needed to have some of their hidden cash back. On a brisk Milanese morning in March 2011, during a meeting between Giulio Martino and his financial broker Longo held at the Western Palace Hotel, the investigators managed to catch this conversation:
“The companies in that list… These are our companies in Dubai. Peter took the money, but… Oh! They made such a mess, they created 10 companies because they can’t keep the money frozen, the money needs to flow,” said Longo.
“I know,” answered Martino.
“So, do you know where this money comes from? It comes from Hong Kong!”
“Yes, I know. Hong Kong.”
“The money comes from Hong Kong, flows to Dubai, and then… Every time somebody ask for this they owe me 15 [percent]. So, if you ask me to [handle] 5 million… It’s always 15 [percent].”
The detectives eventually found confirmation that from 1996 to 2009 the Martinos had kept their hidden capitals in Switzerland and Hong Kong through Edmondo Colangelo, the Martinos’ henchman and drug dealer. Colangelo started cooperating with the authorities after his arrest. Here is a transcript of his declarations to the District Attorney:
DA: Do you have any knowledge about financial operations by Franco Longo involving the Martino Brothers, especially in Dubai and Hong Kong?
Colangelo: In 2011 Giulio Martino told me that , before they were arrested in 1996, both he and his brother Vincenzo kept their money in some confidential bank accounts in Switzerland. He also mentioned that he went through some difficulties because the Swiss bank was acquired by a larger financial institution, and he could have lost his money because of the increasing controls. So he asked for Longo’s help, and he told me that Longo managed to get his money back through foreign bank accounts in Hong Kong and Dubai. But I don’t have any other details.
DA: The Franco Longo you mentioned in several occasions, do you know what’s his job?
Colangelo: Frankly, I never fully understood. Giulio Martino said that Longo had a trust company in Switzerland, that he was a man who knew “how to make the money flow,” and that he “had the right acquaintances.”
According to some investigators, these “acquaintances” included the mysterious “Peter” mentioned in the tapped conversation between Long and Martino at the Western Palace Hotel in Milan, and also a certain “Oliver” whose name pops up here and there in many other confidential conversations. The identity of these men still remains unknown, even after Longo’s arrest, but few people at DDA think that these individuals might be anything else than careful middlemen, brokers hidden in “soft spots” on the financial world map, like Dubai and Hong Kong.
But in this shadowy world of mobsters and financial brokers there was also another specific individual eager to help the ‘Ndrangheta to travel across the Silk Road: a politician. Former Senator Nicola Di Girolamo is a Roman lawyer who — according to “Operazione Phuncards-Broker,” an investigation led by Rome’s DA — owed his seat at the Italian Senate to the Arena family. That particular ‘Ndrangheta clan, based in Isola Capo Rizzuto — a small village in northern Calabria — spread its men and its money across Italy and several European countries.
Di Girolamo ran his campaign for Silvio Berlusconi’s party PDL (Partito della Libertà) and was elected in 2008, but in the previous years he had been working hard behind the scenes to win the Arenas’ support. As the investigators unraveled his past movements, they found evidence that at the end of 2006 Di Girolamo was traveling across Southeast Asia to take care of “the family businesses.” At the end of November 2006, Di Girolamo was in Hong Kong to establish several shell companies such as New Success Ltd., Y2K Diamonds, and Super Harvest Finance. At the beginning of December he was in Kuala Lumpur and then in Singapore, where he left some traces of expensive payments at the lavish Raffles Hotel.
What Di Girolamo did not know, at the time, was that within three years he would find himself at the epicenter of a huge scandal: the web of shell companies he set up was meant for a huge tax evasion scheme that benefited both the top management of two of Italy’s most important IT companies and the Arena family itself. The scheme was nicknamed in Italian “Carosello” (“Carousel Tax Fraud”): the shell companies were used to sell to each other fake IT services in order to provide the mother companies with an illegal exemption of VAT. According to the investigators, Di Girolamo’s contact in Hong Kong was an individual named “Raymond Choi” or “Raymond Chan”: in 2007 the phone calls between the two men and several others involved in the scheme became frantic, as they grew aware of the attention of the authorities that their illicit activities had already drawn, but the identity of “Raymond” has never been established.
One of these persons of interest in the case, Silvio Fanella, allegedly the bookkeeper of the organization, was shot dead in Rome in 2014 while he was serving four years of home detention. The killers, disguised with the uniforms of Guardia di Finanza — the Italian military police responsible for enforcing financial laws — were never found. Di Gregorio, Fanella, Gennaro Mokbel — allegedly the leader of the gang — and 50 other people, including some men of the Arena family, were formally charged with several crimes, including tax evasion and money laundering. Some cautious estimates shows that between February 2006 and February 2007, in Hong Kong alone, the organization managed to hide from Italian revenue authorities approximately 14 millions euros.
Many investigations are still ongoing, but the road to the east is already open. It seems that the ‘Ndrangheta has fallen in love with Hong Kong and the honeymoon is far from over.
*Antonio Talia is an Italian journalist who has reported widely on China and Asia.
Photo: The skyline of Hong Kong is seen through a fence at the Peak in Hong Kong (September 10, 2014) | Image Credit: REUTERS/Bobby Yip