MILAN -- In the old days armed gangsters threatened you with violence or worse if you didn't do their bidding. But in the modern world mobsters brandish environmental impact assessments or power point presentations with balance sheets and projected revenues - and things become far less straightforward.
This April, the Direzione Investigativa Antimafia (DIA) of Palermo announced it had completed the confiscation of assets (a record €1.3 billion) belonging to Vito Nicastri, an entrepreneurial plenipotentiary based in the western province of Trapani, and known in Sicily as “King of the Wind”. His wind farm development empire sold plants on a turnkey basis at a going rate of around €2 million/MW capacity. Crime and corruption crept in at several levels: applications for public grant funding through different legal entities so as to get multiple grants; acquiring land concessions; acquiring operating permits and authorisations from various government bureaucracies; contracts for public tenders; and procuring infrastructure construction services from mafia-certified suppliers.
Anticipation of generous government incentives once the projects were in operation fuelled demand for Nicastri's services. A web spun so widely and finely that it even netted legitimate renewable energy players which had no idea until it was too late.
In September 2010, Denmark's Greentech Energy Systems received a shock when 15 percent of its share capital in a project company, Minerva Messina (a 48.3 MW wind project in Sicily) was seized by the Italian authorities, although it hadn't received state grants and had been financed with Greentech equity and project financing. Nicastri had developed the project, 85 percent of which came into Greentech's possession in 2007 with its purchase of a Danish company Vind Energi Invest. A Nicastri-controlled company held 15 percent until Greentech bought the minority share in May 2010. Another Nicastri company, Eolo Costruzioni, was a subcontractor to Siemens during construction.
Problems for Local Developers
But for local Sicilian companies attempting their own development, the situation was more obvious. Over five years ago, Salvatore Moncada, the CEO of Moncada Energy Group, visited diverse public entities to understand why his applications for wind farm permits were stalled. “I understood I should do something incorrect,” says Moncada, who subsequently went to a meeting in a bar in Castelvetrano, Trapani where an associate of Nicastri's suggested that €70,000 could get seven applications approved. “I felt the obligation to denounce it to the authorities,” remembers Moncada, adding that he also denounced a director in the Sicilian government who tried to sell him a wind project. Moncada's complaints contributed to a series of investigations on Nicastri by the DIA specific to wind energy:
Ironically the Moncada family construction business, founded in 1991, had decided after twenty years to turn to something greener and cleaner as the Italian electricity market was liberalised. “It was one of the most polluted sectors” (not in the environmental sense), says Moncada with reference to construction. “We decided to abandon it and enter renewable energy, which at that time had received little attention either from the mafia or the Sicilian government.”
Having as little contact as possible with the government was a major attraction for Moncada, who estimates that over half of all business activities in Sicily require something from the government. “The laws are transparent but the processes through which they are applied are not. You need to know someone who will move your application forward or it will remain blocked,” he says.
Initially it was smooth sailing with the first wind farm entering production in 2005. A prototype of a 750 kW turbine with direct drive technology designed and constructed by a Moncada group company was tested at the plant in anticipation of a future turbine manufacturing facility. Four more wind farms entered operation in 2007, all in the southern province of Agrigento. “The regional government of Sicily hadn't yet understood the value of these projects. They saw me as a dreamer. But when they saw wind was a profitable business, they began to put up walls. There was no need for a limit but by blocking permits, they could increase the value of the projects,” explains Moncada.
Moncada's main concern with taking his complaint to the police was his family's safety. “As an entrepreneur you expect to take risks, but normally those risks don't involve living under police protection,” he notes. Moncada had already experienced this between 2005 and 2007 for a previous denouncement made to the police related to his construction business. After a quiet period of living mostly at home he became one of the few to voluntarily eschew the protection after only a year and a half, requesting its removal. “Some see a police escort as a status symbol and even go to the cinema, but it's a huge cost to the state.”
A Systematic Dynamic
Nicastri's role as a wind plant developer was a lateral career move following a stint in photovoltaics in the early 1990s. In 1994, Nicastri testified to collecting three billion lire in bribes for delivery to a councillor in the Sicilian government to finance election activities. The proceedings revealed a corrupt system underlying public grant funding for PV installations. Nicastri received a lenient, suspended sentence but the cost to the treasury was estimated at 30 billion lire.
Structural Funds programmes under the EU's Cohesion Policy contribute to the confluence of factors that have made renewable energy in southern Italy a magnet for criminal attention: impoverished regions with a historical presence of organised crime and a large pot of public funds for development of the south's abundant wind and solar resources. Italy is second only to Poland and Spain as a beneficiary of EU Cohesion Policies which aim to reduce regional imbalances within member states. It received €28.8 billion in EU funds for 2007-2013; an additional €95 billion was contributed by the Italian government.
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