Courtesy of a friend who will go unnamed (I do not think she/he would want her company affiliated with these lending practices), I came across this article from the Financial Times (registration required) which describes how Italian businesses are turning to their local godfathers -- in the Mafioso sense of the term -- to stay afloat amidst the credit crunch. According to the article, "Mafia gangs are profiting from the credit crunch by expanding lending to small businesses." But they're still up to their old "protection money tricks". The story notes that if you don't want to lose your left pinky -- well, not in so many words -- protection money is still widely accepted as government sources estimate, "that about 150,000 shopkeepers pay the pizzo, or protection money, to Mafia gangs, amounting to €6bn a year. A stall in a food market in Naples has to pay €5-€10 a day, while a Palermo construction site must hand over €10,000 a month." If you're doing business with Italian suppliers and you're worried about supply risk, I'd strongly suggest that providing EIPP-driven supply chain financing options are a win-win all around relative to the alternatives, unless, of course, you subscribe to the following philosophy: "Why did you go to the bank? Why didn't you come to me first?" Capiche?
- Jason Busch