With Europe’s public subsidy regime for wind and other green energy projects being slashed, all it needed was for the Mafia to blow into town. Unfortunately, organized crime has already hit town – and I do mean hit – to make local officials offers they couldn’t refuse.

According to the US corporate security consultancy, Kroll, the Mafia and organized crime generally, have been skimming millions of Euros from the EU’s €6 billion ($8.7 billion) clean energy budget since 2007. Originally set up to fund green projects between 2000 and 2013, Kroll has detected increasing fraud and criminal activity, especially over wind subsidies in Italy, Spain, Romania, Bulgaria, as well as other parts of central and eastern Europe.

Speaking to Energy Tribune (ET), Jason Wright, a Kroll senior director responsible for conducting due diligence on green energy projects on behalf of legitimate clients, says, “The energy sector has always had a higher level of corruption issues, but EU pressure to meet lower carbon targets has undoubtedly created a gold rush mentality towards EU alternative energy subsidies.”

Investigations have revealed wind scams range from building wind turbines that then stand idle – nothing new in that we might think – to some that stand derelict, with others never being built at all. There is equally evidence to suggest some organized syndicates initially invest only to sell on to unsuspecting legitimate buyers. But it was the spiralling scale of applications that finally alerted for government officials in Italy. Especially as wind farms sprang up across much of the southern part of the country – one of the least windy areas in Europe.

“Just this week,” Wright told ET, “the Italian police froze the €1.5 billion ($1.9 bn) in Mafia-linked assets.” The assets in question belong to Sicilian businessman Nicastri, a man known locally as “Lord of the Wind” because of his holdings in alternative energy projects, mostly wind farms and solar panels. Police investigators maintain Nicastri’s group was trying to “go Green” by laundering money through alternative energy companies. Police claim the assets frozen represent the biggest ever mob haul. Assets include 40 companies, land, bank accounts, fast cars and luxury yachts. Nicastri is believed to have direct links with the Mafia “boss of bosses” Matteo Messine Denaro.

Kroll’s Wright maintains that wind subsidies and associated planning requests are particularly vulnerable to criminal influences as they hinge on the political patronage of local officials. In downtown Sicily – home of the Mafia – it seems ‘patronage influencing’ has become a favoured pastime.

Sicily alone has seen an explosion of wind projects with over 30 wind farms now dotting its western hills; most tellingly, in the Mafia heartland of Corleone, made famous by the Godfather movies. One wind farm built in Corleone was even described by a visiting industrialist as subsiding (in addition to being subsidized, that is). In 2009, approval was granted for another sixty sites before officials smelled a crime syndicate “rat” and froze processing in another 226 applications.

Last year, eight people in the Trapani and Salerno areas of West Sicily were arrested after an investigation into a string of wind projects by anti-Mafia magistrates. By November, a further fifteen people had been arrested accused of trying to embezzle up to €30 million ($38 million) in EU funds. Among those arrested was the president of Italy’s National Wind Energy Association. Local officials in the Spanish Canary Islands and in Corsica have also been arrested on suspicion of filing fraudulent applications in a bid to defraud the EU of millions of euros. And it’s not just wind energy, either.

In Spain, one scheme involved a solar plant which claimed to be generating electricity by solar means – at night. If it hadn’t been for investigators discovering the diesel-powered generators responsible, this miraculous conception would still be running on EU subsidies. How much Big Crime has siphoned off from Spain’s €18 billion (23bn) solar revolution no one can say. But when the bill for solar subsidies exceeds the total cost of energy production for the country, it is no surprise that the Spanish Government has bailed on its subsidy commitments – leaving industry to pick up a tab 17 percent higher than the EU average.

Given the generous financial incentives, the lure for Big Crime is plain enough. A standard 2 megawatt turbine costing around €2.75 million ($3.5mn) can earn investors as much as €500,000 ($650K) a year according to state incentive schemes at market rates. Given that national contracts are usually for between 15 and 25 years – well, you do the math.

Italy currently guarantees a rate of €180 ($235) per kWh of power generated – the highest in the world. In Germany, wind farm attractions include, as elsewhere, feed-in tariff incentives that guarantee investors a return of over €80 ($100) per kWh. That’s around a 15 percent return in an industry where free market prices range between €30 – 70 per ($40-100) kWh.

As Peter Atherton, head utilities analyst at Britain’s Citi Investment Research, has warned, “It’s a bonanza. Anyone who can get their nose in the trough is trying to.” The European Wind Energy Association, however, representing 600 wind industry manufacturers, persists in its claim that the industry is well regulated. John Etherington, professor of ecology at the University of Wales, in his The Wind Farm Scam, however, states he is “not sure that the industry is regulated at all – let alone well regulated.”

The full extent of corruption in the EU subsidy regime is difficult to assess. But Wright maintains that around half of all renewable energy cases that Kroll has been asked to investigate in Italy and Spain revealed evidence of fraud or corruption – that’s an average more than 30 percent above other sectors investigated by the firm.

The EU’s green energy subsidy scheme has created tycoons out of hippy entrepreneurs. It has paid companies to shut down generating capacity when the wind blows too long and hard. On top of this national green stealth taxes and hidden national feed-in tariffs on power bills have all colluded to prove an enormous attraction to Big Crime.

But it’s not all bad news for wind power advocates, at least it has – as you’d expect with Mafia involvement – blown away most local opposition.