Modern Shylocks prey on Italy's small businesses: Millions are falling victim to the ancient scourge of usury, Patricia Clough reports from Rome

AMID the Christmas celebrations an alarm has been raised for the many Italians - thought to be around 2 million - who have fallen into the clutches of the country's new Shylocks.

The ancient scourge of usury, the practice of lending money at astronomical interest rates, has returned to Italy. The economic crisis, the difficulties facing many small shopkeepers, growing unemployment and the banks' caution about lending money, are playing into the hands of criminals and in particular giving the Mafia a golden chance to recycle dirty money.

The alarm was raised in a Christmas night sermon by the Archbishop of Turin, Cardinal Giovanni Saldarini, who denounced the 'worry and suffering' in many families who could not meet their payments and the 'grave consequences for those who risk losing all they possess'.

Adusbef, the association of Italian bank and finance users, estimates that usury now has a turnover of 15 trillion lire ( pounds 6bn) a year. Confesercenti, the main shopkeepers' association, calculates that one in five Italian shop, bar or restaurant owners is caught in the usurers' net. The true figures are hard to estimate because victims are afraid to speak up.

It all starts in a minor and harmless way. A small shopkeeper, for instance, whose takings have shrunk because of the recession, needs funds to pay his or her suppliers, the rent or taxes. The bank refuses to help and the shopkeeper borrows a moderate amount - the average is about pounds 8,000 - from a neighbourhood moneylender at a rate of around 10 per cent a month.

Soon the friendly moneylender is replaced by nastier faces and the interest rates start climbing - to 20, 30 or even 40 per cent a month. The shopkeeper goes to other loan- sharks to pay off the first ones and sinks even deeper into debt.

A restaurant owner, giving her name only as Paola, wrote to the daily La Stampa describing how 'a debt that started at 30m lire soon became 120m'. When she and her husband could not pay, the lenders began to make threats 'especially against our children. They ask women to sleep with them.' In the end the lenders burned down the restaurant.

But Paola and her husband were lucky. Father Massimo Rastrelli, a Jesuit priest who helps victims of usury in Naples, tells of two pregnant women who were so badly beaten up when they refused to pay that they lost their babies. One man was stabbed, another had an eye gouged out.

One man, a young disc-jockey on a little radio station in Naples, offered to sell one of his kidneys for 100m lire to pay his father's debt. Many people end up having to hand over their businesses, their property and even their homes to the moneylenders.

The moneylenders do not look like Shylocks. Paola described them as 'building constructors, big real- estate owners, apparently well-educated people who, however, use the same methods as the Mafia'. One gang rounded up in Rome included three bank officials, a former first- division soccer referee, the president of a small local football club, the father and uncle of a television star and a couple of small industrialists. Another Shylock was a civil servant who operated from his office in, of all places, the Treasury. Another was a flower-seller with pounds 200,000 in her bank account.

In Messina, a 86-year-old woman known as 'Granny Serafina' Giordano would lend housewives cash to pay their phone or electricity bills and gradually lead them into such debt that they would end up working as prostitutes in her brothel to pay her back.

In the big cities, particularly, behind it all is the shadow of the Mafia. Usury, said one of a team of Rome magistrates battling the problem, 'is perfect for recycling dirty money, financing the purchase of drugs, real-estate deals and suchlike'.

But the problem is hard to beat. Italian law punishes, with a couple of years in jail, only those who 'lend money at high rates to people in a state of need'. Proving that borrowers are needy is almost impossible, especially since the moneylenders often make them sign forms saying the loan is to help buy a car or an apartment.

Adusbef is proposing a bill to put a ceiling on interest rates and make usurers more easily punishable, but there are doubts whether it would do much good. Father Rastrelli has created a fund to guarantee loans from banks at legal rates to enable victims to pay off their loan-sharks. In Turin a charitable organisation was planning to do the same but found that the debts incurred there were so huge that they would be unlikely to raise enough money.