Castles of Corruption

Owning a castle has never been easier. In 2017, Italy’s State Property Agency made international headlines by announcing that the country would be giving away over a hundred castles for free. The only catch? Takers must promise to restore the dilapidated structures and turn them into tourist sites. (The program builds on an existing initiative in which the Agency gives historical federally-owned properties to local authorities for restoration.) At first glance, this program looks like a win for everyone. The Italian federal government no longer has to deal with crumbling historic castles, the properties will be cleaned up and made available to tourists, and lucky entrepreneurs and local governments can reap the profits. Unfortunately, however, there are reasons to worry that this program, like so many other castle restoration initiatives, will end up sapped by corruption, money laundering, collusion, and nepotism.

 Corruption and related malfeasance is quite common in the context of castle ownership and restoration. This is not all that surprising, given that corruption is a perennial issue within the construction industry as a whole. All of the usual problems in that sector—including bribery in the bidding process, collusion to funnel work to friends and family, embezzlement, and the substitution of substandard materials—apply in the specific context of castle restoration. On top of that, real estate has long been a favorite of those involved in money laundering due to the lower scrutiny that real property transactions receive, at least in comparison to stock or other commodities. But in addition to these familiar risk factors, castle restoration projects have several additional distinctive features that make them even more vulnerable to corruption than comparable construction projects and real estate transactions:

  • First, castles are surprisingly ubiquitous. While a handful of (usually well-maintained) castles are quite famous, the vast majority have no prominence in the public eye. Germany alone has well over 25,000 castles, although the exact number is unknown because no centralized database exists. Only an estimated 20% of these castles still have a roof, and 40% are categorized as “ruins.” Although the preservation of these castles is important from a historical perspective, the public is unlikely to even know about the vast majority of them, much less be aware enough to raise an outcry if they are mismanaged. The ubiquity of castles also diminishes their usefulness for legitimate ends. Even if properly restored, most castles aren’t natural tourist attractions: many of them are far from traditional tourist routes, and have little to distinguish them from dozens of other castles that tourists might visit.
  • Second, castles lack practical functions that would prompt a follow-up. Unlike a road, bridge, or building that would likely be subject to repeat safety inspections or check-ins to ensure that conditions have not degraded, castles are unlikely to see sustained use over time. Even if properly restored, castles are notoriously difficult to turn into something habitable by modern standards. With few exceptions, a refurbished castle is essentially of decorative and historic import only. Once a castle is transferred into private hands, a government would be forced to go well out of its way to check up on it. Consider the plight of Romania’s castles: Beginning in the early 2010s, the European Regional Development Fund granted tens of millions of euros to private contractors tasked with restoring a string of fortified Saxon churches. The companies that got the contracts “brutally revamped” the structures, replacing ancient plaster with cement, destroying original wooden beams, and replacing historic roofs with “mass manufactured versions from one single supplier, despite concerns over the quality and suitability of the new tiles.” The destruction was blamed on “a lack of transparency” that led corrupt individuals to maximize their own profit and channel money to their friends’ companies, with little care for the quality or completion of the restoration itself. Although these corruption problems are typical of construction projects, it was not until five years into the project (and after eighteen of the castles had been “revamped”) that the European Commission “organi[zed] a meeting with locals and stakeholders to hear criticisms and uncover what went wrong.”
  • Third, the “never-ending expenses” of maintaining or restoring castles, many of which are in terrible condition, can quickly add up into millions of euros; far more to make them habitable by modern standards. This makes governments eager to unload the castles onto anyone who is willing to take them with even a cursory promise of restoration, and this eagerness often results in a failure by the government to perform adequate diligence. In 2008, for example, the run-down Reinhardsbrunn Castle in Germany was purchased from the government at a low price by Russian investors who professed plans to transform the building into a luxury hotel, but in fact used the castle as a vehicle for money laundering until the state repossessed it ten years later. When it was estimated that up to 40 million euros would be necessary to restore the castle, the government announced intentions to once again sell the site to a private investor.

These factors not only make castles easy to overlook when they are used for corrupt purposes, but also mean that castles are less likely to be restored for non-corrupt reasons in the first place. To return to Italy’s giveaway, it turns out that even a free castle isn’t a particularly good deal. Even if the aspiring castle owner successfully renovates the castle and markets it to tourists, the Italian government will reclaim ownership of the castle after nine years (although the owner has the possibility to renew for a second nine-year term). In short, the owner of a free castle has a limited amount of time with which to renovate a “no-name” ruin at enormous expense with the hopes of attracting enough tourists to break even, all while beholden to Italy’s byzantine and onerous property taxes. The only person who would take on such an enterprise would be an altruist, a fool, or someone with a more sinister ulterior motive.

All that said, a few recent examples provide a hopeful model for corruption-proofing castle giveaways. Bucking the more free-for-all trend of past years, the mayor of the medieval village of Castropignano has been giving away historic restoration projects by carefully hand-picking applicants with detailed plans and matching them with suitable properties. This level of deliberative scrutiny, although costly and time consuming, avoids the corruption problem entirely by weeding out mere opportunists from the start. Neglected though they may be, these castles are part of an important cultural and historical heritage: governments would be wise not to open the gates anyone who wants to take one for the mere sake of expediency.

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