Former Mafia-linked banker Vito Palazzolo tells South African government: ‘I’m back, but I’m no threat’

First published in the Daily Maverick 168 weekly newspaper.

One of the most controversial figures to have called South Africa home and who was suspected of having links to the Mafia, underworld figures as well as high-ranking local politicians, has apparently received the green light to enter this country again – which he has done.

DM168 can reveal that Vito Roberto Palazzolo, who now goes by the name Robert von Palace Kolbatschenko, recently visited South Africa.

And there is nothing to suggest the former jailbird – who has been imprisoned in Switzerland, Thailand and Italy – will not do so again.

This after he was fully released in July 2019 from detention in Italy, where he was held for seven years for his participation in a Mafia-type association.

Palazzolo has never been convicted of any crime in South Africa and views his conviction in Italy as unfair.

A DM168 investigation has revealed that post-jail there, he has had trouble travelling – apparently because his South African passport was red-flagged. Palazzolo and the Department of Home Affairs seem to have differing versions of this.

Palazzolo has effectively said his travels were made difficult because Home Affairs deemed him a known fugitive from justice and had declared him a “prohibited person” (someone who is indefinitely banned from entering South Africa).

Home Affairs has said it has no record of Palazzolo, under the Von Palace Kolbatschenko name, applying for this status to be lifted, but court documents suggest he did.

“I have spent seven years in jail unnecessarily. I am not a threat to anyone. I have not committed any offence in this country where I have lived since 1986 and I should not be subjected to arbitrary and mindless treatment of this nature,” Palazzolo said in a March 2020 affidavit to the Western Cape High Court relating to his apparent battle with Home Affairs.

In the affidavit, he explains what happened after his full release from custody in Italy in July 2019: “Although I had some difficulty … I managed to obtain a new South African passport. Upon leaving for South Africa from Milan on 17 September 2019 and at the Milan Airport, I was told by the passport control official that my passport was flagged V-listed [the V-list is a 'no entry' list]. The same thing happened the next morning, 18 September 2019, at Cape Town International Airport.”

Palazzolo has experienced the same issues when travelling between Cape Town, Hong Kong and Windhoek.

“When travelling from abroad and at check-in on my way to South Africa when it is discovered that I am flagged, I have to wait for the officials to make copies of my passport and eventually override the system to allow me to travel,” his affidavit says. “In South Africa, on the other hand, I am normally detained at passport control… This is, as I have said at the outset, part and parcel of an ongoing process of harassment.”

A November 2019 email that appears to be from a Home Affairs official, which DM168 has seen, says: “[Palazzolo] is v-listed as an internationally known fugitive from Justice and remains v-listed on that basis.”

This tallies with a document on the Justice Department’s website that suggested he was trying to enter South Africa.

Under a section of the document headed “Briefing for March 2020” and subheaded “State Attorney Cape Town” is an entry listed alongside the name Robert von Palace Kolbatschenko. It says: “Prohibited status of Applicant be lifted and that he be removed from the V-list.”

In his March 2020 affidavit, Palazzolo, under the Von Palace name, says: “This is an application to compel [the Home Affairs minister and director-general] to remove my name from a so-called V-list, which apparently signifies that I am a prohibited immigrant and to declare that I am not a prohibited immigrant.”

However, when asked about the application, Home Affairs spokesperson Siyabulela Qoza this week told DM168: “The Department does not have such an application for Mr Robert von Palace Kolbatschenko.”

Justice and Correctional Services ministry spokesperson Chrispin Phiri said: “We are not involved in the reinstatement of one’s status as persona grata.”

Palazzolo’s wife, Tirtza von Palace Kolbatschenko, said that after several unsuccessful attempts, Palazzolo had approached a court and was successful in having his prohibited status lifted.

An apparent Western Cape High Court order from March 2020 provided to DM168 via a lawyer showed that his code on a movement control system had been changed.

“My husband and myself visit South Africa from time to time, but not currently,” Tirtza told DM168 this week. “My husband is a South African citizen … and there are no restrictions on him to travel to or from SA with his SA passport. There [are] no pending legal actions of any kind against my husband.”

Alleged Italian Mafia member Vito Roberto Palazzolo (centre) is escorted by Thai prison officers as he arrives for his extradition hearing at the Criminal Court in Bangkok, Thailand, on 29 October 2012. (Photo: EPA / NARONG SANGNAK)

Mafia and local underworld suspicions

Palazzolo became the focus of police when he was based in the Western Cape. An October 1997 document by policeman Andre Lincoln, who was heading an investigative unit mandated by then president Nelson Mandela, detailed suspicions involving Palazzolo and the Mafia.

“The Sicilian Mafia, Cosa Nostra, is still one of the most powerful and ruthless organised crime gangs in the world. Colombian, Chinese and Japanese drug cartels are in partnership with them,” it said. Cosa Nostra members, the document stated, viewed SA as a location to escape justice.

“Information on hand suggests that the individuals associated with Cosa Nostra in South Africa launder large amounts of foreign drug money, run extortion rackets in Cape Town and have succeeded in corrupting senior members of the South African Police Service and government officials.”

Palazzolo was flagged in relation to this.

In court papers linked to legal issues Lincoln faced, which stemmed from his time investigating Palazzolo, Palazzolo was described as the alleged “sixth-highest-ranking member of” Cosa Nostra “engaged in an unsavoury relationship with a certain Commissioner of Police and a cabinet Minister”. These suspicions did not result in Palazzolo being criminally charged.

Lincoln headed a secret investigation, codenamed Operation Intrigue, into suspicions relating to Palazzolo and local underworld figures. Palazzolo was suspected of operating with, among others, nightclub security boss and rumoured intelligence agent Cyril Beeka, who was assassinated in Cape Town in 2011.

Lincoln was subsequently accused of crimes and some of his colleagues were of the view he had improper links to Palazzolo.

Lincoln, however, has consistently insisted the allegations against him were concocted by apartheid-era cops intent on scuppering his investigations that led back to the state. He was eventually convicted of criminal charges, but managed to overturn these and re-enter the police service.

SA citizenship investigation

In 2012, when Palazzolo was arrested in Thailand, Home Affairs announced an investigation into his citizenship here and the passport he used to travel out of South Africa.

Mkuseli Apleni, the department’s director-general at the time, said Palazzolo had been in South Africa since the 1980s “and was granted citizenship by the then government”.

The process that saw Palazzolo getting citizenship was under investigation, however.

Apleni added: “We are currently investigating how this individual, known to us in South Africa as Vito Roberto Salvatore Maria Palazzolo, acquired a passport in a different name of Robert Palace Kolbatschenko and used it to leave the country.”

In his March 2020 affidavit, Palazzolo said he viewed Home Affairs’ questioning of his citizenship (which he said a judge found lawful) in 2012, when he was seeking diplomatic protection from the South African government after his arrest in Thailand, “as part and parcel of a pattern of harassment which continues to this day”.

His family still has business ties to South Africa, where they are involved in the water-bottling industry. One of Palazzolo’s son’s is an active director of La Terra de Luc, an estate in Franschhoek, as well as of the company La Terra de Luc Mineral Water.

DM168 has established that Palazzolo is still an active director of a company that has a registered address in George in the Western Cape. He previously resigned from several other local companies.

Italy’s extradition battle

Originally from Sicily, Palazzolo worked as a banker in Switzerland. He was jailed there in 1985 on charges relating to his control of some accounts apparently receiving money via drug dealing – this, in turn, linked to the US.

A year later, he made his way out of prison and ended up in South Africa.

National Party parliamentarian Peet de Pontes has been linked to getting Palazzolo a permanent residence permit in the former Ciskei.

The Mail & Guardian reported in February 1999: “Former South African president FW de Klerk presided over a Cabinet meeting in March 1993 that gave [Palazzolo] a residence permit, although at the time he was the subject of an Italian extradition warrant.” There is no response from De Klerk to the article.

In 2009, an Italian court sentenced Palazzolo, in absentia, to nine years in jail relating to Mafia-association allegations.

His legal troubles there affected him in South Africa. A 2010 Western Cape High Court judgment, relating to Italy wanting him extradited, hinted at his dual-country legal woes: “Ever since [Palazzolo’s] arrival in South Africa on 26 December 1986, his relationship with the South African authorities has been troubled,” it said.

“In fact, he maintains that, probably because of his undeserved reputation as an influential member of the Italian Mafia, the South African Government has for many years waged a vendetta against him.

“Notwithstanding this troubled relationship”, the judgment said, Palazzolo was granted South African citizenship “by automatic naturalisation” in January 1995.

“His alleged membership of the Italian Mafia has, however, led to six requests by the Italian Government to the South African authorities, for the extradition of applicant.

“The first five requests, which were made during the period December 1992 to August 2003, were, for a variety of reasons, unsuccessful. The sixth request, dated 16 January 2007, was received by the South African Government on 5 February 2007.”

The 2007 request for Palazzolo’s extradition to Italy related to his conviction, in absentia, in 2006 by a Palermo court for “the offence of complicity of aggravated Mafia-type association.” Palazzolo was sentenced to nine years in jail.

In 2009, the Supreme Court of Appeal in Rome dismissed Palazzolo’s attempt to have the matter overturned, and this led to fresh extradition attempts to have him sent to Italy.

According to the 2010 Western Cape High Court judgment, however, there was an issue with whether Palazzolo’s Italy conviction equated to an extraditable offence.

There was also a misunderstanding in that some were under the impression he had been convicted of international drug trafficking and money laundering – he was not. So, in 2010, the Western Cape High Court set aside the decision to proceed with Palazzolo’s extradition.

But two years down the line, the situation swung drastically against him. While reportedly on his way back to South Africa, he was arrested in Thailand and sent to Italy to serve the nine-year jail sentenced he had been handed there.

He ended up serving seven years, and was released on parole in 2019. This later lapsed, leaving him free to leave Italy.

Money matters

amaBhungane reported in June 2019 that Italian authorities were eyeing Palazzolo’s assets – this included assets in South Africa.

The Italians had also, thanks to Thai authorities giving them the go-ahead, reportedly frozen a deposit of tens of thousands of euros in an account under Tirtza’s name.

But Italian authorities eyeing their wealth was not the only financial issue the Palazzolo family faced. A Hong Kong court judgment from March 2021, relating to a case they had driven against an accountant in Hong Kong, said Robert and Tirtza von Palace Kolbatschenko “are [now] South African nationals”.

The judgment said that in about 2010 Palazzolo and his wife had “entered into an oral trust arrangement” with the accountant who was appointed their trustee “being tasked with handling their financial affairs and money and assets in Hong Kong”.

“Accounts were to be established in the name of a Hong Kong company, Chase Fund Ltd, which had been established so as to act as the vehicle for holding [Palazzolo’s] assets in Hong Kong,” the judgment said.

“On the advice of the [accountant], a further corporate vehicle, Ace Direct Investments Ltd, was incorporated in the BVI on 23 September 2011.” (Although not elaborated on in the court papers, “BVI” refers to the British Virgin Islands.)

Palazzolo was the director of Chase and Ace.

“Substantial deposits were made into Chase and Ace, which are said to have been in excess of $17.8-million. It appears that a substantial part of that money was a commission earned by [Palazzolo] in respect of what was referred to as the ‘Kalahari Mineral Deal’. However, by August 2018 these funds were depleted.”

The judgment added that Palazzolo had not been able to supervise the accountant because he had been detained in Thailand and Italy between 2012 and 2018.

Palazzolo and his wife contended the accountant, who denied the existence of the alleged trust arrangement, had misappropriated funds.

Tirtza told DM168 this week that “our civil legal proceeding of any jurisdiction … are of personal nature and are not of public interest” and therefore declined to comment.

DM168 initially contacted Home Affairs about Robert von Palace Kolbatschenko’s status in this country on 23 September 2021. After several follow-ups, the department replied with one line: “The Department does not have such an application for Mr Robert von Palace Kolbatschenko.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.