SILVIO BERLUSCONI, the prime minister of Italy, has gotten The Economist magazine very excited--hysterical, even. In its July 31 issue, the editors condemn the new Italian law which exempts prime ministers from prosecution while they are in office. Since he can't be prosecuted now in the courts, they say, they will bring public opinion to bear against him. But looking at just what The Economist itself presents us, it looks to me like The Economist has gone bonkers.

What has Mr. Berlusconi done? Well, the criminal case against him which must now be postponed because of the new law charges him with bribing judges.

The SME case from which the prime minister has now obtained immunity while in office has opened a window on to Mr Berlusconi's business techniques. The case involved a successful effort by Mr Berlusconi to block the sale in 1985 of a state-owned food conglomerate, SME, to another Italian businessman, Carlo De Benedetti, a sale for which a contract had already been drawn up and signed. Beyond the accusations about what was done, perhaps the most noteworthy point about SME is that neither Mr Berlusconi nor his companies benefited directly from blocking the sale. They did not buy the firm instead, nor have they done so since. Yet they went to remarkable lengths to prevent Mr De Benedetti from buying it.

Why? On Mr Berlusconi's own admission, it was because he was asked to by the then prime minister, Bettino Craxi. Was this on ideological grounds? No: the late Craxi was head of the Socialist Party, and as a self-proclaimed free-marketeer Mr Berlusconi is supposedly in favour of privatisation. The real reason is that Craxi had issued a decree that made it possible for Mr Berlusconi's television companies to build the national networks that have now given them a near monopoly on commercial broadcasting.

Craxi did do Berlusconi a favor , even if the TV policy change was also good public policy, as would seem to be the case to anyone who thinks that government TV, especially in a corrupt country like Italy, shouldn't have a monopoly. So Berlusconi naturally would try to help Craxi on issues that Craxi cared about. That's normal politics, and quite legitimate, though.

In your one remaining trial, you are accused of bribing judges. One of your co- defendants is Cesare Previti, a close friend, a senator for your Forza Italia party, and defence minister in your first government in 1994. The judges who allegedly took bribes are Filippo Verde and Renato Squillante, both of whom formerly worked in the courts in Rome.

While investigating the aborted 1985 sale of SME, a state-owned food conglomerate, to Carlo De Benedetti, a wealthy Italian businessman, magistrates came across a payment made by All Iberian, a secret offshore part of Fininvest, the company at the apex of your corporate hierarchy.

In March 1991, All Iberian had paid $434,404 into Mr Previti�s Mercier bank account at Darier Henscht & Cie in Geneva, through two transit bank accounts called Polifemo and Ferrido. On the next day, the same amount was transferred from Mr Previti's account to an account held in the name of Rowena Finance, a Panamanian company, with bank accounts in Switzerland. The beneficial owner of Rowena Finance was Mr Squillante.

In late 1999, you and Mr Previti were charged with bribing Mr Squillante, and Mr Verde who, with two fellow judges in Rome�s court of first instance, gave a controversial ruling which stopped Mr De Benedetti buying SME.

The government blocked the sale with a decree, saying it had to have authorization from the elected officials (i.e., Prime Minister Craxi). De Benedetti sued, saying such approval was unnecessary. He lost at the trial court (where the supposedly bribed Mr Verde was one of the three judges). The appellate court said that the law did not require the approval,but the contract was written in such a way as to require it, so De Benedetti lost again. De Benedetti appealed again, to the highest possible court, and lost again.

So why is The Economist complaining? It looks like De Benedetti got a sweetheart deal, below market price and without open competition, from the bureaucrat in charge, who naturally avoided getting ministerial approval. Recall that this is in an Italy famous for corruption. The ministers, wanting the cash for government spending, objected to the low price, as did other companies who wanted to buy SME. The courts ruled repeatedly that De Benedetti's contract was no good.

So Berlusconi was on the side of the good guys here.

But what about the bribery? Even though virtually the entire Economist report is on the wheeling and dealing, all that is tangential to whether Berlusconi was bribing judges. Absolutely the only part that is relevant is what I quoted above, which says that made payments were made from a Berlusconi company to Mr. Previti's bank account, which then transferred the money to Judge Squillante. Berlusconi himself and Judge Verde seem to have zero evidence against them. Who the heck is Judge Squillante?

I got so interested that I did Google and Lexis searches, and I still can't find out anything about this trial. My impression, though, is that the Milan judges and prosecutors are out to get Berlusconi, but don't have the evidence to do it, so they just bring case after case. And that Berlusconi probably is guilty of bribery, but no legal evidence will be found, and that quite possibly the bribery has all been either merely to ensure that corrupt laws were circumvented or to help him make his own bribes (as in his illegal gifts to Prime Minister Craxi). And that the Press hates Berlusconi.

[ http://php.indiana.edu/~erasmuse/w/03.08.03a.htm ]

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