Italian Premier Under Fire For Conflict of Interest

INVESTIGATING magistrates in Milan are focusing their latest probes on Fininvest, the business empire owned by Prime Minister Silvio Berlusconi.

They have ordered the arrest of two Fininvest managers and Mr. Berlusconi's brother, Paolo, and the search of Fininvest offices.

The prime minister lashed out Tuesday against the judges, telling them they should administer justice and not politics.

Mario Segni, a member of the ex-Christian Democrat opposition, retorted that Berlusconi should behave like a prime minister and not like the president of Fininvest.

The potential conflict of interest between Prime Minister Berlusconi and businessman Berlusconi has never loomed larger. Even his own government spokesman insists that Berlusconi needs to put his business in a blind trust as soon as possible or the government will self-destruct.

The reason is clear: Italians are growing suspicious that Berlusconi may be using government to protect his private interests.

His government issued a decree on July 13 that eliminated preventive custody for people involved in Italy's ongoing corruption scandal and gagged the press from reporting the launching of new investigations.

Milan Judge Antonio Di Pietro and three colleagues then requested transfers to other posts, saying they could not work under the new conditions. Judge Di Pietro is immensely popular for exposing how businessmen paid billions of dollars in kickbacks to politicians.

Public outrage over the decree mounted to a level unseen since Di Pietro's work began in 1992. Despite Berlusconi's vigorous support, Parliament voted July 21 to set it aside.

Throughout the controversy, the government never adequately explained why it issued a decree, which the Constitution permits only in emergencies. Why didn't it propose a law to Parliament instead? What was the emergency?

Sen. Gianfranco Miglio, in Europeo magazine, quotes Berlusconi as telling him: ``We had to pass that decree: The judges were persecuting me and my friends and they wanted to destroy us as soon as possible so they could be in charge. In short, we had to try to stop them to keep them from becoming the bosses of Italy, perhaps even with Di Pietro in my place.''

Berlusconi responded immediately, saying that Senator Miglio assured him that he did not make this statement to Europeo. Europeo replied that anyone is free to come listen to their cassette recording of the interview. Miglio neither confirmed nor denied the quotation, saying he had not seen the article yet.

Back at work Saturday after the defeat of the decree, the Milan judges issued search and arrest warrants for a range of businessmen, including Salvatore Sciascia and Marco Rizzi, the two leading tax experts for Berlusconi's Fininvest. Paolo Berlusconi was also sought for questioning.

``All this hurry,'' says Franco Bassanini, a member of the opposition Democratic Party of the Left, referring to the issuance of the decree, ``derived from the fact that they knew the magistrates' probes were reaching the heart of Fininvest.''

On Sunday night, Berlusconi had dinner in his villa in Arcore, near Milan, with Cesare Previti, his longtime lawyer and now defense minister; Gianni Letta, former Fininvest vice president and now government undersecretary; Fedele Confalonieri, Fininvest president; Oreste Dominioni, the lawyer for Paolo Berlusconi; and Guido Viola, the lawyer for Mr. Sciascia, who then was still being sought by police.

To the opposition, the cast of characters made it obvious that the meeting was set to work out Fininvest's legal defense. Not so, say participants and Berlusconi allies. It was simply a gathering of old friends.

The presence of Mr. Dominioni and Mr. Viola belies the government's explanation, says Mr. Bassanini.

``This is frankly untenable,'' he says. ``They're not friends of Berlusconi, but the two lawyers of the people under investigation.''

Questions about the meeting's propriety did not come only from Berlusconi foes.

``With a disconcerting combination of candor and arrogance, Berlusconi cannot manage to distinguish his personality as politician from his personality as businessman. He is deeply, openly convinced that there's no difference between the two activities,'' writes history professor Sergio Romano in Tuesday's La Stampa daily. Mr. Romano also writes for the Epoca magazine, owned by Fininvest.

The day after the dinner, Sciascia turned himself in and testified before Di Pietro that Paolo Berlusconi authorized him to pay the Guardia di Finanza, Italy's tax police, 330 million lira ($208,000) in bribes following Guardia inspections of three Fininvest divisions - and that Paolo Berlusconi gave him the money to do this. The bribes' purpose was not disclosed.

A crucial aspect in the current probe is Telepiu, a pay-television company of which Fininvest officially owns 10 percent. It has been alleged that bribes were paid to the Guardia di Finanza to cover up facts surrounding the ownership of Telepiu stocks. Under Italian law, if Fininvest owns more than 10 percent, it could lose its three conventional TV networks, says Bassanini.