Bloomberg News

Berlusconi Tax-Fraud Conviction Sets Up Showdown in Senate (1)

August 02, 2013

Former Italian Prime Minister Silvio Berlusconi

Former Italian Prime Minister Silvio Berlusconi greets his supporters in Milan, on July 1, 2013. Photographer: Pier Marco Tacca/Getty Images

Silvio Berlusconi’s conviction for tax fraud, upheld late yesterday by Italy’s top court, set up a Senate showdown over his potential expulsion from parliament.

The upper house’s committee for immunities is required to vote on whether to strip Berlusconi, a three-time premier and now a senator, of his seat. The debate, which may take weeks or months, threatens to stoke divisions in the ruling coalition, weakening Prime Minister Enrico Letta’s government.

“I am absolutely aware of the politically delicate moment,” Letta said today at a conference in Rome. “I hope that the collective interests prevail for the good of the country, the good of Italy, and not the partisan interests.”

The fight over Berlusconi’s fate moves to the political arena after the court, which confirmed his guilty verdict, left the sentence for his crime unresolved. Berlusconi was spared the immediate enforcement of a five-year ban on holding public office because the court said it required further judicial review. Berlusconi’s four-year jail sentence, which is temporarily suspended, is unlikely to land him in prison due to leniency guidelines.

“This legal matter could have significant political repercussions given that it is ultimately up to the Senate to vote on whether or not Berlusconi should be ineligible,” Wolfango Piccoli, an analyst with Teneo Intelligence, wrote today in a research report.

Senate Committee

The Senate committee is required to consider the case due to a law passed in December under former Prime Minister Mario Monti. It will hold a preliminary vote prior to a final vote in the full Senate, which could be a secret ballot, the head of the committee, Dario Stefano, told Ansa news agency yesterday.

“I think the law must be applied, and from what I understand there is no margin for discretion,” Letta said.

The divide is deepening within the ruling coalition between lawmakers loyal to Berlusconi, 76, and those who, like Letta, have traditionally opposed him. Renato Brunetta, chief whip of Berlusconi’s People of Liberty party in the lower house, said the ruling put democracy in Italy in question, and vowed to rally around the ex-premier. Giuseppe Civati, a lawmaker with Letta’s Democratic Party, said it was time to plan “an exit strategy” from the alliance with Berlusconi.

Yesterday’s ruling was “completely groundless” and “irresponsible,” Berlusconi said in a video message. His party will “stay in the field” and seek a majority from Italians, the former premier said, without giving details.

Cabinet Undersecretary

Berlusconi’s People of Liberty party will continue to support the government, Nitto Palma, a member of the party in the Senate, said in a statement. Still, Cabinet Undersecretary Michaela Biancofiore, a member of the PDL, will resign to protest the verdict, Ansa reported. Civati said in a message “we can’t go on like this to infinity.”

Berlusconi may resign from parliament while maintaining leadership of his party, Maurizio Paniz, a former lawmaker with the PDL, was cited as saying by Ansa. Berlusconi is scheduled to meet with PDL lawmakers at 6 p.m. today.

Berlusconi’s three defense lawyers, Franco Coppi, Niccolo Ghedini and Piero Longo, said in a statement they would “take every useful initiative, even at the European level, so that this unjust sentence is radically changed.” The conviction is linked to tax evasion in the purchase of U.S. film rights for the ex-premier’s broadcast company Mediaset SpA. (MS)

The court found that Mediaset evaded 7.3 million euros ($9.6 million) in taxes in 2002-2003, while the PDL said in a statement last month that the company over the same period had paid 567 million euros in taxes.

Separate Cases

The billionaire ex-premier is also appealing convictions in separate cases on paying a minor for sex and illegal wiretapping. He has denied any wrongdoing, calling the allegations part of an attempt by prosecutors to destroy his political career.

Italy’s 10-year bond yield fell 6 basis points to 4.30 percent at 4:29 p.m. in Rome. Mediaset, the best performer in Milan’s benchmark FTSE MIB stock index this year, fell 2.3 percent to 3.29 euros.

The judges yesterday sent the five-year ban from holding public office, imposed by a court in the original conviction in October, back to a lower tribunal for review. That followed a request by Berlusconi’s prosecutor, who said on July 31 that the lower court erred and the ban should be just three years.

Berlusconi probably won’t be incarcerated for this case, according to Andrea Castaldo, a criminal lawyer and professor at the University of Salerno. The four-year prison sentence may be reduced to one year due to a law against prison overcrowding. The penalty will probably be revised to community service or house arrest, due to factors including leniency for criminals over the age of 70.

Berlusconi has until Oct. 15 to file a request to be granted an alternative to jail, Ansa reported.

To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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