PM BERLUSCONI'S FORMER LAWYER CONVICTED OF BRIBING

UNCLAS SECTION 01 OF 02 ROME 001835

SIPDIS


SENSITIVE

E.O. 12958: N/A
TAGS: PREL PGOV IT ITALIAN POLITICS
SUBJECT: PM BERLUSCONI'S FORMER LAWYER CONVICTED OF BRIBING
JUDGES

REF: REF 0355

SENSITIVE BUT UNCLASSIFIED


1. (SBU) SUMMARY. FORMER BERLUSCONI LAWYER CESARE PREVITI
WAS CONVICTED ON APRIL 29 OF BRIBING JUDGES IN TWO CORPORATE
TAKEOVER BATTLES. HE WILL APPEAL THE SENTENCE. THE VERDICT
IS EMBARRASSING FOR THE PM BECAUSE OF PREVITI,S
LONG-STANDING ASSOCIATION WITH BERLUSCONI, BUT WILL NOT SHAKE
THE GOVERNMENT,S STABILITY. MORE SERIOUS IS AN ONGOING
TRIAL THAT DIRECTLY INVOLVES BERLUSCONI, WHO HAS BEEN ACCUSED
OF HAVING FUNNELED MONEY TO A JUDGE TO INFLUENCE HIS DECISION
ON ANOTHER CORPORATE TAKEOVER MATTER. THE VERDICT COULD BE
ISSUED IN JULY WHEN ITALY WILL HOLD THE ROTATING EU
PRESIDENCY. END SUMMARY.


2. FORMER DEFENSE MINISTER CESARE PREVITI, FORZA ITALIA
PARLIAMENTARIAN AS WELL AS ONE OF PM SILVIO BERLUSCONI'S
FORMER LAWYERS, WAS CONVICTED ON APRIL 29 IN A MILAN COURT
FOR HAVING BRIBED JUDGES. HE WAS SENTENCED TO 11 YEARS IN
PRISON. PREVITI SAID HE WOULD APPEAL THE SENTENCE, WHICH
STEMS FROM HIS INVOLVEMENT IN TWO LONG-RUNNING TRIALS*DUBBED
IMI-SIR AND LODO (AWARD) MONDADORI. LAST JANUARY, THE MILAN
TRIBUNAL DECIDED TO COMBINE THE TWO INTO A SINGLE TRIAL AS
MANY OF THE ACCUSED WERE INVOLVED IN BOTH.


3. IN THE IMI-SIR CASE, PREVITI WAS CHARGED WITH THE CRIME OF
CORRUPTING (THROUGH BRIBERY) JUDGES TO FIX A COURT RULING IN
FAVOR OF THE ROVELLI FAMILY. THE ROVELLIS WERE DISPUTING THE
TERMS OF A TAKEOVER BY THE PUBLICLY-OWNED ITALIAN REAL ESTATE
INSTITUTE (IMI) OF THEIR FIRM, THE ITALIAN RESIN COMPANY
(SIR). ACCORDING TO THE PROSECUTION, PREVITI AND TWO OTHER
LAWYERS RECEIVED THE EQUIVALENT OF EUROS 33 MILLION IN THE
EARLY 1990S FROM OILMAN NINO ROVELLI'S HEIRS IN ORDER TO
BRIBE THREE JUDGES, WHO AWARDED THE HEIRS A LUCRATIVE
SETTLEMENT.


4. IN THE SECOND CASE, PREVITI WAS CHARGED WITH BRIBING A
JUDGE IN 1991 SO THAT PM BERLUSCONI,S FININVEST HOLDING
COMPANY COULD WIN CONTROL OF MONDADORI, ITALY'S LARGEST
PUBLISHING COMPANY. AT THE TIME, PREVITI WAS WORKING AS A
LAWYER FOR BERLUSCONI. THE OWNER OF MONDADORI HAD AGREED TO
SELL THE FIRM TO INDUSTRIALIST, PUBLISHER, AND BERLUSCONI
RIVAL CARLO DE BENEDETTI UNTIL FININVEST STEPPED IN WITH A
BETTER OFFER. DE BENEDETTI SUED IN COURT FOR BREACH OF
CONTRACT, BUT THE DECIDING JUDGE--ACCUSED LATER OF ACCEPTING
A BRIBE--RULED IN FAVOR OF FININVEST. BERLUSCONI IN 1997 WAS
ALSO INDICTED FOR CORRUPTION IN THE MONDADORI CASE, BUT THE
STATUTE OF LIMITATIONS FOR HIS ALLEGED LESSER CRIME RAN OUT
DURING THE COURSE OF THE TRIAL.


5. (SBU) THE APRIL 29 VERDICT, ALTHOUGH EMBARRASSING FOR
BERLUSCONI DUE TO HIS CLOSE AFFILIATION WITH PREVITI, WILL
HAVE NO DIRECT IMPACT ON THE GOI,S STABILITY. BERLUSCONI,
WHO HAS BEEN OUTSPOKEN IN HIS CRITICISM OF THE RULING MILAN
COURT FOR ITS ALLEGED POLITICIZATION, IMMEDIATELY ISSUED A
COMMUNIQUE EXPRESSING HIS PERSONAL SOLIDARITY AND THAT OF HIS
PARTY, FORZA ITALIA, WITH PREVITI. HE SAID THE VERDICT
CONFIRMED HIS SUSPICIONS OF A &POLITICAL PROSECUTION.8 THE
CENTER-LEFT OPPOSITION, WHICH MIGHT HAVE BEEN EXPECTED TO
UNLEASH A BARRAGE OF CRITICISM AT THE PM IN THE WAKE OF THE
VERDICT, HAS INSTEAD DECIDED TO TAKE A LOW KEY APPROACH. IT
IS PROBABLY CALCULATING THAT THE PRESS HAS DONE A SUFFICIENT
JOB OF DRAWING OUT THE PREVITI-BERLUSCONI CONNECTION FOR THE
PUBLIC. MOREOVER, THE DEEPLY DIVIDED AND LEADERLESS
OPPOSITION HAS NO INTEREST IN PROVOKING A GOVERNMENT CRISIS
THAT COULD POTENTIALLY LEAD TO NEW ELECTIONS.


6. (SBU) BERLUSCONI, WE WANT TO UNDERSCORE, IS NOT OUT OF
THE JUDICIAL WOODS. HE IS ON TRIAL IN YET ANOTHER JUDGE
BRIBERY CASE FOR ALLEGEDLY DELIVERING CASH PAYMENTS IN ORDER
TO INFLUENCE A RULING ON THE PRIVATIZATION OF A FORMERLY
STATE-OWNED FOOD CONGLOMERATE (SME). DE BENEDETTI, ALSO A
PROTAGONIST IN THE SME CASE, HAD IN 1985 BEEN GIVEN THE
RIGHTS TO PURCHASE THE COMPANY. HOWEVER, FORMER PREMIER
BETTINO CRAXI--WHO HAD CLOSE TIES TO BERLUSCONI--INTERVENED
TO BLOCK THE SALE IN FAVOR OF A RIVAL FININVEST BID. DE
BENEDETTI RESORTED TO THE COURTS, BUT LOST, AND BRIBERY
CHARGES WERE SUBSEQUENTLY BROUGHT AGAINST BERLUSCONI BY
INVESTIGATING MAGISTRATES. BERLUSCONI MAY MAKE A STATEMENT IN
MILAN AT THE SME TRIAL ON MAY 2.


7. (SBU) PRESS REPORTS INDICATE THAT A RULING IN THE SME
CASE COULD BE HANDED DOWN IN JULY, JUST AS ITALY IS BEGINNING
ITS SIX-MONTH EU PRESIDENCY TERM. ITALIAN MAGISTRATES CLAIM
THAT THEIR RULINGS ARE COMPLETELY DEVOID OF POLITICS, AND THE
OVERWHELMING MAJORITY OF THEM MAY WELL BE. HOWEVER, THERE IS
A CURIOUS HISTORY OF RENDERING DECISIONS THAT AFFECT
BERLUSCONI AT MOMENTS THAT ARE PARTICULARLY INOPPORTUNE FOR
HIM. SEPTEL WILL ANALYZE THE POLITICAL IMPLICATIONS OF A
CONVICTION AND EFFORTS BY THE GOI TO AMELIORATE THE


NOTE: PLS SERVICE FOR INVALID REF

ROME 00001835 001.2 OF 002

BING JUDGES IN TWO CORPORATE
TAKEOVER BATTLES. HE WILL APPEAL THE SENTENCE. THE VERDICT
IS EMBARRASSING FOR THE PM BECAUSE OF PREVITI,S
LONG-STANDING ASSOCIATION WITH BERLUSCONI, BUT WILL NOT SHAKE
THE GOVERNMENT,S STABILITY. MORE SERIOUS IS AN ONGOING
TRIAL THAT DIRECTLY INVOLVES BERLUSCONI, WHO HAS BEEN ACCUSED
OF HAVING FUNNELED MONEY TO A JUDGE TO INFLUENCE HIS DECISION
ON ANOTHER CORPORATE TAKEOVER MATTER. THE VERDICT COULD BE
ISSUED IN JULY WHEN ITALY WILL HOLD THE ROTATING EU
PRESIDENCY. END SUMMARY.


2. (U) FORMER DEFENSE MINISTER CESARE PREVITI, FORZA ITALIA
PARLIAMENTARIAN AS WELL AS ONE OF PM SILVIO BERLUSCONI'S
FORMER LAWYERS, WAS CONVICTED ON APRIL 29 IN A MILAN COURT
FOR HAVING BRIBED JUDGES. HE WAS SENTENCED TO 11 YEARS IN
PRISON. PREVITI SAID HE WOULD APPEAL THE SENTENCE, WHICH
STEMS FROM HIS INVOLVEMENT IN TWO LONG-RUNNING TRIALS*DUBBED
IMI-SIR AND LODO (AWARD) MONDADORI. LAST JANUARY, THE MILAN
TRIBUNAL DECIDED TO COMBINE THE TWO INTO A SINGLE TRIAL AS
MANY OF THE ACCUSED WERE INVOLVED IN BOTH.


3. (U) IN THE IMI-SIR CASE, PREVITI WAS CHARGED WITH THE CRIME OF
CORRUPTING (THROUGH BRIBERY) JUDGES TO FIX A COURT RULING IN
FAVOR OF THE ROVELLI FAMILY. THE ROVELLIS WERE DISPUTING THE
TERMS OF A TAKEOVER BY THE PUBLICLY-OWNED ITALIAN REAL ESTATE
INSTITUTE (IMI) OF THEIR FIRM, THE ITALIAN RESIN COMPANY
(SIR). ACCORDING TO THE PROSECUTION, PREVITI AND TWO OTHER
LAWYERS RECEIVED THE EQUIVALENT OF EUROS 33 MILLION IN THE
EARLY 1990S FROM OILMAN NINO ROVELLI'S HEIRS IN ORDER TO
BRIBE THREE JUDGES, WHO AWARDED THE HEIRS A LUCRATIVE
SETTLEMENT.


4. (U) IN THE SECOND CASE, PREVITI WAS CHARGED WITH BRIBING A
JUDGE IN 1991 SO THAT PM BERLUSCONI,S FININVEST HOLDING
COMPANY COULD WIN CONTROL OF MONDADORI, ITALY'S LARGEST
PUBLISHING COMPANY. AT THE TIME, PREVITI WAS WORKING AS A
LAWYER FOR BERLUSCONI. THE OWNER OF MONDADORI HAD AGREED TO
SELL THE FIRM TO INDUSTRIALIST, PUBLISHER, AND BERLUSCONI
RIVAL CARLO DE BENEDETTI UNTIL FININVEST STEPPED IN WITH A
BETTER OFFER. DE BENEDETTI SUED IN COURT FOR BREACH OF
CONTRACT, BUT THE DECIDING JUDGE--ACCUSED LATER OF ACCEPTING
A BRIBE--RULED IN FAVOR OF FININVEST. BERLUSCONI IN 1997 WAS
ALSO INDICTED FOR CORRUPTION IN THE MONDADORI CASE, BUT THE
STATUTE OF LIMITATIONS FOR HIS ALLEGED LESSER CRIME RAN OUT
DURING THE COURSE OF THE TRIAL.


5. (SBU) THE APRIL 29 VERDICT, ALTHOUGH EMBARRASSING FOR
BERLUSCONI DUE TO HIS CLOSE AFFILIATION WITH PREVITI, WILL
HAVE NO DIRECT IMPACT ON THE GOI,S STABILITY. BERLUSCONI,
WHO HAS BEEN OUTSPOKEN IN HIS CRITICISM OF THE RULING MILAN
COURT FOR ITS ALLEGED POLITICIZATION, IMMEDIATELY ISSUED A
COMMUNIQUE EXPRESSING HIS PERSONAL SOLIDARITY AND THAT OF HIS
PARTY, FORZA ITALIA, WITH PREVITI. HE SAID THE VERDICT
CONFIRMED HIS SUSPICIONS OF A &POLITICAL PROSECUTION.8 THE
CENTER-LEFT OPPOSITION, WHICH MIGHT HAVE BEEN EXPECTED TO
UNLEASH A BARRAGE OF CRITICISM AT THE PM IN THE WAKE OF THE
VERDICT, HAS INSTEAD DECIDED TO TAKE A LOW KEY APPROACH. IT
IS PROBABLY CALCULATING THAT THE PRESS HAS DONE A SUFFICIENT
JOB OF DRAWING OUT THE PREVITI-BERLUSCONI CONNECTION FOR THE
PUBLIC. MOREOVER, THE DEEPLY DIVIDED AND LEADERLESS
OPPOSITION HAS NO INTEREST IN PROVOKING A GOVERNMENT CRISIS
THAT COULD POTENTIALLY LEAD TO NEW ELECTIONS.


6. (SBU) BERLUSCONI, WE WANT TO UNDERSCORE, IS NOT OUT OF
THE JUDICIAL WOODS. HE IS ON TRIAL IN YET ANOTHER JUDGE
BRIBERY CASE FOR ALLEGEDLY DELIVERING CASH PAYMENTS IN ORDER
TO INFLUENCE A RULING ON THE PRIVATIZATION OF A FORMERLY
STATE-OWNED FOOD CONGLOMERATE (SME). DE BENEDETTI, ALSO A
PROTAGONIST IN THE SME CASE, HAD IN 1985 BEEN GIVEN THE
RIGHTS TO PURCHASE THE COMPANY. HOWEVER, FORMER PREMIER
BETTINO CRAXI--WHO HAD CLOSE TIES TO BERLUSCONI--INTERVENED
TO BLOCK THE SALE IN FAVOR OF A RIVAL FININVEST BID. DE
BENEDETTI RESORTED TO THE COURTS, BUT LOST, AND BRIBERY
CHARGES WERE SUBSEQUENTLY BROUGHT AGAINST BERLUSCONI BY
INVESTIGATING MAGISTRATES. BERLUSCONI MAY MAKE A STATEMENT IN
MILAN AT THE SME TRIAL ON MAY 2.


7. (SBU) PRESS REPORTS INDICATE THAT A RULING IN THE SME
CASE COULD BE HANDED DOWN IN JULY, JUST AS ITALY IS BEGINNING
ITS SIX-MONTH EU PRESIDENCY TERM. ITALIAN MAGISTRATES CLAIM
THAT THEIR RULINGS ARE COMPLETELY DEVOID OF POLITICS, AND THE
OVERWHELMING MAJORITY OF THEM MAY WELL BE. HOWEVER, THERE IS
A CURIOUS HISTORY OF RENDERING DECISIONS THAT AFFECT
BERLUSCONI AT MOMENTS THAT ARE PARTICULARLY INOPPORTUNE FOR
HIM. SEPTEL WILL ANALYZE THE POLITICAL IMPLICATIONS OF A
CONVICTION AND EFFORTS BY THE GOI TO AMELIORATE THE


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2003ROME01835 - Classification: UNCLASSIFIED