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August 8, 2005 10:20 pm

Probe raises ghost of Calvi affair

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To seasoned observers of Italy's colourful financial imbroglios, this summer's Banca Antonveneta affair evokes memories of many of the country's most lurid scandals.

As details emerge of how Antonio Fazio, governor of the Bank of Italy, sought to favour Banca Popolare Italiana, a small Italian bank, over Dutch lender ABN Amro in the takeover battle for Antonveneta, one past scandal comes readily to mind: the Banco Ambrosiano affair. This culminated with the body of Roberto Calvi, Ambrosiano's chairman, hanging from Blackfriars Bridge in London in 1982.

“The only thing missing so far is a corpse,” says one Milanese banker.

Among the similarities are an attempted takeover of the company that owns Corriere della Sera, Italy's most influential newspaper and a tough critic of the Bank of Italy's role in the affair; secret alliances among bankers, financiers and real estate moguls; links with the Vatican; mysterious off-shore bank accounts; and, of course, political scheming.

Thanks to almost daily leaks of taped phone conversations among the protagonists, the saga has replaced bestsellers as the must-read story for Italians spending August at the beach.

The ghost of the Ambrosiano affair itself continues to haunt Italian finance. In April, as the fight between Banca Popolare Italiana and ABN Amro for Antonveneta heated up, a judge ordered that three suspects be tried in October for their alleged roles in Mr Calvi's death, 23 years after his hanging was first ruled a suicide.

An important difference, however, concerns the role of the Bank of Italy.

In the battle over Antonveneta, magistrates are investigating whether the central bank failed to adequately supervise BPI's accounts, and why Mr Fazio and his wife repeatedly held long, personal conversations with Gianpiero Fiorani, BPI's chief executive, while the central bank and Consob, the Italian market regulator, were reviewing BPI's bid. In one conversation, Mr Fazio told Mr Fiorani (who has employed two of Mr Fazio's three children at BPI): “We must not make a single wrong move now.”

In 1978, the central bank was tougher. When Banco Ambrosiano was rumoured to be conducting too many odd deals, the central bank sent in a horde of inspectors. Despite political interference to try to stop the investigation including false accusations made against the central bank governor, which forced his resignation Banco Ambrosiano eventually sank into bankruptcy, strangled by bad loans to the Vatican bank and otherclients.

Mr Calvi, known as “God's banker” because of his close ties to the papacy, was finally found guilty and imprisoned for illegal foreign money transfers after being enmeshed in odd transactions.

Out of prison on appeal, Mr Calvi fled to London soon after and met his mysterious death.

One echo of the Ambrosiano era involves Corriere della Sera. More than two decades ago, Mr Calvi became embroiled in a takeover of RCS Mediagroup, which owns the newspaper. This spring Stefano Ricucci, who is helping BPI to acquire Antonveneta, bought nearly a quarter of the shares of RCS, and said he would consider a full takeover. Critics of Silvio Berlusconi, prime minister, have accused him of supporting Mr Ricucci's share-buying in order to gain influence at the newspaper ahead of next year's elections a charge both deny.

As with the Ambrosiano scandal, much of the Antonveneta probe is being conducted within the grim grey-brown halls of Milan's courthouse. Milan magistrates are old hands in such matters. Only 20 months ago Francesco Greco and Eugenio Fusco helped uncover the massive fraud at Parmalat, the dairy group. Mr Greco, who is now overseeing Mr Fusco as he unravels the Antonveneta affair, was also among the prosecutors in the “Clean Hands” sweep of the early 1990s, the nationwide bribery investigation. Thousands of businessmen and politicians were put under telephone surveillance, interrogated and sometimes incarcerated until they confessed.

One parallel between Clean Hands and the Antonveneta case that troubles Mr Berlusconi is the use of telephone taps a technique that has reheated the premier's argument that Italy's justice system is seeking to grab power from the government.

When Mr Calvi went on trial, Bettino Craxi, the Socialist leader who fled the country during Clean Hands, attacked the judges for prosecuting the banker.

Now, Mr Berlusconi has also seemed to want to shoot the messenger. Over the weekend, he said he would seek to ban publication of tapped phone conversations.

He and government officials have expressed far greater outrage over newspapers' decisions to publish Mr Fazio's conversations than over their content.

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