Silvio Berlusconi pulls out austerity clause

Silvio Berlusconi on Tuesday withdrew proposed legislation inserted into his government’s austerity package that would have allowed his media empire to delay paying court-awarded damages.

Ministers insisted that the clause – potentially enabling payments of €750m ($1bn) owed by the prime minister’s media company Fininvest to be postponed – was inserted without their knowledge.

Opposition politicians denounced the move as another example of Mr Berlusconi’s conflict of interests as prime minister.

Mr Berlusconi, who faces three separate trials for alleged tax fraud, corruption and sex with an underage prostitute, has complained about the damages awarded against Fininvest.

The controversy could threaten delays in passing the austerity package, intended to cut the country’s budget deficit by €47bn by 2014. The legislation is being watched by markets worried about Italy’s public debt, which stands at 120 per cent of gross domestic product.

Giorgio Napolitano, head of state, was under pressure Tuesday night to refuse to sign the decree into law unless the government withdrew the offending clause.

Franco Frattini, foreign minister, told reporters the clause had not been discussed by the cabinet when it agreed to the austerity package last week. The clause appeared at the weekend before the final text of more than 120 pages was sent to Mr Napolitano on Monday, according to reports. The issue is an embarrassment to Giulio Tremonti, finance minister and architect of the austerity package.

Angelino Alfano, justice minister with responsibility for changes in judicial procedures, was also reported as saying he knew nothing about it. Mr Frattini insisted the clause was a “matter of principle” and not designed specifically for Mr Berlusconi.

The controversial clause, which was unrelated to budget matters, would have enabled offending parties in lawsuits not to pay fines exceeding €20m until a verdict was reached by a final court of appeal.

Spokesmen for the prime minister and Fininvest both declined to comment.

The legal case dates back to the late 1980s when Mr Berlusconi and Carlo De Benedetti, a media rival, battled for control of the Mondadori publishing house. An official arbitration panel decided in Mr De Benedetti’s favour, but its findings were overturned by an appeals court.

But in 2003, another court found one of Mr Berlusconi’s lawyers had bribed one of the judges of the appeals court, using funds traced to Fininvest’s offshore accounts. Both the lawyer and the judge received jail sentences.

Mr De Benedetti filed for damages, and in 2009 a Milan court ordered Fininvest to pay €750m.

Fininvest appealed and a ruling is expected soon. Should it lose, the company can launch a final appeal.

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