Telecom Italia feels heat from wire-tap probe

Telecom Italia was on Wednesday thrust uncomfortably into the spotlight again when police arrested 20 people in several Italian cities in connection with a probe into illegal wire-tapping.

A long-running debate into the ubiquity of wire-taps in Italy, and the habitual leak of transcripts to the press at crucial moments of investigations, have inevitably involved the country’s largest telecoms company, which supplies technology and information to investigators and keeps logs of telephone calls.

TI has denied repeatedly any wrongdoing, but Marco Tronchetti Provera, while still chairman of the company in August, pledged to prosecute the “few bad apples” that had “tried to take advantage of the company from within”.

Of the people arrested on Wednesday, one was Giuliano Tavaroli, former security chief of the company who left in May. Another was Pierguido Iezzi, head of security of Pirelli, the tyre company that exercises control over TI through a complex web of shareholdings.

Many of the others were police officers. Some of the allegations focus on an investigation into a large “shadow” wire-tapping network set up illegally and involving private investigation agencies, police officers and rogue telecoms staff.

TI is at odds with the government of Romano Prodi over a controversial restructuring plan that could lead to the break-up of the group. Mr Tronchetti, who is still Pirelli chairman, quit as TI’s chairman last week as relations with the government collapsed.

Mr Prodi has accused Mr Tronchetti of not being open enough about the restructuring plan when the two met. People close to TI say senior management and the board are incensed at Mr Prodi and believe the government could have been more truthful.

Antonio Di Pietro, the infrastructure minister who has been one of the strongest critics of the company, on Wednesday went on the offensive again. “Inside the company there were people of doubtful trustworthiness. It seems that they created a parallel intelligence structure . . . which was used privately.”

The investigation is another headache for Guido Rossi, the noted corporate lawyer who took over as chairman of TI after Mr Tronchetti’s resignation. Regulators have also started a preliminary look at the company’s recent disclosures.

TI has not formally announced a sale of any assets but it could consider selling its interests in Brazil, in the local fixed-line infrastructure in Italy, and Telecom Italia Mobile, people close to its talks say.

TI feels under pressure on the local network as regulators in Brussels and Italy are keen for former monopolists to separate those activities from their other business interests.