Hounded by the past: De Benedetti warrant was based on old Ambrosiano case

THERE ARE worse places in which to undergo house arrest than Carlo De Benedetti's pied- a-terre in a medieval quarter of Rome across the Tiber from the city's Queen of Heaven prison.

The Olivetti chairman came home after 13 hours of questioning in the jail last week and turned his apartment into a working office with his lawyers in attendance. A procession of friends and business colleagues called to lend support. And if Mr De Benedetti could not quite hear the devotions of his neighbouring seminarians in the Venerable English College, a nearby convent sent an assurance of its prayers.

Mr De Benedetti has been through his most testing week since the 65 days he spent as deputy chairman of Roberto Calvi's Banco Ambrosiano, which he left before its collapse and Calvi's death. More than a decade after that affair, its spectral themes and characters remain present in Italian business and politics. In what may be the dying days of the old system, the one leading Italian businessman who said he was above its machinations has been embroiled in its demise.

Mr De Benedetti faces charges of corruption alleging that Olivetti made payments to secure business with the Italian Ministry of Posts. He has already testified voluntarily on 16 May before magistrates in Milan about Olivetti's relationship with the state sector, stating that he accepted responsibility for any misdeeds. The matter remained in the hands of the Milanese magistrates and Olivetti's lawyers.

At the heart of his defence is the argument that he was the victim of extortion rather than a willing participant in bribery. The Italian legal system has so far taken a widely different view of the two offences. But in the politicised Italian magistracy, this was unlikely to satisfy everyone. The public prosecutor in Rome, Maria Cordova, and an investigating magistrate, Augusta Ianinni, decided, in Ms Ianinni's words, that the Olivetti boss 'represented a social threat because of the danger he might repeat the offence'. Saying they had new evidence to add to the Milan case, the Rome magistrates issued an arrest warrant for Mr De Benedetti, who gave himself up to para-military police in Milan and was driven at speed to the capital and placed in its gloomy riverside prison.

Rodolfo De Benedetti, his eldest son, described the legal action as 'stupefying'. The Rome judiciary has not hitherto shown itself energetic in the pursuit of corruption and is widely regarded as still influenced by political appointees.

The bishop of Ivrea, where Olivetti is based, even hinted that the arrest was prompted by the same dark forces behind Calvi and Banco Ambrosiano - namely the Mafia, the illegal P2 masonic lodge, and shady figures among the dead but not yet buried political class.

A storm of protest greeted this assertion. Mr De Benedetti, however, wrote back in thanks, noting that 'the power of the masonic lodges which undermined this country was, and still is, strong'.

Could there be anything in this conspiracy theory? The cast of characters is Calvi, P2 and the former central banker who is now Italy's reformist prime minister, Carlo Azeglio Ciampi.

In 1981, the crooked banker Roberto Calvi asked Mr De Benedetti to become deputy chairman of Ambrosiano in a bid to regain respectability as the bank slid into insolvency and scandal. Mr Ciampi, then governor of the Bank of Italy, was enthusiastic about the idea.

Mr De Benedetti joined on 19 November 1981, only to leave on 22 January 1982. Calvi had uttered warnings that P2 was against him, he had been denied information and had discovered a suspect loan portfolio of dollars 800m in the bank's Peruvian subsidiary. He got out at a profit, however. His investment was repaid with interest and L27bn ( pounds 11m) worth of shares were placed in a portfolio held by one of his companies.

Mr De Benedetti wrote to Mr Ciampi outlining his worries. But the central bank dithered about sending in the commissioners and Ambrosiano collapsed five months later, with devastating effect on confidence in the Italian banking system. It was not Mr Ciampi's finest hour.

The Olivetti chief was later convicted in the trial for fraudulent bankruptcy of those involved in the bank's final days. He appealed against the conviction and that is still pending. But it was this case that the magistrates employed to justify last week's warrant, although they acknowledged 'it was not a definitive sentence and did not constitute a criminal record.'

Mr De Benedetti is paying a price for years of co-existence with a corrupt system. He may also be vulnerable because the media empire in which he is a major shareholder, L'Espresso group and La Repubblica, have been consistently critical of the political class. Editoriale La Repubblica Spa owns 18 per cent of shares in Newspaper Publishing Plc, publisher of the Independent on Sunday.

Shares in Olivetti, the De Benedetti holding company CIR and the financial group Cofide all fell during the week but the whole Milan market declined because of concern over political instability. The head of state, President Oscar Scalfaro, had to deny taking funds from the Secret Service while Prime Minister Ciampi was accused of failing to act promptly on the BNL-Iraq scandal, a claim he rejected. Carlo De Benedetti was not the only figure important to Italy's future who found himself last week caught up in its murky past.

(Photograph omitted)