WORLD

DECLINE AND FALL

A SPREADING BRIBERY AND KICKBACK SCANDAL IS SHAKING ITALY TO ITS FOUNDATIONS

ANDREW PHILLIPS March 22 1993
WORLD

DECLINE AND FALL

A SPREADING BRIBERY AND KICKBACK SCANDAL IS SHAKING ITALY TO ITS FOUNDATIONS

ANDREW PHILLIPS March 22 1993

DECLINE AND FALL

WORLD

A SPREADING BRIBERY AND KICKBACK SCANDAL IS SHAKING ITALY TO ITS FOUNDATIONS

ANDREW PHILLIPS

Benetton’s billboards often use quirky images to make their point, and the clothing company’s giant new poster in Milan’s bustling Piazza San Babila is no exception. Looming over the sharp-suited business people striding through the square, it simply shows the arms of two men with their wrists linked by handcuffs. In another city the meaning might be obscure, but no one in Milan doubts its significance. Almost every day another member of the city’s political and business elite is arrested and dragged off to prison in the ever-widening corruption scandal that is shaking Italy to its foundations. Ultrachic Milan, the country’s fashion and finance capital long symbolized by Gucci handbags and designer suits, now has a new emblem: handcuffs around an elegant wrist Operation Mani Pulite (Clean Hands), Europe’s biggest-ever investigation into political bribery and kickbacks, is centred on Milan, but it has spread across Italy. By last week, some 30 cities were affected and more than 830 people had been arrested. More than 1,000 others had been formally notified that they are under investigation. They include a former prime minister and a score of ex-ministers, a fifth of Italy’s 630 members of parliament, and top executives of both giant state enterprises and flagship private companies like Fiat. Seven men have taken their own lives rather than suffer the humiliation of joining other well-heeled accused in Milan’s notoriously crowded and filthy San Vittore prison. Italians have been first disgusted, then outraged, by revelations suggesting that nearly their entire political class had its hands in the till. The result is what senior politicians are calling a

peaceful revolution—one that promises to sweep away the web of political and financial power that has enmeshed Italy since the Second World War. “This is not just a series of scandals, but a fundamental crisis,” leading reform politician Mario Segni told Maclean’s. “Corruption has entered the heart of the political system.”

If anything, the crisis intensified last week. Investigators ordered the arrest of senior executives at two of Italy’s biggest state-owned companies. Milan, its once-brilliant image tarnished by scandal, withdrew its application to host the 2000 Summer Olympics. And, in the face of public outcry, the beleaguered government of Prime Minister Guiliano Amato withdrew a proposal that would have removed criminal penalties for

politicians accused of illicitly obtaining kickbacks for their parties. When Amato went to the senate in Rome to defend his government, opposition MPs showered the chamber with handfuls of fake 10,000-lire bills symbolizing the bribery scandals and screamed “thieves!” and “clowns!” at the prime minister and his allies. Amato, a normally soft-spoken economist, finally snapped and shouted: “Shut up! Basta! (Enough!)” Throughout Italy, a similar cry has gone up among ordinary citizens revolted by what

Operation Clean Hands has revealed. Italians have long been used to political turmoil— Amato’s four-party coalition government, after all, is the country’s 51st postwar administration. And the fact that bribery is widespread came as no surprise to a people accustomed to handing out “tips” for even routine government services. But what Milan’s investigators uncovered over the past year went far beyond that. It amounted to an organized system of kickbacks from government contracts and construction projects to political parties and individual politicians that by some estimates creamed off up to $24 bil-

lion over the past decade. Contracts on everything from building highways to cleaning seniors’ homes were inflated to cover the cost of paying tangenti (bribes) to the parties, which often divided the spoils in rough proportion to their share of the vote. Throughout Italy, Milan is now mocked as Tangentopoli, translating roughly as Bribesville.

The problem is rooted in four decades of near immobility in Italian politics. Below the surface turmoil of revolving-door governments, the same group of politicians has ruled since the founding of the postwar Italian republic in 1948. Christian Democrats and Socialists formed an endless variety of coalition administrations with one overriding purpose: to keep the powerful Italian Communist party out of government. Italy’s

electoral system, based on strict proportional representation, allowed party bosses to broker deals above the heads of voters. At the same time, all parties built up vast networks of workers and patronage that required billions of lire to keep running. An estimated one million Italians work directly or indirectly for the parties, which awarded jobs in everything from hospitals to nationalized banks and state-run television.

The result was what Italians called “partitocracy”—the rule of the parties with little reference to ordinary citizens. In some ways, said Segni, the dissident Christian Democrat who is heading a campaign to overhaul the country’s electoral system, it resembled the sort of Leninist party structure that dominated life in Communist Eastern Europe. “The ruling classes here have been immobile for almost 50 years,” he said at his office in central Rome. “The parties were everything— above parliament, even above the state.”

The end of the Cold War signalled the demise of that system. “We used to say, ‘Hold your nose and vote for the Christian Democrats,’ ” said Cesare Merlini, president of Rome’s International Affairs Institute. “Now the threat of the Communists has disappeared, so people feel freer with their votes.” As a result, in last April’s general election, support for the old-line Christian Democrats and Socialists slumped, while such protest parties as the federalist Northern League and the anti-Mafia La Rete (Network) group picked up disenchanted voters. The new political climate, in turn, allowed Milan’s investigators to pursue corrupt politicians and businessmen without political interference. Led by 42-year-old prosecutor Antonio Di Pietro, the investigators have become the new heroes of a disillusioned nation. An astounding eight million Italians tuned in to the TV broadcast of a corruption hearing that Di Pietro conducted in February. He even has his own youthful fan club in Milan, with members sporting Di Pietro T-shirts.

Operation Clean Hands began in 1991 but investigators got their big break in February, 1992. At the time, Luca Magni, the 32-yearold owner of a cleaning company near Milan, became fed up with paying kickbacks to a local Socialist party official, Mario Chiesa, who was also president of the city’s main old people’s home. Magni took his complaint to Di Pietro’s team, who wired him up with a microphone hidden in a pen and listened in as he delivered a seven-million lire ($5,400) payoff to Chiesa for renewing his cleaning contract at the seniors’ home. When Chiesa uttered the incriminating words, “When are you bringing the other half?” police rushed in and arrested him.

After a few hours in jail, Chiesa began telling investigators about an intricate web of party kickbacks throughout the city and country, and implicated fellow Socialist politicians. The fallout has astounded even Di Pietro’s hardened magistrates, who operate out of a group of scruffy offices in Milan’s im-

The resignation of four cabinet ministers has paralysed his government

The Milan prosecutor

has become a hero to disillusioned Italians

The former prime minister is the most prominent victim of the scandal

posing fascist-era courthouse. “We had no idea it would be anything like this,” said Piercamillo Davigo, one of three investigating magistrates on Di Pietro’s team. ‘We discovered a very organized network of payments to all parties.”

Since that breakthrough, the investigation has widened to reach the highest levels of Italian public life. The most prominent victim so far is Bettino Craxi, prime minister from 1983 to 1987 and leader of the Socialist party for 16 years. He received several official warnings that he was being investigated for alleged corruption and extortion, and resigned on Feb. 11. Others who have been arrested or been handed a formal warning include about 125 MPs, half of Milan’s city council and the chief financial officer of Fiat, Francesco Mattioli. Three of Amato’s cabinet ministers resigned after being told that they are under investigation, and a fourth, Carlo Ripa di Meana, quit last week in disgust at the spreading scandal.

The crisis has produced an overwhelming consensus among Italians that their political system must fundamentally change. Hopes for change are focused on a referendum set for April 18, when voters will decide whether to scrap the proportional representation system for elections to the senate—which awards seats even to minor parties based on their share of the vote in a particular region— and replace it with a Canadian-style, winnertakes-all system. Last year, more than one million Italians signed petitions in favor of such a referendum. They were circulated by the Popular Reform Movement, a grassroots group headed by Segni, the soft-spoken Christian Democrat who maintains that such an apparently technical change would revolutionize Italian politics.

Proportional representation has produced a constellation of minority parties, guaranteeing that no one group could ever form a government on its own. In the wake of Italy’s traumatic experience with Fascist rule from the mid1920s to early 1940s, that appeared good. But in practice it meant that the Christian Democrats effectively held unbroken power with Socialist support. “The system has been totally blocked,” said Segni. A winner-takes-all system, he explained, would force the parties to reorganize into a few major groups that would alternate in power—like Liberals and Conservatives in Canada. Most analysts predict that voters will overwhelmingly approve the change, paving the way for elections under the new system by early 1994.

In the meantime, however, the revelations of corruption have undermined Amato’s already weak government and fuelled protest movements from both north and south. Only a few months ago, Amato’s administration was winning high praise for its ambitious plans to cut Italy’s soaring deficit, proportionately the biggest among advanced European countries, and prune the public sector by cutting some social services and privatizing many state-owned enterprises. Those plans, however, have been derailed as the government struggles just to survive from week to week. The government’s main advantage, say observers, is that no politician wants to face the wrath of voters in an early election—and so the opposition parties prefer to keep Amato in office.

At the same time, unorthodox protest groups are drawing new support from the discrediting of the old system. One is La Rete, which started as an anti-Mafia party in Sicily but now has support in the north as well. Headed by senator Leoluca Orlando, a

onetime Christian Democrat mayor of Palermo who made his name as a Mafia fighter there, La Rete won 15 seats in parliament last April and now campaigns as a new force for change. More threatening to the old order is the Northern League, which advocates a federal system of three republics—north, south and central. The League was bom as a protest party, tapping into the rich vein of resentment felt by prosperous, efficient northerners at what they see as the corrupt, inefficient south. The fact that the corruption scandal broke out in Milan, the north’s leading city, has not changed that perception. “In Milan we have just seen the first results against corruption,” noted Francesco Speroni, the League’s leader in the senate. “But when they go to work in the south, they will find it is much, much worse there.”

That is almost certainly true. But even as they applaud the end of the system of institutionalized graft, some Italians question whether the Milan investigations are going too far. In the present climate of suspicion, they say, every public figure who is informed that he is under investigation is automatically assumed to be guilty—and the result could be a witch-hunt that would lead to further injustices. “You now have a presumption of guilt,” said Luigi Spaventa, an adviser to the finance ministry. “This can get out of control.” Di Pietro himself has said that there must be a political, rather than just a judicial, solution—such as an amnesty for politicians who confess to corruption and quit public life. But for the moment, Italians appear to be enjoying the humbling of their once-proud miers—and looking forward to a new system cleansed of the worst excesses.

ANDREW PHILLIPS in Milan