Berlusconi Empire To Blind Trust

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MILAN-Prime Minister Silvio Berlusconi moved swiftly last week to prevent his house of cards from toppling.

Italy's chief of state, under pressure building from the arrest warrant issued July 27 for his brother Paolo, announced two days later he would put his Fininvest media empire in a blind trust. The trust proposal goes to vote in Parliament in September.

The warrant against Paolo Berlusconi, who turned himself in last Friday, was for allegedly paying off tax inspectors on behalf of Fininvest and has seriously strained the delicate balancing act of the Italian prime minister and media baron.

Mr. Berlusconi had already resigned as Fininvest's president to avoid the appearance of conflict.

Although Mr. Berlusconi will choose someone to run the trust, he said it won't be a family member or a Fininvest executive.

The last-ditch move could forestall a parliamentary hearing this week that was set to look into a "private dinner" that the press has dubbed a secret summit hosted by the prime minister at his villa near Milan July 24. The dinner included Italian Defense Minister Cesare Previti; Orese Dominioni and Guido Viola, attorneys representing Paolo Berlusconi; and Salvatore Sciascia, Fininvest's tax consultant, since arrested on a bribery charge.

The Fininvest blind trust is expected also to cool the conflict-of-interest fires that have flamed up in a country often unfazed by political scandals. Mr. Berlusconi ran on a platform of getting rid of corruption in Italy once and for all.

Pressure has been mounting for Mr. Berlusconi to act quickly: The latest polls show four out of 10 Italians who voted for the prime minister wouldn't do so again.

"In his first 100 days of government, all he did was address issues such as the changing of the guard at RAI [Italy's state-owned TV network], issuing a decree to relax the squeeze on corruption and condoning illegality in the real estate business. Allof which were not called for or urgent except to his own interests," said Marco Benatti, president of Cia Medianetwork and of Assomedia, the national association of media planners.

Also critical are employees at Fininvest, an $8.5 billion conglomerate that includes three national TV networks competing with RAI and controlling more than 30% of the national TV market; leading Italian publisher Mondadori; and media buyer Publitalia.

Andrea Monti, editor in chief of Italy's No. 1 newsweekly Panorama, published by Mondadori, wrote in the current issue: "To win back credibility, he has to solve the problem of incompatible interests between Fininvest and government, stop getting angry with journalists and start dealing seriously with the issues for which the people elected him-the relaunch of the economy, labor, state administration and tax reform."

Even Mr. Berlusconi's advisers were distressed at the July 24 private meeting.

"It better have been a very, very private dinner and nothing more; otherwise, I quit," said Giuliano Ferrara, Mr. Berlusconi's minister of relations with Parliament.

Now moot is a September deadline Mr. Berlusconi set for a three-person study group appointed last month to find a solution to his divergent interests.

The blind trust may not please everyone. Antonio La Pergola, one of the three experts, admitted July 26 that "A blind trust American-style is not recommended. It only works for stocks and bonds, not for company ownership. The alternative is to sell."

That Mr. Berlusconi has no intention of doing, saying, "They want me to resign and to sell. I will end up unemployed."

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