September 29, 2005

Fazio put under criminal investigation

By Tiziana Barghini and Gavin Jones

ROME (Reuters) - Bank of Italy Governor Antonio Fazio has
been put under criminal investigation in a takeover case, a
judicial source said on Thursday after the banker won a vote of
confidence from the only body that can fire him.

Rome prosecutors have included Fazio among those under
investigation for possible crimes in a cross-border banking
takeover battle and will be questioned by two magistrates for
suspected abuse of office, the judicial source told Reuters.

The legal setback came hours after the central bank's
Superior Council -- the only body with the power to fire the
governor -- said it supported Fazio despite calls from the
government for him to quit over the takeover scandal.

The judiciary is probing for suspected crimes in Banca
Popolare Italiana's failed effort to outbid Dutch bank ABN AMRO
for Italian bank Banca Antonveneta.

Fazio's lawyer said in a statement that as Thursday
evening, neither he nor Fazio had received a request for the
central banker to appear before magistrates.

So far Fazio has been able to resist political pressure to
resign, but his direct involvement in the criminal
investigation opened a new, uncertain chapter in the
months-long saga.

Both the government and the European Central Bank have said
they do not have the power to oust Fazio, who has denied
accusations that he abused his office by unfairly favoring Pop
Italiana over ABN AMRO.

The Rome magistrates have been investigating Fazio since
August and a summons is ready to be sent to the governor and
his lawyers, the judicial source said. On Wednesday, a judicial
source said Fazio would be questioned by October 5.


Being placed under investigation does not imply guilt and
does not mean that charges will necessarily be brought.

However, it could embolden Fazio's critics and was sure to
prolong the Fazio affair, which has dominated Italian headlines
for weeks and dented the country's international image.

The central banker has denied any wrongdoing and defied
government calls to resign after leaked wiretap transcripts in
July fueled accusations that he favored Pop Italiana and its
former CEO, a friend of Fazio's.

As expected, the central bank's Council did not revoke
Fazio's open-ended mandate, which would have required the
backing of two thirds of its 13 members. Instead, it issued a
surprise statement of confidence.

"For us at this point the Fazio case is closed," Council
member Paolo Emilio Ferreri told Reuters after the meeting.

The central bank's independent status has protected Fazio
from any outside attempts to oust him.

Fazio's supporters note that in July a Rome court threw out
a case brought by ABN AMRO that the BOI had discriminated
against it in the takeover case.

The Fazio affair has been politically damaging for Prime
Minister Silvio Berlusconi, whose Economy Minister Domenico
Siniscalco resigned last week in protest at the government's
failure to act against the governor.

The timing of the resignation, a week before the cabinet
had to pass the 2006 budget, deepened rifts within the
coalition and prompted calls from parts of the government that
Berlusconi should not lead the center-right into polls due
early next year.