The Dark Heart of Italy (21 page)

There was nothing particularly new about the size and inefficiency
of Italy’s bureaucracy, which had, for centuries, been the brunt of
bitter criticisms. ‘In Italy,’ wrote Stendhal, ‘and especially in the
neighbourhood of the Po, everyone’s conversation turns on passports.’
He describes in
The Charterhouse of Parma
one clerk who
‘waved his hand several times in the air, signed his name, and
dipped his pen in the ink to make his flourish, which he executed
slowly and with infinite pains … The clerk gazed at his flourish with
satisfaction, added five or six dots to it, and finally handed the passport
back …’ Luigi
Barzini
was even more scathing. Bureaucrats, he
said, ‘are as a rule impatient, overbearing, hurried, ignorant,
indifferent to other people’s problems, insolent and sometimes
corrupt … Italians of all classes (unless they are important people
with powerful friends) spend a substantial part of their time standing
in angry queues, in front of office windows, or waiting endlessly
merely to have some simple right recognised. What their rights are,
nobody knows for sure. Uncertainty is used, in Italy, as
instrumentum
regni
.’

There were other problems. Mediobanca was the epitome of the
‘salotto buono’, an exclusive club of few high-financiers whose interests
overlapped wherever possible. In fact, there had been ‘a massive
rush towards the concentration of capital. Between 1966 and 1967,
twenty-nine companies possessed over 34% of the entire equity capital.’
4
That trend would continue during the following decades, witness
to both the financial muscle of a few, very large corporations and the
small size of Italy’s stock exchange. Given the size of the Milan Borsa,
it had traditionally been simple artificially to inflate or deflate stock
prices. Shareholder rights were minimal, consolidated accounts were
until recently unheard of, public information was nearly impossible
to obtain. Business empires were split into the usual ‘Chinese boxes’;
if you opened the lid on one company, you didn’t see the contents
but just another box. Meanwhile many of the largest and most
influential companies remained unquoted and in private, family
hands
.

Even today, that habit of Chinese boxes is incredible. Take, for
example, the takeover in
2001
of Olivetti (and therefore of Telecom
Italia) by Pirelli. It was masterminded by Marco
Tronchetti
Provera
(former husband of Cecilia Pirelli) and his Benetton allies
(‘Benetton
Edizione
Holding’, responsible not just for the clothing
empire, but also a Formula One team, and almost all of Italy’s
motorway service stations and the motorways themselves). In the
deal,
£4
.
3
billion was paid for a 23% stake in Olivetti (in a move
which would have been illegal elsewhere, a premium was paid only
to certain shareholders). The resulting Chinese boxes should give
some idea of the byzantine, secretive world of the Borsa:
Tronchetti
Provera
now owns 53% of Gpi, which owns 55.
1
% of
Camfin
, which
owns 29.6% of Pirelli and Company, which owns 100% of Pirelli and
Company Luxembourg, which owns 27.7% of Pirelli S.p.A, which
owns 60% of Newco, which owns 27% of Olivetti, which owns 54.9%
of Telecom Italia which in turn controls 56% of Telecom Italia
Mobile and 54.6% of Seat-
Pagine
Gialle
, which is responsible for the
seventh national television channel, now renamed ‘the seven’.
Looking at that empire, and it’s much the most simple example of
the genre, the usual pattern emerges. In a few family hands all the
aces are held: telecommunications, publishing, mass media, offshore
stop-overs and so on. None of which is, of course, illegal. It’s simply
that high-finance is like so much else: not exactly transparent
.

Italian investors, at least those outside the cosy
‘salotto buono’,
were disinclined to invest money in someone else’s Chinese boxes.
There was for years an enormous export of capital abroad (an estimated
three billion dollars in 1969, before the crisis had even begun).
Once inflation did begin to go well into double figures, people
realised that it was better to invest money in dollars, sterling, or even
Parmesan cheese, than in the Lira. Foreign investment, too, was
minimal (even in 1999 it was only one ninth of Britain’s), largely due
to the opaque quality of Italian finance. Transparency International,
a company that analyses the corruption factor across the globe on
behalf of potential investors, now ranks Italy bottom of all western
European countries. On the world stage, it rates worse than Estonia
and Botswana because its free-market is perceived as being besieged
by ‘dirty hands’
.

Mani Pulite,
Clean Hands, was the name given to the pool of investigative
magistrates who, in that brief period from 1992–94, caused
the political and economic revolution. It was a period that marked
the end of the First, the beginning of the Second, Republic. After fifty
years, the music seemed to stop: the rules of that game of musical chairs
(in which no seat had ever been removed, but politicians simply
changed position according to the political music of the time) were
suddenly rewritten. In their indignation the Clean Hands magistrates,
overwhelmingly supported by the Italian public, removed all
the chairs in one fell swoop. Entire political parties which had, for
decades, been taking hefty kick-backs on the contracts they dispensed
were brusquely rejected; the city of ‘Tangentopoli’ (meaning literally
‘bribery city’, referring first to Milan, but subsequently used for the
entire peninsula) was razed to the ground by zealous ‘revolutionaries’
who fought to apply the letter of the law
.

What’s strange reading the story with a
foreigner’s
eyes is that
everyone had always known that corruption was rife in Italy, many
even had the evidence, but until the early 1990s nothing was done. It
was politically or legally impossible. For years commentators had
derisively talked about politicians’
‘petrodollari’
(the money they
salted away in offshore accounts thanks to deals cut with the energy
industry). Elio
Vetri
and Gianni
Barbacetto
had already published
Milano degli scandali,
Giampaolo
Pansa
had written
Il Malloppo (The Swag).
The scandal of 1992–94, then, wasn’t shocking because
of the discovery of corruption; the real shock came in the fact that it
was finally possible for the millions of long-suffering, law-abiding
Italians to do something about it
.

The sudden crumbling of the First Republic looks, in retrospect,
very much like the ‘velvet revolution’ of 1989. A system which had,
since the end of the Second World War, been monolithic and menacing
self-imploded within the space of a few, breathless months. There’s
more than imagery to link the two events. The collapse of the Soviet
Union, and the end of the Cold War, had much sharper consequences
in Italy than in other European countries. The credibility of
the Italian Communist party obviously collapsed, but so did that of
the Christian Democrats. Their winning card (and that of their
junior coalition partners) had always been that they represented a
dam against ‘red terror’. Once that threat was gone, the dam looked
rather unnecessary and – many finally dared to say it out loud –
rather corrupt. At the same time, another international situation
was bringing pressure to bear on the peninsula. The advent of the
Exchange Rate Mechanism, and the monetary orthodoxy demanded
by Europe in preparation for the Euro, meant that Italy needed
Clean Hands. The rules of the game were international, and Italy’s
record of inflation and budget deficits was being sternly criticised
from both inside and outside the country. (At the time of the signing
of the Maastricht treaty, Italy’s inflation still stood at almost 7%,
and 20% of all state revenue was going simply on interest payments
for the public debt, which was itself over 100% of GNP.) What was
new, at the beginning of the 1990s, was not that the bureaucracy
was inefficient and discretionary (only useful to those with the
right contacts), but that it was a luxury the country could no longer
afford. The situation was exacerbated by the tradition of tax evasion
which meant that, in order to recoup a percentage of the earnings of
its citizens, various governments almost had to bribe them to buy
into BOTs (government bonds) by offering absurdly high interest
rates which the state, again, couldn’t afford. ‘The cake is finished’
read one of the headlines in
Corriere della Sera
at the time of the
crisis,
5
as if to suggest that the system of corruption had collapsed not
so much because of an outburst of righteousness but simply because
there was nothing left to go round
.

Most importantly, Clean Hands happened thanks to the country’s
‘minoranze virtuose’,
its moral minority: those ‘recalcitrant elements
obstinately convinced that the official morality of the
Republic, its laws and constitution, couldn’t be simply a fig leaf to
cover non-codified practices
’.
6
The pool of magistrates was made up
of men of such steely integrity that the crude corruption of generations
of politicians and businessmen was thrown into sharp relief.
Head of the pool was Francesco Saverio Borrelli, the dignified
Procuratore Capo
of Milan; others included Gherardo
Colombo
and, most famously, Antonio Di Pietro. The latter was a gruff former
policeman who became famous for his extensive computer database
and his gruelling interview techniques. The word ‘pool’ had been
borrowed from magistrates in Palermo, where another investigative
pool was trying to perform exactly the same task as that in Milan:
the application of the law after years of fudge and neglect. Indeed,
those revolutions would often overlap, the southern one against the
Mafia, the northern one against its white-collar incarnation
.

The revolution began on 17 February 1992. Mario Chiesa, a stalwart
of the Socialist party and head of Pio
Albergo
Trivulzio
, an old people’s
home, was filmed as he pocketed seven million lire, which was
half of the overall bribe, which was in turn exactly 10% of the agreed
contract. He had only been caught because a disgruntled contractor,
Luca Magni, had complained about the systematic extortion whereby
10% of any contract in Milan had to be paid back, under the counter,
to the people who gave out the contracts, be they for laundry, rubbish
collection, funeral services and so on. Chiesa, who had lowered the
blinds whilst taking the money, was caught red-handed. Twelve
billion lire were later discovered in his bank accounts. From that
simple, innocuous beginning, the whole system unravelled. Mario
Chiesa, languishing in prison and offended that the leader of his
party, Bettino Craxi, had nicknamed him ‘Mariuolo’ (‘scoundrel’),
began to name names. From there the investigation snowballed,
although (and it’s a vital point, since it would be one of the principal
accusations made years later against the revolutionaries) the Clean
Hands held back from investigating any politicians since there was
an election pending in April 1992
.

After that General Election (in which the socialists lost only
0
.7%
of the vote), the revolution began in earnest.
Clemente
Rovati
, the
constructor responsible for the building of the third ring of the San
Siro stadium, was arrested. On
1
May 1992 Paolo
Pillitteri
, Bettino
Craxi’s brother-
in-
law, and Carlo
Tognoli
, ex-Socialist mayor of the
city, were given ‘avvisi di garanzia’ (notice that they were under
investigation). Before long, there were lines of businessmen queuing
up to talk to the Clean Hands pool, keen to portray themselves as the
victims of extortion rather than parties to corruption. Notorious
businessmen and their political patrons were accused, arrested and
tried. The sophistication and calculation of the bribery system, it
emerged, was so precise that exact percentages were being given to
various parties. The kickbacks arising from contracts for work on the
Milanese underground, for example, were subject to an exact mathematical
division: 36% to the Socialist party, 18.
5
% to the Christian
Democrats and the
Communists/Democrats
of the Left and so on
.

Many accused politicians would later argue that such payments
were simply ‘election funds’. The number of personal accounts held
offshore, however, awash with billions of lire, began to shock the
public. The circumstances of the arrest of
Duilio
Poggiolini
, head of
the pharmaceutical department of the Ministry of Health, became
emblematic for the corruption of an entire era. Billions of lire were
found stuffed into a pouffe. 120 million dollars were found in three of
his homes. He had fourteen Swiss bank accounts, sixty expensive
paintings, diamonds,
krugerrands
, gold ingots stacked in shoe-boxes
.