Fininvest SpA, the investment company of Prime Minister Silvio Berlusconi, was ordered to pay Compagnie Industriali Riunite SpA more than 540 million euros ($770 million) by an Italian court. Fininvest said it will appeal.
The company will also have to pay interest and CIR’s court expenses, an appeals court in Milan decided, according to the text of the ruling released today and obtained by Bloomberg News. The decision is effective immediately, the court said.
Marina Berlusconi, the premier’s daughter and Fininvest president, called the decision a “bitter defeat for justice” and “the umpteenth scandalous episode of frantic aggression that has gone on for years against my father, by all means and on all fronts, including entrepreneurial and economic.” Fininvest will appeal the ruling, she said in an e-mailed statement.
Fininvest in October 2009 was ordered to pay 750 million euros to CIR for bribing a judge during a takeover battle for publisher Arnoldo Mondadori Editore SpA (MN) dating back to 1991. Fininvest, which said at the time the ruling was “profoundly unjust,” appealed and won a suspension of the court ruling, which allowed the company to delay payment while its appeal went through the courts.
In December 2009, Fininvest provided an 806 million-euro bank guarantee, including interest and “ancillary costs” to cover the damages owed to CIR.
The guarantee was provided by a group of banks including Intesa Sanpaolo SpA (ISP), UniCredit SpA (UCG), Banca Monte dei Paschi di Siena SpA (BMPS) and Banca Popolare di Sondrio SCARL (BPSO), Ansa news agency reported at the time. Compensation will be paid if Fininvest loses the appeal.
With today’s ruling the court ordered Fininvest to pay a “fine amounting to twice the current value of the stake” the company holds in Mondadori, Marina Berlusconi said in the statement. “We shouldn’t pay a single euro,” she said.
Mondadori, 50.1 percent owned by Fininvest, has a market capitalization of 610 million euros, according to Bloomberg data.
The appeals court said separately that Silvio Berlusconi should be considered co-responsible for the civil charges tied to the bribery ruling, Ansa reported.
The civil charges in the current Milan case date back to the period between 1986 and 1991, when Silvio Berlusconi was building his media empire. He began accumulating shares in Mondadori in the 1980s in a bid to wrest control of Italy’s biggest publisher from financier Carlo De Benedetti.
“The ruling confirms once again that Mondadori was subtracted from CIR through the bribery of Judge Vittorio Metta, which was organized on behalf of and in the interest of Fininvest,” Milan-based CIR said in an e-mailed statement. CIR added the ruling “affects a business story and has nothing to do with the current political situation.”
According to the Italian law, Fininvest may now request a court to suspend the payment to CIR only on the ground of a “serious and irreparable damage” to the company’s finances.
“The ruling does not put Fininvest’s survival at risk, but certainly puts its finances under stress and will have a serious impact on this year’s earnings,” said Emanuele Vizzini, who helps manage about $1 billion at Investitori SGR in Milan. He owns shares in Berlusconi’s media company Mediaset SpA (MS) and Mediolanum SpA (MED), a financial-services company partly owned by the politician.
Berlusconi on July 5 said his government dropped a clause from Italy’s new budget law that would have helped closely held Fininvest to delay the damages to CIR, following the ruling. The premier said he eliminated the loophole because of “shameful polemics” from the opposition, according to an e-mailed statement by his office.
The clause would have allowed convicted parties in civil cases to put off paying fines in excess of 20 million euros until a final verdict is reached.
Silvio Berlusconi told reporters July 7 in Rome that his holding company doesn’t need to be saved by any special laws and that Fininvest will “save itself.” He added that the clause was “a fair and balanced rule” and may be added again in the final version of the government’s austerity law following debate in parliament.
Silvio Berlusconi entered politics in 1994. Before then he controlled Fininvest directly. Marina, his oldest daughter, is also chairman of Mondadori.
CIR, whose honorary chairman is De Benedetti, controls businesses including publisher Gruppo Editoriale L’Espresso SpA (ES), power generator Sorgenia SpA and auto-parts company Sogefi SpA.