Berlusconi Is In Political Dock as Panel Mulls Expulsion

Silvio Berlusconi’s future in Italian politics is hanging in the balance after a Senate panel voted today to recommend expelling the former prime minister from the upper house, following an August tax-fraud conviction.

The panel’s recommendation will be put before the full Senate for a final vote in the next few weeks.

The decision capped a week of turmoil in Rome that followed Berlusconi’s failed bid to bring down the five-month-old coalition he forged with Prime Minister Enrico Letta. That effort collapsed two days ago due after lawmakers in his People of Liberty party mutinied, led by Deputy Premier Angelino Alfano, leaving the billionaire vulnerable to counter-attack.

Berlusconi’s ouster from the Senate “would of course worsen the atmosphere,” Lucio Malan, a panel member and Berlusconi ally, said yesterday in a Bloomberg Television interview. That decision would work “against any kind of decent relations between coalition partners,” he said.

Berlusconi’s legal troubles led to Italy’s latest round of political upheaval, with Letta’s Democratic Party saying his eviction is mandated by a 2012 anti-corruption law. The ex-premier’s allies and lawyers say it would be unconstitutional to apply the statute retroactively since Berlusconi’s conviction stems from a case initiated before the law existed.

“The life of the government and the decision of the committee on his mandate as Senator have overlapped each other in the last few weeks in a crescendo of turbulence,” Letta told lawmakers Oct. 2. “The situation became unsustainable.”

6-Hour Meeting

The 23-member committee announced its decision after a 6-hour closed-door meeting that followed a public hearing in Rome.

Italy’s 10-year bond yield dropped 6 basis points at 4:54 p.m. to 4.32 percent, pushing the difference with comparable German bunds to 247.9 basis points. The benchmark FTSE MIB index rose 1.5 percent to 18,297.

Italy’s highest court on Aug. 1 upheld Berlusconi’s conviction for tax fraud, sentencing him to four years in prison. While a Milan appeals court must still determine the length of a public-office ban attached to that final sentence, the Senate has already acted, due to an anti-corruption law passed in December 2012 that bars anyone from seeking public office for at least six years after receiving a prison sentence of more than two years.

A motion to halt expulsion proceedings against Berlusconi was rejected on Sept. 19 in a vote by the Senate committee.

Berlusconi, 77, must decide by mid-October whether to serve his four-year sentence, which should be reduced to one year due to a law against prison overcrowding, under house arrest or perform community service. He’s unlikely to spend a day in jail, also because of leniency to those older than 70.

Berlusconi maintains his innocence in all cases against him, saying he’s the victim of a political vendetta.

Confidence Vote

Letta won a confidence vote Oct. 2 after Berlusconi pulled his ministers from the government Sept. 28, setting off a week of turmoil. Cracks in his PDL began to show when prominent figures said they’d vote for the government.

The turning point came Oct. 1 when Alfano broke away from his mentor and declared his support for Letta, 47.

Berlusconi, forced out as prime minister in 2011, brought down his successor, Mario Monti, in December 2012. The fragmented parliament elected in February has been incapable of enacting a program to pull Italy from its two-year recession. This week’s crisis blocked the approval of economic measures including the delay of a planned VAT increase.

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