Telekom Srbija: scandal or electioneering?

In the general scheme of things political in Italy, the Telekom Serbia story is pretty low in terms of real significance even in its effects on politicians let alone on the rest of the country. But it does provide a useful microscope with which to examine the broader workings of the system.

Last week saw one of the chief accusers being arrested and charged with perjury and at the moment, at least, it looks as if the story will deflate and disappear.

Like all good scandal stories, Telekom Serbia had layers under layers and it was never clear if the right metaphor was an onion where you peel and peel and end up with nothing, or an artichoke where at the end of the leaves, there is a succulent heart covered with a spiky beard. Today we are closer to the onion.

There were alleged bribes and slush funds; there are shady Balkan and Italian characters, top names in Italian politics as well as of course Slobodan Milosevic, respectable and louche bankers and their agents in London, Switzerland and Monte Carlo. Magistrates, parliamentarians and journalists are all searching for the truth, or for some, the most useful “truth”. Beneath the hype was the more banal possibility of a badly thought out deal with insufficient political control exercised, one one which seemed a good idea at the time and then turned out to be much less of one.

First of all the few facts which almost no one disputes: on 9 June 1997, Italian Telecom, then a state-owned company, bought a 29% share in Telekom Serbia for 843 million D-marks. The shares were sold back to the now privatised Telecom Italia in February 2003 for 193 million euros. Beyond this, all is interpretation, hypothesis or evidence before court and Parliament.

The accusation from the centre-right is that a good portion of the purchase price went into a Milosevic slush fund and thus indirectly contibuted to the war crimes he is accused of. Worse for the centre-left as we move towards European elections this year and Italian ones in ‘06, are the allegations that then senior members of government received hefty kickbacks on the deal. Happen that two of the names belong to present leaders of the Olive: then Prime Minister Romano Prodi and Undersecretary for Foreign Trade, and Piero Fassino, the most likely Prime Ministerial and Deputy Prime Ministerial candidates in ‘06; the third name is Lamberto Dini, then the Foreign Minister and still an important figure. At one stage last year, a whole raft of Olive leaders’ names was being bandied about from Mastella to Veltroni to Rutelli. Finally, there is a shadow in the background, the then Economics Minister, Carlo Azeglio Ciampi, now President and therefore supposedly worthy of respect and above party politicking. Still, he has already blocked the government’s media reform bill and Mr. Berlusconi has been clear that he does not appreciate the President’s powers so any lever on the person or the insitution is useful.

The slush fund story was broken by the centre-left Repubblica in 2001 but for most of last year, it was the ultra-pro-Berlusconi Libero and the Prime Minister’s brother’s paper, Giornale which made the running so much so that DS leader Piero Fassino accused Mr. Berlusconi of being the “puppetmaster” organising a campaign of defamation.

There are judicial investigations in Turin which began in 2001, looking into possible bribes, fraud and tax offences around the deal plus accusations of kickbacks. The two main witnesses accusing the centre-left politicians have now been indicted, one for money-laundering last year and the other, Antonio Volpe, for perjury last week. At the same time, a special Parliamentary Committee was set up in 2002 to investigate the possible political involvement. It only had the support of the centre-right.

With Volpe’s arrest, the centre-left is trying to close the Parliamentary Commission saying that Volpe’s perjury is proof that the whole “scandal” was invented. The government is playing for time. Mr. Berlusconi has repeated that the deal was a mistake though he has retreated from saying it was criminal. The centrist UDC Marco Follini has suggested a compromise where Prodi and the others will admit to political or economic errors and any suggestion of criminal activity will be dropped.

It is not going to happen; Mr. Prodi has already explained that the deal actually profitted the Treasury as Telecom shares went up between the Serbia purchase and privatisaiton (Repubblica.it/politica: Prodi: "Con Telekom S...). In any case the bitter accusations have been so serious that it has become impossible to discuss the merits of the business.

Arguably, the deal was justified both politically, diplomatically and economically in 1997 and arguably with hindsight it turned out to be a mistake on all counts. There is also a fair chance that some of the commissions paid ended up in the hands of shady middlemen. But we are not going to hear those arguments or the evidence, at least not in the near future.

If, as seems likely today, the Prodi-Fassino-Dini connection is shown to be a complete fabrication, there will always be the lingering doubts. We know that there will always be the possibility of disclosures close to the elections; on the other side, the substance of the deal will not be aired and above all, the presumptions of guilt, innocence and conspiracy will continue for months, years and maybe decades.