Italy's Silvio Berlusconi Convicted, But Allowed to Stay in Politics

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Silvio Berlusconi

The court upheld a ruling that the mogul created an illegal slush fund in connection with inflated fees from acquisition deals with U.S. studios.

ROME – Italy’s Supreme Court formally upheld a lower court’s guilty verdict against media tycoon and former Prime Minister Silvio Berlusconi Thursday, but it sent the case back to a lower court to reconsider the original sentence that included a five-year ban from politics.

The 76-year-old Berlusconi, who founded cinema and television giant Mediaset, was convicted last year of creating an illegal slush fund in connection with inflated fees from acquisition deals made with U.S. studios, allowing the company to escape paying at least €300 million ($393 million) in taxes.

Sending the case back to the lower court is most likely a victory for Berlusconi, since chances are good that statute of limitations will run out before the case concludes.

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Still, it is the first definitive conviction against Berlusconi, who in the past usually wiggled out of trouble by outrunning the statute of limitations, or on technicalities. Berlusconi had been named in more than two-dozen criminal and civil trials dating back 20 years.

The convoluted outcome probably prevents either side from declaring a clear victory, wounding Berlusconi without pushing him out of the political scene. 

The Rome-based Supreme Court agreed to take on the case after Berlusconi’s lawyers appealed the lower court's conviction, arguing in part that the court's sentence was too harsh. In the end, the Supreme Court justices appeared to agree with that point.

A 2006 amnesty law meant three years of the four-year jail term were removed, and because of Berlusconi’s advanced age a sentence of house arrest or community service is far more likely than prison time. But the ban from public office -- which prosecutors on Tuesday offered to reduce to three years -- was the centerpiece of the conviction, though it would have required parliamentary ratification before it could go into effect. Now the same court will have to reconsider its sanctions.

It was not clear how Berlusconi’s allies in parliament would react to a guilty verdict. Berlusconi had been unusually tight-lipped leading up to the decision -- the Italian media speculated that was to avoid engendering resentment from the Supreme Court judges. But any pullback of support from Berlusconi’s allies would put the fate of the current government of Prime Minister Enrico Letta in doubt: Letta was able to form the government in April, following a two-month political stalemate, only with support from Berlusconi’s parliamentary bloc. If the Letta government collapses or becomes less stable, it could have wide-reaching implications, including the health of the euro currency and Europe's progress in confronting widespread debt problems. Thursday's ruling probably allows the fragile government coalition to survive.

The tax fraud and false accounting trial is not Berlusconi’s only legal problem: The mogul is appealing a one-year jail sentence in connection with a wire tap case in which damaging information against a political rival was published in Il Giornale, a Milan daily newspaper Berlusconi controls and that is run by his younger brother, Paolo Berlusconi.

The elder Berlusconi is also appealing a seven-year jail term and lifetime ban from politics from a conviction of abuse of power and paying an under-age girl, former exotic dancer Karima el-Mahroug, for sex. Both appeals should be ruled on this year, though in both trials another appeal level -- again to the Supreme Court -- is possible.

Despite the legal woes of its founder, Mediaset shares have performed strongly this year. The shares closed Thursday at €3.37 ($4.41), nearly triple their all-time low of €1.16 ($1.52) set in December.

Twitter: @EricJLyman