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Boardrooms restless over Berlusconi’s legal woes

February 16, 2011

By Rachel Sanderson in Milan and Guy Dinmore in Rome, published: February 16 2011

Italy’s boardrooms are restive as the country’s business elite grapples with the political uncertainties stemming from Silvio Berlusconi’s judicial woes.

Charged with paying for sex with an underage prostitute and abuse of office, the beleaguered prime minister has been ordered to stand trial on April 6.

The business community, given voice by Emma Marcegaglia, head of Confindustria, Italy’s employers’ federation, has complained for months that Mr Berlusconi’s government has been paralysed by its internal divisions and his personal battles with the courts, which also include three cases related to his media empire.

“Under siege in his bunker and fighting magistrates . . . the prime minister is without doubt a man who does not have time to govern, and probably no longer has the authority to do it effectively,” wrote Stefano Folli, commentator for Il Sole 24 Ore, Italy’s main business daily.

An executive from a major Italian energy company, who asked not to be identified, complained that the government crisis had severely undermined Italy at an EU summit, primarily focused on energy, attended by Mr Berlusconi on February 4 in Brussels.

In a quirk of timing, two days before Mr Berlusconi is due in court, the government is expected to carry out a wide-ranging reshuffle of top jobs at leading state-controlled companies, including Eni, Enel, Finmeccanica, Terna and Poste Italiane.

In all 47 board appointments are up for grabs, and how they are dished out will be watched more closely than ever in a country known for its closely entwined political and business elites.

“Italian politics is like a club of about 30 people. They talk to themselves, they are self-serving, like a private club with a large gap between them and the country,” said Luca Cordero di Montezemolo, head of Ferrari, who is flirting with the idea of a career in politics.

The boardroom moves, which happen every three years, will be closely parsed for signs of Mr Berlusconi’s waning influence and attempts by political rivals to exploit his weakness.

The Northern League, junior coalition partner in the centre-right government, is determined to use the corporate reshuffle to extend its influence beyond its northern heartlands.

Jobs for Northern League sympathisers may be the price to pay for the populist and protectionist party’s continued support in parliament, where the government has a wafer-thin majority.

The struggle for influence is not confined to publicly controlled companies. RCS Mediagroup, owner of the Corriere della Sera newspaper, is in the throes of a boardroom spat as allies and foes of Mr Berlusconi jockey for influence.

But it is the jobs at state-controlled multinationals, including some of the largest companies listed on the Milan stock exchange, where the struggle will be most intense.

The appointments are routinely made every three years and involve some of Italy’s best known executives: Paolo Scaroni, chief executive of Eni; Fulvio Conti, chief executive of Enel and Pierfrancesco Guarguaglini, head of Finmeccanica.

“If Berlusconi is strong, you will see little change in the jobs. If he is weaker there will be a reshuffling,” says a senior Milan banker.

Another government adviser points out that the roles ultimately may prove to be spoils handed out before Italy heads towards possible early elections.

The decision on the appointments will be made by Mr Berlusconi, Gianni Letta, cabinet undersecretary and one of Italy’s most powerful unelected officials, together with Giulio Tremonti, finance minister, who is close to the Northern League.

Senior bankers say Mr Scaroni and Mr Conti are expected to get third terms as heads of Eni and Enel. At a moment when foreign investors are concerned about Italy’s mounting debt, the government needs to reinforce stability in its biggest companies.

Mr Scaroni is also considered key to implementing Italy’s energy plans involving Russia struck in bilateral negotiations between Mr Berlusconi and Vladimir Putin, the Russian prime minister.

Among possible changes, Mr Tremonti could retain Mr Guarguaglini as chairman of Finmeccanica, but give the role of chief executive to someone close to the Northern League, according to financial sources.

Umberto Bossi, leader of the Northern League, a year ago said he wanted to put more of his sympathisers on the boards of northern Italian banks.

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