Olivetti Chief Interrogated in Italy’s Kickback Scandal

Roman magistrates briefly jailed one of Italy’s leading industrialists Tuesday in a new twist to a national kickback scandal in which hundreds of millions of dollars were systematically paid to all major Italian political parties in exchange for government contracts.

Carlo de Benedetti, the chairman of Olivetti, one of Italy’s largest private companies, surrendered to police in Milan before dawn Tuesday and was immediately driven to Rome for interrogation by magistrates who ordered his arrest in a surprise move last Saturday.

De Benedetti, among the richest men in Italy and one of its ablest industrial leaders, was interrogated for more than five hours at Rome’s Queen of Heaven prison by Magistrates Augusta Iannini and Maria Teresa Cordova.

De Benedetti was released to house arrest later Tuesday, the Italian news agency ANSA reported, although under Italian law a suspect may be held 48 hours for questioning without formal charge.

Nearly 3,000 business people, politicians and government officials have been implicated in a 20-month investigation begun by magistrates in Milan, but the astonishing proportions of the scandal are only just now coming to light.

Extracts of a memorandum written to judges by former Prime Minister Bettino Craxi were published by Italian newspapers Tuesday. Craxi says in the document that his Socialist Party, which was long a partner in governing coalitions with about 15% of the national vote, received the equivalent of around $150 million in illegal funds between 1987 and 1990.

All parties, including those such as the former Communist Party that were not in the government, were guilty of systematic corruption in accepting payoffs, Craxi avers.

Testifying voluntarily to Milan magistrates in May, the 58-year-old De Benedetti said that Olivetti, a computer and telecommunications giant, had paid around $7 million in bribes to obtain contracts to supply equipment to the Ministry of Post and Telecommunications.

De Benedetti insisted then that Italian businesses who made payoffs were not villains but victims of a political system that lived off corruption. Not making the payoffs, he argued, would have cost Olivetti contracts and jobs.

The arrest warrant issued Saturday, however, alleges that De Benedetti’s testimony was flawed. Based on allegations by two former Post Ministry officials now in jail, the judges suspect that Olivetti engaged in corrupt practices for at least a decade.

The warrant, published in La Repubblica newspaper, which De Benedetti controls, charges that he used political pressures and payoffs to supply the ministry with inferior and out-of-date telecommunications equipment between 1988 and 1991.

There was a risk that De Benedetti would tamper with evidence if he were not jailed, the warrant said. His lawyers dismissed that allegation and argued that his arrest was unnecessary because he has already been cooperating with investigators.

De Benedetti’s empire, built from a typewriter company, now includes finance, manufacturing and publishing interests as well as computers and telecommunications.

The industrialist, who went to the jail Tuesday in a stylish gray suit and silk necktie, is also appealing a six-year sentence for participating in the fraudulent bankruptcy of a bank where he was briefly deputy chairman in 1982.