Bank of Italy Governor Under Pressure to Resign

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The Bank of Italy's governor is under pressure to quit after a leaked phone tap suggested he favored an Italian bidder over a Dutch rival in a bank takeover battle. But the governor says he is innocent and refuses to resign. And it seems unlikely that Prime Minister Silvio Berlusconi will force him out.


Italy's economy minister stepped down today. He left in protest of his government's refusal to oust the governor of the Bank of Italy, Antonio Fazio. Fazio's apparent opposition to a foreign takeover of an Italian bank has the country's political and financial world in an uproar. He denies any wrongdoing and is resisting demands for his resignation. NPR's Sylvia Poggioli reports from Rome.


Controversy began swirling around the central bank chief in 2003, when the Parmalat Dairy giant collapsed in Europe's biggest case of corporate fraud. Both domestic and international banks were directly involved in the Parmalat scandal. Now Fazio is accused of going beyond his regulatory role and of unfairly favoring Italian bidders over foreigners in a bank takeover. The European Union has criticized what it sees as Fazio's protectionist policies that go against EU regulations. Social commentator Bepis Evinini(ph) says the Fazio affair has tarnished the country's most respected institution and seriously harmed it image.

Mr. BEPIS EVININI (Social Commentator): The real problem is that Italy's credibility abroad--and we're talking about the elite, the establishment, the banking financial and political establishment--took another blow. And really, we didn't need one.

POGGIOLI: It all began with the leak of wiretaps to the Italian media. A Dutch bank and a small Italian bank were bitterly contesting control of Antonveneta, Italy's ninth-largest bank. Italian magistrates were investigating what they suspected was a shady operation by the Italian bidder. He was Gianpiero Fiorani, who was under investigation for market rigging and false accounting. The wiretaps indicated that Bank of Italy Governor Antonio Fazio was a close friend of Fiorani, and that against the advice of two senior Bank of Italy officials, Fazio was facilitating Fiorani's bid for Antonveneta.

The Fiorani wiretaps revealed a cozy friendship with the Fazio family. Some of these calls were with Mrs. Fazio, Maria Cristina, who offered words of comfort to Fiorani that all would go well with the bank battles. In another call, Governor Fazio gives assurances the bank takeover will be approved. Fiorani replies, `Tony, I'm overwhelmed with emotion. Thank you! Thank you! I would kiss you on the forehead if I could.'

Fazio has been governor of the Bank of Italy for 12 years, a post with life tenure. But now he's under strong pressure, both in Italy and from abroad, to step down, but he stubbornly holds on.

Professor JAMES WALSTON (American University): He's been described as a limpet, those shells which stick to the bottom of ships and will not move until they--unless they get broken.

POGGIOLI: James Walston is professor of political science at Rome's American University. He says Fazio is a devout Catholic whose daughter, a member of the ultraconservative movement Legionnaires of Christ, recently became a nun. Conservative Catholic circles consider Fazio a victim, and the Vatican daily L'Osservatore Romano complained of an anti-Catholic campaign against Fazio.

Prof. WALSTON: Italy has a long history of the church banking, of religious banking and religious finance, which is felt encircled by secular--and secular often meant Jewish or was perceived to be Jewish--banking in the distant past, in the 19th century, the beginning of the 20th century, too.

POGGIOLI: A dispute over financial protectionism metastasized into bitter charges of religious prejudice and anti-Semitism. The economic spokesman of the Forza Italia Party of Prime Minister Silvio Berlusconi lamented that Italian banks are `attractive targets for Jewish and American Freemasons.' The statement was denounced by Italian-Jewish leaders, and after a few days, Berlusconi himself condemned remarks that he said stir up echoes and ghosts of a monstrous past.

Yet Italy still doesn't know what to do with Fazio. Italian magistrates have announced they want to interrogate Fazio in connection with the bank takeover, but it's still not clear whether he'll appear as a witness or as a suspect. Sylvia Poggioli, NPR News, Rome.

MELISSA BLOCK (Host): This is NPR, National Public Radio.

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