Berlusconi Facing Possible Election Year Tax Fraud Trial

by Ulrika Lomas, for LawandTax-News.com, Brussels

01 November 2005

A Milan court began a preliminary hearing on Friday to establish whether Italian premier Silvio Berlusconi should stand trial on charges of tax evasion relating to the purchase of US film rights through his television network, Mediaset.

Prosecutors allege that Berlusconi and 13 other defendants committed the crimes of tax fraud, false accounting, money laundering and embezzlement when Mediaset acquired the US film rights through two offshore companies between 1994 and 1996 and artificially inflated the purchase price to avoid 125 billion old lire in tax.

Judge Fabio Paparella has adjourned the hearing until November 7 after the defence team requested more time to examine some 1,500 pages of new documents deposited last month by the prosecution. If the Prime Minister is indicted however, a trial could be scheduled for next year - an election year - severely hampering Berlusconi's chance of holding on to the Italian leadership.

The proceedings are also likely to have ramifications beyond the Italian government; among the accused is British lawyer David Mills, the husband of the UK government's Secretary of State for Culture, Tessa Jowell. According to Italian news agency ANSA, Mills has told prosecutors that he helped to set up two offshore companies, Accent and Timor, to hold money for Berlusconi and members of his family. Mills is also accused of money laundering and tax evasion, and faces a prison term of up to twelve years if convicted.

Berlusconi is no stranger to accusations of illegal business practices, and the new charges come little more than a month after Berlusconi was cleared of false accounting at Fininvest, a family holding company chaired by his daughter, between 1989 and 1995.

Berlusconi denies all the charges levelled against him in the Mediaset case.

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