Embroiled in a row over Telecom Italia, Premier Romano Prodi denied on Friday that his centre-left government was seeking to renationalise the telecommunications giant.
"The centre left does not want a return to a centralised economy," Prodi said from Vasto in Abruzzo where he was attending a national rally of a party in his nine-way coalition.
The premier also repeated that he had nothing to do with a controversial report on Telecom drawn up by a close advisor which recommended that the state buy back part of the debt-laden group.
"I don't know the Rovati report and I have not read it," said the former European Commission chief, who faces opposition grilling over the case in the House next week. Angelo Rovati resigned as Prodi's economic advisor on Monday after the report was leaked to the press.
His resignation came three days after Telecom's controlling shareholder Marco Tronchetti Provera quit as the group's chairman following a bitter clash with Prodi over an unexpected U-turn in company strategy. Tronchetti Provera, who also heads tyre group Pirelli, announced last week a radical new plan of splitting Telecom into three, with the creation of stand-alone companies for its fixed line, mobile and broadband/media activities.
Since Telecom and TIM merged little more than a year ago, analysts immediately speculated that Tronchetti Provera was preparing for a TIM sell-off in order to reduce Telecom's debt mountain of 41.3 billion euros, a sum which almost equals the group's estimated market value. Prodi expressed surprise and alarm, saying that Tronchetti Provera had failed to inform him of his plans during two recent meetings.
The opposition immediately accused Prodi of interfering in the running of a private group.
With the publication of Rovati's report, the premier was also accused of knowing far more about Telecom's plans than he had let on.
The informal report, sent to Tronchetti Provera by Rovati in early September, offers several restructuring options to help solve Telecom's debt problems. One of them is that Telecom split itself from TIM and that the Treasury's savings and loans division then buy control of the fixed-line
entity.
Rovati said the operation would reduce Telecom's debt by17-20 billion euros and that the state's investment would beoffset by 5-7 billion euros from the capital gains on Telecomplus 120-170 million euros per year in profits. Rovati insists that Prodi and the government had nothing to do with the 28-page analysis, even though it was printed on letter-headed paper from the premier's office.
He quit saying his report had been "distorted" and used to "damage Prodi and his government".
The opposition is now demanding Prodi's resignation and a parliamentary inquiry into the matter.
The rightist National Alliance (AN) said on Friday: "Prodi's lying. We believe he was informed (about the report). In other countries, when leaders are caught lying, they resign".
But Prodi rejected the opposition's accusations, including charges of interference.
"It was my right to be informed about Telecom's plans in the name of the Italian people. A government cannot completely ignore what happens in companies that are vital to the country's future. "Tronchetti Provera asked for a meeting with me and informed the press about his request. if a person asks to speak to the premier, they have to inform him about their current plans. That did not happen," he said.
The Telecom affair has also triggered a probe by prosecutors in Rome and on Friday, police raided the Milan offices of Telecom where they seized documents relating to recent board meetings and a copy of the Rovati report. Telecom's new chairman, veteran lawyer and troubleshooter Guido Rossi, also met with prosecutors in Milan where he handed over other board documents.
The prosecutors are investigating whether Telecom followed correct procedures with bourse watchdog Consob and investors in its announcement of the restructuring plan. No individuals have been placed under investigation as yet.
Shares in Telecom fell 2% on Friday to 2.19 euros. Pirelli, which indirectly controls Telecom, plunged 3.34% to 0.68 euros.
