Italy’s slow justice finally snares central banker

May 31, 2011

By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON — It’s taken six years, but Italy’s justice system has finally caught up with Antonio Fazio. The former governor of the Bank of Italy has been sentenced to four years in jail for his role in helping to rig a 2005 takeover battle. The conviction suggests Italy’s courts can hold the powerful to account. But the drawn-out process allows many to slip through the net.

Fazio was convicted for intervening in the battle for Antonveneta, a mid-sized Italian lender, to prevent it from falling into the hands of ABN AMRO, the Dutch bank. Viewed through the debris of the global financial crisis, this misdemeanour may seem fairly small. Even so, it is startling that the person who was once one of Italy’s most prominent figures — one who was given the job of central bank governor for life — could end up behind bars.

Nevertheless, the process is just too slow. Fazio will not go to jail immediately, because under Italian law, defendants are not locked up until they have exhausted their last appeal. Parmalat founder Calisto Tanzi remained a free man until Italy’s highest court finally sentenced him earlier this month for his role in the dairy group’s collapse in late 2003.

The drawn-out process has several drawbacks. First, it allows public anger to fade. Most Italians probably still remember Fazio and Parmalat, but many lesser crimes will be forgotten. Second, it allows those facing charges to carry on with their careers. Cesare Geronzi has been under investigation for his role in the bankruptcy of Cirio, the food company, since it collapsed in 2003. But that black mark did not prevent him from becoming chairman of Mediobanca, the investment bank, and Generali, Italy’s largest insurer. Though Geronzi has now been forced out of Generali, a swifter justice system could have established his guilt — or innocence — much earlier on.

But the biggest problem with Italy’s approach is that many cases expire before they can be brought to a conclusion. Every modern legal system has a statute of limitations. However, in Italy it has often worked in favour of the powerful — most notably Prime Minister Silvio Berlusconi, who has escaped numerous trials because the alleged crimes happened too long ago. The statute of limitations may not help Fazio. But he may prove the exception to the rule.

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