Kickback claims hit Italian left

Pressure was growing on leaders of the Italian left yesterday over allegations that they took massive kickbacks when Telecom Italia bought a chunk of Telekom Serbia during Slobodan Milosevic's rule.

A key financial adviser has accused European commissioner Romano Prodi; a former foreign minister, Lamberto Dini; the leader of the Democrats of the Left party, Piero Fassino; and Rome's mayor, Walter Veltroni, of taking millions of pounds in backhanders when the deal was done in 1997.

Mr Prodi, prime minister at the time, has rejected the accusations as "infamy", and offered, in an open letter published in the Espresso newspaper, to appear before a parliamentary commission to clear his name.

"I never took a penny and I never will," Mr Fassino said on Saturday.

More used to firing similar accusations at Italy's billionaire prime minister, Silvio Berlusconi, he suggested, without giving details, that Mr Berlusconi was the real "puppetmaster" pulling the strings behind this scandal too.

Mr Berlusconi's spokesman dismissed the accusations as "outlandish".

Earlier this year Mr Berlusconi attempted to bounce allegations of bribing judges in a 1980s corporate takeover onto his rival, Mr Prodi. Mr Prodi also dismissed these allegations.

In recent weeks a financial adviser and an important witness in the investigation, Igor Marini, has named the leftwing leaders. Mr Marini was extradited to Italy in July after he was arrested in Switzerland for money laundering in a different case.

He said the proof of his allegations against the Italian leaders was to be found in Switzerland.

The commission has been investigating the allegations since May last year. Mr Prodi, widely rumoured to be planning to return to lead the Italian left, has always denied knowledge of any foul play when state-run Telecom Italia bought a 29% stake in Telekom Serbia for US$497m (£330m).

Last year Telecom Italia agreed to sell the stake back to the Serbian government for US$202m, roughly half the price paid six years ago.

Authorities in Serbia are also investigating the kickback allegations.

Mr Prodi is also facing growing pressure over a financial scandal at the EU's statistics office, Eurostat.

He is to appear before a closed-doors EU parliamentary committee hearing on September 25.