After reading his deposition aloud, De Benedetti handed it to the leading magistrate, Antonio Di Pietro, who ordered coffee to break the tension.
De Benedetti said he 'assumed personally the full responsibility' for paying bribes to politicians, although he himself had never paid anyone. In an interview with the Milan newspaper Corriere della Sera, he explained: 'I and only I authorised my aides to transgress the very principles of ethics which I had upheld since I entered the company.'
De Benedetti is not the first Italian businessman to make such a confession. More than 1,500 have already been arrested and are under investigation. They were mostly small fry. Then last month came the mea culpa of Gianni Agnelli, the head of Fiat and Italy's most powerful industrialist, after his company's decision to co-operate with the Milanese magistrates. Now De Benedetti has admitted his company's involvement in what he termed 'a right racket' of political payments and official bribery.
The involvement of Fiat and Olivetti has transformed the corruption inquiry from political scandal into an affair that involves Italy's national economic interests, the country's ability to trade and obtain credit, and the future terms of business between Italian and foreign companies. Both companies have given public proof that northern Italian private industry, long hymned as a bright exception to the morass of inertia and graft in Rome, had in reality come to terms with the system.
The twin poles of modern Italian economic development, the great private dynasties and the state-owned behemoths, such as the energy conglomerate ENI, are thus both facing a critical moment of change.
'Within the next couple of years all these guys are going to have to face the choices which they have fudged for such a long time,' said a market analyst with a big Italian oil company.
For De Benedetti, the moment of truth could hardly have come at a worse time. Brokers estimate that Olivetti's 1992 losses could be in the region of pounds 280m. The computer and office equipment company, with a workforce of 60,000, has a high cost base in northern Italy, and even the effects of the lira devaluation are not enough to ward off competition from Asian manufacturers. The legal problems, therefore, were especially unwelcome.
There is, of course, an inevitable Italian complexity to the Olivetti admissions. While admitting to bribes, De Benedetti is at the same time portraying himself as a man who was blackmailed into paying out, to protect his employees and shareholders. For example, he admits payment of about pounds 4.52m to obtain contracts from the Italian ministry of posts, a notorious fount of political patronage. Without such contracts in its home market, he maintained, Olivetti would have had no credibility in tendering for work in northern Europe.
There is a key legal point here. Italian law differentiates between the crime of corruzione, in which two parties conspire to divert money, and that of concussione, which is extortion by a public official from a private businessman. De Benedetti's strategy is to represent Olivetti as the victim of extortion, not a willing accomplice to bribery.
It was indicative that the day after De Benedetti presented his 11 pages of testimony to the magistrates, Olivetti launched a rights issue on the Milan bourse. The company's shares actually rose after his appearance on the front page of every Italian newspaper. Most investment houses reckon the industrialists have struck a deal with the judiciary. Recession has arrived in Lombardy and Piedmont and so, their argument runs, this is no moment to derail the economic locomotives of the region. Di Pietro, the most prominent magistrate, has already spoken of the need for 'a political solution' to the scandals; he does not believe any purpose can be served by putting hundreds of business people behind bars.
De Benedetti says he feels 'liberated' since his testimony. The affair has, however, damaged his reputation as an entrepreneur above the wearisome compromises of much Italian business. Critics have pounced upon his role as major shareholder in the news magazine L'Espresso and the daily paper La Repubblica, both highly critical of the Italian political and economic system. (La Repubblica owns 18 per cent of the shares in Newspaper Publishing Plc, publisher of The Independent on Sunday).
Giampaolo Pansa, the leading commentator on L'Espresso, used his weekly column to invite the proprietor to come clean. 'It's time to pay the highest price,' commented Pansa, 'to tell what you came across in your role at the head of a company, the rottenness you were able to repel and that which you had to accept.'
Fiat is one step ahead of Olivetti in the public relations battle. The car company's chief executive, Cesare Romiti, preceded De Benedetti by several weeks in his pilgrimage to the magistrates. Fiat turned over a dossier of all its dealings with politicians and officials. Senior managers agreed to testify. Agnelli, who had already admitted 'mistakes' and spoken of the 'need and the will to change', called a board meeting.
Fiat has issued an official code of conduct, which forbids its executives to make any payoffs upon pain of disciplinary action. Romiti even made a pious public appeal to his fellow industrialists to come clean and to join the 'renewal' which Fiat, rather belatedly, has discovered that Italy requires.
Such are the gestures which Di Pietro intends when he speaks of a 'political solution'. Economic renewal, however, is far from easy. Its problems may be summed up in two words: protection and privatisation.
Olivetti and Fiat were not just paying out for individual contracts. They were purchasing commercial protection on a grand scale. Despite Italy's diplomatic posture, which ecstatically embraces European union, Italian markets remain protected by barriers which were, until now, invisible. Olivetti dealt with the ministry of posts because officials threatened to welcome Siemens and Philips in its place.
The collapse of corrupt political protection is likely to make foreign competition more real, with positive benefits for the Italian consumer, who still languishes behind a Chinese wall of artificially inflated prices. A genuine free market would not be such good news for the big Italian groups. But it could provide a bonanza for the well-run small and medium-size firms that form the backbone of Italian industry, hitherto shut out by the cartels.
Whatever the challenges to the industrial dynasties, the immediate future looks grim for the numerous medium-size firms whose cash flow is dependent on public-sector contracts. Politicians continue to demand bribes, but businessmen are now too frightened by the possible legal consequences to pay up. The result is that a large number of public contracts have been blocked or frozen.
Yet even these tribulations seem as naught compared to the uphill task ahead of Italy's massive state sector. Plans exist to 'privatise' the great state holdings: the IRI conglomerate, plus ENI (energy), Enel (electricity) and INA (insurance). But political resistance by the Christian Democrat and Socialist parties undermined the Amato government's efforts to get the process going. Under the new government of Carlo Azeglio Ciampi, there is certainly greater will to push through change. But the Ciampi government does not possess enough power to compel the political appointees in IRI and the rest to give way.
Ricardo Gallo, an economics professor who once served as vice-chairman of IRI, says the privatisation process is not real. He regards it merely as a means for the present management to raise new capital though partial sell-offs.
In a climate of fervid rhetoric - about privatisation, reform, competition and efficiency - investors and foreign businesses would do well to recall that evocative Italian phrase in which matters pass dalle parole ai fatti - from words to deeds. The debt agency Moody's is one of the few hard-headed institutions to embrace this philosophy. When it recently downgraded Italy's credit rating again, a chorus of pained rebuke arose from the peninsula.
Had Moody's analysts not read the new government's plans for radical change in the state sector or listened to its proposals to curb the public sector deficit? Indeed they had. But until Prime Minister Ciampi's visions pass from words to deeds, Moody's prefers to be cautious.
The most effective agent of economic reform is political change. The First Italian Republic, founded after the Second World War, has to all intents and purposes collapsed. Ciampi's government is entrusted with steering through electoral reform as a prelude to new elections and a Second Republic. The parliament that emerges from this contest, perhaps by the end of the year, may be very different in complexion from the present Christian Democrat-Socialist regime.
'It was a regime that gave you a free press and the right to vote, but was none the less a regime,' says De Benedetti. Its disintegration may bring to power a less cohesive coalition, but one with a mandate to sell off public companies, liberalise services, attack the bloated state bureaucracy and make a serious attempt to tackle the deficit. It is that government, not the Ciampi administration, which will face the true test.
Even in intellectual circles there is an unlikely air of free-market ferment. 'Something new will happen,' said the esoteric author Umberto Eco last week. 'Buy shares - they cannot but go up.'
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