An investigation by the Independent on Sunday has found that City solicitor David Mills established, and was involved as a director in, several offshore companies for Mr Berlusconi which are the focus of a joint investigation by Italian police and the Serious Fraud Office. Mr Mills, 52, is the husband of Dulwich MP Tessa Jowell and brother-in-law of Barbara Mills, Director of Public Prosecutions.
The investigations are part of the "Mani Pulite" or "Clean Hands" anti- corruption campaign which started in 1992 and drove most of Italy's old guard politicians from power.
The SFO and Italian police raided an office in Regent Street, London, in April, carting away sackfuls of documents proving that Mr Berlusconi owned a web of offshore firms which prosecutors allege were the conduit for bribes to politicians and officials. Several of these had been formed by a company set up by Mr Mills, who has advised Mr Berlusconi for 18 years.
Mr Mills was also variously company secretary or director of several London-based firms which sold film and TV rights for Fininvest, Mr Berlusconi's top Italian company. Italian investigators allege the sales, which amounted to at least pounds 700m over 10 years, were made to Mr Berlusconi's Italian empire at over-inflated prices, allowing slush funds to be built up offshore.
There is no suggestion that Mr Mills was involved in any of the alleged corruption activities. Last week he was reluctant to discuss his role in detail, but it is understood that it extended to film rights negotiations. Mr Berlusconi, he said, had "a complete defence of the facts and will put these forward at the appropriate time".
Fininvest is fiercely trying to stop the Home Office sending the London papers to Italy and a judicial review will be heard shortly.
Mr Mills also said that all film rights sold were properly valued and the accounts were audited by leading accountants Arthur Andersen.
The solicitor has been a reluctant star of an eager Italian press, which is abuzz with talk of Mr Berlusconi's "London trail". This weekend Italian news magazine L'Espresso carries an eight-page investigation of the magnate's companies under the headline "The Empire of Lies". Much of it is based on the leaked testimony of two Andersen auditors of Fininvest in Italy, which appears to confirm the existence of a parallel offshore empire designed to allow Mr Berlusconi to bypass TV regulations.
Last week, former fugitive Fininvest executive Giorgio Vanoni also admitted to prosecutors in Italy that one Jersey company at least had been used not only for television rights but as a channel for secret investments. More revelations are likely to follow this week. The Jersey firm is also alleged to have paid a pounds 4.3 million bribe to disgraced former prime minister Bettino Craxi, who fled to Tunisia.
Mr Mills was a director of at least three London-based Berlusconi companies which had also had Vanoni and other wanted Fininvest executives on the board.
The investigations threaten to derail the pounds 3 billion stock market flotation of Mediaset, Mr Berlusconi's TV and advertising group, later this month. The move fulfils a pledge by Mr Berlusconi aimed at reviving his political career free from allegations of undue media influence.
Mediaset is Italy's biggest commercial TV broadcaster, with three channels, best known in Britain for their "stripping housewives" programme.
Full story, business section