David Mills, a leading tax lawyer and the husband of the Culture Secretary, is accused by the Italian authorities of receiving money from the Prime Minister, Silvio Berlusconi, in exchange for giving false evidence on his behalf in two corruption trials during the 1990s. But he denies the charges, claiming that he has been guilty only of acting like a "complete idiot".
Mr Mills was forced on to the defensive on Sunday after the publication of a leaked letter to his accountant apparently confirming he had received $600,000 as a long-term loan or gift from the "B organisation", in return for providing favourable evidence for the Italian premier.
But he alleged the money received in 1999 through an offshore fund, Struie, based in the British Virgin Islands, had in fact come from an Italian client, the shipbuilder Diego Attanasio. The letter was merely a hypothetical scenario to get tax advice, he said.
But it has emerged that Mr Attanasio told Italian prosecutors he was in prison on bribery and corruption charges at the time the money was paid to Mr Mills.
Mr Mills, who is currently in Florida with his wife, is adamant Mr Attanasio is the source of the cash and that he handed it to him before travelling to Italy, where he was arrested. But in evidence to prosecutors, Mr Attanasio admitted giving Mr Mills only "blank documents and other items".
Meanwhile, one of Mr Berlusconi's lawyers, Niccolò Ghedini, told a newspaper owned by the Italian premier's brother that Mr Attanasio had not ruled out the possible scenario that the funds were taken without his knowledge.
"Attanasio said, 'I never gave him [the money], but I can't exclude the possibility that Mills took it'," Mr Ghedini said. Asked whether he considered Mr Mills dishonest or merely an idiot, he said: "Neither one nor the other ... I would simply define him as a person who was very frightened."
Milan magistrates are expected to bring charges against Mr Berlusconi, who is fighting a general election campaign, as early as next month. The probe arises out of the activities of Mr Berlusconi's Fininvest media group in the early 1990s.
Two other businessmen allegedly cited by Mr Mills to prosecutors as the source of the money also denied their involvement. According to the Italian daily Corriere della Sera, Mr Mills supplied the names of Flavio Briatore, the Formula One millionaire, and the media owner Paolo Marcucci, after retracting what he claims was a forced confession in 2004 that he "protected" Mr Berlusconi during various trials and investigations.
Mr Briatore told prosecutors that he had met Mr Mills in 1997 when he was a director of Team Benetton in Formula One. He said he asked Mr Mills to set up an offshore fund to sell his shares in the company. Mr Mills suggested using Struie, but Mr Briatore claimed he became concerned over the deal when he found there was $1.6m originating from Gibraltar already in the fund and asked him to sign a document confirming the money was his. The document was later passed to the prosecutors.
"I had understood that it was one of those companies that had never been used, that many professional people hold in reserve in case they have need of it. I am sure that Mills underlined the fact that the company was empty," he said.
Mr Marcucci, who used Mr Mills's services in the autumn of 1988 in the purchase of a London-based satellite TV channel and was twice interviewed by prosecutors last December, also denied being the source of the $600,000. In detailed evidence last year he said he had "no memory" of being involved in the transaction.
Who's who in the affair
* DAVID MILLS
Leading British tax lawyer and former adviser to Silvio Berlusconi accused of protecting him during two corruption trials in the 1990s. A close personal friend of senior members of the Blair government, his wide-ranging business interests have caused the Government embarrassment since 1997.
* TESSA JOWELL
Culture Secretary has insisted her husband's problems with the Italian authorities do not compromise her government position. An unswervingly loyal Blairite, she is understood to enjoy the Prime Minister's full support.
* SILVIO BERLUSCONI
The Italian premier's legal difficulties have been raging through the courts since the mid-1990s. He is currently in the middle of a general election campaign and awaits the decision of Milan magistrates next month.
* DIEGO ATTANASIO
Mr Mills's main "alibi" but claims he was in jail on bribery and corruption charges when the alleged bribe was paid into the lawyer's offshore fund. Said he provided Mr Mills only with "blank documents".
* FLAVIO BRIATORE
Formula One millionaire and former boyfriend of Naomi Campbell and Heidi Klum allegedly named by Mr Mills as a possible source of the $600,000. Met Mr Mills through his involvement with Benetton motor racing but became concerned when Mr Mills suggested using his offshore company to sell his shares. Denies being the source of the money.
* PAOLO MARCUCCI
Wealthy media businessman who used Mr Mills's services in the autumn of 1988 in the purchase of a London-based satellite TV channel. Was twice interviewed by prosecutors in December 2005. Also named by Mr Mills as a possible source.Reuse content