Embattled Berlusconi lashes out at reports linking him with the Mafia

Italian premier Silvio Berlusconi has been forced to make a dramatic denial that he colluded with the Mafia after rumours that have swirled for days about his alleged links with Cosa Nostra chiefs in the early 1990s exploded on to the front pages of Italian newspapers.

The conservative Prime Minister told political supporters in Sardinia at the weekend that allegations printed in several papers that his business empire benefited financially from close links with the Cosa Nostra were "unfounded and insulting".

Mr Berlusconi's broadcast group Mediaset and his holding company Fininvest announced on Saturday that they were suing the centre-left Rome daily La Repubblica over an article that claimed Mediaset was "20 per cent owned by the Mafia".

The Prime Minister's daughter Marina, who runs Fininvest, Mediaset's financial holding company, issued a statement saying the company was "100 per cent owned by our family, by Silvio Berlusconi and his children".

Rumours of the premier's links with the Mob have never really gone away since it emerged that the known Cosa Nostra member Vittorio Mangano worked as Mr Berlusconi's "stable master" at the tycoon's villa in Arcore outside Milan in the 1970s.

Mr Berlusconi said in Sardinia on Saturday, however: "They've accused me of doing things that I could never have imagined doing. If there's one government that more than all others has made the fight against the Mafia one of its key objectives, then that government is mine."

But his political opponent and the former anti-Mafia magistrate Antonio Di Pietro commented: "He has a strange way of combating the Mafia: taking them into this home and bringing them into parliament."

This was a reference to Mangano, and to Mr Berlusconi's close political associate Marcello Dell'Utri, the Sicilian co-founder of the Forza Italia party, who is still a senator despite being sentenced in 2004 to nine years in prison for his associations with the Mafia.

Crucially, Dell'Utri's next appeal hearing is on Friday, raising the possibility that both he and Mr Berlusconi could be linked to the Mafia by the key Cosa Nostra informant Gaspare Spatuzza in open court.

Mr Berlusconi also dismissed as "untrue and defamatory" more outlandish claims by Spatuzza that the premier was implicated in bomb attacks carried out by the Mafia in 1992 and 1993 – the year he entered politics – during the Mob's brief war against the Italian state.

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