Berlusconi 'using austerity bill to save himself €750m'

Prime Minister accused of exploiting Italy's spending cuts to avoid business liability

Italian Prime Minister Silvio Berlusconi said he would not run again when his term expires in 2013 (EPA)

Silvio Berlusconi has attracted the ire of Italian MPs across the political spectrum after it was alleged that government legislation before parliament had been designed specifically to benefit one of his companies.

To the outrage of opposition MPs, alert officials in the office of State President Giorgio Napolitano have spotted small print in a bill that proposes €47bn (£42bn) of public spending cuts, which appears less than austere with the billionaire Prime Minister's finances.

The offending paragraph in article 37 will allow Mr Berlusconi's Fininvest group to avoid a crippling €750m compensation payment to a left-wing business rival, Carlo De Benedetti.

Under the proposals, such payments of more than €20m would not be obligatory until cases are finally settled in the Supreme Court – which in Italy can take years – and would save Fininvest millions of euros in interest payments.

Rosy Bindi, president of the centre-left Democratic Party, said the proposal showed "how Berlusconi uses the office of Prime Minister to guarantee his impunity from prosecution and to protect his business interests".

Giuseppe Maria Berruti, a judge in the civil law section of the Court of Cassazione, Italy's highest legal authority, said the article was "designed to favour serious debtors and would produce irreversible damage to the legal system".

Mr Berlusconi is defending himself against the criminal charge of abuse of office, with Milan prosecutors claiming he used his powers to cover up illegal sex with an underage prostitute.

Senior officials in the State President's office were last night said to be furious about the inclusion of the offending paragraph and there were doubts about whether Mr Napolitano would agree to rubber stamp the bill in its current form.

The €750m payment – potentially disastrous for Fininvest – was ordered by judges last year after a decades-old bribery and corruption scandal. The company, which holds the Prime Minister's key business assets, including his Mediaset broadcast empire and AC Milan football club, bribed a judge back in 1991 to acquire a controlling stake in Mondadori, the country's leading publishing house.

In 2007, a criminal court found Mr Berlusconi's ally and former lawyer Cesare Previti had bribed one of the two Rome judges hearing the takeover battle to find in favour of Fininvest over Mr De Benedetti's CIR group.

Predictably, press coverage of the "Save Mediaset" law was led yesterday by the left-leaning La Repubblica, which is owned by Mr De Benedetti. The press baron is himself no stranger to controversy having admitted to bribing state officials in 1993, to obtain low-cost computers.

A leading Berlusconi ally, Foreign Minister Franco Frattini, denied that the measure in the finance package was aimed at protecting the Prime Minister's business interests.

However, Finance Minister Giulio Tremonti cancelled plans to present the austerity bill. Treasury officials blamed the stormy weather in Rome, rather than the inclement political conditions.

As it stands, the finance package, while possibly good news for Mr Berlusconi's business interests, looks set to inflict pain on the rest of the country.

Pensions will be hit, and some economists predict €10bn in health service cuts, which will mean €500 extra in annual health bills for each Italian family. Local authority budgets will also be cut, leading to higher local taxes.

However, the political commentator James Walston, of the American University in Rome, said the austerity plans had been "fudged" and that the bulk of the €47bn savings would be delayed until mid- 2013 – to help the conservative government's chances at the next general election.

Silvio's brushes with the law

* The Italian Prime Minister was sentenced to 16 months in prison in 1997 for false accounting of 10bn lire during his buyout of the Medusa cinema company and received a further 33 months for bribing financial police. He did not serve either sentence and was acquitted of both charges on appeal.

* Just a year later, Silvio Berlusconi was sentenced to 28 months in prison for illegally financing the Italian Socialist party through an offshore company, but the case was later dropped. He also received a jail term for bribing a judge during Fininvest's buyout of a publishing company, but the case "timed out" under Italy's statute of limitations.

* Two court cases against Mr Berlusconi were temporarily suspended in 2008 when his cabinet launched a bill designed to give him immunity from prosecution while he remained in office. A move to make the bill permanent was ruled out by a constitutional court in 2009. The cases against him reopened.

* Mr Berlusconi was indicted to stand trial in February this year on charges of paying for sex with alleged underage prostitute Karima El Mahroug (more commonly known as Ruby) and abusing his power to ensure her release from custody when she was being held over another matter. He denies both charges. The trial continues.

* Mr Berlusconi returned to court in March, but not for the "Rubygate" affair. At a pre-trial hearing he faced allegations of tax fraud and embezzlement against his Mediatrade company in connection with the purchase of television rights. He said the charges were "ridiculous".