Fazio's resignation from the Italian central bank hints at widespread institutional corruption in Italy, writes Paddy Agnew in Rome
Felice Fusar-Poli was a hardworking "contadino" farmer from the area around Cremona, just south of Milan. In the good times, he managed to put a little away in a special savings account at his local branch of the Banca di Lodi. By the time he died, he had saved €130,000.
Perhaps Fusar-Poli intended to leave the money as a little surprise present for his two sons, Alvaro and Artemio, and for his daughter Ornella.
If that was so, Fusar-Poli would have been disappointed because before his children had time to check out all his financial affairs, Banca di Lodi had stripped the account clean.
It was only in the last month when Banca di Lodi's former chief executive, Gianpiero Fiorani, was imprisoned on charges of embezzlement and market rigging that the Fusar-Poli family got to know about their missed inheritance.
The Fusar-Polis are just one of many families to have been damaged by the Banca di Lodi, now called the Banca Popolare Italiana (BPI) - the bank at the centre of a six-month scandal which, punctuated by wiretaps, judicial investigations, obscure offshore dealings and controversial bank takeovers, prompted the resignation of the governor of the Bank of Italy, Antonio Fazio, in Christmas week.
Not surprisingly, this scandal has already been dubbed "Bribesville 2", in reference to the Tangentopoli corruption scandal that turned Italian political life upside down in the early 1990s.
For the second time in three years, the Italian business community will start the new year in the shadow of an internationally damaging scandal.
Two years ago, there was the pre-Christmas collapse of dairy giant Parmalat. This year begins with Fazio (69), the man who has run the Bank of Italy since 1993, under investigation for insider trading and with his good friend Fiorani cooling his heels in Milan's San Vittore prison.
Economic commentators pointed out that the last thing Italy needed right now was a major banking scandal.
All the more so if that scandal involves one of the few national institutions, the Bank of Italy, which throughout many turbulent Italian times in the past 60 years had established a reputation for stability, transparency and competence.
At the heart of the scandal are this summer's takeover battles for two Italian banks, Banca Antoniana Popolare Veneta (Antonveneta) and Banca Nazionale del Lavoro Spa (BNL) which were targeted by Dutch bank ABN Amro and by Spain's Banco Bilbao Vizcaya Argentaria respectively.
As far back as February, EU internal markets commissioner Charlie McCreevy had sounded an early alarm when writing to Fazio to seek explanations as to why the Italian central bank was blocking foreign takeovers of Italy's banks.
Italian public opinion, however, first became concerned about the takeovers in the summer with the publication of a series of wiretapped conversations, including one between Fazio and Fiorani, then the chief executive of BPI, a rival bidder to ABN Amro for Antonveneta.
The tone and content of the conversation not only made it clear that Fazio was a good friend of Fiorani but also implied that he greatly favoured the BPI offer at the expense of ABN Amro.
At 12 minutes past midnight on July 12th, the governor rings Fiorani to tell him that he has "signed" the approval for the - ultimately unsuccessful - BPI takeover bid for Antoveneta.
Fiorani's florid reply has since passed into the realm of popular myth: "Ah, Tonino [note the use of the familiar name], I'm moved. I've got goose pimples. Look, right now, I'd like to kiss you on the forehead. I know how much this has cost you, believe me. I would take a plane and come and see you right now if I could."
The wiretaps prompted a major political storm and widespread calls for Fazio to resign.
Significantly, among those to defend the governor at the outset were the federalist Northern League party and the Catholic Church.
Fazio is a daily churchgoer as well as a close friend of influential Cardinal Giovanni Battista Re, prefect of the Congregation of Bishops. Two days after his resignation, perhaps with time on his hands, he attended Pope Benedict's public audience on Wednesday, December 21st.
As for the Northern League, it had long looked to Fiorani's BPI to bail out debt-ridden Credieuronord, a bank with which the party was closely associated.
The governor was also able to draw some solace from the uneasy silence of his peers at the European Central Bank (ECB).
Fazio rejected all calls for his resignation, so infuriating then economy minister Domenico Siniscalco that the latter himself resigned when it became apparent that Fazio would not move and that prime minister Silvio Berlusconi was not going to move against him.
Even when Fazio was summoned by Rome magistrates in September to answer questions with regard to a possible "abuse of office" charge in relation to the Antoveneta takeover, he still refused to move.
Nor did a government snub, withdrawing his right to represent Italy at a World Bank meeting in Washington in September, discourage Fazio.
Parliament rushed through legislation placing limits of tenure on future occupants of the governor's position but these had no effect on Fazio, who was effectively governor for life.
It was only when the Procura di Milano, the state attorney's office which oversaw the "Tangentopoli" investigations in the 1990s, opened another investigation that things became too hot even for the seemingly unflappable governor.
It was embarrassing enough that Fiorani should be arrested, but Fazio's position became untenable when he himself came under investigation for insider trading. Even the ECB felt emboldened enough by that stage to seek his departure.
As with the many scandals of public life in Italy, this is one which prompts awkward questions. For a start, how come Fiorani's allegedly illegal activities at BPI, involving the transfers of sums of money - which could amount to more than €70 million - in and out of Italy via accounts in the Cayman and Virgin Isles, so completely escaped the Bank of Italy's vigilance to the point that on his arrest warrant it states that "it has not yet been possible to arrive at an exact definition of, nor quantify the illegal actions involved"?
What do we make of the evidence of Donato Patrini, a close collaborator of Fiorani, who has told magistrates that Fiorani paid various politicians by way of winning favours and political "cover"?
Are magistrates right in their accusation that Fiorani ran his criminal rackets, "secure and safe in the knowledge" that he would be protected by Fazio and the Bank of Italy?
Last but not least, what, if any, is the role of prime minister Silvio Berlusconi in all of this? Berlusconi figures in several of the wiretaps, and he even takes the phone to talk to Fiorani on July 12th, the night that Fazio gave the go-ahead for the BPI takeover.
How come the government has been so slow to act? Berlusconi, for his part, has repeatedly said that he is extraneous to the entire affair and that he could not act because the governor is appointed by the Bank of Italy not the government.
The governor may now have fallen on his sword, but this is one story that will run and run throughout the new year.
