Fazio put under criminal investigation

Bank of Italy Governor Antonio Fazio has been put under criminal investigation in a takeover case, a judicial source said yesterday after the banker won a vote of confidence from the only body that can fire him.

Rome prosecutors have included Mr Fazio among those under investigation for possible crimes in a cross-border banking takeover battle and will be questioned by two magistrates for suspected abuse of office, the judicial source said.

The legal setback came hours after the central bank's Superior Council - the only body with the power to fire the governor - said it supported Mr Fazio despite calls from the government for him to quit over the takeover scandal.

The judiciary is probing for suspected crimes in Banca Popolare Italiana's failed effort to outbid Dutch bank ABN AMRO for Italian bank Banca Antonveneta.

So far Mr Fazio has been able to resist political pressure to resign, but his direct involvement in the criminal investigation opened a new, uncertain chapter in the months-long saga.

Both the government and the European Central Bank have said they do not have the power to oust Mr Fazio, who has denied accusations that he abused his office by unfairly favouring Popolare Italiana over ABN AMRO.

The Rome magistrates have been investigating Mr Fazio since August and a summons is ready to be sent to the governor and his lawyers, the judicial source said. On Wednesday, a judicial source said Mr Fazio would be questioned by next Wednesday.

Neither the Bank of Italy nor Mr Fazio's lawyer were available for comment.

Being placed under investigation does not imply guilt and does not mean that charges will necessarily be brought.

However, it could embolden Mr Fazio's critics and was sure to prolong the Mr Fazio affair, which has dominated Italian headlines for weeks and dented the country's international image.

The central banker has denied any wrongdoing and defied government calls to resign after leaked wiretap transcripts in July fuelled accusations that he favoured Popolare Italiana and its former CEO, a friend of Mr Fazio's.

As expected, the central bank's Council did not revoke Mr Fazio's open-ended mandate, which would have required the backing of two thirds of its 13 members. Instead, it issued a surprise statement of confidence.

"For us at this point the Fazio case is closed," Council member Paolo Emilio Ferreri said after the meeting.