Prodi spied on

Italian Prime Minister Romano Prodi and his wife have been spied on for the past two years, with state employees making illegal checks on their tax returns and financial records, a judicial source said yesterday.

The investigation led by Milan prosecutors showed the tax records of centre-left leader Prof. Prodi, who came to power after narrowly winning an April election, were scrutinised "many, many times", the source said.

In a statement, Prof. Prodi's spokesman said the prime minister was "shocked and deeply upset" by the reports. Checks into the financial affairs of Prof. Prodi and his wife had failed to find any irregularities, the spokesman said.

Prosecutors are investigating 128 officials at the internal revenue department, the tax police and at other public agencies. Searches were underway in various cities, said the source, who declined to be named.

Prof. Prodi's statement mentioned illegal checks being carried out over the past two years but it was not immediately clear whether they had continued since Prof. Prodi's election.

The fact they took place during Prof. Prodi's campaign for office sparked speculation among the centre-left the checks may have been ordered by centre-right political opponents.

"It's obvious that only clear and unacceptable political motives can be behind this kind of activity," said Gianclaudio Bressa, a centre-left lawmaker in the lower house of Parliament.

The revelations are the latest in a series of scandals about illegal spying during the centre-right government of Silvio Berlusconi, Italy's richest man.

The investigation found other Italian personalities, including politicians and show business figures, also had their financial records checked illegally, the judicial source said.

Infrastructure minister Antonio Di Pietro, a former anti-graft magistrate, called for a commission to "identify the reasons for which these activities took place".

"Who ordered this and why?" Mr Di Pietro said. "One must understand who did it, because this could undermine the country's democracy."

Last month, police arrested a former manager and employees at phone company Telecom Italia in a separate probe into alleged wiretaps to collect sensitive information on well-known businessmen and others.

The head of Italy's military intelligence agency, Nicolo Pollari, faces possible indictment in the coming weeks over a Milan investigation into the alleged CIA abduction of a terrorism suspect in 2003.

Prosecutors believe the Italians helped gather intelligence illegally to help the American agents kidnap the suspect and fly him out of the country.

But the revelations also come a politically difficult time for Prof. Prodi, who is fighting to keep his fractious government behind the 2007 budget. Unpopular spending cuts have already been watered down to please allies, and ratings agencies downgraded Italy's debt rating earlier this month.