Prime minister has been getting richer in power, while most Italians have been getting poorer

LAST MONDAY, Italian prime minister Silvio Berlusconi held an emergency working lunch in his private residence at Arcore, outside Milan. You might imagine that, with the economic storm clouds about to burst over Italy, he had assembled his most trusted government advisers with a view to limiting the damages. You would be wrong.

No, Monday has long been a day when the Berlusconi family stages an informal get-together over the luncheon table at Arcore. This is an occasion when everything from the most recent form of the family football team, AC Milan, through to the problems of key elements in the Berlusconi Fininvest empire and on to the prime minister’s all-too-well-documented judicial problems tend to get an airing.

Around the Arcore table last Monday were Fedele Confalonieri, chief executive of the jewel in the family crown, television company Mediaset, as well as Pier Silvio Berlusconi, son of the prime minister and number two at Mediaset.

Also present were eldest daughter Marina Berlusconi, chief executive of publishing house Mondadori, Pasquale Cannatelli, managing director of Fininvest, and family lawyer, Nicola Ghedini.

Even if those familiar with the Arcore lunch suggest that it would be wrong to portray it as some sort of family “war cabinet”, it is hard to believe this week’s gathering was not one at which the family drew up strategies for dealing with the fallout of the then impending (but not yet decided) resignation of Berlusconi as prime minister.

After all, the Berlusconi Fininvest empire, comprising Mediaset, Mondadori and bank Mediolanum, to name but the most obvious and not to mention a whole battalion of expensive real estate, is worth approximately €4 billion.

The point about Silvio Berlusconi, of course, is that Berlusconi the politician has been inextricably wrapped up in Berlusconi the business tycoon since day one of his 17-year venture in Italian politics. Often, it has seemed not so much a conflict of interests as a particularly happy symbiosis of interests.

How else do you explain the fact that, at a time when the Italian economy has been notably sluggish if not to say stagnant, Berlusconi’s empire has grown and grown?

Last summer, the Economist pointed out that if you wanted to find economies that have performed worse than that of Italy in the last decade, you would have to consider Madagascar, Bahamas, Kiribati, Togo, Brunei, Saint Kitts and Nevis, the Central African Republic, Haiti, Ivory Coast, Liberia, Zimbabwe and Eritrea.

Yet, politics appears to have been good for the Berlusconi empire. This week, Rome daily La Repubblica calculated that when Berlusconi entered politics in 1994, his Fininvest group had approximately €162 million in liquidity. Today, it has approximately €1.2 billion.

Thus, at a time when the rest of Italy has more or less stood still (if not actually receded), Berlusconi’s main holding company has become seven times bigger. While Italians have been getting poorer, Berlusconi has been getting considerably richer.

Analysts have a simple explanation for this. They point out, for example, that the fact that his Publitalia TV advertising company has overtaken Sipra, the company run by state broadcaster RAI, almost certainly owes something to a very Italian consideration: major companies simply feel it is more “prudent” to advertise with the Main Man himself. You never know when it could be useful.

Then, too, there are those who argue that every now and then, Berlusconi gives his own companies a little “dig-out”. The Gasparri law in 2004 not only lifted the antitrust ceiling on the amount any one advertising company could gather, but it also allowed his Rete 4 channel to continue broadcasting even thought the European Court of Justice had ruled that it should transfer to either cable or satellite by January 2004.

Further little dig-outs concerned the granting of government subsidies for decoders, used for Italy’s terrestrial digital service featuring Berlusconi’s three channels, as well as the “surprise” decision to double the VAT charge on satellite broadcaster and rival, Sky Italia.

It would seem the markets share the view that Berlusconi in government is good for his companies, while Berlusconi out of government could be bad news.

During Wednesday’s torrid session, Mediaset shares dropped 12 per cent, continuing a negative trend that has seen the television company drop 51 per cent since the beginning of a year marked by constant worries about the solidity of the Berlusconi government.

As if all that were not bad enough, the Berlusconi finances have also been hit hard by three other factors – the July ruling that Fininvest must pay a €560 million compensation settlement to Carlo de Benedetti’s CIR conglomerate; a €500 million investment by Mediaset in TV company Endemol that now looks “lost”; and last but not least, Berlusconi’s estranged wife, Veronica Lario, who will be knocking at the door soon for what is sure to be an expensive “settlement”.

It never rains but it pours, does it Silvio?