Italian prime minister Silvio Berlusconi withdrew a draft regulation today that would have directly benefited his Fininvest financial holding company, following strong criticism from media and the opposition.
The measure would have averted a €750 million penalty Fininvest was ordered to pay to rival conglomerate CIR in a dispute over the takeover of publisher Arnoldo Mondadori Editore in the 1990s.
Slipped unexpectedly into a package of budget measures currently being evaluated by president Giorgio Napolitano, the clause was attacked as an "abuse of power" by the centre-left opposition after it was first reported yesterday.
In a statement today, Mr Berlusconi defended the proposed measure and described opposition criticism as a "disgraceful manipulation", but said he wished to avoid a damaging dispute.
"To clear the field of any polemical argument, I have directed that this just and appropriate measure be withdrawn."
The clause would have ordered courts to suspend compensation orders of more than €20 million until a final verdict was issued, on payment of a guarantee.
Mr Berlusconi's critics, who have frequently attacked the prime minister for "ad personam" laws they say are designed to help him in his various legal battles by creating special exemptions or conditions, condemned the proposal.
"It is obvious, we're looking at the umpteenth abuse of power by Berlusconi who is using state law for his personal interest," Rosy Bindi, president of the Democratic Party and deputy speaker of parliament, told the daily La Stampa.
The proposed €20 million limit would have suspended a €750 million payment Fininvest was ordered to make to CIR in 2009 as compensation for bribing a judge in the Mondadori takeover battle.
Fininvest, which also controls broadcaster Mediaset, is appealing the verdict. A decision by Milan judges is expected on Saturday but the case is likely to be appealed again, ending up in Italy's highest appeals court.
Withdrawal of the measure - dubbed the "Save Fininvest law" by Il Messaggero newspaper - was the latest blow to the 74 year-old premier, who is engulfed in sex and financial scandals and reeling from heavy local election and referendum defeats.
In his statement today, Mr Berlusconi said he was confident the Milan judge would rule in favour of Fininvest, saying anything else would be "an absurd and incredible denial of fundamental judicial principles".
A €750 million penalty would severely hit Mr Berlusconi's business interests and benefit CIR head Carlo De Benedetti, one of his most bitter business rivals and owner of the fiercely anti-Berlusconi daily La Repubblica.
The decision to include the measure in a budgetary package designed to shore up Italy's strained public finances drew heavy criticism.
Il Sole 24 Ore, Italy's leading business daily, said the new law "fed suspicions of another made-to-measure rule that ... Berlusconi would do well to put to rest".
Antonio Di Pietro, head of the small Italy of Values opposition party, said: "Criminal actions have a limit to being credible. Beyond that, they are ridiculous."
Even the rightist Northern League, Mr Berlusconi's coalition partner, was surprised and upset by the new law since it was not in the budget text approved by ministers last week.
The €43 billion austerity plan containing the new law is aimed at shielding Italy, the euro currency zone's third-biggest economy, from the Greek debt crisis and wiping out the budget deficit in 2014.
Shares in CIR closed down 0.91 per cent.
Reuters