Tax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating deductions).

Tax evasion is an activity commonly associated with the underground economy and one measure of the extent of tax evasion the amount of unreported income, namely the difference between the amount of income that should legally be reported to the tax authorities and the actual amount reported. In the 1970s and 80's, The IRS undertook the Taxpayer Compliance Measurement Program (TCMP) in an attempt to measure unreported income and the tax gap. The tax gap is the difference between the amount of tax legally owed and the amount actually collected by the government. The TCMP program was believed to produce the most reliable information about noncompliance,^[1] but these "audits from hell" were deemed to be overly intrusive and were discontinued in 1988. The National Research Program was undertaken in the 1990s as a less intrusive means of measuring noncompliance and was described as "the most careful and comprehensive estimates of the extent and nature of tax noncompliance anywhere in the world"^[2] However, critics^[3] point out numerous problems with the tax gap measure. The IRS direct audit measures of noncompliance are augmented by indirect measurement methods, most prominently currency ratio models^[4]

Tax avoidance, on the other hand, is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. Both tax evasion and avoidance can be viewed as forms of tax noncompliance, as they describe a range of activities that are unfavorable to a state's tax system.^[5]

Economics of tax evasion[link]

A "Lion's Mouth" postbox for anonymous denunciations at the Doge's Palace in Venice, Italy. Text translation: "Secret denunciations against anyone who will conceal favors and services or will collude to hide the true revenue from them."

In 1968, Nobel laureate economist Gary Becker first theorized the economics of crime,^[6] on the basis of which Allingham and Sandmo produced in 1972 an economic model of tax evasion. It deals with the evasion of income tax, the main source of tax revenue in the developed countries. According to them, the level of evasion of income tax depends on the level of punishment provided by law.^[7] The literature's theoretical models are elegant in their effort to identify the variables likely to affect non-compliant behaviors, however, alternative specifications yield conflicting results concerning both the signs and magnitudes of variables believed to affect tax evasion. As such, empirical work is required to resolve the theoretical ambiguities. Income tax evasion appears to be positively influenced by the tax rate, the unemployment rate, the level of income and dissatisfaction with government.^[8] The U.S. Tax Reform Act of 1986 appears to have reduced tax evasion in the U.S.

Evasion of customs duty[link]

Customs duties are an important source of revenue in the developing countries. The importers purport to evade customs duty by (a) under-invoicing and (b) misdeclaration of quantity and product-description. When there is ad valorem import duty, the tax base is reduced through underinvoicing. Misdeclaration of quantity is more relevant for products with specific duty. Production description is changed match an H. S. Code commensurate with a lower rate of duty.^[9]

This section requires expansion.

Smuggling[link]

Smuggling is importation or exportation of foreign products through unauthorized route. Smuggling is resorted to for total evasion of leviable customs duties as well as for importation of contraband items. A smuggler does not have to pay any customs duty since the products are not routed through an authorized or notified Customs port and therefore, not subjected to declaration and payment of duties and taxes.^[9]

Evasion of value added tax (VAT) and sales taxes[link]

During the later half of the twentieth century, value added tax (VAT) has emerged as a modern form of consumption tax through the world, with the notable exception of the United States. Producers who collect VAT from the consumers may evade tax by under-reporting the amount of sales.^[10] The US has no broad-based consumption tax at the federal level, and no state currently collects VAT; the overwhelming majority of states instead collect sales taxes. Canada uses both a VAT at the federal level (the Goods and Services Tax) and sales taxes at the provincial level; some provinces have a single tax combining both forms.

In addition, most jurisdictions which levy a VAT or sales tax also legally require their residents to report and pay the tax on items purchased in another jurisdiction. This means that those consumers who purchase something in a lower-taxed or untaxed jurisdiction with the intention of avoiding VAT or sales tax in their home jurisdiction are in fact breaking the law in most cases. Such evasion is, especially, prevalent in federal states like the Nigeria, US and Canada where sub-national jurisdictions have the constitutional power to charge varying rates of VAT or sales tax. In Nigeria for example, some local states enforce VAT on each goods sold by trader. The price must be clearly stated and the VAT distinct from the price of the good purchased. Any act by the trader contrary to this (like including VAT in the price of the goods) is punishable as attempting to syphoning the VAT.

Borders between tax districts in the same nation usually lack the resources to enforce tax collection on goods carried in private vehicles from one district to another, so states only pursue sales and use tax collection on high-value items such as cars.^[11]

Government response[link]

The level of evasion depends on a number of factors, one of them being fiscal equation. People's tendency to evade income tax declines when the return for due payment of taxes is not obvious^{[citation needed]}. Evasion also depends on the efficiency of the tax administration. Corruption by the tax officials often render control of evasion difficult. Tax administrations resort to various means for plugging in scope of evasion and increasing the level of enforcement. These include, among others, privatization of tax enforcement,^[12] tax farming,^[13] and institution of Pre-Shipment Inspection (PSI) agencies.^[14] In 2011, HMRC stated that it would continue to crack down on tax evasion, with a goal of collecting £18 billion in revenue before 2015.^[15] A voluntary amnesty program HMRC began in 2010 that targeted middle-class professionals raised £500 million.^[16]

Corruption by tax officials[link]

Corrupt tax officials cooperate with the tax payers who intend to evade taxes. When they detect an instance of evasion, they refrain from reporting in return for illegal gratification or bribe. Corruption by tax officials is a serious problem for the tax administration in a huge number of underdeveloped and southern European countries.^{[citation needed]}

Level of evasion and punishment[link]

This article contains weasel words: vague phrasing that often accompanies biased or unverifiable information. Such statements should be clarified or removed. (October 2009)

Tax evasion is a crime in almost all developed countries and subjects the guilty party to fines and/or imprisonment. In Switzerland, many acts that would amount to criminal tax evasion in other countries are treated as civil matters. Even dishonestly misreporting income in a tax return is not necessarily considered a crime. Such matters are dealt with in the Swiss tax courts, not the criminal courts. However, even in Switzerland, some fraudulent tax conduct is criminal, for example, deliberate falsification of records. Moreover, civil tax transgressions may give rise to penalties. So the difference between Switzerland and other countries, while significant, is limited. It is often considered that extent of evasion depends on the severity of punishment for evasion. Normally, the higher the evaded amount, the higher the degree of punishment.

Privatization of tax enforcement[link]

Professor Christopher Hood first^{[citation needed]} suggested privatization of tax enforcement for overcoming limitations of government tax administration in controlling tax evasion.^[17] Some governments have resorted to privatization of tax enforcement to enhance efficiency of the tax system. The assumption is that leakage of revenue will lower under a privatized regime. In Bangladesh, part of customs administration was privatized in as early as 1991.^[18]

Abuse by private tax collectors (see tax farming below) has led to revolutionary overthrow of governments which have outsourced tax administration.

Tax farming[link]

Tax farming is an old means of collection of revenue when it is difficult to determine the leviable amount taxes with certainty. Governments lease out the collection system to a private entity for a fixed amount, who then collects the revenue and shoulders the risk of attempts at evasion by the taxpayers. It has been suggested that tax farming may be a solution to the problem of tax evasion seen in developing countries.^[19]

This section requires expansion.

Governments have historically turned to tax farming for quick cash. A "tax farmer" buys a "franchise" by making pre-payment to the government. The "tax-farmer," then invested with the authority of the government, goes into the "farm" and begins extracting "taxes" from citizens. This is a system destined to be abusive as the "tax-farmers" seek back their investment, plus profit, and are themselves unrestrained by "politics." Abuses by "tax farmers" (together with a tax system that exempted the aristocracy) were a primary reason for the French Revolution that toppled Louis XVI.

PSI agencies[link]

Pre-shipment Agencies like SGS, Cotecna etc. are employed to prevent evasion of customs duty through under-invoicing and misdeclaration. However, in the recent times, allegations have been lodged that PSI agencies have actively cooperated with the importers in evading customs duties. Authority in Bangladesh has found Cotecna, a PSI agency of Swiss origin, guilty of complicity with the importers for evasion of customs duties on a huge scale.^[20] The same company Cotecna was implicated for bribing Pakistan's prime minister Benazir Bhutto for securing contract for importation by Pakistani importers. She and her husband were sentenced both in Pakistan and Switzerland.^[21]

United States[link]

Under the federal law of the United States of America, tax evasion or tax fraud, is the purposeful illegal attempt of a taxpayer to evade payment of a tax imposed by the federal government. Conviction of tax evasion may result in fines and imprisonment.^[22]

The Internal Revenue Service has identified small business and sole proprietorship employees as the largest contributors to the tax gap between what Americans owe in federal taxes and what the federal government receives. Rather than W-2 wage earners^{[clarification needed]} and corporations, small business and sole proprietorship employees contribute to the tax gap because there are few ways for the government to know about skimming or non-reporting of income without mounting more significant investigations. When tips, side-jobs, cash receipts and barter income is not reported it is illegal cheating because no tax is paid by individuals. Similarly, those who are self-employed or run small businesses may not declare income and evade the payment of taxes.

The IRS has developed several methods of proof of income tax evasion in an effort to decrease the tax gap. These investigations can be carried out to determine the correctness of any tax return, make a return where none has been made, determine the liability of any person for any income tax or collect any income tax.^[23] The IRS has the authority to summons the taxpayer to provide particular information for purposes of investigating and ascertaining the correctness of the tax return.^[24] The information requested may include books, records, papers and any other data which may be relevant to the investigation.^[25] However, the IRS investigator must follow all proper administrative steps in obtaining the information. The IRS tax informant (whistleblower) award was created to assist the IRS in obtaining necessary information. While these investigations can lead to criminal prosecution, the IRS itself has no power to prosecute tax evasion crimes. The IRS can only impose penalties and require payment of proper tax due.

In the United States, the most recent IRS estimate of the tax gap was for 2001 at which time, the tax gap amounted to $345 billion.^[26] A more recent study^[27] estimates the 2008 tax gap in the range of $450–$500 billion, and unreported income to be approximately $2 trillion. Thus, 18-19 percent of total reportable income is not properly reported to the IRS. The typical tax evader in the United States is a male under the age of 50 in the highest tax bracket and with a complicated return, and the most common means of tax evasion is overstatement of charitable contributions, particularly church donations.^[28]

Illegal income and tax evasion[link]

In the United States, persons subject to the Internal Revenue Code who earn income by illegal means (gambling, theft, drug trafficking etc.) are required to report unlawful gains as income when filing annual tax returns (see e.g., James v. United States^[29]), but they often do not do so. Suspected lawbreakers, most famously Al Capone, have therefore been successfully prosecuted for tax evasion when there was insufficient evidence to try them for their non-tax related crimes. The United States Supreme Court has ruled that a simple declaration of income does not violate an individual's right to remain silent,^[30] although the privilege may apply to the source of the income if claimed.^[31] Those who attempt to report illegal income as coming from a legitimate source could be charged with money laundering. By contrast, in the UK law enforcement agencies do not generally have access to tax returns and so illegal earnings can supposedly be safely declared^{[citation needed]} but in practice those carrying on criminal activities generally prefer not to do so, and so can sometimes be prosecuted for tax evasion rather than for other crimes^{[citation needed]}. Soviet spy Aldrich Ames, who had earned more than $2 million cash for his espionage, was also charged with tax evasion as none of the Soviet money was reported on his tax returns. Ames attempted to have the tax evasion charge dismissed on the grounds his espionage profits were illegal, but the charges stood.

Net worth and cash expenditure methods of proof[link]

Under the net worth and cash expenditure methods of proof, the IRS performs year-by-year-by-year comparisons of net worth and cash expenditures to identify under reporting of net worth. While the net worth method and the cash accrual method may be used separately, they are often used in conjunction with one another. Under the net worth method, the IRS chooses a year to determine the taxpayer's opening net worth at year’s end. This provides a snapshot of the taxpayer's net worth at a particular point in time. The snapshot includes the taxpayer’s cash on hand, bank accounts, brokerage (stocks and bonds), house, cars, beach house, jewelry, furs and other similar items. Generally the IRS learns about these items through very thorough and in-depth investigations, sometimes casing the suspected fraudulent taxpayer. In addition, the IRS also assesses the taxpayer’s liabilities. Liabilities include expenses such as the taxpayer’s mortgage, car loans, credit card debts, student loans, and personal loans. The opening net worth is the most critical point at which the IRS must assess the taxpayer's assets and liabilities. Otherwise, the net worth comparison will be inaccurate.

The IRS then evaluates new debts and liabilities accumulated in the next year, and assesses the taxpayer’s new net worth at the next year’s end. In addition, the IRS reviews the taxpayer’s cash expenditures throughout the tax year. The IRS then compares the increase in net worth and the cash expenditures with the reported taxable income over time in order to determine the legitimacy of the taxpayer’s reported income.

The net worth method was first used in the case of Capone v. United States.^[32] The cash method was approved in 1989 in United States v. Hogan.^[33]

Bank deposit cash expenditure method[link]

First approved by the Eighth Circuit in 1935 in Gleckman v. United States,^[34] the bank deposit cash expenditure method identifies tax evasion through review of the taxpayer’s bank deposits. This method of investigation primarily focuses on whether the taxpayer’s total bank deposits throughout the year are equal to the taxpayer’s reported income. This method is most appropriate when the majority of the taxpayer’s income is deposited in the bank and most expenses are paid by check.^[35] This method is most commonly used for surveillance of tipped employees and is combined with statistical analysis to determine what a tipped employees actual wages are. Information gathered through this method is most successful when the credibility of tipped employees can be destroyed. This method is used less frequently now for tipped employees because the IRS negotiates with hotels or casinos, the largest employers of tipped employees, to identify a tip estimate. If the tipped employee reports the minimal amount agreed upon, he is not questioned by the IRS. However, it is recommended for corroborating other methods of proof.^[36] Given the uncertainty of this method, this method likely could not be used in criminal prosecutions where the guilt must be found beyond a reasonable doubt.

Whistle blower Program[link]

In addition to the methods of proof the IRS has developed, the IRS has recently adopted a program which allows anonymous whistle blowers to receive 15 to 30 percent of any recovery by the IRS which comes to at least $2 million including all penalties, interests and any other monies collected from the government. The whistle blower program seeks information based on evidence and analysis which can provide a solid basis for further investigation rather than speculation and hearsay.^[37] The program is designed to provide incentive to ordinary citizens to inform on tax cheats. The program provides far greater incentives for whistle blowers than previous programs because under prior programs the government was not required to compensate whistleblowers.^[38] Under this program, a taxpayer may file in court if they are not issued a deserved award.^[37]

Historical Tax Evasion Cases in the U.S.[link]

This May 2012 needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (May 2012)

• 1932-1939: Al Capone served seven years of an 11-year sentence in federal prison on Alcatraz Island for tax evasion. He was let out of jail early while suffering with the advanced stages of Syphillus.
• 1933: Gangster Dutch Schultz is indicted for tax evasion. Rather than face the charges, he went into hiding.
• U.S. President Harry Truman pardons George Caldwell and Seymour Weiss for income tax evasion.
• 1963: Joe Conforte, a brothel owner, serves two and a half years in prison, convicted for the crime of income tax evasion.
• 1971: Martin B. McKneally (R-NY) is placed on one-year probation and fined $5,000 for failing to file income tax return. He had not paid taxes for many years prior.
• Cornelius Gallagher (D-NJ) pleaded guilty to tax evasion, and served two years in prison.
• 1974: Otto Kerner, Jr. (D) Resigned as a judge of the Federal Seventh Circuit Court District after conviction for bribery, mail fraud and tax evasion while Governor of Illinois. He was sentenced to 3 years in prison and fined $50,000.
• 1982: Frederick W. Richmond (D-NY) is convicted of tax evasion and possession of marijuana. Served 9 months
• 1985: Joseph Alioto, a lawyer, confesses that he paid no income taxes during the years he served as Mayor of San Francisco.
• 1985–1986: Iran-Contra Affair - Thomas G. Clines is convicted of four counts of tax-related offenses for failing to report income from the operations.
• 1987: Robert Bernard Anderson (R) former United States Secretary of Treasury (1957–1961) pled guilty to tax evasion while operating an offshore bank.
• Harry Claiborne, Federal District court Judge from Nevada, is impeached by the Houseand convicted by the Senate on two counts of tax evasion. He served over one year in prison.
• 1990: IRS handed country musician Willie Nelson a bill for $16.7 million in back taxes and seized most of his assets to help pay the charges. He sued accounting firm Price Waterhouse, contending that they put him into tax shelters that were later disallowed. The lawsuit was settled for an undisclosed amount. His debts were paid by 1993.
• 1991: Harry Mohney, founder of the Déjà Vu strip club chain, begins to serve three years in prison for tax evasion.
• "Matty the Horse" Ianniello (Mafia) was sent to prison for income tax evasion.
• 1992: Catalina Vasquez Villalpando (R), Treasurer of the United States, pleads guilty to obstruction of justice and tax evasion.
• 1993: Sam Roti, nephew of alderman Fred Roti, is indicted on Federal tax charges, which were later dropped.
• Nicolas Castronuovo is the owner of the Florida pizza parlor where Senator Robert Torricelli was caught on an FBI wiretap soliciting contributions in 1996. Nicolas Castronuovo and his grandson Nicholas Melone later pleaded guilty to evading the government of $100,000 in taxes.
• 1995: Webster Hubbell, (D) Associate Attorney General, pleads guilty to mail fraud and tax evasion. He is sentenced to 21 months in prison.
• 1996: Heidi Fleiss is convicted of federal charges of tax evasion and sentenced to 7 years in prison. After two months she was released to a halfway house, with 370 hours of community service.
• U.S. President Bill Clinton pardons Marc Rich and Pincus Green, indicted by U.S. Attorney on charges of tax evasion and illegal trading with Iran. President Clinton also pardons Edward Downe, Jr. for wire fraud, filing false income tax returns,, and securities fraud.
• 2002: James Traficant (D-OH) is convicted of ten felony counts including bribery, racketeering and tax evasion and sentenced to 8 years in prison.
• 2002: The Christian Patriot Association, an "ultra-right-wing group", is shut down after convictions for tax fraud and tax evasion.
• 2005: Duke Cunningham (R-CA) pleads guilty to charges of conspiracy to commit bribery, mail fraud, wire fraud and tax evasion in what came to be called the Cunningham scandal. He is sentenced to over eight years.
• 2008: Actor Wesley Snipes is sentenced to 3 years in jail for tax evasion.
• 2008: Charles Rangel (D-NY) failed to report $75,000 income from the rental of his villa in Punta Cana, Dominican Republic and was forced to pay $11,000 in back taxes.
• 2008: Senator Ted Stevens (R-AK) is convicted on 7 counts of bribery and tax evasion just prior to the election. He continued his run for re-election, but lost. However, prior to sentencing, the indictment was dismissed—effectively vacating the conviction—when a Justice Department probe found evidence of gross prosecutorial misconduct.
• Jack Abramoff, lobbyist, is found guilty of conspiracy, tax evasion and corruption of public officials in three different courts in a wide ranging investigation. Currently serving 70 months and fined $24.7 million
• Jared Carpenter, Counsel of Republicans for Environmental Advocacy, pled guilty to income tax evasion, and received 45 days, plus 4 years probation.

See also[link]

• Tax amnesty
• Tax avoidance
• Tax noncompliance

References[link]

External links[link]

• US Justice Dept press release on Jeffrey Chernick, UBS tax evader
• US Justice Tax Division and its enforcement efforts

A major contributor to this article appears to have a close connection with its subject. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. Please discuss further on the talk page. (April 2012)

Silvio Berlusconi
50th Prime Minister of Italy
In office 8 May 2008 – 16 November 2011
President	Giorgio Napolitano
Preceded by	Romano Prodi
Succeeded by	Mario Monti
In office 11 June 2001 – 17 May 2006
President	Carlo Azeglio Ciampi Giorgio Napolitano
Deputy	Giulio Tremonti Gianfranco Fini Marco Follini
Preceded by	Giuliano Amato
Succeeded by	Romano Prodi
In office 10 May 1994 – 17 January 1995
President	Oscar Luigi Scalfaro
Deputy	Giuseppe Tatarella Roberto Maroni
Preceded by	Carlo Azeglio Ciampi
Succeeded by	Lamberto Dini
Personal details
Born	(1936-09-29) 29 September 1936 (age 75) Milan, Italy
Political party	Forza Italia (1994–2008) The People of Freedom (2008–present)
Spouse(s)	Carla Dall'Oglio (1965–1985, Divorced) Veronica Lario (1990–2010, Divorced)
Children	Marina Pier Silvio Barbara Eleonora Luigi
Alma mater	University of Milan
Signature
Website	https://www.forzasilvio.it/

Silvio Berlusconi (Italian pronunciation: [ˈsilvjo berluˈskoːni] ( listen); born 29 September 1936) is an Italian politician and media tycoon who served three times as Prime Minister of Italy from 1994 to 1995, 2001 to 2006 and 2008 to 2011. Berlusconi is also the controlling shareholder of Mediaset and owner of A.C. Milan. He is nicknamed Il Cavaliere (The Knight) for his knighthood to the Order of Merit for Labour, which he received in 1977.^[1]

Berlusconi is the longest-serving post-war Prime Minister of Italy, and third longest-serving since Italy's unification, after Benito Mussolini and Giovanni Giolitti, holding three separate terms. Technically, he has been sworn in four times because after a cabinet reshuffle, as happened with Berlusconi in 2005, the new ministry is sworn in and subjected to a vote of confidence. He is the leader of the People of Freedom political movement, a centre-right party he founded in 2009. From November 2009 to November 2011, he was the most senior leader of the G8 countries. In 2012, Forbes magazine ranked him as the 169th richest man in the world with a net worth of US$5.9 billion.^[2]

Berlusconi's political rise was rapid and surrounded by some controversy. He was elected as a Member of the Chamber of Deputies for the first time and appointed as Prime Minister following the March 1994 parliamentary elections, when Forza Italia gained a relative majority a mere three months after having been officially launched. However, his cabinet collapsed after nine months, due to internal disagreements in his coalition. In the April 1996 snap parliamentary elections, Berlusconi was defeated by the centre-left candidate Romano Prodi. In the May 2001 parliamentary elections, he was again the centre-right candidate for Prime Minister and won against the centre-left candidate Francesco Rutelli. Berlusconi then formed his second and third cabinets, until 2006.

Berlusconi was leader of the centre-right coalition in the April 2006 parliamentary elections, which he lost by a very narrow margin, his opponent again being Romano Prodi. He was re-elected in the parliamentary elections of April 2008 following the collapse of Prodi's government and sworn in for a third time as Prime Minister on 8 May 2008.

Berlusconi was criticised for his dominance over the Italian media whilst he held political office.^[3] His broadcasting company Mediaset is the largest in the country and one of the biggest in Europe, Berlusconi never fulfilled his election promises to sell off his assets in the company to avoid a conflict of interest. His leadership was also undermined by sex scandals.^[4] After losing his majority in parliament amid growing fiscal problems related to the European debt crisis, Berlusconi officially resigned as Prime Minister on 16 November 2011.^[5]

Family background and personal life[link]

Berlusconi was born in Milan in 1936. He was raised there in a middle-class family.^[6] His father, Luigi Berlusconi (1908–1989) was a bank employee and his mother, Rosa Bossi (1911–2008), a housewife.^{[citation needed]} Silvio was the first of three children; he had a sister, Maria Francesca Antonietta Berlusconi (1943–2009) and has a brother, Paolo Berlusconi (born 1949), both entrepreneurs.^{[citation needed]}

After completing his secondary school education at a Salesian college, he studied law at the Università Statale in Milan, graduating (with honor) in 1961 with a thesis on the legal aspects of advertising. Berlusconi was not required to serve the standard one-year stint in the Italian army which was compulsory at the time.^[7] During his university studies he was a upright bass player in a group formed with the now Mediaset Chairman and amateur pianist Fedele Confalonieri and occasionally performed as a cruise ship crooner. In later life he wrote AC Milan's anthem with the Italian music producer and pop singer Tony Renis and Forza Italia's anthem with the opera director Renato Serio. With the Neapolitan singer Mariano Apicella he wrote two Neapolitan song albums: Meglio 'na canzone in 2003 and L'ultimo amore in 2006. Berlusconi also owns the Serie A Club AC Milan.

In 1965, he married Carla Elvira Dall'Oglio, and they had two children: Maria Elvira, better known as Marina (born 1966), and Pier Silvio (b. 1969).^{[citation needed]} By 1980, Berlusconi had established a relationship with the actress Veronica Lario (born Miriam Bartolini), with whom he subsequently had three children: Barbara (b. 1984), Eleonora (b. 1986) and Luigi (b. 1988). He was divorced from Dall'Oglio in 1985, and married Lario in 1990. By this time, Berlusconi was a well-known entrepreneur, and his wedding was a notable social event. One of his best men was former Prime Minister and leader of the Italian Socialist Party Bettino Craxi. In May 2009, Lario announced that she was to file for divorce.^[8]

Business career[link]

[edit] Milano Due

Berlusconi's business career began in construction early in the 1960s. After a couple of successful projects, in the late 1960s he carried out the construction of Milano Due, a huge residential project of about 10,500 apartments, which he eventually built in Segrate, an eastern suburb of Milan.

Telemilano[link]

Berlusconi first entered the media world in 1973 by setting up a small cable television company, 'Telemilano', to service units built on his Segrate properties. It began transmitting in September the following year. After buying two further channels, Berlusconi relocated the station to central Milan in 1977 and began broadcasting over the airwaves.^[9]

Fininvest[link]

In 1978 Berlusconi founded his first media group, Fininvest, and joined the Propaganda Due masonic lodge. In the five years leading up to 1983 he earned some 113 billion Italian liras (€58.3 million). The funding sources are still unknown because of the complex system of holding companies that makes them impossible to trace, despite investigations conducted by various state attorneys.

Fininvest soon expanded into a country-wide network of local TV stations which had similar programming, forming, in effect, a single national network. This was seen as breaching the Italian public broadcaster RAI's statutory monopoly on creating a national network which was later abolished. In 1980, Berlusconi founded Italy's first private national network, Canale 5, followed shortly thereafter by Italia 1 which was bought from the Rusconi family in 1982, and Rete 4, which was bought from Mondadori in 1984.^[10]

Berlusconi was assisted in his successful effort to create the first and only Italian commercial TV empire by his connections to Bettino Craxi, secretary-general of the Italian Socialist Party and also prime minister of Italy at that time, whose government passed, on 20 October 1984, an emergency decree legalising the nationwide transmissions made by Berlusconi's television stations.^[10] This was because, on 16 October 1984, judges in Turin, Pescara and Rome, enforcing a law which previously restricted nationwide broadcasting to RAI, had ordered these private networks to cease transmitting.

After some political turmoil in 1985 the decree was approved definitively. But for some years, Berlusconi's three channels remained in a legal limbo, and were not therefore allowed, for instance, to broadcast news and political commentary. They were elevated to the status of full national TV channels in 1990 by the so-called Mammì law.^{[citation needed]}

In 1995, Berlusconi sold a portion of his media holdings, first to the German media group Kirch Group (now bankrupted) and then by public offer. In 1999 Berlusconi expanded his media interests by forming a partnership with Kirch called the Epsilon MediaGroup.^[11]

On 9 July, a Milan court ordered Fininvest to pay 560 million euros in damages to Compagnie Industriali Riunite in a long-running legal dispute.^[12]

Political career[link]

From left to right: Bill Clinton, George H. W. Bush, George W. Bush and Silvio Berlusconi.

Berlusconi with Bush at the White House.

As he founded his Forza Italia party and entered politics, Berlusconi expressed his support for "freedom, the individual, family, enterprise, Italian tradition, Christian tradition and love for weaker people"^[13] and his intention to combat fiscal, judicial and bureaucratic oppression of Italians. The political family of the European People's Party was joined by Forza Italia in 1999 and by the People of Freedom in 2009.^[14] Some allies of Berlusconi, especially the Lega Nord, push for controls on immigration. Berlusconi himself has shown some reluctance to pursue such policies as strongly as his allies might like.^[15] A number of measures have been taken, with mixed results. The government, after introducing a controversial immigration law (the "Bossi-Fini" law, from the names of the Lega Nord and National Alliance leaders, as first authors of the text) is seeking the cooperation of European and other Mediterranean countries in reducing the large number of immigrants trying to reach Italian coasts on old and overloaded ferries and fishing boats, risking (and, often, losing) their lives.

On 8 November 2011, after losing his majority and public support, Berlusconi announced he would resign once parliament passed economic reforms.^[16] Many believed that the problems and doubts over Berlusconi's leadership and his coalition were one of the factors that contributed to market anxieties over an imminent Italian financial disaster, which could have a potentially catastrophic effect on the 17-nation eurozone and the world economy.^[17] On 12 November 2011, after a final meeting with his cabinet, Berlusconi met Italian president Giorgio Napolitano at the Palazzo del Quirinale to tend his resignation.^[18] Following Berlusconi's resignation, Mario Monti formed a new government that would remain in office until the next scheduled elections in 2013.^[19][20] On 16 November, Monti announced that he had formed a Cabinet and was officially sworn in as Prime Minister of Italy, also appointing himself as Minister of Economy and Finance.^[21]

Legal problems[link]

Allegations[link]

Silvio Berlusconi has an extensive record of criminal allegations, including mafia collusion, false accounting, tax fraud, corruption and bribery of police officers and judges. Berlusconi has been tried in Italian courts in several cases. In three of these cases accusations were dropped by the judiciary because of laws passed by Berlusconi's parliamentary majority shortening the time limit for prosecution of various offences and making false accounting illegal only if there is a specific damaged party reporting the fact to the authorities.^[22][23] In all of them, but one, either he was acquitted by a court of first instance or on appeal, or charges were dropped because the statute of limitations had expired. Therefore he has not been sentenced up to now, despite having been found guilty of providing false testimony in 1990.^{[24][25][26][27][28]} Berlusconi claimed that "this is a manifest judicial persecution, against which I am proud to resist, and the fact that my resistance and sacrifice will give the Italians a more fair and efficient judicial system makes me even more proud",^[29] and added that "789 prosecutors and magistrates took an interest in the politician Berlusconi from 1994 to 2006 with the aim of subverting the votes of the Italian people" citing statistics that he said have constituted a "calvary including 577 visits by police, 2,500 court hearings and 174 million euros in lawyers' bills paid by me".^[30][31] Berlusconi has always been able to afford top lawyers and publicists, for example Nicolas Sarkozy was one of his French top defenders.^[32][33][34] Some of his former prosecutors later joined the parliamentary opposition. Some of his attorneys are also members of parliament.

False testimony[link]

Receipt for membership of Silvio Berlusconi to "Propaganda 2" (P2) masonic lodge

In 1981, a scandal arose after the police discovery of Licio Gelli's secret quasi-Masonic lodge Propaganda 2 (P2), which aimed to change the Italian political system to a more authoritarian regime. The list of people involved in P2 included members of the secret services and some prominent characters from political arena, business, military and media. Silvio Berlusconi, who was then just starting to gain popularity as the founder and owner of "Canale 5" TV channel, was listed as a member of P2.^[35][36] The P2 lodge was dissolved by the Italian Parliament in December 1981 and a law was passed declaring similar organisations illegal, but no specific crimes were alleged against individual members of the P2 lodge. While the Italian Constitution had forbidden secret associations since 1948, no penal law provision had ever been passed by Parliament to enact that, and in the Italian legal system an action cannot be a crime if no law declaring that action a crime was in force when the action was committed. Thus, members of the P2 were members of anti-Constitutional and yet not illegal per se association.

Berlusconi later (in 1989) sued three journalists for libel for writing articles hinting at his involvement in financial crimes. In court, he declared that he had joined the P2 lodge "only for a very short time before the scandal broke" and "he had not even paid the entry fee". Such statements conflicted with the findings of the parliamentary inquiry commission appointed to investigate the lodge's activity, with material evidence, and even with previous testimony of Berlusconi, all of which proved that he had actually been a member of P2 since 1978 and had indeed paid 100,000 Italian liras (approximately equivalent to 300 euros today) as an entry fee. In 1990 the court of appeal of Venice found Berlusconi guilty of false testimony in front of the Court of Verona, however the court could not pass sentence as the offense had been pardoned by an amnesty passed in 1989.^[37]

Some political commentators claim that Berlusconi's electoral programme followed the P2 plan.^[38]

Jowell controversy/David Mills bribery case[link]

David Mills, lawyer husband of the former British cabinet minister Tessa Jowell, acted for Berlusconi in the early 1990s, and was later accused by Italian prosecutors of money laundering and of accepting a gift from Berlusconi in return for witness evidence favourable to Berlusconi given in court. Mills claimed that the money in question came not from Berlusconi but from another client. Tessa Jowell then announced her separation from Mills, which some of the UK media suggested was an attempt to distance herself from a potential scandal. She also denied having discussed the money with her husband; Private Eye magazine published a satirical front cover of Jowell with a speech bubble stating: "I have never met my husband". In December 2010, information obtained by the Wikileaks website revealed Mr Berlusconi had become very fond of Ms Jowell, referring to her in private company as 'piccolo puntaspilli' (the little pincushion).^{[citation needed]}

On 17 February 2009, Mills was found guilty of accepting a bribe of about 400,000 pounds sterling, allegedly from Silvio Berlusconi, and was sentenced to four-and-a-half years in prison.^[39] On 25 February 2010, the Court of Cassation gave a verdict of not guilty because the statute of limitations expired.^[40][41] The supreme court judges ruled that he received the money in 1999, and not 2000 as prosecutors had previously argued. He was ordered to pay €250,000 compensation to the office of the Italian prime minister for "damaging its reputation".^[42]

Soliciting minors for sex[link]

In February 2011, Berlusconi was charged with having sex with nightclub dancer Karima El Mahroug between February and May 2010 when she was under the age of 18.^[43][44] He was also charged with abusing his political powers in an attempt to cover up the relationship (by trying to persuade the police to release the girl while she was under arrest for theft, based on a false claim that she was the granddaughter of Hosni Mubarak).^[43]

Abuse of office[link]

In February 2012, Milan prosecutors brought charges against Berlusconi for alleged abuse of office connected with the publication of confidential wiretaps by the Italian newspaper Il Giornale, which is owned by Berlusconi's brother, in 2005.^[45][46] The publication of the conversations between then Governor of the Bank of Italy Antonio Fazio, senior management of Unipol and Italian centre-left politician Piero Fassino was a breach of secrecy rules and was seen at the time as an attempt to discredit Berlusconi's political rivals. Their publication also eventually led to the collapse of the proposed takeover of Banca Nazionale del Lavoro by Unipol and the resignation of Fazio.^[45] The head of the company used by Italian prosecutors to record the conversations has been previously convicted of stealing the recordings and making them available to Berlusconi.^[46] On 7 February 2012, at an initial court hearing, Berlusconi denied he had listened to the tapes and ordered their publication.^[46]

Personal fortune[link]

In 2012, Forbes magazine reported that Berlusconi was Italy's sixth richest man, with a net worth of $5.9 billion. He holds significant assets in television, newspapers, publishing, cinema, finance, banking, insurance, and sport.^[47] Berlusconi's main company, Mediaset, comprises three national television channels covering half of the national television sector; and Publitalia, the leading Italian advertising and publicity agency. Berlusconi also owns a controlling stake in Arnoldo Mondadori Editore, the largest Italian publishing house, whose publications include Panorama, one of the country's most popular news magazines. His brother, Paolo Berlusconi, owns and operates il Giornale, a centre-right wing newspaper which provides a pro-Berlusconi slant on Italian politics. Il Foglio, one of the most influential Italian right-wing newspapers, is partially owned by his wife, Veronica Lario. After Lario sold some of her ownership in 2010, Paolo Berlusconi acquired a majority interest in the newspaper. Berlusconi is also the founder and major shareholder of Fininvest, which is among the largest private companies in Italy^[48] and operates in media and finance. With Ennio Doris he founded Mediolanum, one of the country's biggest banking and insurance groups. He has interests in cinema and home video distribution (Medusa Film and Penta Film). He is also the owner of the football club A.C. Milan which along with Boca Juniors has won the most FIFA recognized international club titles in the world. After his resignation as prime minister of Italy, he announced that he will return as president of A.C. Milan in 2012.^[49]

See also[link]

• Controversies surrounding Silvio Berlusconi
• Forbes list of billionaires (2011)

References[link]

Documentaries[link]

• "Citizen Berlusconi – The Prime Minister and the Press", 2003
• Viva Zapatero!, directed by Sabina Guzzanti, 2005
• "Quando c'era Silvio", documentary film directed by Beppe Cremagnani e Enrico Deaglio, 2005.

Feature films[link]

• Draquila - L'Italia che trema (directed by Sabina Guzzanti, Cannes Film Festival, 2010)
• Videocracy (directed by Erik Gandini, 2009) "Videocracy / ATMO independent film- and TV productions". http://www.atmo.se/film-and-tv/videocracy/. Retrieved 12 November 2009. 
• "Bye Bye Berlusconi!/Buonanotte Topolino"
• Il Caimano (directed by Nanni Moretti, 2006)
• Shooting Silvio (directed by Berardo Carboni)
• Citizen Berlusconi (directed by Andrea Cairola and Susan Gray)

Further reading[link]

External links[link]

Wikimedia Commons has media related to: Silvio Berlusconi

Wikiquote has a collection of quotations related to: Silvio Berlusconi

• Official website
• Profile: Silvio Berlusconi, BBC
• A chronology of Berlusconi's life from Ketupa.net
• Berlusconi cuts stake in television company, IFEX
• Forbes.com: Forbes World's Richest People
• BBC News Europe: Berlusconi in his own words
• Berlusconi to lobby EU on behalf of Russian travellers video on RussiaToday
• Silvio Berlusconi; A Complex Character
• (Italian) Progetto Politica: le 10 domande di Repubblica a Berlusconi
• (English) (Italian) Forza Italia, Berlusconi's political movement; click on International for an English version.
• (English) "EN" (Italian) A popular paper spread among the members of the European Parliament about Berlusconi's life chronology, mysteries and trials. By Marco Travaglio and Peter Gomez.

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