The Sewer not the Sewage?
David Mills, Berlusconi and New Labour
Imagine that Robert Maxwell had become British Prime Minister. A similar situation actually obtains in Italy with the premiership of Silvio Berlusconi. I examine below one strand of Berlusconi’s activities, mainly through his relationship with one of his senior lawyers.
Until recently, David McKenzie Mills was Berlusconi’s London lawyer. A pillar of the New Labour establishment, Mills is married to Tessa Jowell, the Culture Minister and is a friend of both Alastair Campbell, New Labour’s communications supremo, with whom he plays golf, and Peter Mandelson, the ‘online begetter’ of New Labour.
Mills has suffered various public embarrassments since the mid-nineties, when his offices were raided by the Serious Fraud Office searching for papers relating to investigations by Italian magistrates into allegations of corrupt financial practices by Berlusconi. Mills had acted as Berlusconi’s lawyer in the deals. There was no suggestion at the time that Mills had done anything illegal; but there was the added embarrassment that his sister-in-law, Dame Barbara Mills, had recently been the head of the Serious Fraud Office. This was before she became head of the Crown Prosecution Service. She took early retirement from that post at the time of Mills’ initial embarrassment. There is no reason to believe the two events were connected.
This original appearance by Mills in a British court as a defence witness for Berlusconi culminated in an appearance before the Court of Appeal. This hearing was interesting not only because it concerned Berlusconi and publicly established the nature of his legal relationship(s) with Mills but also because of the nature of Berlusconi’s defence and the other legal personalities involved. Berlusconi (who never appeared in person) had two main defences against the request for evidential papers. It was argued, firstly, that the Italian request was simply part of a fishing-expedition, an attempt to gain evidence by means of a general trawl, when there was no prima facie reason to believe that the papers had any specific relevance to the Italian case against Berlusconi. This was quickly dismissed by the two appeal judges, of whom the senior one is now the Right-Honourable Lord Justice Simon Brown.
The second defence ground was more interesting. It concerned the papers which the Italian authorities held would help sustain the case against Berlusconi that he had bribed Craxi, the leader of the Italian Socialist Party. This is an important allegation. Craxi died recently in exile in Tunisia after fleeing Italy in the wake of the Tangentopoli scandals which brought down the Cold War Italian political establishment when it emerged in 1992 that much of Italian political activity, including that of the two major parties, the Christian Democrats and the Socialists, had been funded through bribes since the end of WWII. This political implosion had first led to the political rise of Berlusconi, heading a new party, Forza Italia, and representing himself as a pair of clean hands prepared to sweep away the endemic corruptions of Italian politics. That is, he first became Prime Minister in 1994 on the back of the magistrates’ campaign to clean up politics.
First resignation
Within a year, he was forced to resign his first premiership when it emerged that he was being investigated for corruption himself. Craxi had been the political boss in Milan, Berlusconi’s home city, and the place where he made his first fortune in two housing deals. He had achieved this through two means. First the political patronage of Craxi, who had not only fixed the deals whereby Berlusconi gained the building contracts but is also alleged to have been party to the changing of the approach routes of planes to Milan airport. This change added substantially to the value of the developments which had previously been under the flightpaths. Second, Berlusconi had had a still unexplained inflow of capital routed through anonymous Swiss sources to fund the housing developments.
Three theories have been put forward as to the origins of this seed-corn for Berlusconi’s subsequent business empire. First, that he already possessed the money and was funnelling it to himself through Swiss sources. This would have been illegal under Italian law. Second, that the money came in part at least from Mafia sources. Witting association with the Mafia is illegal under Italian law even if the ‘investment’ is into a legitimate business activity. The third theory is that the money came from P-2, the rogue masonic lodge which Berlusconi had joined in 1978. These alleged associations have continued to dog Berlusconi and his reputation for the best part of a decade. Others have arisen from them, including an accusation that was examined by the magistrates for two years, that Berlusconi was complicit in the murder of magistrates investigating the Mafia in an attempt to cover up his own Mafia associations. He is currently on trial for the alleged bribing of a judge. I will examine both the allegations and Berlusconi’s attempt to deal with them in more detail below. For now, it is sufficient to note that they are the reason it is increasingly believed that Berlusconi, far from being a new start in Italian politics, is simply a continuation of the old corrupt politics by other means.
In the British 1996 appeal hearing, the Italian authorities claimed that Berlusconi had laundered the sterling equivalent of some £7 million as Craxi’s final payment cum pension fund. This had been routed through Mills and the various shell companies he had set up for Berlusconi, mainly in the British Virgin Islands. Through his lawyers, Berlusconi disputed neither the fact of the payment to Craxi, nor that the payment could be construed as a bribe, a payment for past services.
Nor did Mills legally dispute the facts. On behalf of Berlusconi, Clare Montgomery, his barrister, argued that this would have constituted a ‘political offence’ and, under the European Convention of Human Rights, was not subject to the Court’s jurisdiction.
This defence that it was not corrupt to bribe a politician, precisely because he was a politician, was given very short shift by Lord Justice Brown, who stated that he found it impossible to see politicians who had been in power at the time of the alleged offences as ‘political prisoners’. (1)
Given David Mills’ closeness to New Labour, it is also interesting that Clare Montgomery was Berlusconi’s counsel at the appeal. Her chambers are Matrix, specialists in human-rights law, politically and socially close to New Labour. Ms Montgomery shares not only chambers with Cherie Booth, Tony Blair’s wife, but also shares a room with her.
In addition to the two main defence planks, there was the general defence by Mills that as Berlusconi’s lawyer any information Mills had concerning his legal and financial affairs was subject to professional confidentiality and thus immune to any judicial inquiry.
Beginnings
Mills and Tessa Jowells connections with Labour go back to the 1960s when they were both Labour councillors. Educated at Oxford, Mills was a young civil servant at what became the Ministry of Defence and part of the ‘fast-track’ for promotion intake. He left the MOD after only a few years, taking the bar examination and becoming a barrister. Though not yet a qualified lawyer, during his brief career at the MOD, his work was sometimes connected with legal aspects of the intelligence services. He was a minor member of that London NW1/NW5 set(2) and still lives in Kentish Town within a hundred yards or so of retired Labour/SDP politician William Rogers.
He pursued his career as a barrister through the seventies but then suddenly switched track and became a solicitor. This was an unusual step. More then than perhaps now, there was a strict legal and social difference between the two professions. On the whole barristers were seen as upper-middle class while solicitors were seen as middle or lower middle class. Only barristers were entitled to plead before a judge in open court. Solicitors could draw up the papers for a case, including legal contracts, but could only represent a client before a magistrates court. Any plaintiff or defendant in a civil or criminal case had to be represented by a barrister in court but had to instruct a solicitor to do so. The solicitor would in turn instruct a barrister. In effect the barrister became a public legal advocate (a British version of an American trial lawyer) and the solicitor became a legal technician, often having more legal knowledge than the barrister himself. The origin of this peculiar arrangement, unique to the UK and countries such as Australia which inherited their social systems as well as their legal ones from the UK, was the British class system. It was assumed that any judge (until the 199”s only barristers were promoted to the judiciary, and not solicitors) would be upper-middle class and a legal client could only be fairly represented before the judge by a member of his own social class. Until recently, the majority of the British legal profession would have agreed that this system, while not egalitarian, was essentially more democratic than other legal systems, allowing the humblest citizen access to the best possible advocacy. (3)
Enter Carnelutti
Despite this potential self-demotion in the British system, David Mills struck lucky. After only a couple of years as a solicitor he was chosen to open the London office of the prestigious Italian law-firm, Carnelutti. He took charge of all their London business, including their foreign business channelled through London. This ranged from Argentina to Croatia, then still part of Yugoslavia. This opening in Mills’ legal career occurred in 1981 at about the time that the body of Roberto Calvi, a central figure in the Vatican Bank scandal, was found hanging under Blackfriers Bridge. (4) Mills quickly became a partner in the new law firm, and the London end was renamed Carnelutti-McKenzie-Mills (CMM). (5)
It was at this time that Mills became Silvio Berlusconi’s London lawyer. Using the advantages given by the numerous offshore possessions, and the deregulation of the UK financial services in 1984, Mills was able to set-up the offshore shell-companies through which Berlusconi conducted the business of Fininvest. These have now been the object of investigation for the last ten years by Italian magistrates who assert that they were the vehicles through which Berlusconi endlessly cycled money with a sterling equivalence of billions to no apparent purpose. The magistrates allege that the companies were laundering vehicles for everything from simple tax-evasion to the attempted illegal purchase of Spanish television stations. Baltasar Garzon, the Spanish magistrate who attempted to extradite Auguste Pinochet from London in the late nineties, is in charge of this case in Spain. Berlusconi has attempted to block any possible attempt at extraditing him to Spain by blocking the implementation of the proposed common European arrest warrant.
He is reintroducing into Italian law the criminal immunity of MPs and ministers, a measure first introduced under Mussolini but abandoned in the wake of the bribery scandals in the early nineties. Berlusconi and some senior members of his party, also employees of his firm Fininvest, already enjoy considerable immunity under European law as current or ex-members of the European parliament. This immunity is lifelong and protects them against prosecution in any member-state of the EU except their home jurisdiction. (6) Marcell Dell’Utri, a senior employee of Fininvest recently on trial in Italy for Mafia association, is also a member of the European judicial commission and enjoys non-Italian immunity within the EU; as does Berlusconi, himself, as an ex-member of the European Parliament.
Berlusconi is introducing similar measures into Italian law to guarantee himself and his associates immunity from prosecution. The most notable of these is the proposal to render false accounting a non-criminal offence. This would prevent even an official investigation of serious fraud by the examining magistrates. Any citizen who felt they had suffered damage through means of false accounting would have to mount courts. The matter would have little to do with the state. (7)
Though acting as Berlusconi’s legal conduit Mills had never been officially accused of any wrongdoing himself. Even if Berlusconi’s operations through the companies set up by Mills had involved illegalities, Mills was not himself guilty of illegal activities as an automatic consequence. At worst, he was the sewer and not the sewage.
Fellow conspirator?
This situation changed in February of this year. In yet another appearance before a London court to defend Berlusconi’s legal interests, Mills refused to testify on the grounds that he was himself currently being investigated by Milanese magistrates with a view to prosecution concerning his handling of Berlusconi’s affairs.
In his attempt to get round both Spanish and Italian law forbidding the concentration of ownership of television stations in too few hands, Berlusconi had divested himself of legal ownership of some of the stations. Mainly because of the large fee of £2 millions paid to Mills’s firm, CMM, the Italian investigators ruled that Mills had not simply administered one of the stations but was, in effect, the beneficial owner of it. Part of their case is the belief that if Berlusconi was to willing in effect cede legal ownership of one of his stations to Mills, this goes far beyond a normal lawyer-client relationship. It opens up Mills to prosecution as a fellow-conspirator of Berlusconi.
In part, this tactic of the Italian authorities is due to their frustration with Berlusconi’s repeated evasion of the legal consequences of his actions. Of nine prosecutions brought against him, many have lapsed under the statute of limitations which in Italy runs throughout the trial process up to the moment of final appeal. If the final appeal, which may take ten years to reach, is not brought within the given time-frame, the prosecution lapses. This option is only open to the very rich. An extra element of frustration has been introduced by Berlusconi’s attempts to pass legislation which would make his actions retrospectively legal. As a consequence, the magistrates have begun to target Berlusconi’s lawyers, particularly the ones they judge to be in reality his business partners rather than legal representatives. These include Mills.
Cesare Previti and Marcelle Dell’Utri, the former an ex-minister of Defence in Italy, and both lawyers and close business and political associates of Berlusconi, have recently been convicted on charges relating to Berlusconi’s affairs. Previti was convicted for bribery and Del’Utri for Mafia associations. In the latter case, the links went back to the seventies when Berlusconi had employed on his estate a Vittorio Mangano as a chauffeur and stable-manager. Mangano was later convicted as a senior Mafia figure. Berlusconi’s given reason for employing him was that he was a bodyguard protecting the family against potential kidnappers. However, Mangano was related to one of the five New York crime families, the Gambino family. They were originally the Mangano family. He was also seen as a major link in the heroin trade, co-ordinating relations between the Sicilian and the Northern Italian families.
This link between Berlusconi and Mangano was first revealed in an unbroadcast television interview by Borsellino, the anti-Mafia magistrate, in 1993. He was killed weeks later. Berlusconi was investigated for two years with reference to the killing but there was insufficient evidence to bring charges. Berlusconi has dismissed the charges of Mafia associations as ludicrous. However, it is traditional within the Mafia for a senior figure to have as his bodyguard/chauffeur a rising young star. For example, Vincent Giganti, the jailed head of the New York Genovese family, acted as Frank Costello’s bodyguard/chauffeur in the fifties when Costello was the senior mob figure in New York.(8)
Subsequent to his appearance in the appeal court, Mills wound-up CMM and took early retirement. He registered as a mature PhD student at the Courtauld Institute and studied Italian art, spending much of the next few years in Italy – he is bilingual in English and Italian. He came out of retirement recently, becoming a partner in the prestigious London law-firm, Gordon Dadd, situated in Grosvenor Square opposite the American Embassy.
Any lawyer may find himself embarrassed by a client, but David Mills’ list of embarrassments is long. It begins with the Ecclestone affair in which Bernie Ecclestone, the head of Formula One racing, managed to gain an exemption for the sport regarding the ban on tobacco advertising while Tessa Jowell was a health minister, and Mills turned out to be a director of the firm involved. Mills handled the legal work for a consignment of HIV-contaminated blood plasma being shipped to the Third World by a company registered in the British Virgin Islands; which is also the home of Oceanic Disposal Management, another company with which Mills was involved, which specialises in the disposal of nuclear waste on the ocean bed. (9) The latest was the Iranian air bus affair in which Mills seemed to be gaining access to Baroness Symons, a Foreign Office minister, and a colleague of his wife, in order to smooth a path through any objections to the deal arising from US sanctions policy towards Iran.
Mills may be innocent of any specific wrongdoing in all of these cases, but the impression left is that of a seriously flawed judgement combined with a desire to make money which can only call into question his general sense of values. This impression is familiar to many who have paid detailed attention to the political ethics of New Labour. It wouldn’t be unfair to say that David Mills seems to exemplify them.
Notes
1 It is interesting that this politically embarrassing case was handled by Lord Justice Brown. He is currently the Intelligence Commissioner and thus the final “court of appeal” under the new tribunal system which deals with any case regarding the intelligence services. Given that the Lord Chancellor’s Department not only assigns judges to all trials and appeals in the UK but also appoints the personnel to tribunals – it has recently taken over the administrative control of all tribunals in England and Wales – it’s likely that the LC’s Dept was aware of Lord Justice Brown’s special competence in delicate constitutional cases when he was appointed to hear the appeal. He is also a senior member of the Privy Council.
An odd circumstance surrounding the appeal was the attempt of an Italian lawyer who supports Berlusconi politically to obtain a copy of the written judgement. All court-judgements since 1996 are publicly available on a subscription web site. This is run by Smith Bernal, the official transcription service of the British courts. They receive copies of all legal judgements within twenty-four hours from the Court Service, itself run by the Lord Chancellor’s Department. The lawyer couldn’t obtain a copy of the judgement through the normal channels. He received a copy only after making a specific complaint.
2 I described this in ‘SISies’ in Lobster 40.
3 The fruits of this system are still very much alive in the UK. Despite his image as a moderniser of both British politics and social attitudes, Tony Blair is a typical product of it. As a politician, he depends upon the skills of an advocate, rhetoric and persuasion, rather than analysis, upon charm rather than intellectual power or subtlety.
4 His death has only recently been officially declared in the UK to have been a murder rather than a suicide, the verdict reached at the original inquest despite the numerous oddities surrounding his death. There is still no satisfactory explanation as to his presence in London at the time of his murder. He had made his way to London indirectly via Zagreb in Croatia.
5 Carnelutti had been involved on the periphery of the Vatican Bank scandal through their relationship with Michelle Sindona; and also with some of the Vatican ratlines running from Croatia to Argentina through which money to support Nazi war criminals had been laundered. SIS had had a hand in these lines before the US intelligence services had taken them over.
6 It was originally meant to protect a Euro-MP against undue pressure from a foreign government. It has been widely abused, not least by Berlusconi’s political allies.
7 If only Andersen, Berlusconi’s one-time accountants, had had that law on the US statute books!
8 It is not unheard of for senior Italian politicians to be implicated in political murders. Guillio Andreotti, the leader of the Christian Democrats for many years, and six times Prime Minister, has recently been convicted, pending final appeal, of the murder of Pecorelli, an Italian investigative journalist. Pecorelli mixed his journalism with blackmail, using high-level sources within the intelligence services. He was attempting to blackmail Andreotti concerning his role in the circumstances surrounding the kidnapping and murder of Aldo Moro by the Red Brigades in the late seventies.
9 This Swiss-Italian operation has also been investigated for Mafia affiliations by the Italian magistrates.