Prodi warns phonetaps could hurt Italian politics

ROME, June 13 (Reuters) Prime Minister Romano Prodi said today the publication of phone taps from a court probe into bank takeovers, which reveal active intervention by top politicians, risked undermining faith in Italy's leadership.

Newspapers have published pages of conversations from 2005 between politicians like Democrats of the Left party chairman Massimo D'Alema, now foreign minister, and local banks trying to head off foreign takeover bids.

While there is no suggestion of wrongdoing by any of the politicians, both the ruling centre left and the opposition have criticised the Milan magistrate who ordered the transcripts of 73 taps to be released to the lawyers of about 70 defendants.

''Whole pages of newspapers and hours of TV transcribing and broadcasting phone taps which show or prove nothing risk feeding a climate of conflict and unease with institutions and politics which is harmful and dangerous,'' Prodi said in a statement.

Milan magistrate Clementina Forleo, who released transcripts to lawyers on Monday, is probing the 2005 takeover bids launched by Banco Popolare Italiana for Antonveneta, and by insurer Unipol for BNL.

They were seen as defensive bids orchestrated by the later disgraced Bank of Italy chief Antonio Fazio to head off foreign bidders. Fazio eventually had to step down in a scandal surrounding ABN Ambro's bid battle for Antonveneta.

ABN eventually won and BNL was later bought by France's BNP Paribas.

In the tape that made most headlines, D'Alema, whose party was close to Unipol and was keen that BNL get back to its worker cooperative roots, hears from Unipol chairman Giovanni Consorte that he could secure 70 per cent of BNL.

''Go on, make our day!'' says D'Alema.

Prodi, who has been criticised by coalition members for not defending his foreign minister quickly enough amid talk of a rift between the two men, expressed his ''total faith in the politicians affected by this disagreeable debate''.

Italian politicians are already shown by opinion polls to inspire little confidence in the general public, while Prodi's government has lost popularity a year after beating conservative premier Silvio Berlusconi in Italy's closest post-war elections.

REUTERS CS KN2140