Spreading Italian Corruption Scandal Exposes Dark Side of Political System

THEY call the scandal tangentopoli, or "Bribery City."

The scandal began to unfold a year ago with the arrest of Mario Chiesa, an Italian Socialist Party functionary, who was caught taking a $5,000 bribe for a hospital contract. Mr. Chiesa was found guilty and his arrest proved to be the beginning of an ongoing drama.

In the months since, dozens of politicians from various parties have been arrested or notified that they are under investigation for corruption. Daily headlines proclaim new developments in the case.

What the judicial investigations in Milan, Rome, and other cities promise to lay bare is how Italy's system of partocrazia, or party rule, has worked. For decades, mammoth state-run companies have been the fiefdoms of political parties, contracts have been awarded to companies that give kickbacks to the coffers of the various political parties, and a system of "recommendations" has become entrenched. It is extremely difficult, Italians say, to get a good job in or out of the state system without a politi cal patron.

"People are very interested in politics at this moment, but they're also very disgusted," says Stefano Ceccanti, a member of People for Reform, a movement led by Christian Democrat Mario Segni.

Student Alexia Necci says there is no politician that she likes.

"They're all thieves," adds an art director for a Rome publisher, who asked not to be named. "All of them."

In the year since Chiesa's arrest, Italy has changed markedly:

* Giulio Andreotti, prime minister in six Italian governments, was side-lined after fed-up voters in the April 1992 parliamentary elections punished his Christian Democratic Party and other coalition parties.

In a three-page letter last week, Mr. Segni said that part of the Christian Democratic Party was "already condemned," proposed the creation of a Popular Party, and asked reformist Christian Democrat leader Mino Martinazzoli to join him in creating it. The latter is cool to the idea.

* Bettino Craxi, the 16-year leader of the Socialist Party and former prime minister, resigned Feb. 11 as party secretary. (His successor is Giorgio Benvenuto, a former labor leader.) Mr. Craxi has received five notices from the tangentopoli judges concerning alleged illicit party funding and a sixth notice concerning the fraudulent bankruptcy in 1982 of the Banco Ambrosiano.

Craxi has denied all the allegations. As a parliamentarian, he is immune from prosecution, although the judges have asked Parliament to lift his immunity.

Justice Minister Claudio Martelli, a Socialist, resigned last week when he received notice he was under investigation in the Banco Ambrosiano scandal. Former Foreign Minister Gianni De Michelis, also a Socialist, has received two notices that he is under investigation for corruption. Parliament has waived his immunity.

* Judicial investigation is beginning into the billions of dollars spent on the south of Italy since a devastating earthquake on Nov. 23, 1980. As many as 50,000 people are estimated to live in temporary housing to this day.

For years investigators have been saying that much of the money has gone into the pockets of politicians, businesses, and organized crime. President Oscar Luigi Scalfaro, who himself led a parliamentary inquiry into the scandal, has also asked the government to find out where the money went and how much more exactly needs to be spent.

* Reform of the election of Parliament is nearing. Parliament has become increasingly fragmented among small politically diverse parties that stymie efforts to form workable coalitions. Since a bicameral parliamentary commission appears unable to agree on the best reform, a popular referendum seems certain this spring.

A "yes" vote would establish an English "first-past-the-post" system of elections for three-fourths of the Senate, with the remaining fourth being elected according to the existing proportional system.

Not only would this bring about the demise of smaller parties, it could put the existence of all today's parties in question, Mr. Ceccanti says.

"New parties could be born quite quickly," he says. "But we're heading toward the unknown."