Former UniCredit CEO indicted for alleged fraud

Alessandro Profumo, the former CEO of Italy's largest bank UniCredit, was sent to trial with 19 other people by a preliminary hearings judge on Tuesday for an alleged 245-million-euro tax fraud. Profumo, who is now the chairman of Monte dei Paschi di Siena, another big Italian bank, is accused of defrauding the Treasury using a structured finance operation known as 'Brontos' that sheltered money from the tax authorities. He is accused alongside a number of former and current UniCredit managers plus three employees of the British bank Barclays. Profumo, who stepped down from the helm of UniCredit in 2010 after losing a power struggle with Chairman Dieter Rampl, allegedly signed off on illegal transactions on three separate occasions in 2007 and 2008 "by putting his initials on applications for investment approval", according to prosecutors. The bank then categorized the money as dividends instead of interest, allegedly allowing suspects to pay only 5% tax on the profits instead of 100%. Profumo denies any wrongdoing. The trial will open on October 1 in Milan. Profumo, the architect behind UniCredit's incorporation in 2007 of Capitalia, a group which included the former Banca di Roma and Banco di Sicilia, was said to have lost the confidence of the key stockholders over his management of the bank after the global financial crisis began in late 2007. UniCredit was the most exposed Italian bank in the crisis because it had the biggest international profile, including owning Germany's HVB group, which suffered in the subprime loan crisis that sparked the credit crunch. Profumo is also said to have been at odds with Rampl over his management style, described by some observers as brash and autocratic, which earned him the media nickname of 'Mr Arrogance'. Observers said the final straw came when Profumo did not inform the chairman of Libya's move to boost its stake in UniCredit to over 7.5%. The Milan stock market reacted with indifference in early trading on Tuesday to the news that Profumo has been indicted. UniCredit's share price gained 0.38% while Monte dei Paschi di Siena's went up by 4%.