ITALY: 'SPY' SCANDAL EXPANDS

Rome, 27 Oct. (AKI) - A scandal involving Italian prime minister Romano Prodi and his wife Flavia who were allegedly spied on for two years escalated on Friday as investigators confirmed that the tax and financial situation of other leading politicians, as well as business, soccer and show business celebrities were also being illegally checked out. Milan prosecutors handling the case said Italian president Giorgio Napolitano, his predecessor Carlo Azeglio Ciampi, along with the son and daughter of former premier Silvio Berlusconi were among those spied.

On Thursday, prosecutors in Milan opened an investigation into allegations by the economy ministry that Prodi's tax record had been illegally accessed 128 times.

The case emerged after the ministry reportedly noticed irregularities in the number of times records had been accessed.

Milan prosecutors say 128 people are now under investigation, including employees at the tax and customs offices and members of the tax police.

The revelations are the latest in a series of scandals about illegal spying during the years the previous conservative Berlusconi government was in office. Indeed politicians with the centre-left government coalition alleged on Friday that the previous cabinet was spying on Prodi to try to find irregularities which could harm him in the electoral campaign leading to the April general election.

Piero Fassino, leader of the largest party in the government coalition, the Democrats of the Left, who was also reportedly being spied, denounced on Friday "a poisonous climate" in which the alleged events took place and called for the resignation of Italy's intelligence chiefs.

Last month, police arrested a former manager of telecommunications company Telecom Italia in a separate probe into alleged phone taps to collect sensitive information on other politicians and businessmen.

Prodi beat Berlusconi in April in one of Italy's closest elections ever after a bitter political battle between the two political factions.

During the campaign, Berlusconi's faction accused Prodi of taking advantage of a law introduced by the centre-right allowing him to avoid taxes in 2003 on a gift of almost one million euros to his two sons. On 7 April this year, just a few days before the election, three dailies close to then-premier Berlusconi, published a story in which they denounced the fact that Prodi had criticised the government's tax reforms but had used them to donate 870,000 euros to his children.

On Friday, Berlusconi said the scandal was "an incredible fabrication" while members of his coalition stressed his children had also been victims in the scandal.