Berlusconi Sentenced to 7 Years for Abuse of Power, Sex With Minor

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Silvio Berlusconi and Ruby El Mahroug

Italian judges have found former Prime Minister Silvio Berlusconi guilty of having sex with a minor and of abusing his power.

They sentenced him to seven years in jail, though the sentence is pending appeal, and banned him for life from holding public office.

Berlusconi furiously denounced his convictions, insisting that he was innocent and would carry on in politics.

"An incredible sentence has been issued of a violence never seen or heard of before, to try to eliminate me from the political life of this country," he said after the announcement of his seven-year jail sentence.

"I intend to resist against this persecution because I am absolutely innocent and I don't want in any way to abandon my battle to make Italy a country that is truly free and just," Berlusconi said in a statement.

His lawyer said he would appeal the verdict, as expected.

Earlier, judges in a Milan court had retired to consider their verdict on Monday in a trial surrounding allegations that Berlusconi had sex with former nightclub dancer Karima El Mahroug, known as "Ruby the Heart Stealer," who was then under 18.

More crucially for his political career, the former head of government is accused of abusing his office when he intervened to get her released from police custody when she was arrested in a separate incident.

Italy's coalition government, led by center-left Prime Minister Enrico Letta, depends for its survival on Berlusconi's center-right party, making trial a source of tension for the nation's politics.

Prosecutors had asked for one year in jail for paying for sex with a minor and five years and a life ban from holding public office for the abuse-of-power charge. Even if he loses the appeal, the 76-year old politician may be too old for a custodial sentence and could instead be put under house arrest.

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According to Giovanni Orsina, professor of Italian history at the Luiss-Guido Carli University in Rome, the real worry for Berlusconi and the future of the government isn't Monday's ruling but a tax fraud case that he faces, which could ultimately undo his political career.

"This trial has more visibility, it's more interesting than the tax trial, but ultimately the tax fraud trial will have more of a final effect," Orsina said. "But the trial in November over tax fraud is the last appeal, and if guilty, Berlusconi would be out of politics for good."

Berlusconi is already appealing a recent court ruling convicting him of tax fraud.

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There have been a number of conflicts between Letta's and Berlusconi's parties over tax increases and spending cuts, most recently a planned sales tax rise. Berlusconi's party has demanded that the increase be canceled, creating further concerns for the fragile coalition.

Tensions have not been helped by high-profile and thinly veiled messages to the coalition partners from Berlusconi and his supporters. On Saturday, for instance, Il Giornale newspaper, which is owned by Berlusconi's brother, said in a front-page article that the government would fall unless Letta canceled the sales tax increase.

Berlusconi is like "a powerful animal in a corner," but he won't try to unseat the government, Orsina told CNBC.

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"Berlusconi feels caged ... but he's also a rational animal, and I don't see where he can go from here," said Orsina, the author of a forthcoming book titled "Berlusconism." "He's not going to leave or kill the coalition government now—it wouldn't be in his interests."

Tobias Blattner, euro area economist at Daiwa Capital Markets, echoed that conviction.

"He was so much in favor of the coalition from the start that it would be difficult to see him withdrawing from it, though over the last few weeks he has made threats to leave the coalition if tax increases goes ahead."

"There would be fragility and volatility if Berlusconi is found guilty, but I doubt that the government will break up. … If he leaves the coalition, it will be over [coalition disputes] and nothing to do with the trial."

The underage sex trial has lasted two years and led to revelations of Berlusconi's lavish and now infamous "bunga bunga" sex parties. El Mahroug and Berlusconi deny having sex, and he has said repeatedly that the three Milan-based judges—all women—are biased against him.

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Wolfango Piccoli, managing director at Teneo Intelligence, told CNBC that the impact of Berlusconi's "bunga bunga" trial was overstated and that the government, despite its "huge political deadlock," was not at risk.

"It's certainly a fascinating story to write about, especially for the international media," he said. "In Italy we're used to this kind of behavior from Berlusconi. But in terms of the political repercussions on the government it's going to be minimal. It's going to create noise, but it's going to be a very noisy week in Italy regardless," he added.

"The government has to decide whether to scrap the planned VAT [sales tax] increase on Wednesday, which is one of the major requests from Berlusconi," Piccoli said.

"This is not the end of it [for him]," he said. "We've got a much more important verdict coming at the end of the year connected to the tax fraud case. Until then, I don't think Berlusconi is going to pull the plug on the Letta government."

—By CNBC's Holly Ellyatt. Follow her on Twitter @HollyEllyatt. Reuters contributed to this story.