Richard Owen, Rome Correspondent, on how a long-running fraud investigation in Italy has reached Britain and could threaten the career of Tessa Jowell, the Culture Secretary.

Why is Ms Jowell under pressure?

Her husband David Mills, a well-connected corporate lawyer, is accused of lying to an Italian court to protect Silvio Berlusconi, the Italian Prime Minister, over corruption charges at trials in 1997 and 1998. In return, he is accused of having received a bribe of £350,000.

The inquiry has been rumbling on for more than a decade during which Ms Jowell has distanced herself from involvement "on any level".

However, The Sunday Times published documents yesterday - leaked from the investigation - which suggest that after a series of transactions through an array of international offshore accounts, the "gift" was apparently used to cover the repayment of borrowings made against the couple's £700,000 terraced home in Kentish Town, North London.

Since the house is owned in both of their names, and Ms Jowell signed the papers to allow the complicated re-mortgage deal, the Conservatives are asking whether this potentially created a conflict of interest and whether Ms Jowell has breached the ministerial code of conduct.

How did Mr Mills come into contact with Signor Berlusconi?

Just before his marriage to Ms Jowell in 1979, Mr Mills - an Oxford-educated barrister who retrained as a corporate lawyer - took a job with Carnelutti, a leading Italian law firm, setting up its London office at the same time as building his own firm, Mackenzie Mills.

Mr Mills became an expert in offshore tax avoidance vehicles and by the time Ms Jowell was elected to parliament in 1992 he was running a profitable business with some 50 clients, including Fininvest, the firm at the heart of the Berlusconi media empire.

Two years later Signor Berlusconi, who had initially been just another rich Italian client, became Prime Minister of Italy.

How well do Mr Mills and the Italian Prime Minister know each other?

Signor Berlusoni has tried to distance himself from Mr Mills and stated last week that he "had never known" him. This was contradicted by Italian prosecutors who believe that Mr Mills hosted a dinner for Signor Berlusconi and his daughter, Marina, in 1995 at the Garrick Club in London.

What did Mr Mills do for Signor Berlusconi?

In March 1980, he set up Reteitalia, whose principal activity was the purchase and sale of film rights for Signor Berlusconi's television stations. Over the next 15 years Mr Mills set up a number of other companies for Fininvest.

When he became Prime Minister, Signor Berlusconi's business interests came under intense scrutiny with investigators probing this web of offshore companies. Italian judicial authorities allege that the purpose of the network of accounts in Switzerland, Monaco and the Bahamas was to evade taxes.

Mr Mills and Signor Berlusconi are both facing a trial over this matter which involves two of the companies Mr Mills created, Century One and Universal One.

During the investigation, prosecutors looked into two trials in 1997 and 1998 in which Mr Mills had been a witness on Signor Berlusconi's behalf.

One of these concerned illegal party financing, the other was the alleged bribery by Signor Berlusconi of finance police and judges. Prosecutors allege that in these cases Mr Mills had not given the court the whole truth.

What does Mr Mills say?

In a letter to his accountant, Mr Mills admitted receiving money from "the B people" - meaning Berlusconi - which he was told to treat as a "long-term loan or gift". The letter, dated February 2004, said that he had "kept Mr B out of a great deal of trouble that I would have landed him in if I had said all I knew". He had "told no lies but turned some very tricky corners."

He added later: "I look at myself in the mirror and I say, 'You are a complete idiot, but you are not a crook'."

What does Ms Jowell say?

"What I did was sign a form that enable the bank to take a charge on our house in order my husband could buy some investment he wanted. Both of our houses are in our joint names - it's as simple as that.

"I was perfectly happy in the division of our finances to sign the charge.

"It simply wasn’t a problem. It wasn’t unusual, it wasn’t improper and it certainly wasn’t illegal."

Will the case against Mr Mills go to trial?

Prosecutors started a separate investigation last April into whether Mr Mills had received bribes to falsify evidence.

On February 16, the prosecutors reached their conclusions which they deposited with a judge. He has until March 7 to decide whether to prosecute Mr Mills for taking bribes and perjury.

Signor Berlusconi has amended the statute of limitations - the deadline after which criminal liability for certain offences expires - from 20 years to ten. Since the alleged offence happened in 1997, it is possible that this could be spun out beyond that date.

One potential hurdle is that Mr Mills, if charged, may have to be extradited. If he chooses to challenge extradition the hearing could be fatally delayed.

How is this being received in Italy?

This is the kind of charge that Signor Berlusconi has faced and been convicted of before four times, although he has always managed to overturn the convictions either on appeal or by using the statute of limitations. Its timing is sensitive because there are elections on April 9.

Mr Mills is a pawn in the power game over whether the Prime Minister will be returned to office. Signor Berlusconi is arguing that the entire case is politically motivated.

Will Signor Berlusconi stand by Mr Mills?

Signor Berlusconi said last week that he would not provide any help for the British lawyer: "Somebody used my name to cover himself from the tax authorities in his own country and so as not to have to tell the partners of his legal practice exactly what he had pocketed," he said.

He said that the case against him was "unfounded and absolutely without proof" and was timed to influence the election.

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