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ROME (Reuters) - Giuseppe Mussari, former chairman of Monte dei Paschi, has few friends these days as a scandal swamps the bank. But only a few months ago he was unanimously re-elected as head of Italy's main banking lobby despite questions about his conduct.
In retrospect, Mussari's reappointment in June 2012 at the top of ABI, the association that represents the Italian banking industry, appears increasingly strange given that he had left Monte dei Paschi under a cloud a few months earlier.
A 50-year-old lawyer from Calabria with a passing resemblance to the late screen legend Marcello Mastroianni, Mussari had not sought a new term as Monte dei Paschi chairman and left the bank on April 27, 2012.
Days after he left, prosecutors raided Rocca Salimbeni, the 14th century palazzo in Siena where the 540 year-old bank is based, following suspicions it had misled regulators over its acquisition of smaller rival Antonveneta in 2007-08.
A few months before, on November 15, 2011, the Bank of Italy had summoned Monte dei Paschi's top management "in order to make them face up to their responsibilities" over problems caused by an opaque series of derivatives trades set up by the bank's finance division.
According to evidence given to the Italian parliament this week, central bank regulators told bank management "to quickly and definitively turn around the way it conducts its business".
Shortly afterwards, managing director Antonio Vigni was forced to resign, although he took a 4 million euro (3.4 million pounds) payoff to soften the blow which the Bank of Italy is now contesting.
Italian prosecutors are investigating several former managers of Monte dei Paschi over a string of allegations of fraud and massive corruption in negotiating questionable and loss-making transactions.
No details have been released of who is being investigated and Mussari has made no comment on the allegations.
Badly weakened by its large government bond portfolio which plummeted in value in the summer of 2011, Monte dei Paschi was the only Italian bank to fail tougher new capital requirement rules.
Despite this and the growing concern about the vulnerability of Italy's third largest bank, still struggling to absorb its 9-billion-euro cash acquisition of Antonveneta, there was little sign of worry in the rest of the banking sector.
Federico Ghizzoni, chief executive of Unicredit, Italy's largest bank, backed Mussari as recently as October 18 last year when the scandal was already starting to run out of control.
"He has all our support, not just of Ghizzoni but ABI as a whole," Ghizzoni told reporters.
Just over two months later, the storm broke. Mussari resigned from ABI last week after Monte dei Paschi finally revealed that it faced potential losses of about 720 million euros over some derivatives and structured finance operations.
Given the question marks over Mussari, why was he reappointed as the main spokesman for the Italian banking sector and what does this say about the appetite for transparency in the close-knit world of Italian banking?
"There was the idea around at the time that the presumption of innocence should also apply to bankers," said one person who was close to the situation at the time.
There was certainly little sign that regulators were worried or that the Bank of Italy had expressed any informal concerns to bank chiefs about Mussari. "I don't recall any intervention with any of the ABI re-appointments," the association's new President Antonio Patuelli told Reuters in an interview.
Mussari himself appeared to have no doubts either and at ABI's general assembly in July, a few weeks after his re-appointment, he delivered a reassuring message about the banking sector's ability to resist the economic crisis facing Italy.
"In this context, Italian banks are an element of stability for our country, thanks to their virtuous practices," he said.
A former communist, with the reputation as an intelligent and politically shrewd operator, Mussari's excellent connections in the Italian business establishment and politicians on both the left and the right certainly helped.
Very close to Giulio Tremonti, the economy minister under former prime minister Silvio Berlusconi, he also had strong connections with politicians from the centre-left Democratic Party including the former mayor of Siena, Pierluigi Piccini.
Powerful bankers such as former Unicredit chief executive Alessandro Profumo, who succeeded him as Monte dei Paschi chairman and who is now in charge of cleaning up the bank, were also among his backers.
His own expertise in the technical aspects of banking was less solid and he appears to have given the powerful head of the bank's finance division a free rein with the complex trades that got the bank into trouble.
"They could do what they wanted because no one really understood what they were doing, neither Mussari nor Vigni," a former mid-level official at Monte Paschi said.
A front-page cartoon in the daily Corriere della Sera on Friday showed a man complaining over the breakfast table that he can't understand the arcane talk of swaps and derivatives that pepper stories about the Monte dei Paschi scandal.
"They'll make you president of ABI," his mother responds.
Additional reporting by James Mackenzie; editing by David Stamp