There's a covert, illegal, parallel American-Italian intelligence structure operating out there. Rogue spymasters like Robert Lady, the CIA's "retired" station head in Milan, and Marco Mancini, until recently number two at SISMI, the Italian CIA, are two of its now-exposed operatives. They worked within a web spun by President Bush and Silvio Berlusconi. Big B and little b huddled together for an overnight retreat in Crawford in late July 2003. At the time, Berlusconi was prime minister of Italy, and he remains today that country's richest man.

Their webs of intrigue connect: the forged yellowcake dossier used by President Bush to justify the invasion of Iraq, the "extraordinary rendition" of terrorism suspects to countries where they would be tortured, and the payback to the Italians via a contract to build 23 Marine Ones, the president's helicopter fleet.

The intimate relationship between the shadowy American and Italian security networks is being illuminated by Milanese prosecutors, who simultaneously are being spied upon by those whom they are investigating. The prosecutors' disclosure of parallel American and Italian wiretapping and disinformation campaigns sheds rare light on black operations.

Some of the more troubling news is buried among the papers filed in Abu Omar abduction case. Omar, an Egyptian imam, was kidnapped on a busy Milan street by an American-Italian "special removal" unit and flown to Cairo where he was tortured, apparently under the supervision of the CIA's Robert Lady. The Milanese prosecutors have obtained a confession from Lady's Italian partner, Marco Mancini, and are on the verge of indicting General Nicolò Pollari, the current head of SISMI. The prosecutors have also obtained arrest warrants for 26 CIA agents and are seeking their extradition.

According to L'espresso, a leading Italian newsweekly, the prosecutors claim that it was in the sweltering heat of the Texas summer that Big B asked little b to appoint an Italian operative trusted by the CIA to head SISMI's First Division. The Prima Divisione is in charge of counterintelligence and anti-terrorism, and the recommended agent was none other than Marco Mancini, the overseer of the Abu Omar rendition.

Mancini's subsequent appointment to head SISMI's Prima Divisione created a safe haven for the CIA and SISMI's joint operations. These were carried out by both current and former agents, the latter acting as mercenaries. In addition to abducting suspected terrorists, the agents are charged with global eavesdropping, intercepting financial transactions and fabricating disinformation about terrorist threats. Their tradecraft included spying on investigators, judges, journalists and parliamentarians; misleading congressional and judicial inquiries into criminal acts; and planting stories in media such as Il Giornale, the New York Times and the Times of London.

An incestuous mix of public and private interests profited from the covert work. For example, Giuliano Tavaroli directed Italy's Telecom security department until scandals forced his resignation. One of his tasks was to conduct phone taps requested by the police. Tavaroli used this authority to set up a massive eavesdropping program codenamed "Super Amanda." Eerily similar to the plan implemented by the Bush administration after Sept. 11, 2001, to wiretap Americans' telephone and email communications, Super Amanda was Berlusconi's big ear on Italian civil society and his political rivals. Today Tavaroli stands accused of violating several laws, including selling information illegally intercepted on behalf of SISMI's First Division to business intelligence firms.

Tavaroli and Marco Mancini are best friends. Both began their careers in the anti-terrorism unit of Italy's paramilitary corps. According to the Milanese prosecutors, Tavaroli joined forces again with his best friend to bribe public officers who were investigating the Abu Omar abduction. He also frequently hired CIA agents as consultants and was about to hire Robert Lady away from the CIA before the scandals broke.

Marco Mancini was a surprising choice to head SISMI's First Division. Traditionally the department had been headed by a general, and Mancini is barely a captain. But Gen. Nicolò Pollari -- SISMI's director now facing indictment -- claims that Mancini's appointment was imposed by the highest Italian political authority and supported by America. He didn't disappoint.

From the investigators' filings something deeply subversive emerges: the spy network fomented political instability and raised fortunes by concocting false security threats. On one occasion described by the prosecutors, Mancini alerted the local police of Reggio Calabria (the capital of the Italian state of Calabria) of an imminent mafia attempt on the life of its mayor. On another occasion, Mancini directed the Italian coast guard to intercept a shipment of explosives destined for Al Qaida.

According to Calabria Ora, a regional daily for Calabria, on the first occasion the SISMI tip-off authored by Mancini sent Reggio Calabria's police searching behind the toilet bowl in the office of Giuseppe Scopelliti, the city's mayor. There they discovered a plastic device, which, according to Mancini, would have detonated shortly thereafter. But the device lacked a fuse. Mayor Scopelliti, a known fascist in a region where collusion between political parties and organized crime is a fact of life, went on to acquire the status of an anti-mafia hero. On the second occasion, even though the Italian Coast Guard launched a Mediterranean-wide search and paid some 300,000 euros to a mysterious informer introduced by Mancini, the cargo full of Al Qaida's explosives, the informer, and the money that was paid out were never found.

The Super Amanda project created an intelligence fraternity among the security heads of Italy's largest communication and defense industries. This fraternity promoted or blocked the careers of policemen, investigators, secret agents, coast guards and Carabinieri across the country. And the companies themselves became more incestuous, with Finmeccanica, Italy's largest defense firm, often profiting. For example, Telecom Italia during Tavaroli's tenure transferred control of Telespazio, one of its subsidiaries for space defense, to Finmeccanica. Finmeccanica was also the surprising winner of the prestigious contract to build 23 Marine One helicopters for the U.S. president. The only industry members not surprised by this decision were top Finmeccanica executives. Before the Pentagon announced the winner, one Finmeccanica insider told us, the company's division heads jockeyed for what they were told was an imminent payback from Bush to Berlusconi.

Through the illegal wiretapping operation, Marco Mancini monitored any opposition that might be brewing to the cabal's plans, but evidently didn't consider that his own calls might be tapped. Investigators traced one of the phone calls Mancini received to an 11-room penthouse apartment at Via Nazionale 230, the beautiful Umbertino building just a few minutes walk from Rome's Spanish Steps and Trevi Fountain. The apartment turned out to be SISMI's secret propaganda office filled with tens of thousands of files on unfriendly politicians, magistrates, entrepreneurs and celebrities. Accounts of phone calls in these files were allegedly assembled by members of the Telecom security office. Prosecutors working on the investigation have questioned F.G., a Telecom employee who managed connections between people in the telephone corporation and the SISMI.

Other files indicate SISMI not only wiretapped some Italian journalists, but also hired others as covert flacks. For example, the apartment files contained receipts for payments of 2,500 and 5,000 euros signed by "Betulla," Italian for birch tree. The prosecutors found that Betulla was the code name of the deputy director of Libero, a conservative Milanese daily. Investigators also found drafts of articles, including a smear piece against Prime Minister Romano Prodi. The article was later published in Libero.

The seized materials show how eager SISMI was to refute that "the yellowcake dossier" was a collaborative Italian-American venture concocted to justify President Bush's invasion of Iraq. The dossier's bogus intelligence was cited by President Bush in his 2003 State of the Union address as proof that Saddam Hussein had bought yellowcake uranium ore from Niger to fuel nuclear weapons. To refute La Repubblica's expose of this Nigergate affair, SISMI successfully enlisted or fooled Italian journalists (at Giornale, Unita, Libero, Riformista and Panorama), as well as reporters covering the story for the New York Times and the Times of London. Surreptiously, SISMI shifted blame to French Intelligence.

As Marco Mancini was put behind bars in a Milan jail, he said, "I have confidence in the courts; it will emerge that I had nothing to do with the case." But what emerged was a confession. SISMI's No. 2 fingered SISMI's No. 1, Gen. Nicolò Pollari, and thus was released from jail to house arrest. In turn, Pollari has implied that all of his activities were approved by former prime minister Silvio Berlusconi.

The current prime minister, Romano Prodi, now faces a difficult choice. The shadowy American-Italian web tried first to smear him, then to entangle him. Also Berlusconi, despite being charged since he left office with more financial crimes, is like the maniacal villain in Hollywood movies: he's gone but never dead. Prime Minister Prodi must stay out of the Milanese magistrates' way so that he retains the support of his slim anti-Berlusconi majority. On the other hand, Prodi isn't going to push for the extradition of the 26 CIA agents charged with kidnapping Abu Omar. Running the Italian government is difficult enough without angering an American president. At the recent G8 summit in St. Petersburg, Italian reporters asked Prodi if he'd discussed the spy scandal with Bush. "I don't think that President Bush knows the SISMI initials," Mr. Prodi joked. "We didn't talk about it."

Jeffrey Klein, a founding editor of Mother Jones, this summer received a Loeb, journalism’s top award for business reporting. Paolo Pontoniere is a New America Media European commentator.

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