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ROME - After shrugging off a series of sex scandals that cost him his marriage, Italian Prime Minister Silvio Berlusconi has found that his poll ratings have finally taken a dive as he becomes mired in yet another controversy.

Mr Berlusconi has described regional elections at the end of March as a crucial test. But they have been overshadowed by a new scandal that involves sex, bribes and the mercenary exploitation of the earthquake that struck the town of L'Aquila in April last year, killing 307 and leaving 50,000 homeless.

At the time, Mr Berlusconi's handling of the reconstruction process was seen as proof of a can-do spirit and was widely viewed as his greatest triumph since re-election in 2008. But transcripts obtained by magistrates through wire-taps have led to allegations that one of his political allies swapped rebuilding contracts for sexual favours. And the public outcry shows no sign of abating.

According to the transcripts, two building contractors boasted that ties to the government would win them lucrative work. "I was laughing at 3.30am in bed this morning," said Mr Francesco de Vito Piscicelli, referring to the precise time of the tragedy.

The magistrates wire-tapped Mr Piscicelli and have now arrested three public officials and a contractor.

Twenty-seven people are under investigation, including Mr Guido Bertolaso, the head of Italy's civil protection agency, who is often seen at Mr Berlusconi's side.

"These magistrates should be ashamed of themselves," was Mr Berlusconi's first, furious reaction. But as newspapers filled with accounts of bribes and favours affecting millions of euros of contracts, the Prime Minister has retreated into an uncharacteristic silence.

Earthquake survivors have marched holding banners reading "I wasn't laughing". And according to latest polling, the number of Italians dissatisfied with Berlusconi has risen to a record high of 52 per cent.

Mr Bertolaso has insisted that the alleged "sexual favour" was no more than a massage, but admitted: "I may not have checked things well enough."

Magistrates allege that contractors such as Mr Piscicelli profited as the civil protection agency's power to issue contracts for emergencies was extended to construction projects for Rome's hosting of the 2009 world swimming championships and next year's 150th anniversary of the founding of the Italian state.

Mr Berlusconi, on trial for tax fraud and bribery, re-entered the fray timidly on Thursday, stating that the scandal involved just a handful of "scoundrels".

From TODAY, Monday, 22-Feb-2010

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