Italy seizes $140 million from airline owners compensated for 1980 crash

MILAN (Reuters) -Italian police seized 130 million euros ($140 million) from two directors of an airline that went bankrupt after a 1980 air disaster that killed 81 people above the southern Italian island of Ustica, Milan prosecutors said on Wednesday.

The "Ustica massacre" is one of the unsolved mysteries of recent Italian history. Despite 40 years of investigations and trials, the cause of the in-flight explosion on the DC-9 airliner that took off from Bologna and was headed for Palermo has never been clarified.

The seizure carried out on Wednesday by the Guardia di Finanza police relates to civil judicial proceedings that had ended in 2023 with the transport and defence ministries ordered to pay 330 million euros to the defunct airline company Itavia.

The compensation was aimed at satisfying the creditors of the company, which had closed six months after the disaster.

According to the Milan prosecutors' statement, two businessmen, who had become majority shareholders in Itavia while the company was in extraordinary administration, stripped the company of its assets and used 130 million euros for their own private interests.

"They almost wiped out the remaining company assets from the compensation payments," prosecutors said.

"In particular, the 130 million euros funding was also partly used to pay off the bank loan used by the two to acquire the majority stake in Itavia," they added in their statement.

The prosecutors did not name the two individuals involved. However, in an emailed statement the two businessmen, who identified themselves as Jacopo Di Stefano and Marco Scorzoni, denied any wrongdoing.

"Any reference to subtraction of compensation is without any basis whatsoever," they said, adding they will take their own legal action to clarify the issue as soon as possible.

($1 = 0.9301 euros)

(Reporting by Emilio ParodiEditing by Keith Weir, Alexandra Hudson)