Italy denies report it paid off Taliban, warlords
* Times report said Italy paid off Afghan insurgents
* Italy denies it, to take legal action against paper
* Silence on payments put French troops at risk, Times says
* French army says report appears baseless; U.S. has no info
(Adds Pentagon comment)
ROME, Oct 15 (Reuters) - Italy's government denied a report on Thursday that it paid off Taliban commanders and Afghan warlords, potentially costing the lives of French troops who later took charge of the area unaware of the payments.
Britain's Times newspaper said Italian secret service paid tens of thousand of dollars to insurgents to keep the Sarobi area east of Kabul quiet while Italian forces were stationed there. The report cited unidentified Western military officials.
Knowing nothing of the payments and carrying little ammunition in the belief they were in a benign area, French troops who took over the area in mid-2008 were surprised by an insurgent ambush that killed 10 soldiers, the report said.
Prime Minister Silvio Berlusconi's office denied the accusations, citing several attacks on Italian troops in the first half of 2008 as proof Italy had not paid off anyone.
"The Berlusconi government has never authorised or allowed any form of payment of sums of money in favour of members of the insurgent Taliban in Afghanistan, and is not aware of similar initiatives by the previous government," it said in a statement.
Defence Minister Ignazio La Russa called the report "garbage" and "offensive" and said he had ordered staff to prepare a lawsuit against the Times.
The French military had no independent information on the allegations but, based on its regular contact with Italian and Turkish forces in the area, the report appeared to be baseless, said French army spokesman Christophe Prazuck.
"The command organisation in the region, the permanent exchange of information between Italian, Turkish and French troops enables us to say that what has come out in the British press is without foundation," he told reporters on the sidelines of a news conference in Paris.
"We've had access to all the information the Italians had on what they were doing in Sarobi."
Asked whether it was normal practice to pay the Taliban to avoid combat engagements, he said: "Well, it's not French practice in Afghanistan in any case."
Italy also denied the Times' report that the U.S. ambassador had submitted a formal complaint after discovering through intercepted phone conversations that Italians had been buying off militants in the far-west Herat province.
A U.S. embassy spokeswoman in Rome said the embassy does not comment "on internal diplomatic conversations that may or may not have occurred" while Pentagon spokesman Bryan Whitman said he had no information on the allegations.
The newspaper cited a high-ranking Western intelligence source as calling the Italian behaviour an "utter disgrace" and that the "Italians have a hell of a lot to answer for". (Reporting by Deepa Babington in Rome and Clement Dossin in Paris; editing by Robin Pomeroy)
