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UPDATE 2-Fastweb founder denies links to laundering racket

* Scaglia denies any role in money-laundering ring

* Judge agrees to delay Fastweb hearing on administration

* Fastweb shrs surge 2.5 pct after judge ruling (Adds judge delaying Fastweb hearing, details, shares)

ROME, March 2 (Reuters) - Fastweb FWB.MI founder Silvio Scaglia on Tuesday denied any ties to a money-laundering ring that has led to a stunning fall from grace for the Italian billionaire and hammered the broadband company's shares.

After questioning Scaglia, a judge granted a Fastweb request for a 48-hour delay on a hearing to consider putting the No. 2 Italian telecoms company in the hands of a court-appointed commissioner. Fastweb shares surged 2.5 percent.

Once dubbed a telecoms “wizard”, Scaglia has been held in a tiny cell in Rome’s Rebibbia jail since flying in from the Caribbean by private jet on Friday.

He is one of 56 people sought in a probe that has drawn in Fastweb and phone giant Telecom Italia.

Interrogated by a judge on Tuesday for the first time since his arrest, Scaglia said Fastweb was a “victim” in the fraud and that he personally could not have known of any potentially illegal actions by subordinates when he ran the company.

“From his point of view, as head of the company his role was not to check every commercial operation that was carried out,” his lawyer Piermaria Corso told Reuters after the questioning.

“Scaglia made a series of statements and a reconstruction of facts aimed at convincing the judge of his total non-involvement in the matter.”

One of Italy’s richest men, Scaglia was arrested on charges of ties to a more than 2-billion-euro ($2.7 billion) ring that laundered money via fake sales and purchases of phone services from 2003 to 2006. [ID:nLDE61P161]

He will remain in custody until a judge hears a request for his release submitted by his lawyers, Corso said.

“THE WIZARD”

Coming amid a mood of despair in Italy over corruption scandals, the probe into the racket has sent shockwaves through Italian business and political circles because of the scale of fraud and the big names involved. [ID:nLDE61M1O2]

A centre-right senator is among those who face arrest.

Fastweb CEO Stefano Parisi and Sparkle, a unit of larger rival Telecom Italia TLIT.MI, are also being probed in the wide-ranging inquiry. Telecom Italia was forced to delay the approval of its 2009 results due to the probe. [ID:nLDE61O086].

Fastweb’s lawyers say they have proposed alternatives to putting the company under the so-called special administration process [ID:nLDE6210RD] but declined to specify what those plans included.

Italian media have speculated the options proposed include changes to the company’s board or tightening internal controls.

The appointment of a commissioner would prevent Fastweb from carrying out certain activities, which investors fear will hurt the company’s growth plans.

Fastweb -- which is locked in a battle for market share with Telecom Italia in the fiercely competitive Italian telecoms sector -- last month forecast plans to grow revenues and underlying earnings by about 5 percent this year.[ID:nLDE61E27D]

Shares of Fastweb, which is controlled by Swiss phone company Swisscom SCMN.VX, were up 1.3 percent at 14.6 euros at 1538 GMT. The shares have fallen 12 percent since prosecutors announced the investigation on Feb. 23.

Telecom Italia shares were down 0.75 percent to 1.06 euros.

Scaglia, who also founded Internet television company Babelgum, began his career as a consultant before winning plaudits as the CEO of Omnitel, now Vodafone Italy.

There he was nicknamed “the wizard” by colleagues for increasing the company’s mobile subscribers to 8 million from 300,000 in a short period of time.

He founded Fastweb in 1999, declaring he had invested “all my money, down to the last penny and all my credibility” in the venture. He sold his 18.75 percent stake to Swisscom in 2007, catapulting him into the leagues of the world’s richest men. (Additional reporting by Roberto Landucci and Antonella Cinelli, Editing by David Cowell) ($1=.7395 Euro)

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