News Analysis: Italian minister's resignation 'unexpected distraction' for Renzi, but no major problems

Italian Minister of Infrastructure Maurizio Lupi said he would resign from his post after multiple allegations of corruption and kickbacks connected to large-scale public works projects, in what is being cast as the first major scandal of the 13-month-old government of Prime Minister Matteo Renzi.

Lupi's decision came after Italian police arrested four people and announced dozens more were under investigation of illegally manipulating public contracts worth more than 25 billion euros (26.9 billion U.S. dollars) for projects ranging from high-speed railway lines to the soon-to-launch Milan Expo 2015.

Lupi was not among those put under investigation, but his close ties to those named in the massive probe made it more difficult for him to do his job.

To further complicate Lupi's situation, police revealed that one of the four men arrested, a developer named Stefano Perotti, gave the minister's son, Luca, an architect, a Rolex watch valued at 10,000 euros in connection with one of the engineering contracts in question.

Lupi denied any wrongdoing, and he said his decision to step down was for the good of the government.

"I never obtained any favors or received anything inappropriate while serving in this job," Lupi said, adding that his exit would "help strengthen the government."

Leading up to the latest developments, Renzi warned Lupi that he could not continue under the current circumstances. After the resignation was announced, the Prime Minister called it a "wise decision."

Analysts said the developments, which broke late Thursday, had the potential to hurt Renzi's image.

"Italians won't be surprised to find allegations of corruption connected to a political figure, especially after the years of corruption and corruption charges with (former Prime Minister Silvio) Berlusconi," Gian Franco Gallo, a political affairs analyst with ABS Securities, told Xinhua. "But Renzi set himself up as the anti-Berlusconi. If he starts getting touched by scandal as well, that would change."

Maria Rossi, co-director of the polling firm Opinioni, agreed, up to a point. Rossi said if the Lupi situation remained an isolated case, the impacts would be minimal.

"This is a single incident and Lupi hasn't even been directly implicated, at least so far," Rossi said in an interview. "It is clear Lupi's resignation was managed correctly, and Renzi's track record when it comes to scandals has been good. I think if we don't have another unwelcome surprise in another month or two, he'll be fine."

One unwelcome aspect of the situation, according to Gallo, is that Renzi must now find a replacement for Lupi and get the candidate approved by parliament. Nobody expects problems, but it does siphon away some political capital Renzi would rather use moving his reform agenda forward.

"This is just another unexpected distraction," Gallo said, adding "the impacts add up." Endit