ROME (Reuters) - Italian Economy Minister Giulio Tremonti admitted that using an apartment belonging to a former aide being investigated for corruption was a mistake, but dismissed speculation that he would resign.
Tremonti, widely seen as the guarantor of Italy's financial stability as the euro zone debt crisis has spread, has faced growing pressure over the affair, but has laughed off rumours that he would resign over the issue.
"Did I commit unlawful acts? As far as I'm concerned, no. Did I make mistakes? Yes, definitely," Tremonti wrote in a letter to Corriere della Sera newspaper on Friday.
"I have a job that is very difficult and involves a lot of effort, and I want to continue doing it, as best I can, in the interest of my country," Tremonti later told Italian television.
Tremonti until a few weeks ago occupied a flat in Rome made available by Marco Milanese, a close aide being investigated for graft and influence-peddling by Naples magistrates.
His weekly cash payments of 1,000 euros (876,000 pounds) for the apartment from 2008 raised eyebrows among Italian media commentators and the opposition, who asked whether the payments were legal and declared to tax authorities.
Cash payments for large transactions including doctors' and tradesmen's bills, rent and sometimes even house purchases, are common in Italy as a means of avoiding declaring income for tax.
In the letter, Tremonti confirmed the weekly cash payments for the apartment, but denied any illegality.
"Anyway, nothing in 'black' and no 'irregularities'," he wrote. "If I could admonish myself, it would be for not having left the apartment sooner. I did it in good faith, but without doubt that would have been better, given that this is now driving speculation that I could and should have avoided. With hindsight, I repeat, I was wrong."
Tremonti, whose rigid stance on fiscal discipline has helped shield Italy from the worst of the euro zone crisis, has not been implicated directly in the allegations directed at Milanese but has faced scrutiny for his ties to the former tax official.
Naples magistrates have asked to have Milanese's parliamentary immunity lifted so he can be arrested and questioned and they are also seeking access to mobile phone records and the contents of safe deposit boxes.
With Italy fighting to avoid being dragged into the euro zone debt crisis, markets and analysts have fretted about the wider impact of the affair on Tremonti's position.
The minister has a tense relationship with Prime Minister Silvio Berlusconi and his refusal to budge on an unpopular austerity budget has put his previously solid relationship with the powerful Northern League government ally on shaky ground.
Berlusconi's public criticism of Tremonti as "not a team player" fed speculation of a government split that helped fuel a sharp sell off in Italian bonds and shares earlier this month, but the two have since appeared to strike a truce, for now.
On Thursday, Italy sold some 8 billion euros of government bonds, with yields on benchmark 10-year bonds hitting 5.77 percent, the highest since February 2000, hit by general market jitters and not helped by speculation over Tremonti.
(Reporting by Deepa Babington; Editing by Jon Hemming)
