An Italian court sentences former prime minister Silvio Berlusconi to four years in jail for tax fraud.

 MILAN, ITALY  (REUTERS) -  An Italian court on Friday (October 26) sentenced former prime minister Silvio Berlusconi to four years in jail for tax fraud in connection with the purchase of broadcasting rights by his Mediaset television company.

The court also ordered damages provisionally set at 10 million euros (8.05 million pounds) to be paid by Berlusconi and his co-defendants to tax authorities.

The ruling comes two days after Berlusconi, 76, confirmed he would not run in next year's elections as the leader of his centre-right People of Freedom (PDL) party.

A separate trial over accusations that Berlusconi paid for sex with an under aged prostitute is currently being heard in Milan. He denies all charges against him.

The four-time prime minister and other Mediaset executives stood accused of inflating the price paid for TV rights via offshore companies controlled by Berlusconi, and skimming off part of the money to create illegal slush funds.

The investigation focused on television and cinema rights that Berlusconi's holding company Fininvestbought via offshore companies from U.S. groups for 470 million euros between 1994 and 1999.

Shares in Mediaset, Italy's biggest private broadcaster, fell as much as three percent after the ruling.

Silvio Berlusconi burst onto Italy's political stage in January 1994, promising an economic miracle and a new era of accountability to an electorate tired of decades of corruption and political uncertainly. Within four months he had created a new political party from scratch and won national elections that made him Prime Minister.

But in January 1996, the billionaire soccer, supermarket and media tycoon, went on trial accused of bribing tax inspectors in return for advantageous audits. He was found guilty and handed a two-year, nine-month prison term, but was later acquitted.

Some political pundits dismissed Berlusconi as a mercurial tycoon who had mistakenly stumbled into politics. But Berlusconi proved them wrong with a triumphant return to power in May 2001 when his Freedom Alliance was elected with the biggest majority in the history of the Italian Republic.

Berlusconi continued to be embroiled in a string of law suits. He faced more than 400 investigations in a decade and stood trial in eight cases on charges ranging from bribery and corruption to false book keeping and tax fraud.

After several lengthy trials and appeals he was eventually cleared, either on merit or because of the statute of limitations. Critics accused him of using his political power to water down laws on false accounting and briefly winning himself immunity from prosecution.

Berlusconi's centre-right coalition suffered a crushing defeat at regional elections in April 2005, losing 11 of the 13 regions contested. He failed to restore his flagging popularity during the next twelve months and lost the April 2006 general election by the narrowest margin in Italian history.

After three weeks of political wrangling Berlusconi conceded defeat opening the way for his arch rival, former European Commission President Romano Prodi, to form a government.

But following the collapse of Prodi's government in January 2008, Berlusconi outmanoeuvred his rivals on the left and secured allies on the right to win a landslide victory in April 2008 elections, giving him his strongest ever mandate.

Berlusconi's third term was marked with diplomatic gaffes, sex scandals and controversial comments.

His second wife Veronica Lario wrote to a newspaper in February 2007 demanding a public apology from him for flirting with young starlets at a party.

In May 2009, Lario announced to several newspapers that she wanted a divorce, accusing Berlusconi of having an inappropriate relationship with 17-year-old aspiring model Noemi Letizia.

In October 2009, Italy's Constitutional Court ruled that a law granting him immunity from prosecution while he was in office violated the constitution, opening the way for a resumption of corruption trials against him.