By Emilio Parodi
MILAN, July 17 (Reuters) - The mayor of Milan has been placed under investigation, three sources said on Thursday, caught up in a probe into the dealings that have helped to underpin a real estate boom in Italy's financial capital over the last 10 years.
The investigation into Mayor Beppe Sala comes after prosecutors on Wednesday sought the arrest of Milan's councillor for urban planning, the head of real estate firm Coima and four others.
According to three sources with knowledge of the matter, Mayor Sala, who heads a centre-left coalition in the city, is among dozens of people under investigation.
He is accused of concealing a conflict of interest relating to the appointment of a chairman of a municipal commission that grants building permits. He is also allegedly among those who put pressure on that same chairman to unblock the authorisation of a building project in the city.
His spokesperson did not respond to a request for comment.
The probe on the mayor was first reported by three Italian newspapers.
In a comment published by Corriere della Sera newspaper on Thursday, Sala denied any wrongdoing and said he found it "shocking that the mayor should learn from a newspaper that he is under investigation and not from prosecutors. It is unacceptable".
The scandal risks embarrassing Milan as the city prepares to co-host the 2026 Winter Olympics next February.
The ruling centre-right parties, who govern at national level under Prime Minister Giorgia Meloni, have called for Sala's resignation.
Two of the sources specified that the investigations into the mayor's position are still in their early stages and are not close to any conclusion, expressing regret that the news had become public.
The Milan property market began flourishing in 2015 when the Expo international exhibition helped to transform the city into a hot spot for developers from Italy and abroad, reshaping its skyline. But complaints from local residents objecting to a sharp increase in the number of multi-storey buildings triggered investigations into alleged abuses in the fast-tracking of building permits, stalling construction activity.
According to court documents, prosecutors said investigations related to the largest urban planning projects in Milan "have brought to light a 'system'...whose purpose is to facilitate the issuance of illegal building permits and to carry out highly speculative real estate transactions".