Infrastructure and transport undersecretary and economic advisor to Salvini, Armando Siri, is accused of having accepted a €30,000 bribe – or the promise of it – from a wind farm entrepreneur who has been linked to the Mafia.
The bribe was allegedly for promoting the interests of renewable energy companies.
Both Siri and the businessman have denied any wrongdoing.
M5S members had insisted Siri should be sacked, while Salvini argued he should remain in government until proven guilty in court.
Conte sacked Siri at a cabinet meeting on Wednesday.
“There was a very frank and inhabitual cabinet discussion ... but without citizens’ trust, it would be hard to keep being the government of change,” Conte told journalists.
M5S leader Luigi Di Maio said he was “very proud” of Conte’s decision to sack Siri and insisted the coalition would remain in power for a full term despite the internal strife.
“Today the cabinet decided, as proposed by the prime minister, to start the procedure to revoke secretary of state Armando Siri,” Di Maio said after the cabinet meeting.
“Not because he’s guilty but simply because for us, if a corruption and mafia investigation is mentioned, [then] the political world must react before the judges do.”
There was no immediate comment from Siri, who remains a member of the Senate after losing his government role.
