IT IS the most sensational, and perhaps the most significant, development in Italian politics since the fall of Silvio Berlusconi's government last November: this afternoon Umberto Bossi resigned as leader of the Northern League, the ostensibly separatist movement he founded 21 years earlier. His departure came amid claims by prosecutors that taxpayers' money supplied to the League had been spent on Mr Bossi and his family. Police this week raided the party's headquarters in Milan brandishing a warrant that accused its treasurer, Francesco Belsito, of running its finances in the “murkiest fashion” for the past eight years. Milan's chief prosecutor subsequently disclosed that Mr Belsito, who resigned his post, was formally under investigation on suspicion of fraud, embezzlement and money-laundering. He added that Mr Bossi was not a suspect. Nor were any members of his family. But the warrant also contained damaging allegations that taxpayers' money paid to the League had been used to refurbish Mr Bossi's house and pay for travel, meals and hotel accommodation for his children. Mr Belsito has denied wrongdoing. Mr Bossi and his son Renzo both denied all knowledge of the allegedly improper spending.

Yet, as Roberto Maroni, the former interior minister and a senior member of the League, was quick to point out, this was not the first indication that something might be wrong with the way party finances were managed. It was known that investigators were looking into why Mr Belsito had invested €7m of the League's cash in funds based in Cyprus, Norway and Tanzania. Calls had been made within the party for his removal, and Mr Bossi had ignored them.

Until last year, his autocratic management of the League was seldom contested. Perhaps that is because it had proved highly effective. Mr Bossi had coaxed the League's share of the national vote up to more than 10% and given it a share in power as a coalition partner in all three of Mr Berlusconi's governments since 2001.

But many of his followers were dismayed by Mr Bossi's refusal to pull out of the last of those governments, despite claims of sexual indiscretion made against Mr Berlusconi and of financial impropriety made against some of his ministers. Last year Mr Bossi faced unprecedentedly open criticism of his leadership style from members of his party, many of whom felt the time had come for him to stand aside in favour of Mr Maroni.

The scandal has implications for political stability in Italy, because since leaving government Mr Bossi has steered his party into opposition. The League has been far and away the most acerbic critic of the non-party, "technocratic" government of Mario Monti, who took Mr Berlusconi's place as prime minister last November. Not only Mr Monti's government, but the three big parties that back it, stand to benefit from the League's discomfort.

That discomfort will be extreme. In the first place, corruption of the kind alleged by the Milan prosecutors is the opposite of everything the League is meant to stand for. Mr Bossi's calls for autonomy or independence for northern Italy rest on an assumption that his putative nation of Padania would be unstained by the corruption and waste that the League decries in southern Italy.

Second, Mr Bossi's departure risks bringing into the open bitter differences between Mr Maroni and the moderate wing of the League, on the one hand, and a more radical faction on the other. A pamphlet is already circulating in Milan denouncing Mr Maroni as a “Judas”.

NOTE: This story has been updated to reflect Mr Bossi's resignation.