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Giancarlo Parretti, stunned Wall Street
by bidding $1.2 billion in cash for MGM/ UA-- a movie company
which both Rupert Murdoch and Ted Turner had looked at only
months before but decided not to make an offer. Even more
surprising, in the documents he filed with the SEC, he specified
no source for where the money was coming from-- other than
an "oral, non-binding agreement" for $200 million with an
unnamed company-- and he did not even have an investment
banker. "I do not need Wall Street's money", he told one
New York investment banker, attempting to offer his services
to him, "I can get one billion, two billion, whatever I
need from European banks".
Parretti is Hollywood's latest Hero
From Zero mystery. As later as 1982, he was an employee
of a fish processing factory in Hong Kong. Now his empire,
which includes movie studios, theaters, film laboratories,
distributors, and production companies, is worth, according
to Variety, $1.5 billion. In 1988, he bought the oldest
film company in France, Pathe S.A., as well as the Hollywood
studio, Cannon Films, which was best known for Ninja and
vengeance fantasies (and which he re-named Pathe Communications).
From that point on, at a breath-taking pace, he made announced
a new multi-million dollar deal almost every month. In December
1988, it was a $160 million film production contract for
Menachin Golan, the Israeli entrepreneur, who with his Israeli
cousin, Yorus Globus, built Cannon into a trans-oceanic
film maker. In January 1989, he announced a $80 million
plan to bail out Dino Delaurentus' movie studio from bankruptcy
so he could merge it into his own. In February, he made
a $138 million offer for the television producer, the junk-bond
financed TV producer New World Films. In March, he made
a $39 million offer for the arty Kings Road Films. In April,
he first floated the idea of taking over MGM for a cool
billion. In May, he had bid $220 for Television Monte Carlo,
which owned an Italian TV network.
As it turned out, none of these announced
deals had been actually consummated. He aborted the Golem
production deal a few months after it was announced. Ron
Perlman outbid him for New World. The Kings Road deal fell
apart. The Dino de Laurentius rescue mission failed. MGM
accepted a bid from an Australian suitor, Quinex (which
then failed to make the down payment and went bankrupt.)
The Television Monte Carlo deal also evaporated. offer--
never got off the ground. And, adding insult to injury,
the French government blocked his acquisition of Pathe SA
because he had not accurately represented the principals
behind the deal. But now, he found another $1.2 billion
to buy MGM. Where did the money come from?
In Hollywood, Parretti lives Great Gatsby
style-- when he is there. He bought a $8 mansion in Beverly
Hills, where he proudly takes visitors there to his walk-in
steel vault to see paintings he identifies as Picassos,
Miros and Goyas. He lives there with Maria Ceccone, who
he has been married to for over 20 years,two daughters and
son and Fabio Serena, his 35 year old lawyer. (His wife,
his 18 year old daughter, Valentina, and Serena are also
executives of his holding company.) He also leases a $200,000
Rolls Royce for driving around town, and owns his own Italian
restaurant, Maderos, on the ground floor of the CMA building
(which has a private satellite hook-up to get Italian soccer
games) and his own disco, Tramps`
Like the hero of Gogol's "Dead Souls",
who spawns rumor after rumor about himself as he moves through
the Russian provinces trying to buy up rights to deceased
serfs to further a financial scheme, Parretti, trying to
buy up near-dead film companies, has stirred the collective
imagination of Hollywood. "The word is the Mafia is behind
him," a top agent suggests; "Parretti is a creature of Credit
Lyonnaise," a studio executive theorizes, sent to America
to salvage the bank's bad loans to Cannon, De Larentius,
New World and other shaky Hollywood producers. "Parretti
is laundering money for the drug cartel," a Hollywood investment
banker states, pointing out that movie theaters are cash
businesses, and what Parretti has bought in Cannon and Pathe
is 800 movie theaters. "He is fronting for Sylvio Berlusconi,"the
Milanese media king, an Italian director argues. "It's Qaddafi's
oil money," a film producer asserts. Parretti indeed seemed
to be Hollywood's number one mystery. The proliferation
of Parretti rumors did not sit well with Alan Ladd, Jr.,
who since January 1989 has been Pathe's co-chairman. Like
his father in Shane, he wasted no words. "Its all I hear.
And its complete garbage", he said, leaning forward on the
couch of his plush new office at Pathe Communications on
San Vicenzo Drive. He had met Parretti at the home of Dino
De Laurentius in late 1988, and immediately accepted his
offer to head Pathe. Next to him sat his long time associate
at the Ladd Company, Jay Canter-- Marlon Brando's first
agent-- who is vice president of Pathe. Both men were now
in the odd position of having to defend a stranger who they
had met only a few months earlier. Shaking his head in disbelief,
Ladd cited the recent allegation in newspapers that Parretti
was involved with the Qaddafi. He explained "The reporter
mixed up two countries-- Liberia, where Parretti had a shipping
businesses and Libya". Parretti had nothing to do with Libya
or Qaddafi, Ladd insisted. He found the Mafia money whispers
equally absurd. Why would the Mob put money in someone as
"high-profile" as Parretti, he asked. "Don't you think I
investigated before I took this job? He explained that in
the Spring of 1989 he went to Europe with him in his gulfstream,
which, he recalled, was equipped with a kitchen where Parretti
cooked spaghetti for everyone. During the trip, Parretti
handed Ladd a telephone-size book listing the hotels in
the Melia chain, which he claimed he owned. "There were
hundreds of hotels, and each of them represented real money",
Ladd recounts. He in fact sat in at a At a press conference
in Cannes where Parretti suggested that these hotels earned
$300 million a year. There is "no mystery" where Parretti
money comes from, Ladd concluded.
As it turns out, however, Parretti does
not own the Melia hotel chain. Nor did he own it when he
handed Ladd the impressive Melia book. What had happened
was that he, together with others, had bought the Melia
Group in 1987 but the hotels themselves, which were the
mail asset, were almost immediately resold to the Sol Hotel
chain in a complicated transaction that left Parretti and
his associate owning the name "Melia" and a few Spanish
travel agencies and laundries that lost money and were deeply
in debt. According to the 1988 annual report of his entire
holding company, which included the "Melia Group", its net
worth was not anything like the $1.5 billion figure he reported
to Variety, but $3.6 million ( and even this meager total
is based on questionable evaluations of illiquid investment.)
Instead of his businesses making an annual profit of "$300
million", as he claimed at the press conference-- or a cumulative
profit of a billion dollars as he claimed in an interview
in the Italian newspaper, La Republica-- they had, according
to this annual report, actually lost money in both 1986
and 1987. It, moreover, had only $9000 in its bank accounts
and in short-term funds at the end of 1987 (the last time
it filed an annual report). But if the Melia hotels did
not supply Parretti with the $60 million or so of cash he
used in his Hollywood buying spree, where did he get it?
According to his birth certificate,
Giancarlo Parretti was born on October 26, 1940 in the town
of Orvieto, Umbria, about 100 miles north of Rome. His father,
whom he introduced to Ladd, had been a humble wine merchant
(and still lived modestly in an apartment in Orvieto). At
the age of 17, without the benefit of any higher education,
Parretti went to work as a waiter. During the sixties, he
says, he learned English working as a ship's steward on
the Queen Elizabeth and as a waiter at the Savoy Hotel in
London (though neither the Cunard Lines or the Savoy Hotel
could find any record of his employment). Then Parretti
moved to Sicily where he got a job waiting in a plush hotel
in Syracusa owned by Palermo's political boss, Senator Graziano
Verzotto. By 1973, he had worked his way up to being manager
of the hotel and the aide de camp to Senator Verzotto. Senator
Verzotto, who owned Syracusa' football team and supervised
Sicily's state owned mineral company, then got into serious
trouble. He was indicted for embezzling $3 million dollars
from the mineral company in Sicily and, to make matters
worse, was nearly gunned down by a team of presumably Mafia
hit men. In 1975, he fled to Lebanon, leaving Parretti in
charge of his hotels and the soccer team.
After Verzotto disappeared, Parretti
went into the business of publishing weekly news letters,
called "Diario". Beginning first in Sicily, Parretti then
went in partners with Ceasare de Michealis, a key financier
for the Parti Socialist Italia, or PSI, which in coalition
with the larger Christian Democrat Party, had run Italy
since World war II. Even though most of these "Diarios"
had a circulation of under a thousand readers, they carried
advertising from businessmen-- including those who wanted
to curry favor with the PSI, which was a far more entrepreneurial
organization than its name might imply. It had responsibility,
within the political coalition that ran Italy, for overseeing
a number of Italian state-owned enterprises including ENI--
the Italian equivalent Exxon combined with Dupont, which
was the country's single largest generator of wealth and
foreign exchange.
Parretti here had a crucially important
connection: his partner's brother, Gianni de Michealis,
now Italy's Foreign Minister, who then, as the PSI's Minister
for State Participations, was in charge of ENI. De Michealis,
a long-haired, jowly-faced intellectual, whose extra-curriculum
interest is international discotheques (a subject on which
he wrote a book), was in the late 1970s, because of his
responsibility for ENI, one of the most powerful men in
the PSI. By hitching his wagon to this rising star, Parretti
moved into the inner sanctum of the party. He had been especially
active in its finances, serving for a time as the treasurer
for its Youth organization. He also became a member of the
PSI's central committee, where he took credit for helping
to bring De Michealis' close friend, Benito Craxi, to power
as head of the party-- and Prime Minister. He also arranged
for ENI to help finance the take over the newspaper Il Globo,
so it could support the PSI-- but the deal never worked
out. (It went bankrupt).
His dealings with ENI, and association
with De Michealis, eventually brought him into contact with
his future partner in international finance, Florio Fiorini.
When they first met in the late 1970s, Fiorini was the finance
director of ENI-- a position he had half for a decade. As
such, he was responsible for depositing billions of dollars
in ENI funds in off-shore bank accounts. Part of this money,
as it later emerged in a Parliamentary investigation, came
from off-the-books kickbacks and skims from Saudi Arabia
and Libya-- ENI's two major sources of foreign oil-- and
the off-shore accounts it went into benefitted PSI and other
politicians. In documents that came to light in the ensuing
scandal, for example, Fiorini, along with two other top
ENI executives, had apparently authorized the transfer of
millions of dollars into a numbered account. #63369 in the
Union Bank in Switzerland, which in February 1982 was shuttled
into the account of PSI politicians, including Prime Minister
Benito Craxi, and then wired to an anonymous fiduciary account
in Hong Kong. Even if such surreptitious transfers from
state-owned enterprises to the coffers of political parties
is tacitly accepted in Italy as part of the "system," and
no wrong doing was involved, they gave Fiorini, and his
associates at ENI, a perspective on Italian politics, which
includes the routing of money between numbered accounts
in Switzerland and Hong Kong.
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