Who is Parretti? (Page 2)



by Edward Jay Epstein

In 1982, Parretti came to see Fiorini on an urgent matter. He was in serious financial trouble. his "Diario" newspaper, for which he had pledged Verzotto's former hotels as collateral, were $3 million in debt-- and facing imminent bankruptcy. Moreover, the Syracusa Football team which he headed, seemed to be missing large sums of money. Subsequently, Parretti was arrested on charges of falsifying the team's books and jailed for a week.

He explained to Fiorini that he had a three billion lire saving certificate-- the equivalent of about $3 million-- that had been given to him, through the PSI, by an unnamed businessman but, given his problems, he needed Fiorini's help in cashing it. Fiorini, who had always thought of Parretti as "De Michealis man", took this as, he explained, "a bit of PSI business". Using his formidable financial connections, he sent Parretti to a small Sicilian bank which accepted the certificate and gave him part of the money.

When the bank checked on the certificate, it found that it was a crude forgery. "Three zeros had been added to a certificate", according to Fiorini, changing a $3,000 certificate into a $3 million one. This debacle led to the re-arrest of Parretti in July 1982; this time on charges with bank fraud. Even after he was released, he was under tremendous pressure to reveal who gave him the certificate. He again went to Fiorini, telling him he needed $27,000 to and go to Hong Kong where De Michealis arranged a job for him at Italy's tuna fish plant (which came under his authority as Minister for State Participations). Fiorini provided him with money to get out of the country .

Shortly thereafter, Fiorini had his own troubles at ENI. The Banco Ambrosiano, a bank in which Fiorini had placed $160 million in off-shore deposits, announced it was in serious trouble, and was missing over a billion dollars. As the government moved to place it in bankruptcy, Fiorini became intent on saving the bank--and ENI's deposits. He called its chairman, Roberto Calvi, who had become known as "God's banker" because of his connections with the Vatican, and whom he had dealt with before, and offered a plan whereby ENI would rescue the Banco Ambrosiano, which he did not accept. Less than two weeks later, Calvi was found hanging from a rope under Blackfriar's bridge in London, and, in the ensuing scandal, ENI found it was missing $160 million, and Fiorini was forced to resign for his unauthorized offer to Calvi.

Parretti stayed only briefly at his sinecure in Hong Kong. In 1983, he turned up in Paris. His connections to the PSI apparently still intact, if not strengthened, he became its Secretary in France. As the "French Connection", as he explained it, he acted as liaison with French Socialist businessmen and politicians, on one hand, and their Italian counterparts, on the other. It was a particularly powerful position to be in, especially now that Craxi was Prime Minister.

To aid in this liaison, Parretti set up a shell company, called Interpart in 1984 with the assistance of another PSI financial backer, Lamberto Mazza. It was strategically located in the 999 square mile kingdom of Luxembourg, which provides such corporations maximum secrecy for their transactions. While this shell began with only $20,000 in capital in 1984, at the end of the year, according to corporate statements,, $1 million in cash had been deposited in its account. Three months later, in April 1985, another $4 million materialized. And in December 1986, it received as infusion of $55 million in cash. As this sixty million dollars flowed in, so did Florio Fiorini, who, after buying his own shell company in Switzerland, became a partner and officer of Interpart.

The Luxembourg money first was discreetly channeled into a few select causes sponsored by French Socialist politicians. For example, Parretti, the liaison for the PSI in France, made available $7 million through Interpart subsidiary's, Interpart editions, to buy the French Socialist newspaper, Le Matin; and then turned over 48 per cent of the stock in this company to Paul Quiles, who had been the Defense Minister in the Socialist Government. (In 1987, Le Matin, like so many of Parretti's other publishing enterprises, went bust). Parretti also through Interpart established a shell company for one of the Socialist's main financial backer, Max Theret, called MTI, which was then used by Parretti and Fiorini to buy Pathe S.A with financing supplied by the French state-owned Credit Lyonnaise Bank.

The same $60 million pot was also used by Parretti in 1988 to buy his Hollywood empire. The a complicated series of transaction began with Parretti's Interpart and Fiorini's Swiss holding company buying 90% of the Melia Group in 1987 for $90 million (Parretti's share was about $60 million). After selling the hotels, and making a small profit, they used the proceeds to buy a bankrupt Madrid property company called Renta, which became their holding company, and advanced $90 million to acquire Cannon Films.

But where did Parretti get the $60 million in 1986? Up until that time, most of his businesses in Italy, including his newsletters, football team, consulting company, and hotels wound up bankrupt. He also seemed pressed for cash as late as February 1986 when he was arrested at the Rome Airport on an extortion charge proceeding from a threat he made to a bank to get a mere $20,000. Such desperation over what in Italy is the price of a car suggests that Parretti had no great reserve of cash.

Parretti himself suggested in his interview with me that the money transferred to Luxembourg came from a Panamian holding company he controlled, also called Interpart, which, if anything, raises the question of where the money in Panama came from. Nor are Interpart's scant corporate records of any use in this regard. His own accountant described the Luxembourg "headquarters" as an "empty room", administered on paper by his wife and daughter. And his independent auditing at the time of the injections, Arthur Anderson, noted its concern that there were not any documents explaining the origin of money deposited in Interpart.

Florio Fiorini offered to answer this $60 million question.

He arranged by fax to meet me on a hot Saturday in July at precisely 4 p.m in Monte Carlo at "his bank",the Seychelles Island bank. It turned out to be a dog-eared three room suite on a sub-ground level floor of a large apartment building with a travel poster of a palm tree on a beach in the Seychelles Islands plastered on one wall. He was a large, chubby man, with a cherubic face, who, in his safari jacket, reminded me of the character played by Robert Morley in the film "Beat The Devil. "It seemed like an appropriate name for this bank," Fiorini chuckled with disarming honesty, "since it is a shell company". (One of his associates in this "bank", he later mention, is Giovanni Mario Ricci, an Italian financier closely involved with the government of the Seychelles) .

He told me, with a nothing-to-hide angelic smile that he had recently come back from Tripoli in Libya (not Liberia). He explained that he went to Libya on a regular basis because he was a financial adviser to Qaddafi's Libyan-Arab Bank, and had indeed acted as an intermediary in buying and selling assets for Qaddafi. He explained he was in a rush because he was leaving the next day for an extensive vacation on a private island in the Bahamas but he wanted to talk to me about Parretti.

Just two days before, a warrant had been issued in Spain for the arrest of Parretti on the charge that he had been smuggling currency to Andorra. Fiorini seemed embarrassed by this development and eager to distance himself from Parretti. Pointing to a chart of his own holding company, which had six rows of neat boxes in it, he circled the one that contained the Melia-Renta-Cannon-Pathe entity, and said "This is only a small part of our operation.". As he began telling me of his relationship with Parretti, he took out a pad of graph paper, and neatly outlined the story, as if he was writing out a confession.

He explained that their original purpose was to put the money in safe commercial real estate in Spain-- which was why he had bought Melia and Renta. He said that he had also envisioned Cannon as primarily a conservative real estate investment based on the value of theaters it owned in England, Italy, and the United States. But then Parretti had become "infatuated by the movie media", as he put it. Instead of quietly disposing of the film business, he had hire Alan Ladd, announced new productions at a press conference in Cannes, and became part of the Hollywood scene.

In reply to the sixty million dollar question, he replied jovially "Where had the Luxembourg money come from? That's easy. I made it for Parretti. I sold two Insurance companies for him." But when he sketched out this deal, it was anything but easy.

How had Parretti gotten two Insurance companies? Fiorini explained he had traded two broken-down hotels he had owned in Sicily to Guissippi Cabassi, a Milanese businessman and financial supporter of the Socialist Party, for the controlling blocks of stock in two large Italian insurance companies, Ausonia Assurance and Intercontinale Assurance.

How had Fiorini gotten involved? He explained that in November 1985, he had just acquired a shell company that once belonged to the Vatican, and, together with a group of partners from the Arab Bank for International Investments,, he had organized it into an international "lavanderie", as he put it, or laundry to make "soiled companies sparkle". Parretti, interested in his services, had come to him with a deal he could not refuse. In return for selling these insurance companies, Parretti would pay Fiorini's Swiss holding company 50 per cent of the profits. And, in addition, give Fiorini personally 20 per cent of his holding company, Interpart (which would get the rest of the profits). This meant Fiorini would get 60 per cent of the total profit-- an incredibly high fee for selling Insurance companies listed on the Milan exchange.

Fiorini claims that he was immediately able to sell these companies for a windfall profit of over $160 million, which, if true, might explain how Parretti's holding company got $60 million in Luxembourg (assuming there were some deductions for fees and other expenses from his share of the putative $160 million). But, it turned out on checking through the financial records of these insurance companies, at least three flaws in his account.

First, Cabassi never his insurance companies for Parretti's hotels. He paid what amounted to three million dollars for the hotels, after provision for their' debts ( a sum coincidentally about the same as Parretti needed to offset the forged saving certificate from the unnamed Socialist financier) but he never actually got them. As he explained to the Wall Street Journal "Parretti apparently wasn't in a position to sell them to us." and, bearing this out, as late as 1986, the insurance companies belonged to the Cabassi Group, as, in the case of Intercontinale Assurance, is acknowledged in the annual report of Fiorini's own holding company. Moreover, since the value of the stocks was listed on the exchange-- and hitting record highs-- Cabassi was well aware of their market value.

Second, if Fiorini's holding company made a profit of $80 million on these transactions, it would show up in financial results in its annual reports. But it didn't, not in 1986, 1987 or 1988. In fact, the whole profit over these three years averaged less than $7 million per year. So there couldn't have been any windfall.

Finally, and most definitive, Parretti's holding company, Interpart, reported the $60 million in cash deposits that materialized in 1984, 1985 and 1986, not as any sort of capital gain or profit, but as a new investment for which shares of stock were issued in return. While Fiorini and Parretti might have provided Cabassi and other PSI-backers with a dazzling off-shore daisy-chain of shell companies in Luxembourg, San Marino, Anguilla and Switzerland through which insurance shares could be shuttled around, for whatever purpose, it did not produce the $60 million dollars infusion of capital in Luxembourg. So the mystery remained: Whose anonymous money was it?

If Parretti himself did not have millions of dollars to put into Interpart, as seems evident from his business failures and bankruptcy problems, the Luxembourg money must have come from some one else-- a party that, first of all, had $60 million hidden away in Luxembourg or other discrete banking centers; and, secondly, who trusted Parretti enough to let him act as custodian for it while it was transformed into more conventional commercial real estate investments.

The key to this mystery lies in Parretti's status in 1984 when cash first began coming into Interpart. At that time, he was not primarily a usual businessman. He was the representative of a political party: the PSI, which previously had taken care of him in Hong Kong (where the PSI had at least one of its anonymous fiduciary accounts). To state the relationship bluntly: The PSI was the principal, Parretti, its agent abroad. Moreover, it was a connection that had persisted throughout most of Parretti's business career. He had collected money for the PSI's Youth Organization, published "Diario" newsletters that supported the PSI, worked as a go-between for the PSI and ENI in arranging the take over of the magazine, Il Globo, ran travel camps for PSI workers, and allied himself for over a decade with Gianni De Michealis, whose faction prevailed in the PSI. Nor did he act alone for Interpart: its original administrator was Lamberto Mazza-- who had served as a trusted financier for the PSI in Italy. And Interpart's early disbursement of funds in France were hardly conventional business investments; the money went directly to PSI's allies in the Socialist network, such as Max Theret (who while facilitating Parretti's take over of Pathe was indicted for inside trading in the take-over of Nelson Pelz Triangle industry by the French state-owned Pechiney company).

Parretti's partner, Florio Fiorini, also had an important involvement with the PSI. Fiorini, at ENI, along with ENI President, Giorgio Mazzante, and his deputy, Leonardo Di Donna, helped run the off-shore banking labyrinth through which ENI passed funds earmarked for the PSI. It was along this money trail that the $70 million that ENI received kickbacks from the Saudi Arabian oil sales agency, Petromin, moved in the late 1970s. Even after it leaked to the press in late 1979, and Mazzante was forced to resign, another skimming arrangement was established, according to Fiorini, and approved by the government because it meant "lower oil prices for Italy". This time the deal was with Qaddafi's Libyan Oil Company. Rather than direct kickbacks a la the Saudis, the Libyans agreed to defer 40 per cent of the money ENI owed them for crude oil purchases for two years. If, for example, ENI sold a barrel of Libyan oil to Italian consumers for $30, it paid the Libyan oil agency only $18, and kept the balance of $12 in its own bank account, earning interest. Fiorini estimated that by 1982 ENI was holding $3 billion of this Libyan money and, at the double-digit rates that existed in the early 1980s, it was earning hundreds of millions of dollars of interest on it. Part of this interest was concealed, or made "black", through simple book-keeping artifices at the off-shore banks that held the money, and these "black" funds, like the Saudi kickbacks, were then deposited in designated numbered accounts for Italian politicians that were the beneficiaries of the scheme (and Libyan officials that facilitated it).

Enter Roberto "God's Banker" Calvi, whose Banco Ambrosiano, which was partly owned by the Vatican, provided ENI with highly-discrete off-shore banking services. Fiorini negotiated a deal with Calvi ENI deposits were transferred first to ENI subsidiaries in Nassau, Dutch Antilles and Grand Cayman island and then to Banco Ambrosiano's off-shore subsidiaries. By the early 1980s, ENI was supplying these subsidiaries, including the branch in Luxembourg with well over half of all its medium-term funds. But in 1982, everything suddenly changed when the Banco Ambrosiano collapsed. Calvi died under a bridge in London, auditors found $1.3 billion had disappeared from its Luxembourg branch-- including $160 million of ENI's deposits, and Fiorini was fired. The ensuing financial scandal also left the parties with numbered accounts in off-shore branches with a problem: they had to reclaim the "black" funds that had been stashed away for them without arousing public attention. This, in turn, required a front, one preferably veiled by the secrecy of Luxembourg's banking laws, in which the money could be deposited and gradually be converted into legitimate investments.

At our initial meeting at l'Circe, Parretti had philosophized "life is like a movie. You can look at the parts you like." The version that he preferred is a heroic saga that traces a young waiter's miraculous rise, against all odds, to the commanding heights of the international film business. The alternative version would be a comedy of errors in which a political hack given the job of rescuing a slush funds lost in bank crash winds up buying a bankrupt Hollywood company-- and a disco, for good measure.

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