MILAN — Judge Antonella Brambilla presided over an eight-hour hearing Wednesday as witnesses called by prosecutors Laura Pedio and Gaetano Ruta took the stand in the ongoing trial of Domenico Dolce and Stefano Gabbana, who are charged with omitted and unfaithful earnings declarations. The defendants have denied the charges.
Of note was the testimony of Marco Tanzi Marrotti, an executive of PricewaterhouseCoopers, the consultancy tapped by Dolce and Gabbana to set a price for their brands in spring 2003. “I was told that the designers were looking at the possibility of publicly listing their company,” said Tanzi Marrotti, explaining that an initial public offering would have required the brands to be “brought back into the group,” and controlled by a company rather than two individuals.
Based on a business plan for the 2004-2007 period, calculations of growing royalties and the company’s latest revenues, the consultancy pegged the value of the Dolce & Gabbana and D&G brands at 360 million euros, or $484.4 million at current exchange.
This amount and the fact that it takes into consideration Italy’s tax rate, standing at about 37.5 percent at the time, took center stage for most of Wednesday’s hearing. Questions from prosecutors and the lawyers for the defendants — who include managing director and board member Cristiana Ruella and Dolce’s brother and board member Alfonso Dolce, both once again present at the hearing — revolved around the consultancy’s choice of Italy’s tax rate in the evaluation of the brand, as well as the expected growth of royalties.
Mario Ambrosetti, a PricewaterhouseCoopers corporate finance director, remembered that the possibility of setting up a company in Luxembourg emerged at the time, “although it was not a definitive decision.” According to the tax police calculations, which took into account lower tax charges in Luxembourg, the value of the brands was estimated at 1.1 billion euros, or $1.4 billion. Prosecutors underscored that “the value of the brand is inversely proportional to the fiscal weight,” or tax.
The first Dolce & Gabbana employee took the stand on Wednesday. Maria Grazia Bergomi, employed by the firm since 2001 and responsible for the intellectual property of the brands, relocated to Luxembourg in 2005 to work for Gado Sarl, the designers’ holding company in that country, which the tax police consider a legal entity used to avoid higher corporate taxes in Italy. Bergomi, who reported to Ruella, lived in Luxembourg until December 2006, when she returned to Milan. She was the only Dolce & Gabbana employee in that country, and was succeeded by Claudia Bertinetti. In her job, Bergomi was assisted by Alter Domus, a Luxembourg-based agency that helped provide services. Dealing with lawyers, investigators and anticounterfeit experts, Bergomi registered, controlled and “maintained alive” about 1,600 brands for the group in more than 80 countries around the world. The defendants’ lawyers pointed to lengthy and laborious procedures connected to the protection of the brands that a transfer to Luxembourg entailed.
“It took six months to just initiate these procedures in 2004,” said Bergomi.
To further fuel the concept that Gado was not devised as a screen, the defendants’ lawyers produced paperwork including a job description to seek a successor for Bergomi and the latter’s rent contract in Luxembourg.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty