DESIGNERS BRIBE TRIAL GETS STARTED IN MILAN

Byline: Sara Gay Forden

MILAN--Italy's designer corruption trial began Wednesday with one executive pleading guilty and three others vowing to fight on, claiming, in opening statements through their attorneys, they were victims of extortion.
As expected, a Milan court accepted a guilty plea by Gerolamo Etro to charges of corruption and bribing Italian tax authorities.
The trial of the other executives--Krizia owner and designer Mariuccia Mandelli, Gianfranco Ferre and Versace chief executive officer Santo Versace--will resume in October.
Etro, the owner and founder of the family luxury goods empire that bears his name, was given a suspended jail sentence of nine months. Etro had already paid a fine of $323,000 (500 million lire), a figure equivalent to the sum he paid tax officials.
Although his lawyer declined to comment on the proceedings, Etro followed in the footsteps of Giorgio Armani and Krizia chairman Aldo Pinto, who pleaded guilty in May to save themselves and their business from the impact of a trial.
Prosecutor Elio Ramondini and lawyers for the defendants, which include the designers and managers of their companies, presented their opening arguments.
As reported, the corruption trial revolves around a series of bribes paid by the fashion houses to tax officials between 1989 and 1991, ranging from $62,000 to $260,000. The prosecution charges the fashion houses were party to the bribes and benefited by obtaining speedy and lenient tax audits.
"If we examine what was going on inside the fashion houses at the time of the audits, it emerges that there were requests and there were offers," said Ramondini during his opening argument. "Furthermore, many of the defendants have already confessed and pleaded guilty," he added, asking the court to admit evidence from the plea bargaining proceedings.
However, lawyers for Krizia, Versace and FerrA presented a united defense, maintaining their clients were clearly extorted.
"We will introduce evidence that the tax officials had several meetings before conducting the audits in the fashion sector, during which they decided they were going to ask for money," said Krizia lawyer Oreste Dominioni.
"Furthermore, we have evidence that they took an extremely tough stance [with the fashion houses]," said Dominioni. He added that when Mariuccia Mandelli refused to pay, the officials threatened to extend the audit to all the companies of the Krizia group (including production companies), which could have effectively shut down the design house's operations altogether.
When she subsequently protested she had no way to make such an illegal payment because her company didn't have slush funds, the tax officials were prepared with an intricate system of foreign invoices and bank accounts to make possible such a payment, Dominioni said.
"This just shows how extremely well organized these tax officials were," said Dominioni. "In fact, I think we should be just a little more curious and look into these accounts in Lichtenstein and Gibraltar and see just how much money was in there."
Versace lawyer Alberto Moro Visconti reiterated, "We will be able to show that these payments didn't bring any benefit whatsoever to the companies involved; they were caught in a situation where they had no choice."
The lawyer for Ferre, Carlo Addornato, insisted the designer didn't even know kickbacks were paid until after the fact.
"He was completely in the dark. First of all, he practically wasn't ever around because he was in Paris, where he designs for the house of Dior. Furthermore, he had put complete faith in [FerrA's managing director Gianfranco] Mattioli, who handled everything and told him about it afterwards," Addornato said.
"But it was clear that the tax officials extorted the money from the company for their own benefit. We were forced to pay and we can prove it," he said.
While none of the designers appeared in court Wednesday, they will be called as defendants or witnesses, along with accounting executives and managers who worked for them, at some point after the trial resumes on Oct. 16.

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