MILAN — The day Permira offered to buy the Valentino brand, Matteo Marzotto was busy negotiating the exit of Valentino Garavani from the company he founded and mapping out the couturier’s 45th anniversary celebrations. The deal with the private equity fund was sealed the following day when, according to Marzotto’s electronic agenda, shown in the courthouse here on Friday, he was in Cannes at a Chopard event.
Marzotto’s lawyer Alessandra Mereu highlighted the relevance of the two dates, May 15 and 16 in 2007, to underscore how distant the former Valentino chairman was from working on the sale of the company. Friday’s hearing in the ongoing Marzotto tax trial once again illustrated how the young entrepreneur’s wish was to retain the Valentino Fashion Group.
“Matteo was the only one who believed in the future of the group. [Former VFG chairman Antonio] Favrin had a different opinion and, with [shareholder Dario] Segre, thought it should be divided up. Matteo was not happy after the sale,” said Giorgio Palumbo, a longtime, go-to accountant for the Marzotto family.
Antonella Andrioli, director of Valentino’s legal affairs, said that in his role as president, Matteo Marzotto in the 2006 and 2007 period was also in charge of maintaining good relations with Garavani and business partner Giancarlo Giammetti, as well as coordinating marketing, image and promotion initiatives, while the strategic direction was more in the hands of Favrin and chief executive officer Stefano Sassi, who had succeeded Michele Norsa and who is still helming the brand.
Andrioli recalled a trip to Rome with Marzotto and Sassi for a meeting at the brand’s headquarters in Piazza Mignanelli on May 15 eight years ago to discuss the departures of both Garavani and Giammetti and the July anniversary festivities. Andrioli’s expense accounts from the trip were also presented to Judge Orsola De Cristofaro at the hearing. While Permira executives are expected to be called to testify at the next hearing on July 3, it is still not certain Giammetti will be asked to do so, or, if so, he may be represented by his lawyer.
Earlier in the afternoon, Mereu and his colleague Paolo De Capitani, who both represent Marzotto and his sister Diamante, also indicted, asked Palumbo to explain the reasons behind the establishment of International Capital Growth, the firm that Italy’s tax police believe to be a fictitious entity based in Luxembourg and managed in Milan and allegedly created for the purpose of selling 29.9 percent of Valentino.
According to the indictment, taxes on the profit derived from the transaction were never paid in Italy, and the trial is taking place independently of the fact that the Marzottos, other family members and other defendants have paid more than 56 million euros, or $60 million, in fines to the Italian state.
“The [ICG] operation was proposed because the [VFG] company at the time was publicly listed, and the Marzotto family wanted to maintain control. [Former shareholder] Andrea Donà Dalle Rose, who is also a member of the Marzotto family, proposed to Umberto [Matteo and Diamante’s father] to join forces to obtain control. The minimum stake necessary for a public company to do so is 30 percent,” explained Palumbo.
Donà Dalle Rose and Vittorio Marzotto (Matteo and Diamante’s brother) turned to London-based consultants, “the Roma brothers,” who advised them to set up a vehicle that would regroup family shares and be based in Luxembourg because the country “has simpler rules and litigations don’t last 10 years like in Italy.”
As a public company, all steps had to be communicated to the Bourse and its watchdog Consob, observed Palumbo. “The operation was defensive, set up with the goal not to sell Valentino but to control and manage the company,” he underscored.
Asked by De Capitani if the Marzottos worried about losing control, Palumbo said “there were different entrepreneurial visions” that clashed with Umberto’s “idea that Marzotto [holdings] should continue to exist managed by the Marzottos.”
Asked by Mereu who managed ICG, Palumbo said: “Vittorio, surely,” adding that Matteo was “operative on Valentino.”
The lawyer also asked about Favrin, who had been a manager at several companies controlled by the Marzottos over the years. “VFG became the most interesting because it had Hugo Boss,” he remarked.
Responding to Mereu’s question on whether Favrin wanted control, Palumbo said: “You don’t communicate your intentions.”
As reported, Favrin held shares in VFG and through the Canova vehicle wanted to sell the company. According to past witnesses, ICG was set up to contrast Canova.
The other defendants are Bart Zech, administrator of the board of ICG; real estate entrepreneur Massimo Caputi, and Pierre Kladny, president of the board of ICG. None of the defendants have attended the trial.