MILAN — In the ongoing Marzotto tax trial, prosecutor Gaetano Ruta asked Judge Orsola De Cristofaro on Wednesday to sentence Matteo Marzotto, his sister Diamante and defendant Massimo Caputi to one year and four months in prison. The siblings’ lawyer, Alessandra Mereu, later that day asked for the defendants to be fully acquitted, contending that there is no case to answer.
The Marzotto siblings, along with Caputi, are accused of alleged omission of earnings declaration and tax evasion.
The allegations involve the Marzotto family’s association with the sale of Valentino Fashion Group to private equity fund Permira Advisers LLC in May 2007 for more than 782 million euros, or $864 million at current exchange rate. According to the indictment, taxes on the profit derived from the transaction were never paid in Italy.
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Ruta said he did not want to “excessively simplify” the case, but he defined it as “very limited in complexity.” He said he had seen the same procedures “countless times in the first decade of the Aughts. This was a financial operation, with a company [ICG, International Capital Growth] set up for the purpose in Luxembourg. The sale of Valentino generated a capital gain that was channeled in Luxembourg where the fiscal pressure was more limited. The defendants’ lawyers saying that in the end there had been no fiscal advantages does not change the terms.”
ICG is 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.
He cited the “enormous” capital gain of 218 million euros, or about $241 million, for ICG. “I take for granted the fact that ICG was managed in Italy and by Italians,” Ruta contended. “ICG was involved in Valentino Fashion Group only to buy and sell and obtain a capital gain, and part of that amount was channeled to a fund on the Cayman Islands listed in Amsterdam and closed in 2009. The period spans from 2006 to 2009 and is very limited.”
Ruta highlighted the shareholders’ agreement, which was signed by the defendants between Sept. 13 and 14, 2006. “It defines the governance of ICG. There was a lockup clause and a sale would have had to be approved by three-quarters of the shareholders. It does not appear that there were any contrasts in the decision to sell these shares. There was a communion of intent that was not dented by the family or by personal disagreements,” Ruta said.
In his closing speech, the prosecutor dismissed witnesses that had said Matteo Marzotto did not want to sell the Valentino company, defining them “of little account. He signed the contracts and had a financial gain.” He admitted he could “understand” how Marzotto would be displeased to lose his role as chairman of the company, but said “it is evident that the aggregation [of shares in ICG] was functional to the sale. It is logical, based on the timing, the subjects involved and the facts.”
Ruta said, though not legally representing ICG, the defendants were accessories to the fact.
Mereu lamented the fact that Ruta “referred to the shareholders without differentiating their single positions.” She went on to explain the role of Matteo Marzotto as the only one in the textile family to be working at Valentino and his passion for the brand. He became chairman of the luxury firm in September 2006, and Mereu underscored that was “the same day he signed the shareholders’ agreement. He believed he could develop and grow Valentino, he knew the potential the brand had.”
She had presented the judge with newspaper clips to explain and back up the brand’s growth trajectory since then. “He signed the shareholders’ agreement because he felt more protected that way, he thought it would be more difficult to convince 75 percent of the shareholders to sell. Matteo could not remain isolated with his small stake. The concentration of shares was seen as an opportunity to hold on to the company. He wanted to avoid finding himself isolated the same way [his uncle] Pietro had been.”
Mereu noted that the “only signature [of the Marzotto siblings in relation to the sale] you will find is on the shareholders’ agreement.” She also cautioned against inferring that Matteo Marzotto was managing ICG. “There is no basis to qualify him as an administrator as he had no power of initiative at ICG, never executed any decision and could not represent it,” said Mereu, recalling an incident that took place before the sale when Caputi told Marzotto he could not voice to the press his feelings against selling Valentino. “All of the witnesses said they only dealt with [former shareholder] Andrea Donà Dalle Rose [a member of the Marzotto family]” during the negotiations, Mereu said.
“The shareholders’ pact does not make a shareholder into an administrator, not everyone signed it and Matteo was not an administrator only because he signed it,” argued Mereu. She also reiterated that, while Permira was discussing the acquisition, Matteo Marzotto was engaged in Rome with chief executive officer Stefano Sassi defining Valentino Garavani’s and Giancarlo Giammetti’s exit from the company.
As for Diamante Marzotto, Mereu said she was “the great absent. None of the professionals involved know her and to pair her name with the management of the company is an oxymoron.”
The next hearing is scheduled for Nov. 25, with further remarks by the defendants’ lawyers.