Who is Parretti?



by Edward Jay Epstein

Giancarlo Parretti, stunned Wall Street by bidding $1.2 billion in cash for MGM/ UA-- a movie company which both Rupert Murdoch and Ted Turner had looked at only months before but decided not to make an offer. Even more surprising, in the documents he filed with the SEC, he specified no source for where the money was coming from-- other than an "oral, non-binding agreement" for $200 million with an unnamed company-- and he did not even have an investment banker. "I do not need Wall Street's money", he told one New York investment banker, attempting to offer his services to him, "I can get one billion, two billion, whatever I need from European banks".

Parretti is Hollywood's latest Hero From Zero mystery. As later as 1982, he was an employee of a fish processing factory in Hong Kong. Now his empire, which includes movie studios, theaters, film laboratories, distributors, and production companies, is worth, according to Variety, $1.5 billion. In 1988, he bought the oldest film company in France, Pathe S.A., as well as the Hollywood studio, Cannon Films, which was best known for Ninja and vengeance fantasies (and which he re-named Pathe Communications). From that point on, at a breath-taking pace, he made announced a new multi-million dollar deal almost every month. In December 1988, it was a $160 million film production contract for Menachin Golan, the Israeli entrepreneur, who with his Israeli cousin, Yorus Globus, built Cannon into a trans-oceanic film maker. In January 1989, he announced a $80 million plan to bail out Dino Delaurentus' movie studio from bankruptcy so he could merge it into his own. In February, he made a $138 million offer for the television producer, the junk-bond financed TV producer New World Films. In March, he made a $39 million offer for the arty Kings Road Films. In April, he first floated the idea of taking over MGM for a cool billion. In May, he had bid $220 for Television Monte Carlo, which owned an Italian TV network.

As it turned out, none of these announced deals had been actually consummated. He aborted the Golem production deal a few months after it was announced. Ron Perlman outbid him for New World. The Kings Road deal fell apart. The Dino de Laurentius rescue mission failed. MGM accepted a bid from an Australian suitor, Quinex (which then failed to make the down payment and went bankrupt.) The Television Monte Carlo deal also evaporated. offer-- never got off the ground. And, adding insult to injury, the French government blocked his acquisition of Pathe SA because he had not accurately represented the principals behind the deal. But now, he found another $1.2 billion to buy MGM. Where did the money come from?

In Hollywood, Parretti lives Great Gatsby style-- when he is there. He bought a $8 mansion in Beverly Hills, where he proudly takes visitors there to his walk-in steel vault to see paintings he identifies as Picassos, Miros and Goyas. He lives there with Maria Ceccone, who he has been married to for over 20 years,two daughters and son and Fabio Serena, his 35 year old lawyer. (His wife, his 18 year old daughter, Valentina, and Serena are also executives of his holding company.) He also leases a $200,000 Rolls Royce for driving around town, and owns his own Italian restaurant, Maderos, on the ground floor of the CMA building (which has a private satellite hook-up to get Italian soccer games) and his own disco, Tramps`

Like the hero of Gogol's "Dead Souls", who spawns rumor after rumor about himself as he moves through the Russian provinces trying to buy up rights to deceased serfs to further a financial scheme, Parretti, trying to buy up near-dead film companies, has stirred the collective imagination of Hollywood. "The word is the Mafia is behind him," a top agent suggests; "Parretti is a creature of Credit Lyonnaise," a studio executive theorizes, sent to America to salvage the bank's bad loans to Cannon, De Larentius, New World and other shaky Hollywood producers. "Parretti is laundering money for the drug cartel," a Hollywood investment banker states, pointing out that movie theaters are cash businesses, and what Parretti has bought in Cannon and Pathe is 800 movie theaters. "He is fronting for Sylvio Berlusconi,"the Milanese media king, an Italian director argues. "It's Qaddafi's oil money," a film producer asserts. Parretti indeed seemed to be Hollywood's number one mystery. The proliferation of Parretti rumors did not sit well with Alan Ladd, Jr., who since January 1989 has been Pathe's co-chairman. Like his father in Shane, he wasted no words. "Its all I hear. And its complete garbage", he said, leaning forward on the couch of his plush new office at Pathe Communications on San Vicenzo Drive. He had met Parretti at the home of Dino De Laurentius in late 1988, and immediately accepted his offer to head Pathe. Next to him sat his long time associate at the Ladd Company, Jay Canter-- Marlon Brando's first agent-- who is vice president of Pathe. Both men were now in the odd position of having to defend a stranger who they had met only a few months earlier. Shaking his head in disbelief, Ladd cited the recent allegation in newspapers that Parretti was involved with the Qaddafi. He explained "The reporter mixed up two countries-- Liberia, where Parretti had a shipping businesses and Libya". Parretti had nothing to do with Libya or Qaddafi, Ladd insisted. He found the Mafia money whispers equally absurd. Why would the Mob put money in someone as "high-profile" as Parretti, he asked. "Don't you think I investigated before I took this job? He explained that in the Spring of 1989 he went to Europe with him in his gulfstream, which, he recalled, was equipped with a kitchen where Parretti cooked spaghetti for everyone. During the trip, Parretti handed Ladd a telephone-size book listing the hotels in the Melia chain, which he claimed he owned. "There were hundreds of hotels, and each of them represented real money", Ladd recounts. He in fact sat in at a At a press conference in Cannes where Parretti suggested that these hotels earned $300 million a year. There is "no mystery" where Parretti money comes from, Ladd concluded.

As it turns out, however, Parretti does not own the Melia hotel chain. Nor did he own it when he handed Ladd the impressive Melia book. What had happened was that he, together with others, had bought the Melia Group in 1987 but the hotels themselves, which were the mail asset, were almost immediately resold to the Sol Hotel chain in a complicated transaction that left Parretti and his associate owning the name "Melia" and a few Spanish travel agencies and laundries that lost money and were deeply in debt. According to the 1988 annual report of his entire holding company, which included the "Melia Group", its net worth was not anything like the $1.5 billion figure he reported to Variety, but $3.6 million ( and even this meager total is based on questionable evaluations of illiquid investment.) Instead of his businesses making an annual profit of "$300 million", as he claimed at the press conference-- or a cumulative profit of a billion dollars as he claimed in an interview in the Italian newspaper, La Republica-- they had, according to this annual report, actually lost money in both 1986 and 1987. It, moreover, had only $9000 in its bank accounts and in short-term funds at the end of 1987 (the last time it filed an annual report). But if the Melia hotels did not supply Parretti with the $60 million or so of cash he used in his Hollywood buying spree, where did he get it?

According to his birth certificate, Giancarlo Parretti was born on October 26, 1940 in the town of Orvieto, Umbria, about 100 miles north of Rome. His father, whom he introduced to Ladd, had been a humble wine merchant (and still lived modestly in an apartment in Orvieto). At the age of 17, without the benefit of any higher education, Parretti went to work as a waiter. During the sixties, he says, he learned English working as a ship's steward on the Queen Elizabeth and as a waiter at the Savoy Hotel in London (though neither the Cunard Lines or the Savoy Hotel could find any record of his employment). Then Parretti moved to Sicily where he got a job waiting in a plush hotel in Syracusa owned by Palermo's political boss, Senator Graziano Verzotto. By 1973, he had worked his way up to being manager of the hotel and the aide de camp to Senator Verzotto. Senator Verzotto, who owned Syracusa' football team and supervised Sicily's state owned mineral company, then got into serious trouble. He was indicted for embezzling $3 million dollars from the mineral company in Sicily and, to make matters worse, was nearly gunned down by a team of presumably Mafia hit men. In 1975, he fled to Lebanon, leaving Parretti in charge of his hotels and the soccer team.

After Verzotto disappeared, Parretti went into the business of publishing weekly news letters, called "Diario". Beginning first in Sicily, Parretti then went in partners with Ceasare de Michealis, a key financier for the Parti Socialist Italia, or PSI, which in coalition with the larger Christian Democrat Party, had run Italy since World war II. Even though most of these "Diarios" had a circulation of under a thousand readers, they carried advertising from businessmen-- including those who wanted to curry favor with the PSI, which was a far more entrepreneurial organization than its name might imply. It had responsibility, within the political coalition that ran Italy, for overseeing a number of Italian state-owned enterprises including ENI-- the Italian equivalent Exxon combined with Dupont, which was the country's single largest generator of wealth and foreign exchange.

Parretti here had a crucially important connection: his partner's brother, Gianni de Michealis, now Italy's Foreign Minister, who then, as the PSI's Minister for State Participations, was in charge of ENI. De Michealis, a long-haired, jowly-faced intellectual, whose extra-curriculum interest is international discotheques (a subject on which he wrote a book), was in the late 1970s, because of his responsibility for ENI, one of the most powerful men in the PSI. By hitching his wagon to this rising star, Parretti moved into the inner sanctum of the party. He had been especially active in its finances, serving for a time as the treasurer for its Youth organization. He also became a member of the PSI's central committee, where he took credit for helping to bring De Michealis' close friend, Benito Craxi, to power as head of the party-- and Prime Minister. He also arranged for ENI to help finance the take over the newspaper Il Globo, so it could support the PSI-- but the deal never worked out. (It went bankrupt).

His dealings with ENI, and association with De Michealis, eventually brought him into contact with his future partner in international finance, Florio Fiorini. When they first met in the late 1970s, Fiorini was the finance director of ENI-- a position he had half for a decade. As such, he was responsible for depositing billions of dollars in ENI funds in off-shore bank accounts. Part of this money, as it later emerged in a Parliamentary investigation, came from off-the-books kickbacks and skims from Saudi Arabia and Libya-- ENI's two major sources of foreign oil-- and the off-shore accounts it went into benefitted PSI and other politicians. In documents that came to light in the ensuing scandal, for example, Fiorini, along with two other top ENI executives, had apparently authorized the transfer of millions of dollars into a numbered account. #63369 in the Union Bank in Switzerland, which in February 1982 was shuttled into the account of PSI politicians, including Prime Minister Benito Craxi, and then wired to an anonymous fiduciary account in Hong Kong. Even if such surreptitious transfers from state-owned enterprises to the coffers of political parties is tacitly accepted in Italy as part of the "system," and no wrong doing was involved, they gave Fiorini, and his associates at ENI, a perspective on Italian politics, which includes the routing of money between numbered accounts in Switzerland and Hong Kong.


Questions? Email me at edepstein@worldnet.att.net
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