Gardini suicide mirrors death of Italian system
Sunday 25 July 1993
For almost a decade, the 60-year-old Gardini had been one of the country's most powerful and feared businessmen. The silver-haired, flamboyant and outspoken millionaire was one of Italy's most visible and most admired industrial stars. His countrymen loved his wealth and style, and cheered when he spent millions on an attempt to win the Americas cup yacht race in the late 1980s. Gardini was always adept at propagating the myth that he was an invincible protagonist in the international financial arena.
The son of a wealthy landowning family, he married into the powerful Ferruzzi family, which owned a commodities and cereal trading company. He took over the management of the company in 1980, dreaming of turning it into an industrial giant.
In 1985, Gardini focused on chemicals and began buying stock in the Montedison chemicals group. By 1987, Ferruzzi had acquired 42 per cent of the group and turned Ferruzzi-Montedison into Italy's second largest industrial group. Gardini became one of the stars on the Italian corporate scene and was nicknamed Il Contadino ('the peasant') by Gianni Agnelli, the Fiat chairman - a name soon picked up by the Italian press.
In 1989, Montedison set up a joint venture with the state-owned Enichem chemicals company, called Enimont. Gardini promptly tried to take full control, but the venture collapsed in 1990 to be taken over by ENI. Relations between Gardini and the Ferruzzis continued to deteriorate, particularly when Gardini's 22-year-old son was made chairman of a Ferruzzi subsidiary. When Gardini tried to buy the Ferruzzis out of their own company, the split became a full separation.
The Ferruzzis had decided it was no longer possible to let Gardini do things 'his way'. He had made too many enemies, and they worried that his way of doing business would put everything at stake. With the money his wife received from the Ferruzzis, Gardini promptly set up his own group, with interests in the food and mineral water industry, mainly in Italy and France.
But the legend of Gardini's business acumen was punctured suddenly last June, when it was revealed that his reckless expansion drive had left Ferruzzi choked by almost dollars 20bn (pounds 13.5bn) of debt. The family was forced to relinquish its controlling stake in the group and turned to a consortium of banks to bail it out.
It became known that the Milan magistrates handling the 'Clean Hands' corruption investigation were examining allegations that, at the time of the break-up in November 1990, Enimont was overvalued when it was sold back to ENI. Furthermore, the investigators suspected Enimont had paid some dollars 40m in bribes to the Christian Democrats and Socialist parties.
Two days ago, according to transcripts of his interrogation released to the press, Giuseppe Garofano, a former Montedison chairman, had told magistrates that Gardini had ordered him to create a slush fund to pay off politicians. Garofano also blamed Gardini for some dollars 202m of extra losses in Montedison's balance sheet. Gardini killed himself shortly after the transcripts appeared.
While Gardini's suicide came as a shock, news of his imminent arrest was hardly a surprise. In recent months, the expectation has been when, not whether, he would be apprehended.
It is now recognised that most of Italy's top companies and their bosses have been involved in illegal business practices. And, recent events, such as the Ferruzzi debacle, have shown that some balance sheets are not worth the paper they are written on.
While Italian industry has been plagued for years by high labour costs, insufficient product renewal and poor quality, a series of measures - including high VAT rates and import quotas - protected native industries from outside competition. While Italian companies were free to compete for foreign markets, Italy behaved in its domestic market like a medieval city state, from which foreigners were excluded.
As EC rules removed the barricades, however, all this has begun to change. Fiat, Italy's giant auto maker, provides a perfect example. In just five years, the Turin-based company's share of the domestic market has plunged from 60 per cent to just over 40 per cent.
The deaths of Gardini and Cagliari, who committed suicide earlier this week in Milan's San Vittore jail, are seen by many here as tragic metaphors of the collapse of Italy's scandal-ridden political and financial system.
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