Gemina grounded by inquiry



Italian business leaders yesterday faced an embarrassing setback in their plans to create a giant new industrial conglomerate when share trading in the key holding company, Gemina, was suspended indefinitely following a judicial investigation into its accounting practices.

Gemina, which is controlled mainly by the Agnelli family and the powerful merchant bank Mediobanca, was due to be merged with the Montedison-Ferruzzi group in the next few months. Bigger than anything in Italy apart from Fiat, the company would produce everything from chemicals to newspapers.

But the deal looked in serious trouble after magistrates in Milan announced over the weekend that they were formally placing 10 senior Gemina executives under invest- igation. Among the apparent irregularities is an 800bn lire (pounds 300m) "hole" in the accounting figures for the past 18 months at Gemina's publishing arm, Rizzoli. The company posted a 262bn lire loss for 1994.

Gianni Agnelli, Fiat's chairman, told journalists: "Opening a formal inquiry does not mean much in itself. We'll have to see what it is all about."

Tax inspectors spent the weekend removing documents from Gemina offices, and yesterday moved on to the group's two firms of accountants, Arthur Andersen and Coopers and Lybrand.

The news came as a bombshell to the Italian business community and made suspension in share trading virtually inevitable. The Milan bourse regulator, Consob, waited one hour yesterday morning but then pulled Gemina out of the market indefinitely as shares opened nearly 10 per cent down on their closing price on Friday.

The company, whose other interests include banking, textiles and metals, has been in trouble ever since the merger with Ferruzzi was announced at the beginning of September. With domestic and international investors questioning the wisdom of fusing two loss-making groups at a time when giant conglomerates are going out of fashion, Gemina shares have dropped from 908 lire on 1 September to less than 700 lire. The timetable for the merger is now almost certain to be postponed.

That in turn would be a serious dent to the prestige of Mr Agnelli and his very Italian way of doing business. The Gemina-Montedison deal - like so many before it - was worked out behind closed doors among Mr Agnelli's closest friends, notably the 87-year-old honorary chairman of Mediobanca, Enrico Cuccia.

Yesterday Gemina's shareholders' association cried foul for the second time in two months, saying the high-level machinations went against their interests. They blamed the bourse for failing to suspend share trading several weeks ago.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific