London funds hit as Olivetti teeters

Computer crash: Shares in Italian giant suspended as former top executive claims extent of company's losses were disguised

The Italian computer giant Olivetti was teetering on the brink of disaster last night, threatening to leave a group of big London shareholders facing huge losses, after a former top executive resigned, sensationally accusing the company of disguising the extent of its half-year losses.

The extraordinary claim by Renzo Francesconi, who quit as chief operating officer on Wednesday night after just six weeks in the job, forced Italian stock market regulators to suspend Olivetti shares amid chaotic scenes on the Milan bourse.

Shares in the two holding companies of Carlo De Benedetti, Olivetti's biggest shareholder and until Tuesday night its chairman, also went into freefall as fears gripped the market that the Italian entrepreneur's entire business empire was about to crumble.

Olivetti's plight could prove most serious for a group of about 10 big London-based investment managers who emerged collectively as the company's biggest shareholders following a pounds 913m rescue rights issue last December. Between 30 per cent and 40 per cent of Olivetti shares are now estimated to be held in London. ING Barings Asset Management is sitting on a near 6 per cent stake alone, making it Olivetti's biggest shareholder after Mr De Benedetti.

The drama began on Tuesday when Mr De Benedetti resigned after the company announced a 440bn lire loss for the first six months. His replacement is Antonio Tesone. But it escalated in spectacular fashion yesterday when Mr Francesconi quit, alleging that the losses were far worse than stated.

In a letter published in Italian newspapers he said he was resigning because he "did not agree with the presentation of the half-year results approved by the board". He added that "the situation is very serious and for Olivetti there is the prospect of a very difficult future".

Mr Francesconi told journalists after he resigned that he couldn't accept the half-yearly figures because "numbers and cash flow are not negotiable".

Olivetti's chief executive, Francesco Caio, immediately issued a statement denouncing Mr Francesconi's claims as "totally unfounded" and warned it might take legal action.

But the Consob, the Italian stock market watchdog, suspended Olivetti's shares and hauled in Mr Francesconi and the directors as it launched an inquiry into the claims.

Mr Caio said Mr Francesconi's statement "was clearly the result of stress of the thought of the great task which lies before us".

But Mr Francesconi was in cheerful mood as he left the Rome offices of Consob after a 90-minute grilling yesterday afternoon.

"Do I look stressed to you?" he asked waiting journalists, before disappearing into the Rome traffic on his scooter.

Meanwhile, it emerged last night that Olivetti's influential London-based shareholders were instrumental in Mr De Benedetti's departure. The group held a meeting in London last week, chaired by Nomura Asset Management, at which it discussed Olivetti's deteriorating situation since the rights issue.

A spokesman for ING Barings Asset Management said that while it had not expressly asked for Mr De Benedetti's resignation, he and Olivetti's other directors were made aware of their unhappiness.

"Our position is fairly clear. Since the rights issue the company has not been in reasonable contact with its shareholders."

Other fund managers understood to have taken up shares in the offer include PDFM, Mercury Asset Management, Invesco and HSBC Asset Management. The lead manager on the rights issue was US investment bank Lehman Brothers.

Comment, page 21

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions