“Just as in the past he would tell me things he didn’t have the courage to say to his father, now he was saying to me, ‘Roberta, the time has come to get rid of so-and-so,’” Cassol said. “He had a fragile, insecure personality.”
At the same time, Aldo’s own position at Gucci America grew precarious. In September 1983, on the basis of the court documents filed by Paolo, the Internal Revenue Service started examining the financial affairs of Aldo Gucci and Gucci Shops. By May 14, 1984, the Justice Department authorized the U.S. attorney’s office to open a grand jury investigation into the matter. Aldo—very smart in his business affairs—hadn’t understood the American attitude toward paying taxes, even though he had become a U.S. citizen in 1976. In Italy, the average citizen, skeptical and mistrustful of government, feels that paying taxes is tantamount to throwing money at corrupt politicians for little in return. The American saying—only two things in life are certain: death and taxes—wouldn’t make any sense to an Italian and especially wouldn’t have in the 1980s. Today the Italian government is trying to curb rampant tax evasion, but in those years, the more money one managed to avoid paying in taxes, the smarter one was considered. It was almost something to boast about. De Sole, who was more American in his thinking than Italian, had specialized in tax law. He tried to drive home the seriousness of the situation to Aldo.
“I made a big presentation to the whole family at the Hotel Gallia in Milan,” De Sole said. “‘This is a major problem,’ I told them.
“‘Don’t be ridiculous!’ they said to me. ‘Aldo is a great man and has done great things for the community; they won’t touch him.’
“‘You don’t understand,’ I told them. ‘This is America, not Europe. We are talking about massive fraud—Aldo Gucci is going to go to jail!’”
No one took De Sole seriously and the “Guru of Gucci” brushed the whole matter aside. “You are always so pessimistic,” he said condescendingly to De Sole, who had continued to work for the company after Rodolfo’s death.
“Aldo was being his old domineering self and wouldn’t discuss it,” recalled Pilone.
In the meantime, De Sole had discovered that in addition to illegally transferring millions of dollars out of Gucci America into his own offshore companies, Aldo had personally cashed a stack of checks worth hundreds of thousands of dollars that had been made out to the company.
“Aldo was living like a king, but there was massive fraud at every level!” De Sole said. “It was going to wreck him personally and it was going to wreck the company.”
De Sole begged Aldo to see reason. He flew Aldo and Bruna to Washington, D.C., where De Sole and his wife, Eleanore—at the time living in Bethesda, Maryland, with their two young daughters—invited them home to dinner.
“I told Aldo, I don’t have anything against you, please understand,” De Sole said. At one point during the dinner, Bruna, in tears, took De Sole aside to try to understand.
“I told her, ‘I’m sorry, but he’s going to go to jail,’” De Sole said. “Aldo denied reality. He viewed Gucci as his own personal toy. He had no understanding of the difference between personal and corporate—his attitude was that he had built the company and he deserved to get something back from all he had done.”
In the beginning, De Sole said he even had trouble convincing Maurizio of the consequences Aldo would have to face. “You don’t understand,” De Sole said to Maurizio. “If Aldo goes to jail, he is not going to be there anymore to run the company. Something must be done!”
Maurizio finally agreed. Aldo’s vulnerability on the tax issues favored Maurizio’s far-reaching goal to create a new Gucci. With the help of Pilone and De Sole, he developed a plan to take over the board of directors. The only way to get power was to create an alliance with one of his cousins. But which one? Giorgio was too reserved, traditional, and loyal to Aldo. He wouldn’t want to rock the boat. Roberto was even more conservative and worried about ensuring a future for his six children. Both of them were too comfortable with Gucci as it was. The only possibility was Paolo, the black sheep, who had stopped speaking to Maurizio two years earlier, after the boardroom incident. But Maurizio also knew that Paolo was pragmatic and in financial difficulty—he had already managed to spend the settlement he had received from Gucci. Maurizio decided to make him an offer. He picked up the phone and dialed Paolo’s number in New York.
“Paolo, this is Maurizio. I think we should talk. I have an idea that could resolve your problems and mine too,” Maurizio said to him. They agreed to meet in Geneva the morning of June 18, 1984.
Paolo and Maurizio arrived at almost the same time at the Hotel Richemond. As they sat in the sun at a table on the terrace, overlooking Lake Geneva, Maurizio told Paolo his plan to create a new company, Gucci Licensing, to be based in Amsterdam for tax purposes, which would control all licensing under the Gucci name. Maurizio would control the new company with 51 percent, Paolo would have the remaining 49 percent and the title of president. In exchange, Maurizio wanted Paolo to cast his 3.3 percent vote on the board of Guccio Gucci with Maurizio’s 50 percent. Maurizio would buy out Paolo’s shares at a later date for $20 million. And finally, Paolo and Maurizio would drop all the suits pending against each other. At the end of their meeting, the two cousins shook hands and agreed they would ask their lawyers to start preparing the necessary documents.
They signed their pact a month later, in the Lugano offices of Crédit Suisse, where Paolo deposited his share certificates and Maurizio made a good faith payment of $2 million. Maurizio would gain control of the shares when the new company, Gucci Licensing, was founded, and when he paid Paolo an additional $20 million, for a total of $22 million. In the meantime, he had Paolo’s vote and effective control of the Gucci company.
The board of Gucci America met in New York every year at the beginning of September. Only a few items were on the agenda: approval of the results for the first six months of 1984, a plan for new store openings, and a few new personnel appointments.
In the old days, when Rodolfo, Vasco, and Aldo were running the business, board meetings were enjoyable family reunions when the three brothers would get together and rubber-stamp what Aldo wanted to do, recalled his son Roberto. “There was such trust that they would just vote through what he wanted without contesting anything, then they would go out and have a good time,” he said.
The weekend before the Gucci America board meeting, Domenico De Sole flew secretly to Sardinia, where Maurizio and Pilone were following the runoff races to select the Italian challenger for the America’s Cup sailing competition. They stayed at the Hotel Cervo in Porto Cervo, which the Aga Khan had developed along with nearby Porto Rotondo. Many consider these exclusive vacation resorts among the finest in Italy. The pre-planned village of Porto Cervo extends out from a central piazza complete with cafes, restaurants, and designer boutiques, all painted the same soft pink and overlooking the bay where Italy’s wealthy vacationers moor their luxury yachts and powerboats. The sun-drenched terraces and pruned gardens of luxurious private villas peek out from the rugged mountainside rising from the water. Porto Cervo’s and Porto Rotondo’s artificial style, symbolic of Italy’s nouveau riche, clash with Sardinia’s spartan natural beauty.
By day, Maurizio, Pilone, and De Sole plowed through foaming waters behind the sleek racing boats in Pilone’s Magnum 36 high-speed motorboat; by night they dined on the candlelit terraces of Porto Cervo and reviewed their plan, which was remarkably simple. De Sole, who was secretary of Gucci America’s board of directors, would fly to New York and attend the board meeting as Maurizio’s representative. He had already met with Paolo’s representative, who had committed to vote with De Sole. De Sole would propose to dissolve the existing board and nominate Maurizio as the new chairman of Gucci’s U.S. operation. With control of the majority of the votes, there could be no effective opposition from the other board members. In minutes, Aldo would have lost control of Gucci.
A few weeks later in New York, the plan
worked even more smoothly than they had dreamed. The meeting took place in Gucci’s boardroom on the thirteenth floor of the Fifth Avenue store building. Before the start of the meeting, De Sole deposited his proxy to vote on Maurizio’s behalf. A few minutes later, Paolo’s representative did the same. Aldo, downstairs in his office on the twelfth floor, had decided not to attend the meeting, expecting it to be routine as usual. He sent Gucci’s chief executive officer, Robert Berry, in his place.
De Sole asked for the floor as the dark eyes of a grinning, cigar-puffing Guccio Gucci stared down from a large-as-life oil portrait of the company’s founder that hung on the wall behind the conference table.
“I would like to request that a motion to dissolve the board be placed on the agenda,” De Sole said matter-of-factly.
Berry’s eyes widened as his jaw dropped open.
Moments later, Paolo’s representative seconded the motion.
“I…I…I would like to request a temporary suspension of the meeting,” Berry stammered before he dashed out the door and rushed down to Aldo’s office to tell him what was happening.
Aldo, chatting animatedly on the telephone with someone in Palm Beach, hung up the phone when Berry interrupted him.
“Dr. Gucci! Dr. Gucci! You must come upstairs immediately,” panted Berry. “There is a revolution going on!”
Aldo listened silently to what Berry had to say.
“If that is the way things are, then there is no use going upstairs. There is nothing we can do,” Aldo said tersely. He had misjudged the young Maurizio, who he feared was making a grave mistake.
Berry returned and tried in vain to suspend the meeting on the grounds that Aldo’s lawyer, Milton Gould of a prestigious New York law firm, couldn’t attend because it was a Jewish holiday. De Sole and Paolo’s representative voted to dissolve the board and appoint Maurizio Gucci chairman of Gucci Shops Inc.
Aldo left the building, his face drawn. His own nephew, the very man he had once thought could be his successor, had toppled him in a coup d’état. Now Maurizio was the enemy.
Aldo met soon after with Giorgio and Roberto, but they sadly realized there was nothing to be done; Maurizio, allied with Paolo, effectively controlled the company. The same scenario would take place at the next meeting of the Guccio Gucci board in Florence.
The Guccis reached an agreement beforehand, which they signed in New York on October 31, 1984, and ratified by a shareholders meeting in Florence on November 29. Maurizio obtained four seats on the seven-member board and was nominated chairman of Guccio Gucci. Aldo was nominated honorary president, while Giorgio and Roberto were nominated vice presidents. Giorgio would continue to manage the Rome store, just as Roberto would continue as company administrator in Florence.
Maurizio, ecstatic, had gotten exactly what he wanted. Aldo retained an important title, but had essentially been neutralized; the cousins had been allowed to maintain their roles in the company, but Maurizio had control. Moreover, he had managed to transform Paolo’s shares into a stabilizing factor. The press, gleefully covering the family feud, held him up as a hero; the New York Times dubbed Maurizio as the “Family Peacemaker,” painting him as the image of tranquillity amid the steamy battles that had filled gossip columns.
Maurizio called a meeting of upper-level employees in Florence, inviting the group of some thirty people into the oval-shaped conference room that the staff had nicknamed the “Sala Dynasty,” a tongue-in-cheek reference to the popular television series. The workers gathered around the massive wooden conference table, surrounded by dark, wood-paneled walls and four marble busts that represented the four continents. Maurizio explained his vision of the new Gucci to the group of office and factory workers.
“Gucci is like a fine racing car,” he began hesitantly, looking at the old familiar faces clustered around him. “Like a Ferrari,” he said, using a reference he thought they could relate to. “But we are driving it like a Cinquecento,” he said, referring to the small, postwar utilitarian model produced by Fiat.
“As of today, Gucci has a new driver. And with the right engine, the right parts, the right mechanics, we are going to win the race!” he said with a broad smile, warming up to the subject. At the end of his speech, he asked the silent faces if there were any questions. Amid the nervous shifting of feet and clearing of throats, Maurizio’s glance fell on Nicola Risicato, a man who had started as a clerk in the Milan shop, and worked his way up to manage the Via Tornabuoni store. Risicato, by then well into middle age, had watched Maurizio grow up.
“Nicola, not even you? Don’t you have anything to say to me?” Maurizio asked with a smile, looking fondly at the elder man and hoping for approval.
“No, I don’t give away compliments,” Risicato said dryly, echoing the misgivings of many of his colleagues. They had grown comfortable with the spontaneous, backslapping style of Aldo and Rodolfo, and didn’t quite know what to make of Maurizio’s talk of Ferraris.
That December, the Wall Street Journal published an extensive exposé on Aldo Gucci’s alleged financial transgressions, reporting that he was under investigation by a federal grand jury for allegedly siphoning off some $4.5 million from company coffers between September 1978 and the end of 1981. The article noted that Aldo had declared annual earnings of less than $100,000, “a small sum for a man of his status.”
The Italian press picked up the news too. Gucci had reached a pinnacle in the United States—but perhaps now was heading for its downfall. “For the first time, the Gucci name wasn’t being mentioned in connection with style and class, but with a serious crime,” wrote the Italian weekly Panorama in January 1985.
Maurizio trusted De Sole implicitly and had asked him to become the new president of Gucci’s U.S. business with a specific mandate: clean up the company’s tumultuous fiscal affairs, prepare its response to the tax fraud allegations, and hire professional management. Before De Sole’s arrival, the previous president of Gucci Shops Inc. had been a woman named Marie Savarin. Savarin was an accountant and had been a loyal assistant of Aldo’s for years; she was probably the only woman Aldo had ever really trusted—even to the point of giving her authority to sign his signature.
De Sole agreed to do what Maurizio asked him, on the condition that he could keep his home and law firm position in Washington, D.C., and execute his new corporate duties part-time. De Sole began traveling to New York once a week. He hired a man named Art Leshin as Gucci’s new chief financial officer to help him sort out the company’s accounts.
“When we got in there, we freaked out!” De Sole recalled. “It was a disaster, total chaos. There were no inventories, no accounting procedures. It took us months to make head or tail of what was going on. Aldo ran the business with intuition—and his marketing genius was so great, he had gotten away with it!”
De Sole’s once-a-week trips to New York became Monday through Friday, and his wife, Eleanore, dutifully packed him off with a suitcase of clean clothes at the beginning of each week and welcomed him home each weekend—along with his bagful of dirty laundry. De Sole eventually moved his family to New York.
In 1986, under his cleanup program, De Sole reincorporated Gucci’s U.S. business under a new name: Gucci America. In January 1988, Gucci America paid the IRS $21 million in back taxes and fines covering misappropriations by the family between 1972 and 1982. In exchange, De Sole extracted a promise from fiscal authorities to clear the company from any further liability in that period. The company was forced to go into debt in order to make the IRS payment. But De Sole both expanded and streamlined Gucci’s operations. He bought back six of Gucci’s independent franchisees, bringing the number of Gucci-owned stores in the United States to twenty, and took back wholesale distribution of the GAC from Maria Manetti Farrow in what became a nasty lawsuit—but instantly increased direct revenues. He also nixed a cigarette license that had been signed by the family with the R. J. Reynolds Tobacco Corporation, arguing that the association of Gucci with a cigarette would kill t
he brand in the United States. The license was later issued by Yves Saint Laurent. By 1989, Gucci America reported annual sales of some $145 million and profits of about $20 million, despite the continued family battles.
While De Sole tackled problems at Gucci America, Maurizio authorized the company’s participation in an Italian consortium which was sponsoring a boat to race in the 1987 America’s Cup sailing competition. The race had captured the interest of Italians in 1983 when the Italian boat Azzurra competed in the elite competition, creating enormous returns for its sponsors, Italy’s largest automobile manufacturer, Fiat, and Cinzano, distiller of aperitifs. The historic race attracted the attention of elite viewers in the United States and Europe—just the kind of public to which Gucci catered. Maurizio’s idea was to use the race to promote the strength of the “Made in Italy” label and he rounded up other corporate sponsors including the then–chemicals giant Montedison and pastamaker Buitoni. Maurizio was named image director of the new consortium and took his role seriously, promoting Italy not only as a country with traditions in art and craftsmanship but also as a growing source of advanced technology. The consortium bought a boat, Victory, which had performed well in the previous America’s Cup, as a prototype on which to model its own boat, Italia, of which three models were subsequently made. It also hired a leading skipper, Flavio Scala from Verona, and a top-notch crew.
To the consternation of Aldo, Giorgio, and Roberto, who thought the sponsorship was an enormous waste of time and money, Maurizio threw himself—and much of the Gucci staff—into designing uniforms for the crew. Every item was technically tested to make sure it could withstand the wear and tear of work on a racing boat, as well as being aesthetically beautiful. The crew’s racing gear was even designed to flash the rippling colors of the Italian flag as the men bent to wind and unwind the winches.
The House of Gucci Page 15