The House of Gucci

by Sara G Forden

  On December 18, 1985, Aldo divided his remaining 40 percent in Guccio Gucci SpA between Giorgio and Roberto in a secret pact. He had already divided an initial 10 percent among his three sons in 1974 at the time of Vasco’s death. The transaction gave Roberto and Giorgio 23.3 percent each in the Italian mother company and cut Paolo out, leaving him only with his original 3.3 percent. All the sons also had 11.1 percent in the U.S. company, Gucci Shops Inc. Aldo was left with no shares in the Italian company and 16.7 percent in Gucci Shops Inc. Aldo and his boys also had various stakes in Gucci’s foreign operating companies in France, the U.K., Japan, and Hong Kong. Maurizio controlled 50 percent of Guccio Gucci and Gucci Shops Inc. and the same stakes Rodolfo had held in the foreign units. Paolo may have suspected he wasn’t being treated on par with his brothers, for he had already announced to the family at large: “If Daddy dies leaving me nothing…I will put a team of lawyers to work for fifty years on the case if I have to!”

  To avoid further confrontation with Paolo, Roberto and Giorgio agreed to vote only with their 3.3 percent stakes at Guccio Gucci board meetings.

  In the meantime, Maurizio’s agreement with Paolo fell apart in November 1985 at a final meeting they had set to conclude the pact sealed with a handshake that sunny day in Geneva. Messengers for Paolo and Maurizio rushed back and forth between the two camps along the corridors of the Lugano offices of Crédit Suisse, where Paolo’s shares were held in escrow. According to legal documents subsequently filed by Paolo, Maurizio hadn’t respected the terms of their pact. Maurizio had allegedly frozen him out of the new company, Gucci Licensing Service, which was supposed to be founded with Paolo’s participation. The hours passed, with little progress toward concluding the agreement that would have sealed Maurizio’s control of Gucci at 53.3 percent. Finally, late that night, well past normal business hours and with the bank officials exasperated, Paolo put an end to what he felt had been a charade. He tore up the draft of the contract on which they had been working, rallied his team of advisors, and stalked out, taking his share certificates with him. A few days later, Paolo filed new charges against Maurizio, declaring that his cousin had seized control of Gucci in violation of their agreement, and asking that Maurizio’s nomination as chairman of Gucci be declared null and void.

  Maurizio, beginning to understand the dynamics of the family feuds, had anticipated the breakup with Paolo and had another deal with Giorgio up his sleeve. At a board meeting on December 18, 1985, he proposed a new scenario for the company to nominate an executive committee with four members, comprised of himself, Giorgio, and a trusted manager of each. Giorgio would be confirmed as vice president, while the executive committee would ensure a collegial management of the company. Even Aldo agreed to the proposal.

  Maurizio left for the Christmas holidays feeling he had reached a solution that could hold—at least for a while. In the meantime, relations with Patrizia had improved slightly as they made an effort to keep up appearances for the two girls. Maurizio had been home often in September and they agreed to spend the Christmas holiday together in Saint Moritz. Patrizia knew how much Maurizio loved his mountain retreat and hoped it would be the site of their reconciliation. She threw herself into festive decorations. When she had finished, Chesa Murézzan glowed with red and silver garlands, candles, moss, and mistletoe. She and Alessandra decorated the Christmas tree erected near the fireplace with blown glass bulbs etched in gold and dozens of real miniature candles. Maurizio had promised to go to midnight mass with her, something she had always loved doing, and her spirits leaped at the thought that everything could return to the way it had been between them. She bought Maurizio a set of cuff links and studs inlaid with diamonds and sapphires and couldn’t wait to see the expression on his face when he saw them.

  The evening of December 24, Maurizio went to bed at ten o’clock without saying a word—leaving Patrizia to attend the midnight mass alone. The next morning, as was their custom, the family invited the staff to receive their presents, before opening their own gifts privately. Maurizio gave Patrizia a key chain from the yacht Italia and an antique watch. She didn’t know whether she was more disappointed or furious. She hated antique watches and thought he knew it; the key chain was an insult! That evening, they had been invited to a party together, but Maurizio didn’t want to go. Patrizia decided to attend alone and learned there from one of their friends that Maurizio planned to leave the next day. She confronted him angrily with an outpouring of criticism and he reacted, grabbing her around the neck and lifting her petite frame off the ground as the two girls cowered in the doorway, watching them.

  “Così cresci!!” he yelled. “This way you’ll grow tall!!”

  “Keep going!” she wheezed through clenched teeth despite his neck-hold. “I could use a few extra inches!”

  Their Christmas holiday, for which she had been so hopeful, was over. So was their marriage—Patrizia marked December 27, 1985, in her diary as the day it truly ended.

  “Only a real jerk would dump his wife at Christmas,” Patrizia said ruefully years later. The next morning, she awoke to find Maurizio packing his bags. He told her he had to go to Geneva. Before he left, he took Alessandra aside and said, “Daddy doesn’t love Mommy anymore and so he is leaving. And Daddy has a nice new house where you can come and stay with him, one night with him and one with Mommy.”

  Alessandra dissolved into tears and Patrizia was shocked at how abrupt Maurizio had been with the girl, especially after their pact not to tell the children yet about their estrangement. That day marked the beginning of their battles over the children, battles that would profoundly affect them all. Maurizio accused Patrizia of trying to keep his daughters from him; she protested that his visits upset them so much she preferred to limit their time with their father. “Patrizia kept the children from him because she wanted to force him to come back home to her,” added a former family governess.

  If Patrizia used the children against him, Maurizio used his properties against her. He decided to ban her from the Saint Moritz estate and the Creole—only he neglected to tell her. One day, Patrizia brought the girls to Saint Moritz—only to find the locks changed. When she called the servants, they wouldn’t let her in, saying they had instructions from Mr. Gucci not to allow her on the property. Patrizia called the police. When they determined that she and Maurizio were estranged, but not divorced, the police forced the locks and helped let her and the girls in.

  In the meantime, arbitration had started in Geneva to resolve the dispute between Paolo and Maurizio, though no solution had been reached before the next family board meeting in Florence in early February 1986. Aldo knew that Maurizio’s agreement with Paolo had fallen through. Now that his nephew was in a weaker position, he thought it might be the right moment to bring him around. Despite all that had happened between them, Aldo greeted Maurizio with a big smile and a hug, in the Gucci tradition of proceeding as though nothing had happened.

  “Son! Give up your dreams of being the big boss,” Aldo said. “How can you do everything alone, Avvocatino? Let’s work together.” He proposed Maurizio enter into a new agreement including both Giorgio and Roberto, with himself as arbitrator.

  Maurizio forced a smile; Aldo’s overtures weren’t to be taken seriously. He knew Aldo’s autonomy was limited. U.S. authorities had nearly revoked his passport over the tax case. On January 19, shortly before boarding a plane to Italy, Aldo had pleaded guilty in an emotional hearing in New York federal court to defrauding the United States government of $7 million in back taxes. Aldo admitted he had taken some $11 million out of the company through various devices, diverting the funds to himself and members of his family. Dressed in a double-breasted blue pin-striped suit, Aldo tearfully told Federal Judge Vincent Broderick that his acts didn’t represent his “love for America,” of which he had become a citizen and permanent resident in 1976. Aldo turned over a $1 million check to the IRS and agreed to pay the additional $6 million before sentencing. He faced up to fifteen years
in prison for the offenses and a $30,000 fine. Domenico De Sole had advised Maurizio it was almost certain that Aldo would have to go to jail.

  The family board meeting wound up without any major drama. Maurizio confirmed his accord with Giorgio, promising important jobs within the company to his sons. As Aldo left, he gave Maurizio a pointed message: “I admitted my responsibility [with regard to the U.S. tax issue] to save the company and the family. But don’t think that in those years my little brother Rodolfo had his hands in his pockets,” Aldo said, implying that Rodolfo also benefited from the arrangement. “I got myself in a mess to help everybody. I have a big heart.”

  Now that peace reigned in the family—at least temporarily—it was time to deal with Paolo again. After his pact with Maurizio had fallen apart, Paolo had gone back to his pet “PG” project. This time he went into production and brought out a prototype collection of bags, belts, and other accessories that he launched with a big party in Rome that March at a private social club. In the middle of the festivities, judicial police burst in and sequestered the collection as the guests jumped for caviar tarts and a last glass of champagne. A furious Paolo knew who had sent the unwelcome visitors—Maurizio.

  “Maledetto! You will pay for this!” Paolo, dressed in tails and holding a glass of champagne, yelled out to no one in particular. Paolo was desperate. His legal bills amounted to hundreds of thousands of dollars. He hadn’t earned a salary in years. His Gucci stock wasn’t yielding anything despite the company’s healthy profits because Maurizio had voted through a proposal not to distribute dividends, but to deposit them as reserves to help finance his grand plan. Paolo, forced to give up his home and offices in New York, had returned to Italy. And now Maurizio had ruined his party. He threatened to go to the authorities, but Maurizio paid him no heed.

  While Paolo plotted his punishment for Maurizio, he won his revenge against his father, who was sentenced in New York on September 11, 1986. Paolo made sure the press turned out in force, cameras flashing, for the event by calling all the reporters he could think of the day before. In a tearful plea for clemency before the court, Aldo said in halting English, “I am still very sorry, deeply sorry for what has happened, for what I have done, and I apply for your indulgency. It won’t happen again, I assure you.”

  In a breaking voice, he told the court he forgave Paolo, and “anybody who wanted me here today. Some members of my family have done their duty and others have the satisfaction of revenge. God will be their judge.”

  His attorney, Milton Gould, tried to save the eighty-one-year-old Aldo from going to jail, arguing that sending him to prison “would probably be a death sentence.” But Judge Broderick had already made up his mind. He sentenced Aldo to a year and a day in prison for evading more than $7 million in U.S. income taxes.

  “Mr. Gucci, I am persuaded that you will never commit another crime,” Broderick said, noting that Aldo had already suffered “considerable punishment” from the publicity surrounding the case and from the consequences for his business. “I recognize that you are from another culture where our voluntary system of assessment of taxes does not pertain,” Broderick said, but he explained he felt compelled to send a strong signal to other would-be tax evaders. Aldo received the jail sentence on one count of conspiracy to evade personal and corporate income taxes, as well as three years each on two counts of tax evasion, to which Aldo had pleaded guilty in January. The judge suspended the sentence on the two tax counts, instead ordering Gucci to serve five years of probation, including a year of community service.

  Broderick allowed Aldo to remain free until October 15, when he was admitted to a federal detention center in Florida at the former Eglin Air Force Base in the Florida panhandle. The judge had said it wasn’t his intention to strain a man of eighty-one years. To the displeasure of its warden, a Mr. Cooksey, Eglin was nicknamed “The Country Club Clink” for having facilities that made it sound more like a Club Med resort than a prison. The facilities included courts for basketball, racquetball, tennis, and even bocce, an old Italian game similar to bowling played with wooden balls on a narrow dirt court. There was a softball field equipped with night-lighting, a soccer field, a running track, and even a volleyball court on the beach. The recreation building featured pool and Ping-Pong tables, television, and a bridge club; there were even two horseshoe pits, and inmates could subscribe to newspapers and magazines. For a while Aldo was even allowed a telephone in his room, although his wardens later suspended the privilege because he spent all his time talking on the phone.

  Even from jail, Aldo made his presence felt back in Florence, where his letters and telephone calls became part of company lore.

  “Dottor Aldo?” said Claudio Degl’Innocenti in disbelief the first time he picked up the ringing telephone on his desk in the Scandicci plant to hear Aldo’s jovial Tuscan accent on the other end of the line. “Aren’t you supposed to be in jail?”

  “He used to call all the time,” recalled Degl’Innocenti. “He had a crush on a girl who used to work with me and he would always call to talk to her.”

  Aldo also kept in touch with the home front through letters that showed he was making the best of life in jail and thinking actively about springing back into action as soon as he was released.

  In December 1986, he responded to a letter from Enrica Pirri, the former saleswoman he had hired in Rome more than twenty-five years earlier. “My dear Enrica…I am glad to be here because I am finding it incredibly restful, both mentally and physically,” he wrote, his flourishing script dashing across the page. Aldo added that his family was urging him to resume “his post” at Gucci that he had been “forced to abdicate.”

  “The image of Gucci has been undone in the hands of those who can’t seem to maintain the pace,” he continued. “Sto benissimo, I am doing great and it will be a surprise for all, i buoni e i cattivi—the good and the evil—when…I will return among you,” Aldo concluded.

  After five and a half months at Eglin, Aldo was transferred to a Salvation Army halfway house in West Palm Beach where he was required to perform community service in a local hospital during the day. Paolo claimed he felt no remorse at the news of his father’s jail sentence, though his wife, Jenny, later revealed that privately he was mortified.

  Despite Maurizio’s conflicts with Aldo, the fate of his uncle saddened him. He didn’t think Aldo deserved what had happened to him. “If they had killed him, he would have suffered less,” Maurizio said. To keep Aldo far from his company, in one place, after a life lived dashing around the world, was punishment enough.

  Aldo’s circumstances only made Paolo more determined to get his revenge against Maurizio, who he felt had cheated him. On his desk in Rome, where he had set up operations, he spread out an array of documents describing all the offshore companies in the Gucci empire, including photocopies of bank accounts and a detailed description of how Maurizio had bought the Creole by using funds diverted through the Panama-based Anglo American Manufacturing Research, Rodolfo’s creation. Paolo sent copies of the dossier to everyone he could think of: the Procuratore Generale, or the chief prosecutor of the Republic of Italy; Italy’s fiscal police, Guardia di Finanza; the tax inspection office, the Ministries of Justice and Finance, and four of the country’s then-leading political parties. For good measure he sent his material to the Consob, the Italian stock market watchdog agency equivalent to the SEC. In October, Florence prosecutor Ubaldo Nannucci summoned Paolo, who told him everything he knew. The repercussions for Maurizio were immediate.

  While Maurizio was in Australia following the Italia, investigators burst in the door of his Milan apartment in Galleria Passarella. Patrizia, who was at the Paris Ritz on a shopping spree, heard the news from a friend who was staying with the two girls, who were then aged five and ten. The girls were about to leave for school when five investigators burst in with a warrant to search the house. They even followed Allegra to her school, the Sisters of Mercy, later that morning, shocking the mother superi
or and demanding to see some drawings she had taken in her satchel. The investigators also searched Maurizio’s offices on Via Monte Napoleone.

  Meanwhile the papers that Aldo and his sons had filed against Maurizio over the summer were also making their way through the Italian judicial system. On December 17, 1986, Milan prosecutor Felice Paolo Isnardi issued a request to once again sequester Maurizio’s 50 percent stake in Gucci. Maurizio knew it was going to be more difficult than he had ever imagined to realize his dream of turning Gucci into a topflight competitor in the luxury goods market. He had to move quickly, before Isnardi’s request was granted.

  9

  CHANGING PARTNERS

  Dottor Maurizio! Venga subito!” cried Maurizio’s loyal driver, Luigi Pirovano. Luigi had burst into the offices of Giovanni Panzarini, one of Milan’s leading civil lawyers, where he had finally found Maurizio after searching for him around downtown Milan for more than an hour. Maurizio, chatting with his consultant, Gian Vittorio Pilone, and Panzarini around an antique wooden conference table, looked up in surprise at Luigi’s alarmed voice and saw the worried look on the face of the dark-haired, mustached driver. Seeing his calm, steady-going Luigi so upset, Maurizio knew something was very wrong.

  “Luigi?” Maurizio said, rising from his chair in concern. “Cosa c’è…?”