To the Bitter End

A mother sues her children. Billions of euros are at stake. Then offshore accounts turn up. How a dispute over the inheritance of the Italian Agnelli family of Fiat is shaking up the car industry.

Translation from German of the article posted by DIE ZEIT on 24.11.2022,

https://www.zeit.de/2022/48/fiat-agnelli-familie-erbstreit

An assault with automatic weapons – just over an inheritance dispute? Shortly before Christmas 2020, a dark Lancia and a silver Fiat 500 with Italian number plates stopped in front of a private detective’s house in the posh Swiss resort of Gstaad. The detective immediately recognised the three figures in the cars; they had already attacked him in a multi-storey car park a few days earlier.

The first figure, in a dark suit, was the leader. The only one who said anything. He grabbed the detective, punched him in the left eye, nose and stomach. He pressed the detective’s head against the side window of the Fiat, so that he could see the thing on the passenger seat: a RAK-63 rapid-fire gun, with 25 bullets in the magazine.

Then the second stranger pulled out a gun, probably a Makarov, waved it, pointed it first at the detective’s temple, then at his neck and chin.

The third attacker held a knife to his throat. As he did so, the leader warned the detective in broken German that he would have to stop his investigation or he would not live long. This is how the victim described the assault in his statement to the Bernese Oberland Regional Police. Then, according to the interrogation report, he said that the three were not ‘amateurs’, but people ‘used to acts of violence’.

The detective was part of the team investigating an unprecedented inheritance dispute in Europe. At its core is one of the world’s most enigmatic and influential industrialist families: the Agnellis. The family made the car manufacturer Fiat great, and Fiat made the family rich, incredibly rich. When Gianni Agnelli, the patriarch of the family, died in 2003, he left behind a billion-dollar fortune that is difficult to estimate: shares in Fiat, Ferrari, Maserati and Juventus F.C.. He also left a huge art collection with originals by Paul Klee, Claude Monet, Pablo Picasso, as well as palaces and villas in Italy.

All this was inherited by Gianni Agnelli’s wife, Marella, and their only daughter, Margherita. His wife, in turn, bequeathed part of this fortune during her lifetime not to her daughter, Margherita, but to Margherita’s son, John Elkann, now president of Stellantis, one of the world’s largest car companies. The Agnellis have been feuding ever since. Even after the death of their mother Marella in 2019, the dispute continues. Because the daughter believes she has been deceived – by her own mother and her own son. One could also say that madness reigns in this family and there is no end in sight to the conflict.

Family friends included John F. Kennedy and Truman Capote.

This inheritance dispute concerns no less than EUR 4.6 billion, as claimed by the daughter in court in Turin. The last statements were made by the parties there at the beginning of November. Margherita Agnelli filed a suit against John Elkann, as well as his brother and sister, her children of her first marriage. Margherita also initiated legal proceedings against her children in Geneva.

DIE ZEIT’s research now shows that offshore accounts were also involved in the management of the family’s assets, and that even the closest relatives were apparently unaware of their existence for a long time. Money was transferred from unknown funds. There are also doubts about the Swiss residence of a family member. DIE ZEIT analysed court documents relating to the dispute, documents from trade registers, minutes, investigation files, supplier invoices, and flight data of private jets and helicopters. Names of dead people whose company used to be part of a billion-dollar deal even appear in the documents. All this shows how precarious the foundation is on which the billionaire family established its legacy – and with it its peace.

If the daughter Margherita wins the case, 2023 could be the year in which the Agnellis’ wealth will have to be redistributed. This would also affect the ownership of the car company Stellantis, which owns Fiat. But not only that. Shockwaves would also hit Ferrari, Iveco, Juventus Turin, the Italian newspaper La Repubblica, and the publishing group of the economic newspaper The Economist. The Agnellis are involved in all these companies.

What the private detective from the Bernese Oberland wanted to ascertain could be decisive in the legal battle between Margherita Agnelli and her children. The point of interest is a chalet in Lauenen, an ordinary village not far from Gstaad.

While the rich of the world meet in Gstaad in the summer for the Polo Gold Cup, those who work there live in Lauenen. Of all places, Marella Agnelli, the company’s patriarch’s wife, was officially registered as living in the chalet at Grünbühlstraße 6. The question the detective had to answer was: Did she really live there? Did Marella Agnelli, who had furnished villas and well-groomed parks in Turin, Piedmont and Marrakech, really have her centre of life in a narrow Swiss valley where there are hardly any inns and the grocery shop only accepts credit cards for amounts over ten francs?

Or did she actually live in Italy?

The answer to these questions is crucial in the inheritance controversy. But more on this later.

There are few industrialist families that were as important in the post-war period as the Agnellis. Some other business dynasties also became very rich during that period. In Germany and Austria, for example, the Porsches, the Piëchs of Volkswagen, the Quandts of BMW. But the Agnellis became extraordinarily rich. And their wealth was visible for miles around. Gianni Agnelli, the patriarch, wore a Rolex above his shirt cuff, would fly over the Alps in the morning in a private helicopter to go skiing, in the afternoon he would jump out of the helicopter to go swimming in the Mediterranean. His yacht Agneta was recognisable from afar due to its mahogany hull.

Gianni Agnelli was only 14 years old when his father died in the crash landing of his seaplane near Genoa. From then on, the half-orphan had the full attention of his grandfather, Fiat founder Giovanni Agnelli. At only 22 years old, Gianni was appointed to the company’s supervisory board. In 1945 he met Marella Caracciolo di Castagneto of a noble Neapolitan family. She was 18 years old, he was 24. They married in 1953 in the castle of Osthoffen in Alsace.

For a long time, Gianni and Marella Agnelli’s life seemed like a never-ending party. They did not always dance closely together, though. While the Fiat executives worried about making money, the two worried about spending it. They enjoyed their summers in a baroque palace in Piedmont. They were already jet-setters when ‘aeroplanes still had propellers instead of jet engines’, Der Spiegel once wrote. Their lives were spent at openings and art receptions, on their yacht in the Mediterranean, in Saint-Tropez, in New York. In St. Moritz they bought their friend Aga Khan’s chalet. Andy Warhol portrayed the two in his series of silkscreens. They collected art like other people collect postcards. At one point they had accumulated so many modern works by Jasper Johns, Robert Rauschenberg and Robert Indiana that they had an entire flat converted.

Margherita’s legacy: several villas, art and EUR 300 million fortune

The couple’s circle of friends included John F. Kennedy, Henry Kissinger, Truman Capote and Gunter Sachs. Queen Elizabeth II also met Gianni Agnelli. When Jackie Kennedy Onassis visited Gianni Agnelli in Italy with her daughter Caroline, the paparazzi flooded the world with photos of the President’s wife and the patriarch. It is said that the jealous John F. Kennedy then telegraphed his wife: ‘More Caroline, less Agnelli’. Rumours about the Agnellis’ affairs abounded and the ‘lawyer’, as the newspapers called him, took care to keep it quiet.

In 1954, their son Edward was born, followed a year later by daughter Margherita, the only two children of the glamorous couple. They were born into a world of plenty. The parents rarely devoted time to their children: too many dinners and trips to the Mediterranean. Edward and Margherita were mostly looked after by nannies.

The family’s life was full of drama. In 1997, a grandson of the patriarch Gianni’s died of cancer at the age of just 33. In 2000, Edoardo Agnelli, the only son of the company’s patriarch, was found dead under an 80-metre-high motorway bridge, with his car on top. A suicide, at least that’s what the death certificate read. Later, a relative was found pumped full of cocaine on the sofa of a transvestite in Turin. He survived despite a heart attack.

It was thought impossible that his daughter, Margherita Agnelli, could one day join Fiat. As a teenager, she became interested in the hippy movement, much to the disappointment of her parents, and later wrote poetry and started painting. In 1975 she married the American journalist Alain Elkann and their three children John, Lapo and Ginevra were born, today her opponents in court. In 1981, Margherita married again the French-Russian count Serge de Pahlen and five more children followed. Marella was anything but enthusiastic about her new husband. Daughter and mother only talked to each other about the most necessary things, says a person close to the family.

But these mother-daughter disagreements were nothing compared to the rifts that appeared soon.

On 24 January 2003, patriarch Gianni Agnelli died at the age of 81. This marked the beginning of a new era in the family, and the dynasty showed cracks. But for the moment, all of Italy had come to a standstill. The great man of the Italian industry received a state funeral. Around 100,000 people came to Turin to bid farewell. The funeral service was also attended by the then President of the Italian Republic Carlo Azeglio Ciampi and Prime Minister Silvio Berlusconi. German Formula 1 driver Michael Schumacher also expressed his condolences. A minute’s silence was observed in stadiums before matches in the Italian football championship, as recently in England after the death of the Queen. With Gianni Agnelli, not an industrialist, but a secret king of Italy died.

At his funeral, the daughter was still standing next to her mother. But by then the relationship between the two had already crumbled. A bitter fight over inheritance ensued.

John Elkann, the eldest grandson, was to become the company’s new strongman, as the old man had decreed. The shares in Fiat and the other companies were divided between his wife, daughter and grandson. The grandson got power. The widow and daughter got the money. But peace did not last long.

The widow and daughter had to agree on how to proceed. The patriarch’s empire was difficult for outsiders to fathom. So the first thing the daughter asked for was an inventory. She never received it, she claims. She saw no possibility of ascertaining the complex construct. So, on 18 February 2004, she signed an agreement with her mother in Geneva on the division of the inheritance. The agreement is eight pages long, plus several hundred pages of annexes. It lists her father’s possessions: the palaces, the art collection, interests in companies, some of them abroad.

The details of what Margherita would receive were to be worked out. Her new properties included: the flat in Palazzo Carandini in Rome – a magnificent building opposite the presidential palace, the baroque estate in Villar Perosa, the Agnellis’ country estate, Villa Frescot, the family residence near Turin. In addition, the daughter received part of the art collection with works by Francis Bacon, Gustav Klimt and Roy Lichtenstein, as well as hundreds of other works from the family estates. Then there is a fortune of EUR 300 million.

Add it all up and you get a legacy of around EUR 800 million, enough for dozens of lives. But was that all?

There were a few hiccups: because Marella’s mother got less on paper, she was granted the right to use the palaces and houses that had actually been assigned to her daughter for the rest of her life. Margherita therefore initially had nothing from the properties – and nothing from the works of art that were hanging there. From then on they belonged to her, but she was not allowed to remove them from the houses. And there was another thing that bothered her: as the supposedly advantaged party in the inheritance contract, she had pledged to pay her mother a pension of EUR 600,000 for life, month after month.

Finally, there was the Dicembre family company. It was the Agnellis’ treasure chest. Before the patriarch died, he, his wife, daughter and grandson John each owned about a quarter of the shares, but only the patriarch had voting rights. Through this company, they held 30% of the Fiat Group and shares in other companies. Whoever controls Dicembre also controls the family fortunes. It is therefore unclear why, when negotiating the succession agreement, the daughter agreed to sell her share to her mother, for EUR 109 million.

It was a lot of money, one reason being that Fiat was doing badly at the time. But the daughter was still not quite convinced about the matter. Not least because in this way she was renouncing her mother’s future inheritance. On the last draft of the contract with her mother, she wrote in her own handwriting: ‘I accept this contract for the sake of peace and tranquillity, to finally allow my father’s succession according to his request. But I make it clear that some figures do not correspond to reality in my eyes’. It does not take much imagination to see how the cracks in the family turned into deep rifts.

It all started when her mother, Marella, handed over the shares she had bought for EUR 109 million to her nephew John Elkann, on whose entrepreneurial acumen the late patriarch had already relied, soon after the purchase was completed – thus reducing the future inheritance of the children of Margherita’s second marriage. But something else awakened her daughter’s suspicions: when the EUR 109 million for the Dicembre share sale arrived in her account in spring 2004, the sender of the payment was not her mother, as she would have expected. The sender was anonymous. All she saw was that the money came from the Zurich branch of the US bank Morgan Stanley.

A foreign account? How is this possible?

The daughter knew nothing about this account. When she started investigating, two directors of the Swiss bank wrote to her: ‘We have received instructions from the account holder not to disclose any further details in connection with this payment’. At that point she was convinced she had been deceived. Somewhere, the daughter believed, there must be money that no one had told her about.

Private investigators, hired by the daughter, found more and more offshore companies.

So the conflict went to the next level. The daughter did something the company’s patriarch had refrained from doing all his life: she took the dispute outside the family and sued the bank to find out more about the origin of the millions. Apparently, the mother now feared for the entire inheritance contract and in turn sued the daughter to prevent the contract from being challenged. The daughter in turn hired lawyers and private investigators. They found more and more of the patriarch’s offshore companies with names like Calamus Trading or Springrest Inc. The daughter wondered who inherited all this,  since none of those companies were listed in the Geneva contract.

Finally, she discovered that the EUR 109 million for the Dicembre shares had been paid by an offshore company called Sikestone Invest Corporation, based in the British Virgin Islands, in whose account there was much more money. Members of the Agnelli family had been registered as beneficial owners. Later, that company was transferred to the mother. At this point, the daughter felt completely deceived.

The dispute had escalated and the daughter immediately stopped maintenance payments to her mother, who was now ill. ‘Monthly payments will be stopped,’ was the laconic answer from an employee on the phone when the mother’s employees asked if there had been an error in the transfer. Only when the mother came up with the idea of auctioning the artwork belonging to the family did the daughter resume payments.

On 23 February 2019, their mother died in Turin at the age of 91. Her grandchildren John, Lapo and Ginevra Elkann had long since taken over the shares in the family business Dicembre on paper – they could now also access them, with John Elkann holding the majority. Daughter Margherita Agnelli and the children from her second marriage inherited nothing from Marella. That day, Margherita was able to take possession of the palaces and residences, and part of the art collection: everything was now hers. But she was not satisfied.

Margherita Agnelli lives in a villa on Lake Geneva and has a fortune of over one billion euros. There is enough money for her and her five children from her second marriage to live without worries. These five, she always says, should be no worse off than John Elkann, his brother and sister from her first marriage, according to people close to the family. She worries about justice among her eight sons and daughters, she claims.

Is the daughter in the right? If you look at the declaration of the family company Dicembre in the Turin company register in February 2021, you come across something strange: the shareholders are not John Elkann, his brother and sister, who actually own the company, but his grandmother Marella Agnelli and two asset managers. The macabre thing is that all three had already been dead by February 2021. So, almost two years ago, there was no one in charge of the Agnelli assets on paper.

Offshore companies transferring money anonymously, a family company where dead people manage billions: all this is more than a comic episode in an operetta. It also raises legal questions.

Dicembre owns shares in another company called Exor through an intermediary company, it is ‘the money machine of the FIAT family of heirs’, according to the Neue Zürcher Zeitung. This company is listed on the Dutch stock exchange. The boss’s name is John Elkann. Through Exor, the family holds 14% of the shares in the Stellantis car group and interests in Ferrari, Iveco, Juventus Torino and The Economist.

However, can dead people own shares? And what does this mean for the Stellantis merger in January 2021, into which Fiat was absorbed?

The merger of Fiat-Chrysler with the PSA Group, which includes Peugeot and Citroën, changed the automotive industry. Should the shareholders in Dicembre have agreed? Were the dead allowed to have their say before the merger? DIE ZEIT sent the Elkann siblings a detailed catalogue of questions. The answers came from confidants of the siblings, who said that all decisions concerning the companies in which Exor is invested are made by Exor executives and not by the Dicembre company. In the meantime, John Elkann, his brother and sister are also registered with the family business in the commercial register – but only as of 8 July 2021, i.e. after the merger.

Margherita, the mother, is now taking legal action against these siblings in two courts simultaneously. In Geneva, she wants to annul the inheritance contract with her mother Marella, the widow of the patriarch. She is using a legal subtlety: she signed the document, but not in front of a notary. So it is not valid. Behind this is the claim that he did not know at the time how much additional wealth was hidden abroad. So she had renounced without knowing what she was renouncing. The confidants of the Elkann siblings claim that the contract complies with all provisions of Swiss law and is valid.

The turning point in the dispute could be the proceedings in Turin, where Margherita is also suing the children of her first marriage. The court heard the parties on 7 November. A decision is expected early next year. The mother’s statement of claim is something for friends of legal details. Again, it is about the inheritance contract she had concluded with her mother in Geneva. Again, she asks that it be declared invalid.

How often was Marella in her Swiss home? Nobody dares talk about this

In Turin, however, she used a different argument: Swiss law had been applied to the inheritance contract. However, as the mother did not actually live in Switzerland and had her centre of life in Italy, Italian law was to be applied – and the contract needed to be negotiated in Italy. The small but decisive difference in this case is that such inheritance contracts are not possible in Italy. If the court applied Italian law, the contracts could be declared invalid. The only daughter would then be entitled to half of her mother’s inheritance.

But she wants more: since the signature on Marella’s will is allegedly forged, the daughter also wants to attack the will.

Confidants of the Elkann siblings claim that this accusation ‘has no basis in fact’. Marella’s signatures in the will were authentic and had been made in front of two witnesses and a Swiss notary public who had confirmed their authenticity. Furthermore, Marella had been residing in Switzerland since the 1970s, first in St. Moritz and then in Lauenen. This was accepted by the authorities and the courts. Therefore, only Swiss courts had jurisdiction over the inheritance dispute. ‘And these courts will fully confirm the validity of the 2004 agreements and her will’. In fact, Margherita is only interested in revising her 2004 decision ‘because she is attracted by the increased value of the group’s assets’.

But if Margherita were to prevail against her children in court, the consequences would be enormous. EUR 4.6 billion would have to be redistributed. This is the figure that a 76-page expert report she commissioned attributes to the value of the holdings in the family business Dicembre. If she ended up owning half of the family business, this would not be without consequences for the automotive industry. Margherita would thus indirectly become an important shareholder in the Stellantis automotive group, which includes Fiat, Peugeot, Citroën, Alfa Romeo, Lancia, Maserati and Opel. Yet she has never distinguished herself as a woman with much interest in cars. The personnel issue would cause at least some agitation. In the camp of Elkanns’ confidants, it is said that Margherita’s demands ‘would have no effect on the management of the group of companies’, in other words: John Elkann would remain the boss.

Whether Margherita will succeed in proving that her mother Marella did not live in Switzerland also depends on the findings by the team for which the attacked detective investigated in Lauenen, the Swiss village that had been the official domicile of the patriarch’s widow, according to the civil register.

You reach Lauenen after a long serpentine drive through the Bernese Oberland. If someone has enough money, they can save themselves the trip and fly to Gstaad airport by private jet or helicopter. From there, they can reach Lauenen in a good quarter of an hour with a chauffeur service. The widow’s chalet is located at the top of a slope. From the terrace, you overlook the forest on the other side of the valley. Nothing special. In the last years of her life, the frail Marella depended on a walking aid. But the garden of her house is as steep as a ski slope. Strange. She supposedly lived here permanently? In a house that seems insignificant compared to all the magnificent family buildings?

She hardly spent much time there. This is the conclusion drawn by those who examined the list of plane and helicopter take-offs and landings attributed to the Agnellis. One of these lists is attached to the daughter’s lawsuit in Turin. The family used a Dessault Falcon private jet and, since 2016, a Bombardier Global 6000 and two helicopters. In the flight data of these aircraft, there is little information about take-offs and landings at Gstaad airport. On 4 July 2017, for example, the family helicopter landed at Gstaad. That the widow was present at that time is also suggested by invoices of over CHF 20,000 from a local pharmacy, which were probably paid by the widow’s employees in July and August 2017. The helicopter then took off for Turin on 30 August 2017. It is possible that the widow travelled to Lauenen by car. But given the life of luxury to which she was accustomed, a strenuous journey on Alpine roads is unlikely.

She probably spent much more time in Morocco than in Switzerland. In Marrakech, she owned the villa Ain Kassimou, built by a relative of the Russian writer Tolstoy. Ain Kassimou is a small paradise with palm trees, a swimming pool, jacaranda and citrus trees. “Some people like to look at gardens,” the widow wrote in an illustrated book about her gardens (The Last Swan). “I love to live them.”

Documents from the Moroccan immigration authorities, obtained by DIE ZEIT, show that she visited Morocco more than 40 times between 2001 and 2017. She often stayed for the whole winter. If one compares flight data, documents from the Moroccan migration authority, supplier invoices and employee work schedules, one can conclude that she commuted between Italy and Morocco – and hardly ever spent any time in Switzerland. Does this mean that the entire legal basis of the billionaire inheritance collapses?

Anyone looking for witnesses to answer the epochal question of how often the widow had stayed in Switzerland, always meets with the same reaction: silence. In his testimony before the Bernese Oberland Police Directorate, the private investigator said he had contacted several people to find out how often Marella Agnelli had stayed in Gstaad. No one wanted to talk. When someone was finally willing to talk, they backed out shortly afterwards. Later, the three figures ambushed the detective and beat him up. The police investigated the beating and the death threats. During the investigation, a carer of Marella Agnelli was also asked if she remembered where the patriarch’s widow had spent August 2018. “I don’t make statements,” was her reply.

As those who beat up the private detective in Gstaad could not be identified, the investigation against the unknown persons was suspended. Confidants of the Elkann siblings claimed they had never heard of the affair. The private detective told the police that he had drawn his own conclusions from his experience. He is now staying away from the case. Too dangerous. Life-threatening.