The National - News

A BRIDGE TOO FAR: WHEN THE STATE AND BUSINESS GET TOO CLOSE

▶ The tragedy in Genoa has reopened the debate about corporate ethics in Italy. Federica Marsi reports

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The names of Italy’s richest families – who represent 5 per cent of the population and hold more than 40 per cent of the country’s wealth – are known the world over.

From Nutella matriarch Maria Franca Fissolo, the widow of Michele Ferrero, to media tycoon and former prime minister Silvio Berlusconi and the Fiat car manufactur­er’s long-time leader Gianni Agnelli, the history of Italian capitalism is peppered with business titans. But external competitio­n and twists of fate may now be sapping some of the vital energy from these eminent clans.

Following the collapse of the Morandi motorway bridge in the coastal city of Genoa on August 14 that killed 43 people, another prominent Italian family, that of fashion entreprene­ur Luciano Benetton, has come under fire due to Benetton Group’s majority 30.3 per cent stake in the company managing Italy’s motorway system, Atlantia.

Gilberto Benetton is a director of the firm, which is publicly traded on the Milan Stock Exchange. From a six-month high of €28.28 on May 15, shares in Atlantia plummeted from just under €25 on August 13, the day before the bridge collapse, to €18.30 on August 16. They slid further to as low as €18.18 on Thursday.

After the disaster, there was a harsh rebuffal of the state’s family-centred approach. According to Andrea Billi, economics professor at Rome’s La Sapienza university: “Benetton surely obtained a preferenti­al treatment by the state.”

The concession awarded to the family is now under scrutiny for being skewed in their favour. Some social media users took to the internet to announce their intention to boycott the family’s fashion businesses as Benetton shares plunged more than 20 per cent.

For the country’s €790 billion (Dh3.37 trillion) worth of family-run businesses – according to figures by the Observator­y on Italian Family Business – the importance of reputation and lineage as key non-economic assets cannot be underestim­ated.

This was well understood by the Italian car manufactur­er Fiat, founded by Giovanni Agnelli in 1899 and managed by his grandson, Giovanni (better known as Gianni) from 1966 until his death in 2003.

“I think Gianni Agnelli was a symbol of Turin, and his disappeara­nce is mourned by all of us,” one of those who attended Agnelli’s funeral told state TV at the time.

After the Savoy crown in Turin was dethroned during the Second World War, the Agnelli family – which reigned over a newly born empire made of machinery and conveyor belts – took its place in the consciousn­ess of the people.

But, as Luiss University economics professor Fabiano Schivardi put it, Fiat is “an exception” in the Italian family-led business landscape in that it employs chief executives who are external to the family.

Its best-known outsider, Sergio Marchionne, appeared on the scene in 2004 when Turin was no longer the heart of Italy’s industrial renaissanc­e and Fiat was a shadow of its former self. When the global car industry was hit by the financial crisis in 2008, Fiat made a deal with the American company Chrysler.

“For many years, Fiat has been one of the main private employers in Italy,” Prof Schivardi tells The National. “There had always been a bargain between employment and state funds, but this model was no longer sustainabl­e in the face of expanding markets and foreign competitio­n.”

Fiat had received state funds, which kept production from relocating to countries with cheaper workforces. But as public debt rose, the state found itself no longer “in a position to issue state funds for big businesses any more”, Prof Schivardi says.

The Italian weekly Espresso said Fiat’s foreign investment­s were an indicator that long-time Italian businesses, “the backbone of Italy’s economy”, were moving far from home turf.

In July 2018, the unexpected death of Marchionne caused shares to plunge by 15 per cent and the company to lose a total of €6 million. The appointmen­t of new British chief executive Mike Manley has also prompted concerns the company will drift farther away from Italy.

If the Agnelli dynasty rose to become the symbol of Turin, another family – one headed by former prime minister Mr Berlusconi – made its mark on Italy’s fashion capital, Milan.

Back in the 1970s, the wouldbe real estate mogul launched a satellite city, Milano 2, marketed as a “Milan without the smog and the traffic”. Now 79, Mr Berlusconi is one of Italy’s richest men, his fortune listed as $7.48bn on the Bloomberg Billionair­es’ Index. His company Fininvest owns TV company Mediaset and Italy’s largest publishing house, Mondadori.

Alongside being one of the richest, Mr Berlusconi is one of the most controvers­ial. During his political tenure, he kept control of his media empire, laying himself open to accusation­s of conflict of interest. He was found guilty of tax fraud in 2013, but attempted a comeback at the national elections in March 2018.

For the first time since entering the political arena, Mr Berlusconi’s party ranked third in the centre-right coalition. The four-time prime minister, who led his party to hold the majority of seats for more than nine years, is the longest-serving politician to occupy this post.

In 2016, the family holding suffered its biggest annual loss of €120m due to foreign competitio­n, which it defined as “great damage”. That led the company to sell the Serie A football team AC Milan, helping to reverse its fate and end 2017 with a profit of more than €600m.

Succession is also a thorny issue affecting Mr Berlusconi’s legacy, as his offspring from his first marriage – Pier Silvio and Marina – are at odds with the offspring from his second marriage, Barbara and Luigi.

According to Prof Billi, “all these families face the great problem of passing on their business to the next generation”.

Prof Schivardi also says that “while Italy has been a closedoff capitalist­ic system since [the Second World War], the comminglin­g of family and state is slowly coming to an end”.

While the Benetton family defended its empire after the bridge collapse, some dynasties previously confronted with the prospect of their own downfall have embraced that possibilit­y.

When asked about the destiny of his empire, Enrico Cuccia, a significan­t figure in Italian capitalism who founded investment bank Medibanca an who died in 2000, gave a pragmatic answer: “The Roman empire ended, Mediobanca will end, too.”

 ?? Reuters; EPA ?? Alessandro Benetton and his company have been criticised after the collapse of the bridge in Genoa
Reuters; EPA Alessandro Benetton and his company have been criticised after the collapse of the bridge in Genoa
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 ?? AFP ?? Silvio Berlusconi, left, and Sergio Marchionne, the late Fiat boss: their relationsh­ip with the state came in for scrutiny
AFP Silvio Berlusconi, left, and Sergio Marchionne, the late Fiat boss: their relationsh­ip with the state came in for scrutiny
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