GIOVANNI AGNELLI, PATRIARCH OF FIAT AUTO, DIES AT 81

New York Times
By John Tagliabue
January 24, 2003

TURIN, Italy, Jan. 24 — Giovanni Agnelli, the patrician head of Fiat who turned the family auto business into an international conglomerate and helped industrialize postwar Italy, died this morning at his home here, his family said in a statement. He was 81 and had been fighting debilitating illness from prostate cancer for months.

With a fortune estimated at more than $2 billion, Mr. Agnelli ran Italy's largest private business so well that he became a symbol of Italy's postwar renaissance. Italian governments came and went, but Mr. Agnelli, as Henry Kissinger once remarked, remained Italy's "permanent establishment." His workers had a slogan, "Agnelli is Fiat, Fiat is Turin, and Turin is Italy."

The president of Italy, Carlo Azeglio Ciampi, said the death left "a large vacuum on the Italian stage," adding that Mr. Agnelli, a close friend, had been, "for more than half a century, one of the protagonists of the history of our country, expressing in every critical moment the fundamental values of the national character and identity."

In keeping with his philosophy that a company must grow or die, the activities of Fiat — founded by his grandfather and namesake as Fabbrica Italiana Automobili Torino in 1899 — extended to banking, insurance, real estate, chemicals, aerospace, telecommunications, defense electronics and armaments, candy bars and vermouths. Its publishing interests included La Stampa, a leading Italian daily newspaper. Fiat's 10 major divisions included hundreds of companies, with almost 200,000 workers.

But in recent years Fiat, and most notably its core automobile business, had fallen on hard times. Indeed, Mr. Agnelli died only hours before a crucial meeting of the closely held family company, Giovanni Agnelli & Compagnie, through which the family controls its broad investments. The meeting was called to discuss plans to spin off the auto division from the Fiat group. Mr. Agnelli died only hours before about 70 family members, in a brief meeting, named Mr. Agnelli's younger brother Umberto to succeed him as head of the family company.

Mr. Agnelli was in treatment in recent months for prostate cancer, and his ability to influence the affairs of Fiat had been increasingly diminished.

Mr. Agnelli was daring in expanding Fiat's image and outlets in other countries. Despite some criticism at home and abroad, Fiat built the huge Togliatti plant in the former Soviet Union that became the linchpin of Soviet auto production. The plant opened in 1970.

"We did not make any money in the deal, but there were lots of other benefits," he said later. Besides gaining Fiat worldwide prestige for completing the $800 million project, Mr. Agnelli said, "what we like best of all, however, is that a very large number of cars rolling in Russia are Fiats."

In another bold international move, Mr. Agnelli sold 10 percent of Fiat to Libya in 1976. Mr. Agnelli defended his action to obtain money for the company, which had suffered several bad years, with his usual directness.

"The only offer for investment in Fiat came from Libya," he said. "And in my view, the recycling of petrodollars from the oil-producing states through investment in European business is useful. It is certainly better than having Libya use its money for other purposes."

After the sale was negotiated, Mr. Agnelli and Col. Muammar el-Qaddafi, the Libyan leader, met in Moscow. Critics accused Mr. Agnelli of bolstering both the Soviets and Colonel Qaddafi through a triangular deal that had the Libyan leader put up petrodollars with which the bankrupt Soviet leadership could strengthen its automotive industry by acquiring Fiat technology.

Mr. Agnelli always denied that this was the case. But under Western pressure he gathered the money to buy back Colonel Qaddafi's Fiat shares in a financial transaction that stirred additional controversy, since it caused immense losses to several western banks while providing the Libyan leader with a huge gain on his original investment.

Mr. Agnelli was a leader in trying to organize European industries to compete on a worldwide scale while providing some protectionism for local business from Japanese and American producers.

He acted from personal knowledge, because the company's automotive division, once Fiat's major moneymaker, was hard hit by the appearance of Japanese cars in Italy in the late 1970's and suffered three years of losses before turning a profit again in 1981. Fiat's steel division also lost hundreds of millions of dollars.

But Mr. Agnelli stuck it out in the automobile business, despite its ups and downs, and in the early 1990's Fiat weathered another major crisis when an aging product line and a severe downturn in European car sales produced further heavy losses and large debt. But by 1994, Fiat was on the way to recovery and had embarked on a new wave of expansion. Nonetheless, the need to raise large amounts of fresh capital forced Mr. Agnelli to overhaul the way Fiat was run, allowing greater influence to corporate investors from outside the family, indeed from outside Italy.

The crisis of the early 1990's was exacerbated by a wave of anticorruption investigations that swept Italy. Mr. Agnelli was forced to acknowledge publicly that Fiat had paid $35 million in bribes over a 10-year period. Moreover, his managing director, Cesare Romiti, was under investigation together with a slew of other high-ranking Fiat executives. Mr. Agnelli asserted that he had known nothing of the irregularities, and his reputation remained largely unsullied.

Mr. Agnelli believed that European businesses had to merge to be able to compete, and he negotiated many deals with other companies for the joint production of basic equipment. Though Fiat automobiles failed to gain acceptance in the United States, this was largely offset by success elsewhere, most notably in Latin America and Eastern Europe. 

After the collapse of Communism there, Fiat moved quickly to expand in Poland and the rest of Eastern Europe.By the late 1990's, the auto business again became unprofitable, as Fiat relied excessively on small cars and its models failed to compete with strong European and Japanese competition, prompting management to develop plans to spin off the automobile business into a separate company and bring in fresh investors from outside the family. Mr. Agnelli was said to resist any outright sale of Fiat Auto. And indeed, Fiat's share price rose more than 5 percent on the Milan exchange this morning, as investors appeared to believe that resolution of the car business's fundamental problems would be simplified.

As economic difficulties mounted, the younger generation of Agnellis was painfully reduced. Mr. Agnelli's only son, Edoardo, committed suicide in 2000; three years earlier, a nephew, also named Giovanni, and considered a likely candidate to succeed Mr. Agnelli as head of the clan, died of cancer.

A tall man with a handsome Roman profile flair for living and leadership traits, Mr. Agnelli, who was called Gianni by friends, was admired for his elegant combination of business, social, political and artistic acumen.

In his younger days, before he assumed control of Fiat, Gianni Agnelli was known as a jet-set playboy who favored beautiful women (he dated, among others, the Swedish actress Anita Ekberg and Pamela Churchill Harriman), large yachts and trips to St. Moritz, the French Riviera and New York.

But his standing in international society was enhanced in later years on his wide range of friends — who included the Kennedys and the Fords in the United States, the royal houses of Europe and members of the Soviet Politburo — and on the almost royal way he and his wife, Marella, lived.

Mr. Agnelli was known to finish a day's work in Turin, where Fiat is based, jump into his personal jet and fly to dinner in London. He was as familiar in Detroit and New York as he was in Rome and Paris.

He was an avid art collector, and his homes were studies in elegant living. He was also a devotee of skiing, horses, sailing and fast cars. Soccer was a passion, and he followed closely the successes of Juventus, the Turin team that he owned. Games between Juventus and Milan A.C., which was owned by the tycoon-turned-politician, Silvio Berlusconi, now the Italian prime minister, were looked on by Italians as contests between competing financial empires.

In the late 1970's, Mr. Agnelli was even mentioned as the leader of a new political party in Italy, a third force to break the deadlock between conservative Christian Democrats and Communists. 

The idea fell through, but he was later appointed a senator for life, and a sister, Susanna, was mayor of Argentario in Tuscany and later minister for foreign affairs. Members of the family could campaign on the slogan that no one could corrupt an Agnelli since an Agnelli already had all the money and power a person could desire.

In the late 1970's and early 80's the Agnellis and Fiat were shaken by the threat of political violence, as were all the rich and the powerful in Italy. Though none of the Agnelli family was harmed, 4 senior Fiat executives were shot dead and 27 were wounded. Mr. Agnelli was forced to move about under heavy armed guard.

In the early 1990's, senior Fiat executives were arrested in Italy's wave of anti-corruption investigations, and Mr. Agnelli admitted that company managers had been caught up in the corruption, though he denied personal involvement. In the period of political uncertainty that followed the collapse of Italy's postwar political class, Mr. Agnelli's behind-the-scenes influence on events was considerable, if difficult to calculate precisely.

When an early effort by Mr. Berlusconi to enter government and inaugurate a new era in Italian politics failed, and the Italian lira came under intense speculative pressure, Mr. Agnelli was instrumental in reassuring foreign markets and getting a former central banker, Lamberto Dini, appointed prime minister. Susanna Agnelli became foreign minister in the new government.

Giovanni Agnelli was born on March 12, 1921, in Turin, the son of Edoardo Agnelli and Princess Virginia Bourbon del Monte di San Faustino.

As the eldest son of the family that owned Fiat, Mr. Agnelli began life with an assurance of the finest opportunities before him. But his young life turned out to have tempering events. When he was 14, his father was killed in a plane crash. In 1945, his mother was killed in an automobile accident.

In 1943, despite the pleas of his grandfather, Mr. Agnelli, who had just received a law degree at the University of Turin, joined the Italian Army. He served as a lieutenant on the eastern front, in Russia, and in North Africa, was wounded and then demobilized. He rejoined the army after Italy's surrender to the Allies so that he could help drive the Germans from his country.

After the war he effectively surrendered the running of Fiat to Vittorio Valletta, an iron-handed manager who served 22 of his 46 years with Fiat as its chairman.

Mr. Valletta, whose paternalism was unbounded, dismissed 2,000 workers between 1957 and 1959 for contemplating union activity. But in the period that came to be known as "the regency," he rebuilt the company from wartime destruction, giving Fiat workers housing complexes, medical benefits, retirement homes and even nursery schools for the children of working mothers. In Turin, Fiat was known as "La Mamma.

"Mr. Agnelli, meanwhile, helped by an income of more than a million dollars a year and immense personal charm, concentrated more on the sweet life than on business. In 1952, he was nearly killed when, traveling at high speed, his Ferrari struck a meat truck along the corniche, above Monte Carlo. It was, he said later, the jolt that changed his life.

One year later, he married Marella Caracciolo di Castagneto, a Neapolitan princess and former Vogue magazine photographer, and became vice president of Fiat.

Mr. Agnelli is survived by his wife, his daughter, Margherita Agnelli de Pahlen, and eight grandchildren.

In 1959, Mr. Agnelli took over the family holding company, Istituto Finanziario Industriale as chairman. Four years later, he was managing director of Fiat. And in 1966, he became president when Mr. Valletta retired. His personal wealth was put at $1 billion, but his financial influence went far beyond. Directly and indirectly, Mr. Agnelli controlled more than one-quarter of the Italian stock exchange, or around $25 billion worth of quoted companies, a control unparalleled on any world stock market.

The change was startling, except for those who realized that Mr. Agnelli, on several trips to Detroit, had become an admirer of the modern methods of American auto makers, who were then in their gravy days.

Quickly reversing Fiat's shoddy reputation, Mr. Agnelli introduced new and larger cars to the European public and quickly overtook Volkswagen as the continent's largest seller.

He began to bring in a new generation of managers and to diversify. It was the diversification that saved Fiat when the automobile business was turned upside down by the effects of oil price increases and the boom in fuel-efficient cars made in Japan.

The pace of diversification accelerated after Paolo Fresco, a longtime friend of Mr. Agnelli and former vice chairman of General Electric in the United States, joined Fiat as chairman in 1998.

A pupil of John F. Welch Jr., G.E.'s former chairman, Mr. Fresco obtained Mr. Agnelli's approval to link Fiat's car division in March 2000 with General Motors in a share swap with a provision that enabled Fiat to require G.M. to acquire all of Fiat's car business after 2004. That led many observers to believe that Fiat was finally about to exit the family's traditional core automobile business, though Mr. Agnelli was said to resist the idea.

In recent weeks, as Fiat Auto's fortunes foundered and losses accumulated, Mr. Fresco and his advisers developed plans to spin off the auto division and attract fresh investors in a move that would probably weaken or limit the Agnellis' grip on the business. In meetings in New York last week, Mr. Fresco outlined the plans to senior executives of General Motors.

Through all the ups and downs, Mr. Agnelli never lost his basic optimism and trust in Italians. In a letter to The New York Times in 1978, at the height of the terrorist wave, he said, in words he might similarly have applied to the political and social turmoil of the early 1990's: "There is a strong determination to live and work in peace, and that determination is at least as strong as the destructive violence we are now facing.

"If we have had our Borgias, we have had our St. Francises as well — and millions of hard-working, law-abiding and good-natured people between them." 

Giovanni Agnelli, Patriarch of Fiat Auto Company, Dies at 81 
http://www.nytimes.com/2003/01/24/obituaries/24CND_AGNE.html?pagewanted=1