Giancarlo Parretti's tenure as chief executive of MGM-Pathe Communications Co. may have ended with his forced resignation last week, but new details of his bizarre business dealings continue to surface even as the beleaguered movie studio struggles for survival.
The latest characters to emerge as players in the MGM story include a possible CIA operative, a mysterious Italian businessman accused of fleeing the country with $500,000 that was set aside for the studio purchase, and several members of the secretive Knights of Malta.
The group came together as Parretti scrambled to secure the final $210 million needed to complete the MGM purchase last October, according to Washington court records and parties to the discussions. Sources say Parretti acted out his own variation on "The Desperate Hours" as the deadline for closing the much-delayed $1.4-billion deal bore down.
Those recruited for the emergency fund-raising effort included Italian businessman Nino L. Sanna, who has been linked to the disappearance of the $500,000; Joe Kelso, a self-styled financier with reported ties to the CIA, and members of the Knights of Malta, O.S.J, a New York organization unrelated to the 11th-Century order of knights affiliated with the Vatican.
The financing plan was supposed to return big dividends to Parretti's partners. While it ultimately collapsed, the convoluted deal illustrates how far Parretti went to gain control of MGM. It also helps explain why the troubled studio slipped through his hands just six months later.
Sources say Parretti's dealings have become the focus of a Securities and Exchange Commission investigation. At least one individual close to Parretti has been asked to provide extensive information to the commission. And while there have been no accusations of wrongdoing, sources say Parretti's eleventh-hour loan discussions are part of the probe.
People close to those discussions say Sanna served as the catalyst to the negotiations that consumed much of last October. The Italian businessman reportedly introduced Parretti to Prince Arnaldo Petrucci,leader of a New York-based Knights of Malta chapter.
Parretti was subsequently admitted to the Catholic charitable group in a church ceremony followed by a lavish reception. The executive reportedly made a sizable donation to the organization in return for the knighthood. But, according to a close associate, Parretti was unaware that the New York knights were unrelated to the more august, ancient order in Rome.
Shortly before the induction, Petrucci and an associate introduced Sanna to attorney Donald O. Clark at a private luncheon. The four discussed Parretti's search for funds, and Clark shortly afterward introduced Sanna to Kelso, according to undisputed claims in a lawsuit filed against Clark's law firm by Melia International, a Dutch firm controlled by Parretti.
Petrucci and Sanna could not be reached for comment, and Clark declined to discuss his dealings with Parretti. Several people who met Kelso have said they believe him to be the same Joe Kelso named in a Penthouse magazine story last November as a sometime associate of the CIA and who surfaced briefly in Oliver North's diary.
Kelso, who now lives in the Western United States, confirmed the details of the story as they pertain to him in a recent interview. He said he remains in the financing business.
Documents filed by Melia show that Parretti entered into a financing agreement with Kelso on Oct. 17. Under the terms of the written agreement, Parretti granted to Kelso a security interest in 32 million shares in various companies, in exchange for Kelso finding the $210 million in financing. The stock was valued, according to Parretti's own court submissions, at $290 million and included 10 million shares in MGM/UA Communications and another 10 million in Pathe Communications.
Kelso was to receive $10 million for his services, according to the agreement. A separate document signed later and filed with a Cook Islands court by Century Insurance Ltd.--which was to bond the Kelso deal, and whose chairman, Donald Davies, was doing business with the Knights of Malta--shows that Parretti sealed his deal with a written promise to the fraternal order.
On Oct. 24, the talks moved ahead as a small group of deal makers sat impatiently around a conference table at 95 Wall St. in the New York offices of Credit Lyonnais, the European banking giant that served as Parretti's chief lender in the MGM deal, sources say.
Parretti stopped in briefly at about 7 p.m. and then took off. Half a dozen bankers and others stayed, waiting for the delivery of the $210 million that, along with other funds raised by Parretti, would allow him to take control of MGM.
Parretti already had raised more than $1 billion of the financing through a patchwork of Credit Lyonnais loans; sales of film rights to Turner Broadcasting System, Time Warner Inc. and others, and transactions with his European affiliates that have yet to be fully disclosed.