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Giovanni Agnelli, 81; Fiat Group Patriarch Had a Powerful Effect on Politics and Life in Italy

January 25, 2003|Tracy Wilkinson | Times Staff Writer

ROME — He was often called Italy's uncrowned king, the erstwhile playboy who wielded unparalleled power and fortune as he transformed his family car business into one of the largest industrial empires in Europe.

Giovanni Agnelli, glamorous patriarch of the Fiat auto conglomerate and an icon in Italian social and cultural history, died at his home in Turin after a long battle with cancer, his family said Friday. He was 81.

The exact time of Agnelli's death was not announced, but the Italian news agency ANSA reported that a priest was called to the family estate late Thursday to administer last rites. Agnelli had sought treatment in the U.S. for prostate cancer twice in the last year.

A snowy-haired multibillionaire of grand style, joie de vivre and bare-knuckle boardroom acumen, Agnelli also played a key behind-the-scenes role through decades of turbulent Italian politics.

He came to embody Italy's postwar economic renaissance, catapulting Fiat Group into the largest private employer in the country, acquiring sexy car maker labels such as Ferrari and Alfa Romeo to dominate domestic production, and expanding the business into new and diverse fields including soccer clubs, newspapers and vermouth.

But even before Agnelli's health began to decline, Fiat's fortunes were fading. Its auto division last year posted operating losses of $1.5 billion and overall group losses were around $2 billion, double the previous year. Three major Italian banks had to step in to help the company pay its mounting debts; the stock price plummeted and 8,000 jobs -- a fifth of Fiat Auto's work force -- were slashed.

Agnelli's death was announced on the day some 70 members of the family were gathering to discuss the company's future. The meeting went ahead as planned and shareholders released a statement later Friday announcing that Agnelli's younger brother, Umberto, 68, will take over.

More long term, however, the future of the group remains cloudy. Members of the family have been at odds in recent years over how to salvage sagging profits.

Stock prices rose initially on news of Agnelli's death. Umberto is thought to be more willing to oversee a restructuring of the company and perhaps to sell off the troubled car division -- something Giovanni had resisted, in part out of sentimentality.

"Fiat without cars was unthinkable for him," former Fiat Chairman Cesare Romiti said Friday.

General Motors Corp. has been mentioned in a possible takeover scenario. GM already owns 20% of Fiat and, under a March 2000 agreement, may be required to buy the remaining 80% after 2004. Several other top industrialists and even Italian Prime Minister Silvio Berlusconi have been mentioned as potential bidders for control of Fiat.

The Agnelli family is also faced with its own succession dilemma. Giovanni was known to have favored the accession of his grandson, John Phillip Elkann, who is only 26.

The man who had been groomed to be the heir -- Umberto's son, Giovanni Alberto, 33 -- died of a stomach cancer in 1997. The elder Agnelli's only son, Edoardo, who never showed any interest in taking over the business, committed suicide three years later by jumping off a highway overpass.

With Giovanni Agnelli gone, the restructuring of Fiat may be accelerated and the ironclad family control diminished, analysts say. In some respects, Fiat under the elder Agnelli was becoming anachronistic, a holdover of unwieldy family-owned businesses that are slow to adapt to foreign competition and the global economy.

As important as Fiat is to Italy's economy, Agnelli's death deals a psychological blow to Italians, who say no other post-World War II figure had more influence in their nation. "He was a father figure for the country," said Franco Pavoncello, a political scientist at John Cabot University in Rome. "He started when very young and turned his company into a global reality. He is fundamentally associated with the industrial transformation of this county and yet is tremendously respected across the board. He was the true spokesman for Italy."

As a sign of Agnelli's political influence, Pavoncello noted, it was crucial for Berlusconi -- plagued by numerous corruption scandals -- to earn the elder tycoon's stamp of approval when he sought the premiership in 1996. In exchange, Berlusconi named a Fiat executive as his foreign minister.

By most accounts, Agnelli benefited from government protection. He is reported to have discouraged government investment in public transportation, enhancing a national dependence on private cars, while the state kept tight quotas on Japanese imports throughout the 1990s.

As a young man, Agnelli drove race cars, frolicked on the Italian Riviera and built palaces in the Alps. An aristocrat, he was the son of a princess and married one too. That didn't stop him from a string of well-publicized dalliances with some of the last century's most glamorous socialites, including Rita Hayworth and "La Dolce Vita" star Anita Ekberg.

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