A new BBC documentary details how Giancarlo Parretti brought the Hollywood studio for $1.3bn, ran it into the ground then fled the US
: Wonderhood Studios/BBC
Giancarlo Parretti has a great story. The 82-year-old Italian businessman and accused fraudster says he bought MGM – the once mighty Hollywood studio known for its roaring lion emblem – after making a bet in a New York restaurant with the former US Secretary of State Henry Kissinger and the Italian industrialist Gianni Agnelli (once head of Fiat, Ferrari and Juventus FC). According to Parretti, he met the two men on Fifth Avenue by chance one lunchtime, during which the pair made a wager – Agnelli said Parretti could buy the movie studio if he wanted. Kissinger, laughing, said he couldn’t. They shook. The loser would buy everyone dinner. Parretti bought MGM for $1.3 billion.
“I never heard that story,” says Alex Yemenidjian, who was the chairman of MGM’s executive board at the time and was present every day of Parretti’s buyout. “If I was betting, I would bet against that story being true,” he adds. It sounds uncannily like the shady millionaires’ wager from the Eddie Murphy and Dan Aykroyd comedy Trading Places. Not that Parretti would know that. He clearly knows very little about movies.
As detailed in the new BBC documentary The Man Who Definitely Didn’t Steal Hollywood, Parretti closed the $1.3 billion buyout of MGM on November 1, 1990. But his good fortune didn’t last long. After seven chaotic months – during which time a six-figure cheque to Dustin Hoffman bounced and the studio couldn’t afford to even print posters for Thelma & Louise – a bank lawsuit forced Parretti’s removal from the board.
Parretti would ultimately flee the United States while a federal investigation uncovered a trail of shell companies, bribery and fraud, in which executives from the very bank that sued Parretti – French state bank Crédit Lyonnais, then the biggest bank in Europe – had in fact been willing co-conspirators.
: Louie Psihoyos/BBC
Parretti’s story is incredible in the truest sense of the word. As in, almost impossible to believe: an Italian waiter-turned-hotel chain owner–turned-wannabe media mogul who arrived in Hollywood almost out of the blue. He first bought Cannon Films – purveyors of low-brow, cheaply-made movies starring the likes of Chuck Norris and Jean-Claude Van Damme – before making his bid to buy MGM from Kirk Kerkorian in early 1990.
Yemenidjian – right-hand man to Kerkorian – recalls meeting Parretti for the first time. “He was a larger-than-life cartoon character,” says Yemenidjian. “Very engaging, very gregarious.” Craig Parsons, then a crisis management PR man for MGM, agrees that Parretti was an enigmatic character. “He was not without charm,” says Parsons. “Though you could barely understand him.” Everyone also agrees that Florio Fiorini – Parretti’s quiet, roly-poly business partner – was the real brains of the operation. “Parretti was the convivial frontman,” says Parsons.
Parretti is interviewed extensively in the documentary. Questioned by director John Dower, Parretti claims that he was friends with Winston Churchill and received awards from Ronald Reagan. He also says he was named a prince by Pope John Paul II.
Particularly amusing is Parretti’s knack for deflecting blame, which verges on impressive. He seems able to produce a tall-sounding tale or some dubious documentation to squirm out of every accusation. Controversy dates back to his pre-Hollywood days, with a string of arrests in Italy for fraud-related crimes.
: Wonderhood Studios
The buyout deal was highly unusual. Parretti agreed to pay Kerkorian $50 million per month until the billion-dollar deal closed. “It was a huge media story at the time,” says Parsons. “The question was, ‘Where is the money coming from?’ I never got an answer to that.”
Indeed, every time the question was asked, Parretti and Fiorini fobbed them off with what Parsons calls “gobbledygook” – something about equity from one of their many, many companies.
In fact, they owned so many interconnected companies across the globe that Parretti brandished a flowchart. Industry reporters and analysts publicly questioned where Parretti’s money was coming from – which now seems like an open acknowledgment that the money was dodgy. And there were doubts that Parretti would make the payment deadlines. “Every month!” says Parker. The money always seemed to come through at 11.59pm.
There was a point when it looked like Parretti couldn’t finish the deal. “After paying $200 million, he didn’t have the rest of the money,” remembers Yemenidjian. “He came to us for an extension. We knew he was scrambling from every place.”
By the time of his MGM bid, Crédit Lyonnais had already loaned Parretti $1 billion. “Having to borrow the second billion required a different kind of manoeuvring,” says Yemenidjian.
The secret to his manoeuvring – it later emerged – was bribery and corruption. Indeed, Parretti revelled in the Hollywood lifestyle – he had a $10 million mansion in Beverly Hills, a $200,000 Rolls-Royce and a private jet – but he wasn’t the only one. The bankers enjoyed the spoils of Hollywood too. Parretti gifted them forged artwork, company shares and trips to Bora Bora.
: Wonderhood Studios
As described by Jeff Isaacs, the US Attorney who led a five-year investigation into the fraud, the scam began with bankers at the Netherlands branch of Crédit Lyonnais, but continued with executives in France.
Parretti was big on Hollywood bluster. After taking control of MGM, he put out a press release saying the goal was to become “the most powerful Euro-American communications group of the Nineties”. He also posed at a press event with an actual lion. Parker laughs looking back at the incident: “We were in this small conference room and here’s this lion, which scared the hell out of everybody – including Parretti. The handler was going, ‘Don’t worry, he’s toothless!’ I think the lion was so anaesthetised it was ridiculous.”
Parker also recalls Parretti trying to impress a Variety reporter by claiming the desk in his office was the original desk of MGM co-founder Louis B Mayer. The Variety reporter, who’d been around the industry, told Parretti that actually it wasn’t. “Parretti was thumping the desk and going in broken English, ‘No, no, no! This is Louis B Mayer’s desk!’” says Parker. According to both Parker and Yemenidjian, the disaster at MGM was “immediate” once Parretti took over. “It was the definition of chaos,” says Yemenidjian.
Parretti laid off dozens of MGM employees. Parker recalls that the chief financial officer was given a box of envelopes, each of which contained the final pay cheque for the people selected for termination. “The first envelope he picked was his own,” says Parker. “That’s kind of how things were going.” Parretti installed his own 21-year-old daughter as the top financial executive and put a trio of beautiful models on the payroll.
Most damning, perhaps, was the fact that MGM wasn’t making any films. And Parretti’s attempt to sell overseas TV rights to the James Bond films – for which MGM was the distributor – caused the fiercely protective Bond producer Cubby Broccoli to sue the studio.
: Keith Hamshere/Getty Images
MGM was in such financial peril that Crédit Lyonnais was loaning $1 million per day. Eventually, the bank filed a lawsuit and Parretti was removed. “He kind of refused to go,” says Parker. “They had to say, we’re stripping you of your duties. He was telling everyone, ‘No, no, I’m still chairman’. He was not going to concede that he was terminated.”
According to Jeff Isaacs, the real reason for the bank’s lawsuit was to deflect blame. “It was clear that the MGM fiasco was going to rebound,” Isaacs says. “It was part of a cover-up by these bankers to try to say they were victimised and deceived into lending all this money that was going to result in millions – if not billions – of dollars of losses to a state-owned bank that the French taxpayer was going to bear.”
Isaacs’ investigation discovered that Parretti and Fiorini’s business flowchart was just “the tip of the iceberg” in a labyrinthine network of shell companies. The companies – which had fancy-sounding professional names – were used to invent profits, move and conceal debt, create fraudulent transactions, inflate asset value, hide the sources of borrowed money, and trick regulators. Isaacs credits Fiorini for masterminding the scheme. “Fiorini was ahead of his time in terms of hiding and laundering the proceeds of criminal activity,” says Isaacs.
Isaacs adds: “Parretti and Fiorini were very good at making debt look like equity through a maze of transactions. That’s what the bank was counting on – they would be able to disguise the bank’s bad debt as some kind of secured equity.”
: WOnderhood Studios
Fiorini was jailed for four years in Switzerland for fraud relating to the $3.4 billion bankruptcy of Sasea, one of the biggest holding companies in their network. Meanwhile, Crédit Lyonnais also tried to sue Kerkorian in another face-saving exercise. Yemenidjian visited Fiorini in prison and – in another incredible turn of events detailed in The Man Who Definitely Didn’t Steal Hollywood – Fiorini confessed everything.
“Every minute detail,” recalls Yemenidjian. “I couldn’t write fast enough. After two-and-a-half hours, I said, ‘Do you have access to a typewriter?’ A week later I got a thick stack of legal-size papers with every single thing he told me – dates, amounts, who they bribed.”
Fiorini – who gives his first ever televised interview for the documentary – admitted his wrongdoing. He later pleaded guilty to the MGM fraud and was sentenced to another 41 months.
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