Five years ago members of Italy’s most famous business dynasty gathered in a large 18th-century villa outside Turin following the funeral of Marella Agnelli, widow of the great 20th-century industrialist Gianni Agnelli.
But rather than a somber reunion, the event proved to be the latest flashpoint in a feud that has divided the family as the late couple’s only surviving daughter, Margaret, clashed with her son John Elkann over the multibillion-dollar estate of his father. They have not seen each other since, according to several relatives.
The schism came to the fore again last month when authorities raided the home and offices of Elkann, head of the family business and chairman of carmaker Stellantis, following a complaint from his mother that he had helped his mother to evade Italian taxes.
“Margherita Agnelli has been persecuting her three eldest children and her parents in court for over 20 years,” Elkann’s lawyers said after the raids.
A fight for the legacy of Gianni Agnelli
The 20-year dispute has pitted Margherita against her three eldest children in a fight that the 68-year-old says she is pursuing for the sake of the five children she had with her second husband. Billions of euros in assets are in contention, including works by Monet and Picasso and a stake in December, the parent company of listed conglomerate Exor, the value of whose holdings grew by 2,700% to reach 33 billion euros under Elkann since his grandfather’s death more than two decades ago. does.
In addition to Fiat, the car company that Gianni Agnelli transformed into one of the largest in the world and which is now part of the global automotive group Stellantis, Exor holds major stakes in companies from luxury carmaker Ferrari and Juventus Football Club to the Dutch manufacturer of Philips medical equipment. and The Economist magazine.
«At stake is the ownership of December and therefore of Exor. . . if Margherita emerged victorious in her [multiple] claims that there would be a redistribution of December’s ownership shares and Elkann would lose the majority,” said Mauro Orlandi, professor of private law at Luiss University in Rome.
When Gianni Agnelli died in 2003, his widow and daughter each inherited a 37.5% stake in Dicembre as well as assets worth hundreds of millions of euros, from art to properties in Italy and abroad. Elkann, his grandfather’s anointed successor, had already received 25% of the company as a gift.
The following year, when the survival of debt-laden Fiat was in doubt, Margherita decided she wanted to exit the family business and agreed to a payment of 1.2 billion euros in exchange for transferring her stake in December to her mother and the renunciation of any rights to its property.
After that agreement, made under Swiss law since Marella and Margherita were each living in Switzerland at the time, the grandmother sold part of December to Elkann’s younger brothers Lapo and Ginevra, who now own 20% each, and sold the remainder of his participation in Giovanni over the years.
But soon after the deal Margherita changed her mind, driven, she said, by the discovery that her father’s fortune included hundreds of millions of euros hidden abroad, a share of which she claimed she was entitled to. In 2010 she lost a legal challenge to the 2004 agreement, but that didn’t stop the family feud from continuing.
According to the agreement, Margherita also had to pay a life annuity to her mother. She now claims that her mother did not pay income tax on this annuity in 2018 or 2019, arguing that she should have done so under Italian laws, where she insists Marella spent most of her time in the final years of her life, so he did. they are not entitled to Swiss residency.
A spokesperson for Margherita told the Financial Times that she had always simply tried to defend the interests of the five children she had with her second husband Serge de Pahlen – and to “respect the wishes of her father who had donated only 25% of December to John Elkann . , leaving the rest to Margherita and the widow Marella Caracciolo”.
Seller’s remorse?
Elkann’s lawyers say that Margherita took a cash in 2004 “at a time when the future of her family’s and her son’s business interests was uncertain”, and that she later changed her mind after Fiat’s turnaround, hoping to profit from the further wealth of the family.
Margherita’s lawyers reject this hypothesis, arguing that it was “provoked” by her three eldest children, referring to an ongoing lawsuit filed by Marella in Switzerland in 2015 and resumed by John the following year to confirm the validity of the inheritance agreement of the 2004. Lapo and Ginevra Elkann joined the case after their grandmother’s death. Other cases continue in Switzerland regarding Marella’s assets.
“It is a fact that the Elkanns have filed a lawsuit against their mother [in Switzerland] even before the grandmother’s will was published,” the lawyer said.
Margherita’s cousin, Lupo Rattazzi, said he believed there was “seller’s remorse” in Margherita’s conduct.
“I remember him telling me [Fiat] it would have ended up like Parmalat,” he told the FT, referring to the Italian food group that went bankrupt in 2003. “If it hadn’t been for the enormous increase in the value of its stake [in Dicembre] after selling, he would not renege on the deal.
Rich rewards
John Elkann now owns 60% of Dicembre, which ultimately controls Exor. Stellantis’ largest shareholder, Exor, is set to reap around 700 million euros in dividends after the auto group last month reported record annual profits of 18.6 billion euros.
Assets owned by Exor, formerly known as IFIL, have increased to around 33 billion euros from around 1.2 billion euros at the death of Elkann’s grandfather.
Family members hoped the differences could be resolved, with Ginevra Elkann acting as interlocutor between her grandmother, mother and siblings. But those hopes dashed at Marella’s funeral reception, where Margherita and John argued again, according to several guests.
A key point of contention now is where Marella lived in his final years. Margherita’s legal team argued that she resided in Italy so her will should be governed by Italian law, under which her children are always entitled to a share of their parents’ estate.
Lawyers for the three Elkann brothers argued in court that Margherita waived her right to any further inheritance claims when she signed the 2004 agreement.
“In 2004, Ms. de Pahlen freely decided to sell her shares [in Dicembre]a transaction that cannot now be reversed,” a spokesperson for the Elkanns told the Financial Times.
But Margherita’s lawyers disagree. In legal cases in Italy and Switzerland you contest the validity of your mother’s will, drawn up in Switzerland in 2011, from which you had been excluded based on the 2004 agreement.
Four of the five de Pahlen children joined their mother in cases contesting their grandmother’s will. In one case, which has been going on for four years, Margherita also disputes whether Switzerland should have jurisdiction over her mother’s estate.
According to several independent legal experts, if the tax fraud complaint that sparked this month’s raids succeeds and prosecutors conclude that Marella was living in Italy before she died, and not Switzerland as she claimed, it could help the legal team of Margherita to argue that Italian law should govern the dispute over her mother’s will.
But the Elkann spokesman said “there is no scenario in which December’s control and ownership could be altered by Ms. de Pahlen’s maneuvers.”
Family schism
The quarrel divided Margherita’s children. Lapo and Ginevra took their brother John’s side and cut off contact with their mother and half-siblings, according to friends and family.
People close to both sides of the family say that the relationship between Margherita, an artist who has never worked in the family business, and her three children from her marriage to Alain Elkann has been “strained” from an early age.
Some members of the extended family, who wished to remain anonymous, argue that Margherita’s resentment is justified, claiming that some assets were hidden from her in connection with the 2004 deal and others, including paintings worth hundreds of millions of euros , would have disappeared since Marella’s death.
“Margherita’s father left his paintings which were kept by her mother until her death [by legal agreement] but some of these works of art have disappeared,” his spokesperson said.
However, the Elkanns’ spokesperson stated that “there are absolutely no missing paintings, these works of art were the personal property of Marella Caracciolo Agnelli and upon her death they were all accounted for in her estate by the administrator appointed by the Swiss court”, adding that Margherita seemed “determined to inflict emotional pain on her three eldest children”.
With seven ongoing lawsuits that will take years to conclude, friends and relatives say the chances of a settlement are slim and that the family is “unlikely to find peace” soon.