Bank Questions Parretti About Money Transfers : Entertainment: Meanwhile, the INS retracts its accusation that the MGM owner made false statements.
The bank that wants to foreclose on Giancarlo Parretti’s ownership of MGM studios tried Thursday to prove he breached an agreement not to interfere with operations.
Richard Holwell, an attorney for the bank, questioned Parretti about large sums of money transferred from MGM to Parretti’s control as head of Pathe Italia, a subsidiary of MGM’s parent, Pathe Communications Corp.
Parretti, however, maintained that he had the right to make the transfers, and he accused MGM and the bank of conducting a witch hunt against him.
The testimony marked the end of the third week of the Chancery Court trial in which Credit Lyonnais Bank Nederland N.V. and Parretti are battling for control of the studio. The trial resumes Monday.
The bank financed Parretti’s $1.3-billion acquisition of MGM-UA last November. Parretti renamed the studio MGM-Pathe Communications Co.
Parretti is being sued for allegedly reneging on an agreement signed in April not to interfere with MGM’s operations.
As part of the agreement, Parretti stepped down as MGM chairman; the bank installed veteran studio executive Alan Ladd Jr. as chief. The agreement was in exchange for money to bail MGM out of an involuntary Chapter 7 bankruptcy filed by its creditors.
Parretti has until Nov. 30 to reduce his debt to the bank to less than $125 million or the bank can sell 51 percent of MGM on Dec. 1. If he meets the deadline, he can be reinstalled as MGM chairman. Parretti said he owes the bank about $400 million.
To bolster the bank’s claim that Parretti continually interfered with MGM’s operation, Holwell cited his transfer in April of $1.8 million from Cannon Netherlands, another subsidiary of Pathe Communications, to Pathe Italia without approval of MGM’s executive committee.
An attempt to transfer an additional $4 million in May was blocked first by Ladd and then by the bank.
Parretti has testified that he’s in charge of the foreign subsidiaries, and the transfers were within his rights. He said Ladd is in charge of MGM and domestic subsidiaries.
Chancellor William Allen has ruled that the bank will be allowed to introduce Parretti’s past criminal convictions as evidence.
Attorneys representing the bank are expected to tell the court about Parretti’s 1990 conviction for bankruptcy fraud, which he is appealing.
Separately, the Immigration and Naturalization Service on Thursday issued a correction to earlier statements that Parretti’s U.S. visa was revoked because he failed to reveal his criminal record.
In its correction, the INS said there was no evidence that Parretti made false statements to the agency in 1982 when he was issued a visitor’s visa for an indefinite length of time.
The agency did not elaborate on how it made the widely published error about the controversial businessman.
Parretti withdrew his application for entry at a Sept. 6, 1991, inspection interview in Philadelphia and his visa was canceled, the INS said Thursday.
Parretti decided to withdraw his application when INS agents began asking questions about the financier’s criminal history, said the financier’s spokesman, Greg Romano. Parretti decided to reapply at a later date.