Audit Finds New Excesses in Parretti’s MGM Tenure : Studio: Examples include costly travel on his charter line and sale of French land to his wife at a bargain price.

With all the urgency of a struggle for survival, executives at the historic but ailing MGM studio are sifting through the accounts, trying to find where the money went during the freewheeling reign of Italian financier Giancarlo Parretti.

And for all Parretti’s well-documented excesses, MGM’s new managers are astounded at what they are learning.

One day it’s the pricey real estate in France being sold for almost nothing--to Parretti’s wife. Or the six-figure payouts at double-the-market rates for travel on jets owned by another of Parretti’s 500 or more companies.

Next it’s the top-of-the-line BMW sedan provided to the manager of a trendy Westside restaurant owned by Parretti, once a waiter himself. Not to mention the Italian actresses hired and housed at company expense--even though they could not speak fluent English.

Two months after a judge stripped him of any remaining corporate control, the epitaph in progress for Giancarlo Parretti at what is now called MGM-Pathe Communications Corp. sounds something like this: He came. He saw. He squandered.

Executives are preparing a report on Parretti’s transactions--details of which have been obtained by The Times--for shareholders and the Securities and Exchange Commission. Meanwhile, observers continue to wonder whether the studio that made such classics as “The Wizard of Oz” and “Gone With the Wind” can regain its long-dimmed luster.

It was less than two years ago, in November, 1990, that Parretti stunned Hollywood and Wall Street by amassing the financing to buy MGM for $1.3 billion. After court decisions last December and February stripped him of control, the 50-year-old Parretti returned to Italy, where early this year he served a brief stint in jail in connection with pending tax-evasion charges.

Through a spokesman in Los Angeles, Parretti said late Thursday that he did nothing wrong as the head of MGM and its parent company. “He categorically denies any wrongdoing in transactions between Pathe and MGM-Pathe,” said the spokesman.

Parretti in the past has blamed the studio’s financial calamities on enemies out to sabotage him, and has vowed to return someday to take control.

Sources familiar with Parretti’s tenure at MGM say that his dealings reveal him to be a man who wanted to build a global empire of movie production and distribution, but who oversaw transactions not always in the company’s best interest:

* When Parretti traveled to Europe or other destinations, he flew chartered jets owned by Interfly, one of his companies. At a time when fully equipped chartered flights were going for $3,000 to $5,000 an hour, Interfly typically charged MGM $8,000 an hour. When Parretti or his entourage traveled round-trip to Paris from Los Angeles, the flight bill would soar to the range of $100,000.

“The rates that were being charged to (MGM) were significantly higher than the normal business rates,” said Sally Suchil, a lawyer for the studio.

Said Parretti’s spokesman: “He doesn’t believe the rates were higher than standard.”

* About 20 acres of MGM-Pathe land outside Paris, on the Marne River, was sold last May for 105,000 French francs--or about $18,000--to a company controlled by Parretti’s wife, Maria Ceccone. According to sources familiar with the transaction and who spoke on condition of anonymity, the price amounted to perhaps as little as 1% of the land’s worth.

“The transfer price clearly does not reflect the fair market value,” said one source.

In court testimony last fall, Parretti said the price was justified by encumbrances on the property.

* At least three young Italian actresses were placed on the studio’s payroll--despite their inability to speak fluently the preferred language for MGM movies.

“They were being given English lessons,” said a source, adding that the lessons and overall employment relationships--which included free housing--have been terminated.

The spokesman for Parretti said that the financier acknowledged the hiring of the actresses. “Such contracts with actors and actresses are standard industry practice,” the spokesman quoted Parretti as saying.

* At company expense, the manager of Madeo Ristorante, Parretti’s restaurant on Beverly Boulevard, was provided a 1989 BMW 750, a fully appointed luxury model.

In addition to the restaurant manager, six other Parretti associates, including his daughter, Valentina Parretti, were provided cars. Officials at MGM-Pathe Communications recently withdrew the use of all seven cars.

Through his spokesman, Parretti said that the restaurant manager’s car was provided by another company he owns, Pathe-Roma--not the studio.

* Parretti installed Valentina, then 21, as the treasurer-without-title of MGM. In part because Valentina’s permission was required for any check to be issued, unpaid bills piled up, further clogging the operations of the financially stressed studio.

When Credit Lyonnais, the French government bank that had loaned him nearly $1 billion for the acquisition of MGM, began last June to seek his ouster, Parretti counseled against removing Valentina.

“He told people that anyone who fired his daughter would ‘suffer consequences,’ ” said one company source. Through a spokesman, Valentina Parretti declined comment.

Last week, MGM-Pathe announced that the SEC had begun investigating other transactions of the studio’s parent company during the period of 1988 to 1990. Parretti controlled the parent, Pathe Communications Corp., during that time, which preceded his acquisition of the studio in November, 1990.

Knowledgeable sources told The Times one of the deals that may be scrutinized concerns Parretti’s discussed--but never consummated--sale of Pathe Communications Corp.’s chain of European theaters to another Parretti company, called Renta.

Ultimately, Pathe kept control of the theaters--but not without concluding the negotiations by paying $60 million to Renta. Pathe remains a company traded publicly on the New York Stock Exchange. Parretti declined comment on the deal.

In its partial annual report released March 30, MGM-Pathe said that it was cooperating with the SEC’s ongoing investigation. Suchil, the MGM-Pathe attorney, said this week that the company was keeping open a full range of options.

“We’re continuing to conduct investigations into all these transactions,” Suchil said. “And where appropriate, we’re taking action.”

From the studio’s headquarters in Culver City, MGM’s newly installed team of executives is trying to win back the confidence of writers, directors and actors needed to help create a new generation of successful movies. Hollywood veteran Alan Ladd Jr., the co-chairman and co-chief executive officer of MGM-Pathe, has been authorized to produce or distribute 14 or more films a year.

Seasoned executive Dennis C. Stanfill shares the chairman-and-CEO post with Ladd and is responsible for the company’s bottom line. When Credit Lyonnais was deciding last May whether to part ways with Parretti, it installed as president Charles R. Meeker, a longtime entertainment industry lawyer who also has helped produce movies, including “Witness,” starring Harrison Ford.

The company also is trying to expand its extensive network of theaters in Europe, with plans to build three new multiplexes in England at an estimated cost of $25 million.

Still, the deepest pocket at risk is Credit Lyonnais, which lent Parretti the nearly $1 billion and has continued to provide much more. In addition to forcing Parretti out, Credit Lyonnais over the past year has sunk an additional $300 million into MGM-Pathe’s operations.

By its actions, Credit Lyonnais has signaled that, rather than quickly cut its losses, it will attempt to help restore the company’s stature--and perhaps part of its lost value. Parretti obtained his original loans from Credit Lyonnais Nederland, the bank’s Dutch affiliate.

Credit Lyonnais’ loans to Parretti--who Italian court records show was convicted seven times for passing bad checks from 1974 to 1980 and imprisoned 11 months in 1977 for making a separate “false representation”--have generated criticism from legislators.

Three Credit Lyonnais bankers who dealt with Parretti have been removed from the bank’s Rotterdam offices in the wake of Parretti’s troubles. One was reassigned to Hong Kong, one was recalled to Paris, one accepted early retirement. None have been accused of criminal wrongdoing.

“We support management as it develops and implements a sound business plan,” a Credit Lyonnais spokeswoman said Thursday. “We have great confidence in the future of MGM.”

Said one MGM-Pathe insider, commenting on Credit Lyonnais’ relationship with Parretti: “These were people who were suckered by a master.”