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Sacked Giro boss Acquarone tells all

7 April 2014 | Posted in Notes & Insights | By James Emmett | Contact the author

Sacked Giro boss Acquarone tells all

Following the discovery of a €13 million fraud last year, Michele Acquarone was sacked as the managing director of RCS Sport and the Giro d’Italia cycling race it runs. The episode remains unexplained but, for the first time, Acquarone reveals his side of the story in an exclusive interview with SportsPro.

Putting the final preparations in place for the 2014 Giro d’Italia before the route unveiling in October last year, Michele Acquarone could be forgiven for feeling satisfied. Widely acknowledged as one of the most positive forces for change in an era of flux for cycling, the Italian had spent his two and a half years in charge of the second-most prestigious grand tour in the sport, and his five as managing director of the sports offshoot of the media company that owns it, busily ushering in innovation and open-mindedness.

As he diversified the activities of RCS Sport, branching into soccer, basketball and rugby, he grew the business from one of 25 people in one office in Milan to one of 70 with offices in Rome, New York and Dubai. Turnover doubled in five years to around €50 million. Taking full control of the Giro in 2011, he injected a purposeful drive towards modernisation and internationalisation. A previously grand but infuriatingly insular event began to court friends and develop links worldwide. The television product, so long inferior to that being produced by the Tour de France, was completely revamped.

An eight-year deal signed between Acquarone and IMG in the summer of 2012 saw the agency giant take the worldwide media rights to all of RCS Sport’s cycling races for an eight-year term. TV rights revenue for the Giro doubled almost immediately to some €8 million, while a set of guidelines were brought in for host broadcaster Rai to produce top-level coverage to state of the art HD quality. Deals to take the start of the Giro to Northern Ireland and the Republic of Ireland, and to set up and run a new race in Dubai, followed shortly afterwards.

Acquarone had expected to find himself in Dubai this February, overseeing the inaugural edition of the Tour of Dubai. Instead, on the opening day of the Middle Eastern race that means so much for the future growth of the RCS Sport business, he is in blustery London giving his account of the events that led to his suspension and then dismissal from his positions at RCS Sport towards the end of last year.

"My reputation is my main worry. I don’t care about money. I want to find a new job; my honour and my family are important to me."

In short, Acquarone was sacked by RCS in late November following an investigation into a €13 million hole in RCS Sport’s accounts. He had been suspended, along with RCS Sport chief executive Giacomo Catano and media relations director Matteo Pastore, since early October. Catano, who was initially moved away from his role to another area of the RCS media business, was also eventually dismissed. Laura Bertinotti, an accountant within RCS Sport and a link to the administrative departments of RCS MediaGroup, resigned.

Acquarone maintains his innocence and, speaking for the first time about the events leading up to his sacking, insists he is still in the dark about a lot of what went on. Legal action – including suits for wrongful dismissal and defamation – is pending against RCS. Acquarone’s lawyer has warned him against speaking to the press, but he is desperate to clear his name.

He has contributed to an investigation by Italian primetime reportage programme ‘Report’ into facets of the RCS business, including the disappearance of €13 million that led to his own dismissal from RCS Sport, the protracted deal that saw RCS buy Spanish media group Recoletos for €1.1 billion million in 2007, and the subsequent financial turmoil and asset sales at the Italian media group that owns the influential newspapers Corriere della Sera and La Gazzetta dello Sport.

“I trust the media investigations into RCS,” Acquarone says. “Maybe things will go faster after they come out. But my reputation is my main worry. I don’t care about money. I want to find a new job; my honour and my family are important to me. Four months ago I was a very good manager and that’s it. Now people think either I’m a thief or a bad manager. I cannot accept the defamation.”

RCS has given minimal details away throughout the whole affair. When asked for a response for this interview, the company declined to comment. It has conducted its own investigations but, while police action is still pending, Acquarone is wary of speculating. Nevertheless, he maintains that he wants to put his side of the story across.

“I don’t believe that anybody at RCS thought that my problem could become a global problem, with the BBC, Washington Post, ESPN interested in it,” he explains. “In Italy, nobody talked about it. It’s incredible. I spoke to all the journalists at the important publications and everybody said, ‘No, we don’t talk about it.’ And I said, ‘Come on, the director of the Giro dismissed just like that?’ We had just five directors in the history of the Giro. How can that not be a story? It has to be a story.”

Acquarone goes back to the beginning of the episode to try to explain things as clearly as possible.  RCS Sport, he says, is a small company, 100 per cent owned by a much larger group – RCS MediaGroup. “We had many cross controls because it’s a listed company,” he says. “Money cannot disappear like that just because one person decides they want to take it. But starting from the summer of 2013, something strange happened to our company.

“I’ve managed a multi-million euro business for many years, and everything was always clear because the financial controllers were taking care of every business across the group, and supporting the manager. I was trying to grow my business but I was not involved in the financial aspects of the business. We were supported by the financial controllers from RCS MediaGroup.”

When Acquarone was appointed managing director of RCS Sport, he would report to chief executive Catano, who was also the publisher of Gazzetta dello Sport and who in turn reported to Alessandro Bompieri, the RCS MediaGroup executive ultimately in charge of all the group’s media businesses. “I said, ‘If I come here I want to do something big.’ This was at the end of 2008, beginning of 2009, so we started to invest in cycling, trying to make the Giro bigger, bringing Lance Armstrong for example, trying to do something different from the past. And we started to invest in other businesses, too. We did rugby, supercross, basketball, running, golf and, of course, football. We worked with the Italian Rugby Federation to organise a Test match at the San Siro with New Zealand, which was a great success.

“We started at almost €30 million in revenues for the year, and we were going to €50 million. Everything goes straight to the media group. Every single manager manages his business. I know incomes and costs for every single event, every single business in my responsibility. Everything I did I always did with 100 per cent agreement from my CEO, Giacomo, and he couldn’t move one pen without the agreement of his boss and the media group.

“We had weekly meetings about the business and he had monthly meetings with the big board; he was meeting his boss every day. We kept the financial controllers updated monthly. Everything was going good. The business was growing up.”

“According to the controller we should have had something like €400,000 in the bank, and the bank told us there was nothing – zero."

In the summer of 2013, one of those meetings with the main media group’s financial controllers took an alarming course. “They said, ‘There are some old credits that you have from the past that you will never get, so we need to reevaluate the business this year.’ So I had to write off €1.4 million for the year. I said, ‘Wait, what are we talking about? We have every single month our meeting and everything is always fine and now there is this – where does it come from?’

“I never had clear answers about that. It was something from 2008, 2009, 2010. I was speaking with my people, saying, ‘Come on, it’s five years we’ve been working together. Do you know about that?’” One or two of his staff, he reports, would not give him straight answers. For the first time, he began to be mistrustful. 

“For the very first time in five years I had the feeling that something was not right.”

A few months later, in September, the media group financial controllers came to Acquarone with a new problem. Serious irregularities had been uncovered in the accounts of offshoot organisations of RCS Sport.

“I need to go one step back,” explains Acquarone. “RCS Sport has some non-profit organisations connected to it – one is for cycling, one for running, one for basketball. The function of these is to develop each sport. They promote grassroots activities and sometimes they are linked to events managed by RCS Sport. These non-profit organisations had a modest turnover generated by small revenues from local administrations and, in the case of running, from registration fees.”

Used in the past as an accounting tool, word came from the central media group that these offshoots were to be shut down in April 2012. This, however, was not a quick operation and Acquarone explains they were still in the process of closing when “on 16th September, the financial controllers of RCS MediaGroup found the bank sheets of these organisations were not right”.

That same day, Acquarone says, he went to visit the bank himself, alongside one of the financial controllers, to get to the bottom of the matter. “According to the controller we should have had something like €400,000 in the bank, and the bank told us there was nothing – zero.

“In the sheet that he had at the bank, it had been cut and copied and the total had been changed,” Acquarone continues. “That’s a big problem because someone has been stealing. They’d cut out the evidence of the withdrawals. I just saw, two or three times, €20,000. Thinking about how much was in the other two organisations, I thought maybe we have another problem of some hundred thousand euros.”

Acquarone and the controller went through the banking records to find out who had made the withdrawals. There were two signatories. Acquarone is uncomfortable naming them on the record but he says that, despite his efforts, he has been unable to speak to either of them at any length since.  They were the same two individuals who wouldn’t give him straight answers when he was quizzing his employees about the €1.4 million write-off earlier in the summer.

Acquarone says he reported the problem to Catano immediately, but the wheels of crisis were already in motion at the central media group. According to Acquarone, executives inside the RCS MediaGroup had known about the irregularities for some time.

“When we spoke to the bank, they said there have been a lot of problems and that they spoke with financial managers from the big media group to say that money is being withdrawn… in April 2012,” he recalls. “One and a half years previously, when the bank had a problem with withdrawals, they called RCS MediaGroup. Of course they did because we had no relationship with the bank.” Catano went to speak to senior management at the media group, returning to give Acquarone the news that an internal audit had already been launched.

Four days later, “on Friday 20th September”, Catano and Acquarone were summoned to a meeting with the group’s most senior management. Acquarone knew there was a problem, but the internal auditor’s presentation of his findings astounded him: “They said, ‘We’ve found out that something like €10 million is missing.’ I said, ‘How is it possible? You cannot have that much from the small businesses. What’s going on?’”

“At the end of November I got a letter that said I didn’t control things like I was supposed to and I was fired.”

As a result of the meeting, an external audit by Ernst & Young was commissioned and Acquarone and Catano were told to make themselves available to the auditors, but no further information was given to or inquiries made of Acquarone for seven days.

In fact, the fraud was even more remarkable. It seems, Acquarone recounts now, that €13 million was taken from RCS Sport exclusively in cash withdrawals. €13 million in less than three years at an average of €100,000 per week in cash. “Group money,” he says. “Shareholders’ money. Please remember that the company is listed on the stock exchange and suffered in the financial crisis.”

On 27th September, Acquarone says, he received a call from Bompieri, who told them that news of the scandal had gone public and as a consequence Catano’s responsibilities would be shifted solely to La Gazzetta. Riccardo Taranto, chief financial officer of the RCS Group since March, would be parachuted in as the new chief executive. Acquarone was tasked with maintaining business as usual while the investigation continued.

“That was Friday,” he says. “On Monday, I was waiting for Taranto, for my first meeting with my new boss, to say, ‘OK what are the priorities? Because in October we have many events, we have to present the new Giro, there are many things to do, and everything is stuck now so we need to start again.’ So I was waiting for him all day, and at the same time there was a board meeting with the shareholders of the group. And the day after, I was suspended. And nobody talked to me anymore.

“Nobody called me: not Bompieri, not the big bosses, not Taranto, nobody. I was at home, I had to give up my email, my phone, and I was in the newspaper.”

In the meantime, the structure and personnel at RCS Sport changed dramatically. Taranto, Acquarone says, shifted the business away from the auspices of the media department and into RCS MediaGroup’s advertising department. “So Bompieri is out, he stays with media,” explains Acquarone. “There is a new person called Raimondo Zanaboni, another manager, in advertising. Human resources changes job. The financial controller, he changes job. They moved everything away where anybody can ask. At RCS Sport, nobody even knows about the investigation.”

Waiting at home with ever dwindling hope, Acquarone was eventually called in to see the auditors on 7th October, the day of the Giro presentation in Milan. “I had just two hours with Ernst & Young – ‘Who are you? What is your job? What are you doing?’ – and then nothing. I asked whether they understood what was going on and they said they couldn’t talk about it. I couldn’t believe it. My defamation is huge and you have nothing against me. Am I suspected of something? They can’t tell me anything. And then I wrote many letters to RCS. Nobody answered me. Never.

“At the end of November I got a letter that said I didn’t control things like I was supposed to and I was fired.”

It was at this point that Acquarone believes he began to understand what had gone on.

“There were contracts between the business company and the associations where the business company gives the association some millions to organise events,” he adds, “but all the costs are here [in the business company], and the money from the associations goes away we don’t know where. And there were no events. All of these are fake contracts. I said, ‘I don’t know about these contracts: is there my signature, my authorisation anywhere? Did I do anything wrong?’ And they said, ‘Your request means nothing. You cannot ask us about that.’”

Acquarone knows he is not a suspect in the police investigation about the fraud, but his reputation, he says, has been torpedoed. “If you Google my name, it’s the first thing.”

He insists he has nothing to hide and has questions he wants answering. Why did RCS MediaGroup back him, and then so publicly reverse that decision, communicating his suspension in association with the lost money? And why, after months of investigation, has RCS not made public the findings into just how the money was stolen?

This article is an edited version of a piece that appeared in the May 2014 edition of SportsPro within a special report on the business of cycling. Subscribe here today.

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