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Monday, February 28, 2011

Italy may score an own goal with its reliance on Libyan money

By James M. Dorsey

The National, Feb 27, 2011

Italy's most popular football club, Juventus, is facing a dilemma as it prepares to discuss tomorrow the brutal clampdown by the Libyan leader Muammar Qaddafi, its second-largest shareholder.

It is a quandary that is also affecting a host of high-profile Italian companies, including UniCredit, Italy's largest bank, and the car maker Fiat in which Col Qaddafi's investment vehicles hold stakes.

For Juventus, however, the dilemma is particularly acute. The club's failure to win a trophy since it was stripped of its 2005 and 2006 Italian titles as the result of a corruption scandal makes it especially vulnerable to criticism from its fans. Amid mounting revulsion, Juventus is finding it increasingly difficult to explain its cosy relationship with the Libyan leader and his sons.

Juventus is likely to be forced to confront the issue publicly after tomorrow's board meeting that will discuss the Libyan crisis alongside the club's results.

UniCredit said last week it had put Libyan voting rights under "careful review". Juventus officials said it was unclear whether the board meeting would be attended by Khaled Fareg Zentuti, the long-term investment portfolio manager of the Libyan Arab Foreign Investment Company (Lafico), who represents Col Qaddafi's 7.5 per cent stake, valued at US$17.5 million (Dh64.2m).

Lafico, a subsidiary of the Libyan Investment Authority, the country's sovereign wealth fund, acquired the stake in 2001 as much as a financial investment as because Col Qaddafi's son, Saadi, a failed professional footballer, supported the Turin-based club.

Club officials hope the popular revolt against the Qaddafi regime will prompt an international freeze on Libyan assets that would take them off the hook. Short of that, they say there is little they can do to cut their umbilical cord with the Qaddafis.

The club's predicament is heightened by the fact that many Italians fear that the Libyan turmoil could bring a wave of refugees on to their shores at a time when Italy is suffering its own economic woes.

Hopes that a freeze on Libyan assets will resolve the club's dilemma is likely to prove wishful thinking. The Juventus association with the Qaddafis contrasts starkly with the club's insistence that it seeks to reconcile the "professional and business side of football with its ethical and social role".

The club did itself few favours when a spokesman suggested last week that the Qaddafis had been model investors. "They've always supported the company [Juventus], for example they participated fully with the recent capital increase in 2007. We are an investment for them," Marco Re, the spokesman, said.

If the club's public relations debacle and Saadi Qaddafi's football career prove anything, it is the greed and abandonment of principle of Italian football clubs. Saadi Qaddafi's football career seems to have been propelled more by Italian and Maltese interest in his nation's oil reserves and the Libyan regime's use of the game as a diversion from the country's problems than by any real sports ambition.

The younger Qaddafi, who heads the Libyan Football Federation and has a majority stake in Tripoli's Al Ahly sports club, initially signed up 10 years ago with the Maltese team Birkirkara, but never showed up.

Three years later, he joined Italy's Perugia but was suspended after only one game for failing a drug test. The incident earned him the reputation of being Italian Serie A's worst ever player.

His dismal record did not stop him from enlisting in 2005 with Italy's Udinese team, where he was relegated to the role of bench warmer except for a 10-minute appearance in an unimportant late-season match.

Riccardo Garrone, the president of Sampdoria and head of the oil company Erg, subsequently invited Saadi Qaddafi to train with his team in the hope that it would open the door to Libyan oil contracts.

The public focus on the Qaddafis paints an uncomplimentary picture of Italian football.

It is a portrait coupled with the Juventus debacle that is likely to make European football clubs on the prowl for cash-rich foreign investors more cautious as the wave of protests sweeps across the Middle East and North Africa and beyond.

2 comments:

  1. Saadi Gaddafi also made a brief appearance once for Perugia against Juventus. He also sat on the Juventus board for a number of years.

    Juventus just announced a loss of €39.5 million euro for the most recent reporting period. The financial loss, along with the fact that Juventus may not qualify for lucrative European football next year, may also factor into what should be an interesting meeting tomorrow.

    John Elkann, who was born and raised in New York City, is one of the Agnelli heirs with a majority ownership interest in Juventus.

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  2. Thanks Steve for pointing this out. None of this, with the exception of Saadi's stint in Perugia and his Juventus board membership, has been reported on this blog. It adds interesting perspective.

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