Prada’s CEOs Under Probe by Italian Authority Over Tax

By Vinicy Chan

Italian prosecutors are investigating past individual tax filings of Prada SpA’s (1913) chief executive officers, making the two fashion executives the latest target of a government probe in the country.
Miuccia Prada and Patrizio Bertelli were informed of the examination by the Italian Judicial Authority “regarding the accuracy of certain past tax filings by them as
individuals in respect of foreign-owned companies,” Milan-based Prada said in a statement to the Hong Kong Stock Exchange today.
“The company confirms that neither the company nor any of its subsidiaries was or is involved in this matter,” Chairman Carlo Mazzi said in the statement. The authority said it never comments on specific cases.
The probe isn’t the first into the tax affairs of luxury-goods executives by Italian authorities. In March 2013, police seized more than 46 million euros ($58 million) of assets from executives linked to jeweler Bulgari for alleged tax evasion. This year, Domenico Dolce and Stefano Gabbana, the founding designers of the Italian fashion company that bears their name, were sentenced to 18 months in prison for non-payment of 40 million euros of taxes at one of the designers’ companies, a charge they deny.

Photographer: Jerome Favre/Bloomberg

Miuccia Prada, chairman of Prada S.p.A.

Prada fell 0.9 percent to HK$47.85 at 3:53 p.m. in Hong Kong trading, amid a broader slump in the city’s shares as democracy protests led the benchmark Hang Seng Index to drop as much as 2.5 percent. Other Hong Kong-listed luxury retailers also fell, including Luk Fook Holdings International Ltd., which plunged 4.6 percent and Chow Tai Fook Jewellery Group Ltd. which was down 4.5 percent.

‘Completely Satisfied’

Prada said a previous voluntary disclosure by the CEOs had led to an agreement that “completely satisfied the claims of the Italian Tax Authority,” according to the statement. Three calls made to Prada’s Hong Kong-based head of regional investor relations Cynthia Cheng weren’t answered.
The handbag maker said in December that its holding company would repatriate assets held in the Netherlands and Luxembourg to Italy as part of a “voluntary disclosure process.”
Prada this month reported a 21 percent drop in first-half net income as demand in Asia and Europe remained weak, joining LVMH Moet Hennessy Louis Vuitton SA and Gucci-owner Kering SA, who both reported declines in first-half earnings.