One of Europe’s richest families is facing potential ruin after being accused of pumping cancer- inducing toxins into the air and having almost $2 billion in assets seized by an Italian judge.
Emilio Riva, 86, the chairman of closely held Gruppo Riva SpA, Italy’s largest steel producer, is accused of causing an “environmental disaster” at the company’s Ilva steelworks plant in Taranto, Italy, according to court documents. The billionaire lost an appeal on Jan. 16 to overturn a house arrest imposed by the court in July, triggering a union protest at the plant, which Italian prosecutors closed part of in July.
Prime Minister Mario Monti’s government issued a decree in December reopening the facility. The prosecutors have appealed to the country’s Constitutional Court.
The company, which has been paying its 12,000 workers since production ceased, is now running out of cash, according to a Riva official who declined to be identified because the company’s finances are private. It may be forced to close the plant if it can’t reach an agreement with its labor unions next week. One of the unions, FIM-CISL, declared an indefinite strike yesterday.
“They tried to cut corners, bend the rules,” said Ruggero Ranieri, a professor of economic history at the University of Padua who specializes in European steel companies. “The family didn’t build a relationship with the community and there is a great deal of hostility toward them.”
In December, prosecutors issued a European arrest warrant for Riva’s oldest son, Fabio, 58, a company vice president, according to Italian news agency ANSA, which said he has fled into exile. Another son, Nicola, 54, a company director, is also facing environmental charges and is under house arrest. The lawsuits against the family have been opposed by Prime Minister Mario Monti.
Giuliana Paoletti, a spokeswoman for the company, said the Rivas declined to comment for this account.
One of Europe’s wealthiest industrial families, the Rivas control a $6 billion fortune, according to the Bloomberg Billionaires Index. The company, which was founded in 1954 by Emilio and his younger brother, Adriano, 81, has operations from Germany to North Africa and produced 16 million tons of raw steel last year. They have never appeared on an international wealth ranking.
The Riva fortune first came under threat in July, when Patrizia Todisco, a judge in Taranto, accused the family of not installing filters and other safety measures that would have prevented the release of toxins that induced some kinds of cancer into the air. In court documents, Todisco said the company had not lived up to earlier promises to clean up its operations. She shut down the plant.
Todisco has asked the company to pay 3 billion euros to clean up the Taranto air. The company, which is fighting the charges, has made a counter offer to the court for the environmental clean up, the Riva official said.
The closing of the plant, which supplies a third of the country’s steel, has set off a conflict in the city of 190,000 between the unions, who are worried about job losses, and the community groups, who are concerned about public health.
It also ignited a fight between Monti and Italian prosecutors, who want to keep the plant closed. In December, Monti’s government passed an emergency decree to allow the plant to continue working, saying that the plant is of strategic importance and could cost Italy about 8 billion euros. The courts have seized all steel produced by the plant.
In 2011, Riva reported revenue of $13.4 billion and net income of $437 million, according to data compiled by Bloomberg. In November, Todisco impounded Riva steel products valued at 1.4 billion euros as part of an investigation into corruption.
She also ordered the arrest of more executives, including Fabio Riva, for corruption and bribery of officials to water down environmental reports. Wire-tap evidence cited by the prosecution claims senior executives tried to bribe officials to cover up environmental hazards at the plant.
European Union Environment Commissioner Janez Potocnik said he was monitoring the developments in Taranto, and that he has not ruled out taking his own legal action against Riva.
“Responsibility to protect the environment and public health lies first and foremost with national governments,” Potocnik said in an e-mail on January 18. “The Commission’s role is to ensure that governments respect EU law, including environmental law. In doing so, the Commission has to follow a number of legal procedures, including going to court if needed.”
To contact the editor responsible for this story: Matthew G. Miller at email@example.com