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Eni's Clash With International Finance

But Mantovani said that everything was okay and organized a meeting with the then head of compliance of Eni, the lawyer La Rocca, to have access to the files of the internal due diligence. Litvack asked the same question and asked of the previous Eni with the US Department of Justice. "If U.S. law were applied as you suppose you would no longer do business in Africa," replied La Rocca.

The hearing of the Eni-Shell trial in Nigeria on Wednesday was entirely taken off the examination of witness Karina Litvack, representative of the institutional funds of large international finance in the board of directors of Eni. And the process has finally started. 

Born in 1962 in Montreal, Litvack worked for more than 20 years in New York and London, representing banks and funds in relations with the large companies in which they invest. With a smile ready for everyone, an almost university-like attitude that was prepared and precise and an excellent Italian — sometimes supported by a flash of key words on her tablet — Litvack immediately explained the governance of companies in the "only" Italian system. Even when they are on the market, they almost always have a reference shareholder who controls them, so investors covering more than half of the capital have at least guaranteed a minority stake in the board of directors: in Eni, three of the nine places on the board.

Like Zingales, Litvack, since her appointment to the Eni board in May 2014, has also been perceived as a problem by management. The first problem was the generous liquidation for the outgoing company Scaroni. Zingales called Litvack, who sits on the board's Risk and Control Committee (CCR), and asked her to suggest to the Chairman of the committee that the payment be delayed by 30 days because it is the practice of the CCR to decide on the new board and not the outgoing one. The answer was a no-dry. Zingales tried to discuss the matter with Emma Marcegaglia, Chairman of the board, but at the first meeting of the board in June 2014 the President announced that the payment had already been made. If good morning is seen from the morning…

The evening before being elected to Eni's board of directors, Litvack had read the article of the prestigious Economist who was very critical of the OPL 245 affair. At the same time, she had learned from the anti-corruption groups of the papers of the London trial of the EVP of Obi against the Malabu of Dan Etete. For this reason, at the shareholders' meeting at which she was appointed, she asked Eni's legal counsel, Massimo Mantovani, about the matter and he saw her in London. Litvack was concerned that the triangulation used through the Nigerian government to acquire Malabu's licence was in compliance with the U.S. anti-corruption law, which she feared. 

The US authorities, in fact, apply the letter but also the spirit of the law and often push for heavy sentences with various expedients. But Mantovani said that everything was okay and organized a meeting with the then head of compliance of Eni, the lawyer La Rocca, to have access to the files of the internal due diligence. Litvack asked the same question and asked of the previous Eni with the US Department of Justice. "If U.S. law were applied as you suppose you would no longer do business in Africa," replied La Rocca. In June 2014, the bubble OPL 245 exploded in the Italian and international media with news on the investigation of the Milan Public Prosecutor's Office. On July 3 at the meeting of the joint JRC with the Board of Statutory Auditors it was unanimously decided to commission an external review of the ENI due diligence. But Litvack asked that those who supervised the client had not been involved in the negotiations. "Immediately there was a strong disagreement" and all the other members defended that it was Mantovani who took care of the client, even if involved in the deal.

"The President [of the board of auditors] Caratozzolo warned me and forbade me to use the word 'involved'. I had nothing against Matovani, but for me, especially in large deals, each head of structure is responsible, it's normal. Neutrality in the definition of the mandate and in the investigation had to be guaranteed. That's how these things are done in the rest of the world", Litvack politely vents herself, always smiling at the college of judges. The matter was sent back to the board. In the meantime, Zingales wrote to Marcegaglia on 11 July, raising all his doubts about the OpPL 245, from which it emerged that "there are problems in the decision-making process and in the flow of information on this type of operation". Hence the risk of repeating the same mistakes in the future.

Litvack agreed with Zingales' five points of doubt in the note, although he admits to having a softer, more collaborative style than his colleague. The board is seen on July 18, each councilor was asked to make a declaration of loyalty to Descalzi, but Zingales and Litvack abstained. It was updated to July 30, with an "excited" meeting. Descalzi arrived furiously and began by saying that "the leaders feel paralyzed, they perceive the hostility of the council and the lack of trust". To be precise, Litvack opened her high school notebook in which she took all the notes of the meetings. The ad continued: "No one wanted to take risks, but some people made groundless accusations about the integrity of the leaders. This is intolerable. Those who criticize executives criticize me. If you don't trust managers, you have to fire me." Litvack admits that on that occasion she learned from Descalzi many vulgar words that she did not know in Italian, and that she does not want to repeat in court. "But I know it's a different culture here, you can't hear those words on the boards of British companies.  She and the other board members felt intimidated. Zingales, on the other hand, had no problems in the video conference and replied by saying that the attitude of the ad was unacceptable. Litvack was anguished, she tried to stitch up explaining that the idea of not involving Mantovani had been her own. He wanted there to be confidence, but then he admitted that he couldn't handle the tension and burst into tears. At the end of the theater, it was decided that there are no blacklists but are white lists of executives who can oversee the external investigation. And Mantovani was among them."

In the meantime Consob asked Eni for information on the case (Litvack has not explained why) and the minutes of the JRC at the time of the approval of the operation. The Chairman of the Committee immediately informed the members that from that moment on the minutes of the meetings would be more concise and the comments would not be attributed to the individuals. Litvack was not there and always asked for its positions to be recorded, but this did not always happen, and the questions asked were not explained in the minutes. 

The climate on the board continued to deteriorate, so the company proposed a review of the board's governance. On April 29, 2015 there was a first meeting, not mandatory, so that Zingales, who was on the American spindle, did not attend. Marcegaglia announced that this time it would be a more extensive and even individual review of the individual members according to a peer review mechanism in which everyone could comment on each other.

"The advisors were not enthusiastic. But the President cut short and said that this was an opportunity for everyone to say what they really thought of Zingales. Because the time had come for this to go away and so would the tensions". Litvack was shaken by this "strong" statement and asked Marcegaglia to speak with Zingales. But the situation fell and Zingales then left the board and slammed the door. In July 2015 Litvack invited Descalzi to dinner. He talked about everything but not about OPL 245. At the end of the dinner Karina confessed to him that she believed that he was honest but had received wrong advice. She replied that "if I accept advice I'm responsible, I'm the boss" in a mogie tone that Litvack calls almost repentant.

She remains on the board but will not have an easy life. On May 11, 2016 Marcegaglia called her to inform her that a very hard press article would come out about her involvement in the parallel investigation of the "Opl245 plot" conducted by the Syracuse Public Prosecutor's Office. The President confessed that she had tried to stop the piece but without success. At Litvack it all seemed absurd: you would pass on confidential information to Nigerian subjects who wanted to blackmail Eni and influence the appointment of Descalzi in 2014. On July 7 Litvack raised a point at the JRC on OPL 245, but it was not included in the minutes with the excuse that it was better to discuss it at the next meeting. No one told her that a guarantee notice had arrived for her from Syracuse that day.

On July 14 Litvack learned from a colleague that she was considering her position on the board in the light of the infamous accusations. The hearing ignites the defences repeatedly try to block the examination of the witness on this point that would be part of another investigation also underway in Milan. Litvack broke the protocol and countered the stir to Avv. Neri Diodà, who defended Eni, said: "That's not true, it has to do with OPL 245!" The judges agree with her and it continues.

On July 27, Karina presented herself at the JRC meeting. Her colleagues Lorenzi and Gemma told her that there will be no meeting (and the discussion on Opl245) but only an informal meeting. They talked about the notice of guarantee received by her and Virgin of Saipem and told her that it was convenient for her to suspend herself from the JRC. She had to decide immediately because after two days there was the board and everyone would go on vacation. Litvack did not stay there and said she did not suspend herself. Marcegaglia invited her to dinner to convince her, talked about her conflict of interest in the case, offered to continue to pass documents for her opinions, but not on Opl245. In short, from accuser, Litvack becomes accused inside Eni. On 29 July the board decided to remove her, talking about a "turnover". Litvack pointed out to the judge that she spoke of "expulsion", attacking the communiqué issued by Eni at the time.

On the other hand, the tension mounts in the courtroom. The former minister Severino, who defends Descalzi, urges you to say that you supported the statement of the board of 20 December 2017 that on the day of the indictment of Descalzi has confirmed the "highest" confidence. For Litvack it was a collegial decision and a due act because it is the role of the board to defend the accused until proven otherwise, without taking the place of the judicial authorities. The exchanges with Diodà are even more nervous. Litvack does not want to answer the question whether there is an investigation into Eni in the United States concerning Opl245, even if it makes it clear that it has heard this from several people. The judge protects her. The witness remembers how she also raised the Congo question in 2016 - as chance would have it before being expelled from the JRC. In the end, she confirms that Pepper Hamilton's external report on Opl245 had certified the compliance of Eni's JRC's work with the procedures then in force, which were more loose than those adopted later. 

This concludes a strong clash between those who represent the international funds in Eni and the top management of the company, Marcegaglia, in the lead — match that will inevitably continue as well as the criminal proceedings on the case.