Gianni in wonderland: Gianni Versace revels in his reputation as the brash, flash Loadsamoney of international fashion designers. Recently, however, people have begun to ask awkward questions about his success

A ROLLING, red tongue of a carpet curls out of Gianni Versace's Milan headquarters in the Via Gesu licks past the sentinel of potted bay trees and spills across the pavement right into the road. Under the klieg lights at either side, guys in black T-shirts - sleeves rolled up into tight little cigars to show off their biceps - are chewing gum and yelling at the assembled photographers. They are Versace's gang, and part of their job tonight will be to stop the photographers from muckying the rug. 'Dai ragazzi. Dai ragazzi,' they yell, pushing the cameramen back against the wall. 'Not on the carpet. Dai]'

A black Mercedes draws up. Four doors spring open. 'Schiffer] Schiffer]' the photographers scream, surging forward. Only it's not her. It's her fiance, the magician David Copperfield, with Claudia's mother and his father.

Claudia Schiffer, Naomi Campbell and the other supermodels are already inside. As the photographers rush the car, the blackshirts try again. 'Dai ragazzi . . . Dai.'

Inside the double-height marquee, built to fit within the atrium in the courtyard of the palazzo, row upon row of little gilt chairs spread outward in circles from the catwalk. A little red and gold cushion sits on each seat like a blob of bloody frosting. Space is at a premium. Of the hundreds of fashion buyers and several thousand journalists, photographers and cameramen who have converged on Milan this week, only a tiny fraction are invited to Versace's show. No one gets in without an invitation, and each name is cross-checked against a list of invited guests.

Inside, there is a definite pecking order. Santo Versace, Gianni's elder brother and managing director of the family company, Gianni Versace SpA, sits in the front row. (Gianni is backstage directing the show.) On his right sits Bonnie Fuller, the new editor of American Marie Claire, with whom Versace expects to place some heavy advertising. On his left is Amy Spindler of the New York Times. Versace bought a mansion in Miami two years ago, and the company's eyes are fixed on the US as the market of the future.

Suzy Menkes of the International Herald Tribune, the doyenne of the world's fashion reporters, is here, and so is Joan Juliet Buck, in Milan for the first time since she was appointed editor of French Vogue. Two young women are yanked off their cushions to make way for two older and clearly more important guests.

Not everyone is happy. As the show is about to start, a wealthy Arab orders his bodyguard to empty a photographer's camera of film. But if anyone is discussing the much-publicised 'Mani Pulite' ('clean hands') corruption investigation that finally caught up with the fashion industry the previous week, they aren't doing it out loud. Mariuccia Mandelli, better known as Krizia, and Gianfranco Ferre have both admitted to the investigating magistrates that they bribed officials of the Guardia di Finanza, the Italian tax inspectorate. So - to general surprise - has Giorgio Armani. The sums are not enormous - typically, 100m lire (pounds 40,000) - but, in return, the Guardia shut their eyes to the designers' audits, which means that their financial announcements should be taken with a pinch of salt.

Santo Versace, by contrast, was grilled at length by the chief magistrate, Antonio di Pietro, but - publicly, at least - admitted nothing.

David Copperfield takes a seat right at the end of the catwalk. Beside him, like a sun-dried tomato in head-to-foot red PVC, sits Elton John. And next to him is Sylvester Stallone. These three have the best seats in the house, Versace's payment in advance for the acres of publicity the trio will bring him in the following weeks. From here you can watch a model moue her way down the entire length of the catwalk, get an eyeful of her knickers as she turns on her heel to head home, and watch her all the way back. As the lights go down, the mosaic of television screens under the Perspex runway lights up. A rock beat begins to pulse, and Claudia Schiffer, dressed all in white, sways slowly towards the three men. Sylvester Stallone leans forward and cups his chin on his hands.

WHAT COMES down the catwalk at a Versace show is only a tiny part of what makes these shows the hottest ticket in town. Ever since the mid-Eighties, when to wear Versace was brazenly to declare yourself a worshipper at the temple of money and sex, his business has grown into a monstrous empire, ruled by Gianni, Santo and their sister Donatella.

The hallmark of his clothes, with their garish prints and triangular-torsoed suits, is an overpowering sexuality which, without much imagination, turns men into studs and women into hookers. But they have an exaggerated, almost cartoon glamour that celebrities the world over seem to love. And this has made Versace into probably the most influential designer in the world.

Giorgio Armani may have built a business that has more than twice the turnover, but in fashion, influence is the greatest measure of achievement.

To hear Versace speak, he is not simply in the business of making clothes.

He's on a cultural crusade. He talks about his designs 'liberating women'.

To wear Versace, according to him, is to be free-thinking, modern, fearless, unfettered by convention. Unlike Armani, who sells clothes to fit into a life, Versace sells his clients a whole new life. The Versace woman is looked at and lusted after. In putting on a Versace outfit, she loses her identity and takes on the one he has invented for her. She doesn't wear his clothes; they wear her.

All kinds of people - men, women and transvestites - love this. Versace's clothes are star clothes. To give life to his mystique he pursues a calculated strategy. He dresses many stars for free, and they come to his parties. He needs their fame. They need his clothes to make them feel famous.

Among his favourites are Elton John ('I've seen something I love in the collection, but I must speak to you about it first,' Elton John told Versace's brother-in-law, Paul Beck, in a fax last week), Joan Collins, Ivana Trump, Madonna, Bruce Springsteen, Prince (and Eric Clapton until his recent defection to Armani). He makes matching wedding clothes for Sting and Trudi Styler and a going-away outfit for Elizabeth Taylor Fortensky. He would like to dress the Princess of Wales, but Roberto Devorik, the Argentine businessman who launched him in London, says she quietly returned the clothes he once sent her.

Fuelled by miles of advertising, costing millions of dollars, and a steady production of picture books autographed in gold ink, Versace has become the world's most successful purveyor of vanity glamerotica.

His personal style is one of mind-boggling extravagance, carefully documented in life-style magazines. With his coterie of relations and hangers-on, he moves from his converted convent in one of the most fashionable parts of Milan, to the Villa Fontanelle on Lake Como, to his mansion in Miami, as if demonstrating his world of unattainable luxury.

Every now and then, however, real life breaks in.

The recent corruption investigations have brought to the surface questions about Versace's empire which have circulated ever since his business took off. How much does he really sell? Can the income from this private family business support all the enormous outgoings necessary to keep his image afloat? How much longer can the extravagance last? There are frequent rumours, as there are with most rich southern Italian businessmen, that Versace is somehow linked to the Mafia. And there is confusion about how the numbers add up.

By the end of last year, the main Gianni Versace line of clothes, jewellery and accessories sold in 345 outlets, including 138 Versace stores from Tokyo to the Caribbean. The cheaper Versus and Istante lines sold through another 730 outlets, and you could buy his jeans in nearly twice as many. Versace likes to boast that the turnover of Gianni Versace SpA topped L1,000bn (pounds 400m) last year. However, turnover, in a company that generates most of its revenue from royalties (from his franchises) and consultancy fees (for his services to theatre, rock concerts, opera and ballet) is notoriously difficult to judge. A better figure would be revenues, which the company says reached L417bn last year, generating a net profit L25.3bn lire.

Getting a detailed breakdown of the business is very difficult. Of the seven Italian companies that make up the Versace group in Italy, only two small subsidiaries, Versace Profumi and Giver Profumi (the two most recently established perfume companies), file any company details at the Camera di Commercio Italiana. Gianni Versace SpA, the heart of the group, publishes no audited balance sheet, nor any details of its shareholders or directors.

The group's international interests are consolidated into a Dutch holding company. Gianni Versace International NV is a letterbox company whose office is that of an Amsterdam lawyer. Although this company has five international subsidiaries - in Germany, Japan, Switzerland, the UK and the US - no trace of it appears in the official map of the corporate structure of the Versace group. The patchy availability of financial documentation has only increased speculation about the real state of Versace's fortunes. And a visit to his London shop does nothing to dispel the impression that Versace is mostly front.

IN 1991, Gianni Versace bought a 25-year lease on the old Midland Bank building at 34-36 Old Bond Street for the site of his London flagship store.

He spent a reported pounds 11m transforming the four floors into a neo-Roman palace complete with frescoed ceiling painted by the set designer from La Scala; 700 square metres of broccattello marble from Siena in 10 different colours; and a kilo of gold leaf to decorate the bronze balustrades and pillars. Four hundred people came to the opening.

Three years later, only two of the floors are open. The other two have been closed for several months. In London, I was told it was because sales were slow. In Milan, Versace's spokeswoman, Emanuela Schmeidler, told me it was because the clothes had sold 'too successfully'. Whichever is correct, last week they had their winter collection on show: tight red leather jackets, belted at the hip (pounds 1,500); gold mesh mini-dresses (pounds 4,000); velvet leopard-print thigh boots (pounds 400). Shop assistants in black shirts, black jeans and black cowboy boots watched zealously. Yet in the two hours I spent there, only eight people came in and no one bought a thing.

Not even me - though I tried on several outrageous yet beautifully made outfits. It does not feel like a shop that is making money - and few people believe that it is.

Its emptiness only underlines the paradoxes. Gianni Versace SpA's revenue last year amounted to nearly pounds 170m; yet compared with Armani, Joseph or Browns, Versace's London store looks as if it is dying on its feet. His clothes are worn largely by celebrities, many of whom get their clothes free. But real people - prepared to pay Versace's extravagant prices - seem harder to find. And whereas a typical issue of Vogue might contain three pages of advertising from Chanel and five from Yves Saint Laurent, it is not unusual for Versace to buy a run of 20. Even with a substantial discount for volume, this costs serious money.

No one doubts that Versace, in turn, brings in serious money. But it is much harder to believe that his profits exceed those of Armani or Chanel by as much as his life-style - and the company's image - suggests.

THE MORNING after the Milan show, the red carpet and the photographers are gone. The guys, still chewing gum, are stacking the little gilt chairs into the back of a lorry. But there is no sign of the cushions that pampered so many expensive bottoms. Inside, a criss-cross of electric cabling laces across the catwalk, and, in the dressing-rooms, the clothes hang quietly in plastic bags. All that remains unchanged from the night before is a Croatian gypsy woman with her three small children still begging by the door.

Snooping around Gianni Versace's palazzo in the floury autumn light of the morning-after may not be quite how Versace's publicists usually like journalists to form their impressions of the designer. But there is a good reason now to take a peek behind the empire's glamorous facade.

Last December, Santo Versace revealed that the family was considering listing the company on the New York Stock Exchange. Sixteen years after they founded it, and six years after the only non-family shareholders were ousted from the company, Santo, Gianni and their little sister, Donatella, are preparing to exchange some of their closely held shares for a handy injection of fresh capital. What's more, they have stated repeatedly over the past 10 months that they want to do it in the world's most demanding and capricious stock market.

For nearly a decade, Santo has said he will float the company on the Borsa di Milano. Nothing has come of that. Now, here he is talking of a listing in New York. To show how serious he is, he says that the company plans to appoint two investment banks to oversee the flotation as early as January or February.

No one takes on a public listing lightly. Yves Saint Laurent, who took his company public in 1989, later thought better of the move, and bought back all his shares. The officers of the New York Stock Exchange and the regulators at the Securities and Exchange Commission are nothing if not pernickety about how new flotations are handled. They demand full disclosure of financial information, and a strict adherence to the rules of conduct for company directors. For many owners, making the switch from a family-owned business to one where potentially thousands of investors need equal protection and equal information, a stock market listing can be as traumatic as a cross-examination by George Carman in a murder trial. How much more so when the business is foreign, the family Italian, and from the secretive southern region of Calabria at that.

GIANNI VERSACE was born in December 1946 in Reggio Calabria, which is the home of the 'Ndragheta, one of the Mafia's most feared clans. His brother, Santo, was born two years earlier, shortly after the Allied armies made their way up through the toe of Italy at the end of the Second World War.

Donatella was born in 1956. The Versaces' father, Antonio, started out as a coal merchant and eventually opened a shop selling electrical goods. For years, Gianni hardly mentioned him. Some say he was ashamed of his parents' simple origins. Father and son fell out badly when Gianni moved to the north. In recent years, however, Antonio Versace would occasionally travel to Milan and stay in Versace's palazzo in Via Gesu. When he got lonely, he would come down to the office for company. One secretary, who got to know him quite well because she too comes from the south, says, 'He was just a lonely little guy. A really simple, lonely old man.' Antonio died last year.

The strongest influence on the children's life was their mother, Franca.

Today, Gianni describes her as having the greatest couture studio in southern Italy, even selling to clients in France. But Aldo Pinto, managing director of Krizia, who knew her in the late 1960s, says: 'She was a dressmaker, really. (She copied French designs for her local clientele.) And she had a little shop for which I would sell her knitwear. She had no big couture studio. But, I'll say this. She was a lady, a real lady.' Gianni left school at 20 and started working with his mother. In November 1972, he moved to Milan where he began designing pret-a-porter collections for Arnaldo Girombelli, one of the most formidable names in Italian fashion, and owner of the Genny, Complice and Callaghan labels. It was this move north that caused the rupture with his father, a break that would not be resolved until after Gianni's mother died in 1989. But Gianni knew the move was essential to his career.

Roberto Devorik, who then owned Hills Cashmere Store in Brompton Road and now has eight luxury clothing shops in the West End, was one of his early fans. 'I remember meeting him at a show in Florence. He was designing for something called Florentine Flowers, which he doesn't admit to now. He was very shy. Very shy and very nice. He couldn't draw. He still can't. He used to pin everything on a mannequin and work with the material in an extraordinary way. He worked in acrylic, crepe, organza. It was very feminine, very charming, very commercial. I bought the whole collection.'

In March 1978, Versace launched out on his own. That same year, he designed his own women's-wear line, his first line for men, and, backed by Gio Moretti, opened the first Versace store, in Milan, on the elegant Via Spiga.

Ask Versace about his influences, and the story he repeats most often is the one about how his mother would force him to cover his eyes whenever they passed the brothel of Reggio with its pouting girls sitting at the window.

'If she hadn't made such a big deal about it, I wouldn't have developed such an interest.' Forget the fact that being a whore in Calabria is a pitiful existence where you earn next to nothing and are grateful if you don't catch some foul disease; it makes good copy.

Versace's visual influences come from his roots. Like all southern Italians, he grew up steeped in the Greco-Roman culture of the Mediterranean. In the libraries in Via Gesu and Villa Fontanelle are more than 10,000 volumes of photographs of the art of the Renaissance and Ancient Rome. 'My only job,' says a former designer who recently left, 'was to comb through these books plundering images that he would re-use in his designs.'

Versace doesn't design his clothes. He'll do a rough sketch and pass it on to a designer to flesh out into something a pattern-cutter can follow. Or, as Devorik says, he'll work with a mannequin, draping cloth, chainmail or leather, to achieve the effect he wants. And the effects can be electric: leather and silk, chainmail like cloth of gold, draped crepe that appears held together by nothing more than a forkful of spaghetti straps, or safety-pins.

In some fashion partnerships, the creative talent and the business brain work quite separately. But Gianni maintains an obsessive control over his empire. That control is something the company won't admit to an outsider.

For Gianni Versace - so warm and genial in public - is, in private, something of a dictator.

When a leading fashion reporter wrote a mildly critical review of a recent Versace show, she was immediately banned from attending another. She went to Milan for the next season's collection and was summoned to Versace's office for an early morning meeting. Closing the door, Versace subjected her to a humiliating tirade that lasted close to an hour.

FOR AN INSIDE view of what it's like to inhabit the Versace empire on a daily basis, I went to a quiet cafe near the Scala opera house. The young woman who sat down opposite me had worked alongside the maestro for six years. As she sipped a cup of lemon tea, she fiddled with her long brown hair, flicking it out from behind her ears and letting it fall over her eyes as if to hide her face from the room. 'They operate on a basis of terrorism, complete and utter terrorism,' she said. 'No one who works there feels at ease. Ever. It's nightmarish.

'There's a very strange relationship among the three siblings. Basically, there are three empires, though Gianni is always the boss. He has the most shares (45 per cent) but there is a lot of conflict between them, especially between the brothers.

'Santo is supposed to be in charge of the actual business. But Gianni can't resist sticking his nose into absolutely everything, every tiny detail.

Every decision that's taken by the company has to be countersigned by him.

'Gianni seems to have very little respect for his brother, but he feels forced to have him (there) because it's better to have a family member in charge than an outsider. They are very Italian in that way. Very southern.

They want it to be a completely family-run business.

'Gianni can be enormously genial. Or he rules by absolute terror. Nothing in between. To Santo, he is either completely silent or absolutely hysterical.

He'll pick up the phone and literally scream at him, calling him an incompetent who doesn't know anything. He'll swear at him. Insult him. The lot. Santo always remains silent in the face of these onslaughts. I don't know how he puts up with it.'

The relationship between Gianni and Donatella is completely different. A chemical blonde with a tightly muscled body, mahogany tan and a serious Malboro habit, Donatella looks like a tart. Gianni sees her, however, as his muse and inseparable partner. 'My perfect woman - a mother, a rock star, a hard worker,' he has said. Gianni is building up Donatella to become a designer in her own right. He has put her in charge of the Versus line.

Brother and sister appear hugging one another on the catwalk at the end of the show.

Unlike Santo, Donatella is never the butt of Gianni's anger. As kids, he says, they would steal their father's car keys and go disco dancing, while Santo went to bed. Another apocryphal story, perhaps. But the bond is still intense. 'Psychologically, there is something almost incestuous about their relationship,' says the young woman who has observed them closely. 'He completely adores her.' The tension between the siblings, while fundamental perhaps to the creative process, does little for harmony within the business. 'Santo hides a lot of things from Gianni. And there's a lot Gianni doesn't tell Santo. When the employees are brought into these little conspiracies, they lose respect all round,' says the woman, looking up over her teacup.

To maintain absolute control, the Versaces favour a style of management that verges on the medieval. 'Gianni always said he only wants (to employ) people who aren't as smart as him. If they are too intelligent, he doesn't want them. He wants people who will snap to attention, and carry out his orders without question. To prosper, not only must you work there, you have to completely take on their mentality. Gianni wants everyone to think of him as some sort of living God.

'All three of them operate a sort of divide-and-rule policy with their employees. Either you're with them or against them. You can't have a mind of your own. They have fierce little cliques. A lot of the people there are ex-lovers. (Gianni's long-time companion, Antonio d'Amico, works for the company, where he is coyly known as an assistant.) You can tell if you're in the inner circle by the way the siblings take you by the arm, by the way they say tu rather than the more formal lei. By the parties, the weekends, the holidays they arrange together.'

The Versaces' parties are known for their opulence, and, like many designer dos, for the extravagant use of drugs by some of the guests. One hostess who held a party to celebrate a Versace couture show remarked afterwards that they could measure in teaspoons the cocaine that had been spilt on to the floor.

If being on the inside track of a Versace clique is one thing, being marginalised is something else. 'They can be horribly brutal in the way people are cast out,' says my source. 'I believe Gianni is very uncomfortable with his homosexuality. He wants to be very macho, with that beard, those black clothes. He's also very macho in his behaviour.

'If Gianni hears that anyone's spoken a word against him, out he goes. One man was kicked out overnight after working with them for 20 years. A former secretary was sacked with the words 'Don't ever show your face again.' '

Rarely is there any comeback. 'If you're on the inside, they shower you with gifts. A diamond ring for one secretary, for a saleswoman an Art Deco brooch. Loads of people get lovely leather handbags. Even the most lowly will get a fancy Versace book. I knew I was on the way out when I stopped receiving a Christmas present from them.

'When they get rid of you,' she adds, 'they use money to buy your silence.'

Claudio Luti, a former shareholder and finance director, was paid L30bn (pounds 12m) for his 20 per cent shareholding when he fell foul of the siblings in February 1988. The figure was vastly more than the shares were worth, and Luti has never spoken since of his association with the family.

When the Versaces decided to break with Roberto Devorik, in 1991, they paid him close to pounds 1m.

Only one employee has ever sued them. The case, brought for constructive dismissal by a designer who was sent to work in the press office, was settled for nearly 10 times the plaintiff's annual salary just days before it went to court.

At the cafe near the Scala, the young woman stared bleakly into her tea leaves. Casually, she brushes her hair aside. 'I wouldn't put my money into that company - how you say in English? - for all the tea in China.'

MOST COMPANIES, like most families, only show the world their best face. But there are few where the divergence between internal reality and outward show is quite so evident as it is at Gianni Versace. The secretive nature of the laws that govern private Italian companies, the all too flagrant corruption that often exists within them, and the arrogance of the three sibling shareholders have combined, in the case of Versace, to create an institution that is markedly lacking in any conventional corporate transparency.

'I have a fantastic relationship with money,' Gianni Versace said in an interview with Harper's Bazaar exactly a year ago. 'I use it to buy my freedom.' His arrogance has attracted the attention of the authorities. The first inkling that things might not be as they should be came a month before the launch of the magistrates' investigation, in January 1992, when the Guardia di Finanza arrived at Via Gesu 12 to investigate Versace's collection of 170 archaeological treasures. For some time, the Superintendent of Archaeological Objects had been writing to the designer, demanding to know the exact provenance of the Ancient Greek and Roman statues, vases and jewels that so often appeared as the backdrop of photographs published in glossy magazines around the world. 'Gianni had ordered his secretary to put their letters in the bin without replying,' one employee told me. 'Fed up with the lack of response, they sent in the financial police. We were all ordered to say absolutely nothing. Everyone was terrified.'

Having photographed and catalogued the collection, the Guardia announced that the investigation was merely a matter of routine, and withdrew. The investigating magistrate, Giampaolo Marra, refuses to discuss the case.

Just over two years later, the 'Mani Pulite' magistrates began to look more closely at corruption within the Guardia itself. Not long after, they targeted Milan's fashion community. Gherardo Colombo, a fuzzy-haired man in his mid-forties, is one of the three judges overseeing the investigation. In his office in the Palazzo della Giustizia, he lights a cigarette and fiddles with a purple-haired troll on his desk. 'Nearly all those being investigated claim they were forced to pay bribes. What we have to examine is whether these irregular payments were made as a result of extortion by the Guardia di Finanza or whether the two parties came to some kind of deal. We have to see if there was any advantage to be gained by the payer. And that takes time.'

Although Colombo refuses to discuss individual cases, it is known that Santo Versace was questioned by the magistrates on 19 September. He was suspected of having made illegal payments in 1990 to officials of the Guardia, who were inspecting the company's tax records. What has never been revealed before is that Santo admitted to having paid the Guardia L250m (pounds 100,000), a far larger sum than was paid by Armani or any of the other designers called in to explain themselves at the same time.

'Yes, it is true. We paid them,' Santo told me later in an interview in his office in Via Gesu. 'Anyone who knows Italy can see very clearly that everyone who worked for the public services demanded payment from our citizens which was used for personal gain. I applaud what the magistrates in Italy are doing. They are saving our country. Certainly, Italy is doing what should be done in many other countries, including your own. We have launched a social revolution here. The country must be rebuilt. We have always been a frontier nation. The existence of the Evil Empire, as Reagan called it, has stopped us from having a real democracy in Italy. The situation is very serious. The magistrates cannot stop half-way. The job must be finished.'

Santo is warming to a favourite theme, and it is hard to stop him; still harder to know whether he seriously believes this. Eventually, he turns to the business. 'Versace is not a family company. It has always avoided taking decisions lightly. If there are decisions to be taken, they are taken professionally. This is definitely not a family company. In fact, for the last 10 years, we have conducted ourselves as if we were a public company.

We have always said it is a strong, secure, transparent com-pany. Every company within it has a board of directors, and its own managing director.

There are no family (at the top).'

'What about yourself?' I ask. 'Well, yes, all right. I am the managing director here. But we want a listing on the New York Stock Exchange,' he goes on. 'We want the investor every year to be happier than the year before. We want him, in time, to grow rich and satisfied, and to be pleased that he made the investment. As I said, we have long been as transparent as a public company. Our balance sheet is signed by one of the biggest accounting firms in the world, KPMG Peat Marwick.'

Santo is a man who will impress investors; he will choose his words carefully as he replies to their questions and those of the redoubtable SEC.

He will have to.

American investors might be curious, for example, as to why it is that, if Gianni Versace is indeed such a transparent company, only the details of its two small perfume subsidiaries are available at the Camera di Commercio Italiana. They might ask for details of the Dutch company, Gianni Versace International NV, which does not show up on the company's corporate 'map'.

The capital of this company was increased 13 times, from 200,000 guilders (pounds 74,000) to 55.4m (pounds 20m), between March 1990 and September 1993. Where did all this money come from? And what does the company do?

Investors might also want to know why Gianni Versace doesn't routinely publish a detailed balance sheet. Indeed, they might even ask why a company that generates so much money abroad gives no details of its foreign exchange transactions. Often fraught with risk, currency hedging is of particular interest to investors who want to assess the dangers of buying one share rather than another.

On more general issues, investors may want to know more about the magistrates' investigation. They may ask what happened to the investigation into Versace's archaeological treasures. They may be curious about why the top floors of the London shop are empty of merchandise. No doubt Santo will make speeches about 'transparency', and about the company's respected auditors, but cautious investors may still be wary. Rightly or wrongly, they may remember other Italian businessmen who said the same, and whose affairs have turned out to be less than perfectly ordered. It is not long, for example, since magistrates looked into Montedison, a vast public company whose accounts were signed by Price Waterhouse, and whose chairman, Mario Schimberni, prided himself on being of the American school of management.

Schimberni's favourite word was 'transparency'. But when the magistrates got too close, Schimberni's boss, Raul Gardini, shot himself. Gardini's payments to political parties came to be known as the 'mother and father of all bribes'.

In such a suspicious business climate, it would not be surprising if potential investors proved too timid to put their money into such an idiosyncratic business as Versace's. Then again, the brothers might find that the effort of answering so many investors' questions might prove a little tiresome. Too tiresome, perhaps, to go public after all.

(Photographs omitted)