Mediobanca's preffered replacement for Gabriele Galateri who resigned as joint-CEO on Tuesday, Enrico Bondi, failed to be appointed and it is now expected that Alessandro Barberis, a long serving Fiat employee who is credited with turning around the fortunes of Scooter manufacturer Piaggio, will be given the job.

Two sides have formed up in the battle for the future of Fiat. Paolo Fresco, most of the board and the creditor banks which this summer lent Fiat €3bn, wish to implement the recently announced restructuring plan and force GM to take up the option to purchase the auto division in 2004. Meanwhile major shareholders, the Agnelli family, influential merchant bank, Mediobanca, and Italian Prime Minister, Silvio Berlusconi, prefer to sack Fresco, appoint Bondi as CEO and work on a plan to create a Ferrari-Maserati-Alfa Romeo company, selling a stake of up to 49% to Volkswagen AG.

The creditor banks have currently agreed to put on hold negociations to take a 51% stake in Fidis, the group's profitable finance arm, while Fresco is in theory safe until the next shareholder's meeting in April. Financial analysts meanwhile believe that failure to remove Fresco is an unwelcome outcome, aportioning to him blame for much of the mess that the Group currently is mired in.

VW have officially denied any involvement in current affairs. However, their continuing failure to elevate Seat upmarket, the brand they publicly stated would be targeted to compete head to head with Alfa Romeo, could see them interested in an Alfa Romeo stake. At the same time insiders at Maserati, after admitting "commercial and technical talks" were on going with VW Group company Audi, have attempted to dampen mounting speculation by stating that talks were revolving around tapping into Audi's aluminium production technology.

With reference to news reported today by some newspapers concerning an agreement I allegedly would have reached with the company for what is referred to as a "huge retirement bonus", I hereby categorically deny that I have agreed upon a package for the termination of my relationship with Fiat, obviously when this will happen. 

Therefore, the news circulating on this issue are totally false and I am astonished that such rumors, proved groundless by the enormity of the sum, are accepted as true not only by the press, but also by certain politicians.

During my five-month mandate as Chief Executive Officer I had the opportunity to deeply evaluate that, given the complexity of the situation, the Fiat Group needs to be guided by an executive manager with a working experience in the industrial field. 

It is for this reason, although with sorrow, that I have decided to signal to the Board of Directors my intention to resign from my office.

The Board of Directors of Fiat S.p.A met today in Turin under the chairmanship of Paolo Fresco.

Today’s meeting focused on the review of the Group’s overall performance, particularly as regards the implementation of Fiat Auto’s restructuring and turnaround plan.

Having acknowledged resignation presented by Director Pierluigi Bernasconi, the Board coopted Daniel John Winteler, General Manager of IFIL.

The Board of Directors also approved a project to revise the Company’s corporate governance regulations, which have been in force for a long time at the Group, and adapt them to reflect recent amendments to the Corporate Governance Code for companies listed in Italy and the provisions of the Sarbanes-Oxley Act of 2002, which are already in force in the United States and are therefore applicable to Fiat as a foreign issuer listed at the NYSE.

The Board, having acknowledged that Mr. Gabriele Galateri expressed his intention to resign, asked him to hold his current office until appointment, in a forthcoming Board to be convened at the soonest, of his successor. Mr. Galateri accepted the proposal.

The Board of Directors reaffirmed its unanimous appreciation for the Chairman, the Chief Executive Officer and the management, and its confidence in them all.

Enclosure: amendments to the Fiat Group’s corporate governance:

The new corporate governance of the Fiat Group.

Audit Committee:

The Committee has been entrusted with the duties of assessing the adequacy of adopted accounting principles and their uniformity in view of the preparation of the Consolidated Financial Statements. 
- The Committee shall be composed exclusively of independent Directors. 
- The Committee shall meet at least twice a year in the absence of the executive directors. 
- The Committee was assigned specific duties as regards the appointment of the Independent auditors. 

Independent auditors:

The Independent auditors may be appointed to perform consulting activities only if prior authorization has been granted by the Audit Committee. 
Guidelines for significant transactions and transactions with related parties:

Significant transactions are subject to prior approval by the Board of Directors. All transactions with related parties must be periodically disclosed to the Board of Directors and to the market. Those transactions with related parties that exceed a predetermined value threshold are subject to prior approval by the Board of Directors. 
The Guidelines also envisage that transactions with related parties be concluded with the assistance of independent experts, when the nature or the value of the transaction so requires. 

Internal Dealing:

The so-called "relevant persons" must promptly serve notice to the Company if they execute significant transactions involving company stock. The Company must periodically and promptly disclose said transactions to the market. 
Guidelines for the Internal Control System:

The guidelines which executive directors will have to comply with during the design, operation and monitoring of the Internal Control System have been defined; and the responsibilities of each entity involved have also been set. 

Code of Conduct:

The Fiat Group Code of Conduct was approved in replacement of the Code of Ethics currently in force. 
The new measures will come into effect as of January 1, 2003. The Code of Conduct will come into force at a later date, because it will have to be made available to all employees prior to its entry into effect.