ITALY: THE FOUNDER OF ITALIAN FOOD GROUP PARMALAT AND THREE FORMER FINANCES DIRECTORS HAVE BEEN PLACED UNDER CRIMINAL INVESTIGATION
Record ID:
646603
ITALY: THE FOUNDER OF ITALIAN FOOD GROUP PARMALAT AND THREE FORMER FINANCES DIRECTORS HAVE BEEN PLACED UNDER CRIMINAL INVESTIGATION
- Title: ITALY: THE FOUNDER OF ITALIAN FOOD GROUP PARMALAT AND THREE FORMER FINANCES DIRECTORS HAVE BEEN PLACED UNDER CRIMINAL INVESTIGATION
- Date: 19th December 2003
- Summary: (U7) ROME, ITALY (DECEMBER 22, 2003) (REUTERS - ACCESS ALL) 1. SLV OF MINISTRY OF INDUSTRY 0.05 2. SLV/CU/LAS OF PRESS WAITING FOR PARMALAT'S CEO ENRICO BONDI TO ARRIVE (5 SHOTS) 0.28 3. SV PARMALAT'S CEO ARRIVING IN CAR, BY DRIVING OFF AT THE SIGHT OF PRESS, PRESS RUNNING AFTER CAR 0.52 (U7) COLLECHIO, ITALY (DECEMBER 19, 2003) (REUTERS - ACCESS ALL) 4. SLV/SV VARIOUS OF PARMALAT'S PRODUCTION PLANT WITH TRUCKS, FORKLIFTS (12 SHOTS) 2.07 5. MCU (Italian) COLLECHIO RESIDENT, MARIO SAYING: "I would be upset that it will end badly, as people are saying. I hope not because it would be a huge mess." 2.24 6. CU PLAQUE OUTSIDE FACTORY SAYING 'CALISTO TANZI AND SONS FIRM 2.27 7. MCU (Italian) COLLECHIO RESIDENT, GIACOMO SAYING: "I have never worked for Parmalat but I would be very unhappy. I would never have imagined such a situation also because it is a company which had an enormous turnover. I don't understand why there is such a large accounting hole. And it seems today that things have gotten worse. Let's hope Mr Bondi can save it for the sake of the country. And also for the sake of the Parma soccer team (owned by the Tanzi family)." 3.09 8. SLV EXTERIOR OF COMPANY 3.12 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 3rd January 2004 12:00
- Keywords:
- Location: COLLECHIO AND ROME, ITALY
- Country: Italy
- Reuters ID: LVA75XLNNBEP2BCB9BOPUB34ELFZ
- Story Text: The founder of Italian food group Parmalat and three former finance directors have been placed under criminal
investigation.
A four billion euro ($5 billion) accounting scandal
at Parmalat deepened on Monday (December 22) when the
Italian food group's founder and three former finance
directors were targeted in a criminal probe.
As prosecutors sought to unravel a complex web of
financial transactions that have led Parmalat to be called
Europe's Enron, a rescue management team was weighing up
the best option for bankruptcy protection.
Parmalat exploded into one of Europe's worst corporate
crises last week when the firm said a document showing 3.95
billion euros held by a Cayman Islands unit, Bonlat
Financing Corp, had been declared false by Bank of America.
Prosecutors launched a fraud probe, and on Monday named
in their investigation Parmalat's founder Calisto Tanzi,
who resigned last week as chairman and CEO of Italy's
biggest food group, a judicial source said.
Also targeted in the probe into possible false
accounting, fraud and market rigging were former chief
financial officers Fausto Tonna, Alberto Ferraris and
Luciano Del Soldato, all of whom held the post during 2003,
other judicial sources said.
Ferraris and Del Soldato were questioned on Monday.
They admitted providing false information but said the plan
had been thought up by Tanzi and Tonna, one of the sources
told Reuters.
Parmalat has 35,000 staff in 30 countries and is one of
Italy's best-known brands and its eighth-largest industrial
group.
The missing four billion euros dwarfs a one billion
euro accounting scandal at Dutch retailer Ahold and drew
comparisons with the collapse of energy giant Enron.
Media reports said the hole could be as big as 10
billion euros, making it one of Europe's biggest accounting
scandals.
Prime Minister Silvio Berlusconi vowed on Saturday his
government would save operations and jobs at Parmalat.
On Monday, Parmalat's newly appointed Chairman and CEO
Enrico Bondi met Industry Minister Antonio Marzano. The
minister may be required to name administrators for
Parmalat.
A statement from Berlusconi's office after the meeting
suggested that his cabinet could approve on Tuesday a
decree dealing with the Parmalat crisis.
Earlier, financial sources said a government decree
could shield Bondi and his team from any legal action while
they attempt a turnaround, similar to U.S. Chapter 11.
Parmalat officials were not available for comment.
On Saturday, police took documents from Bonlat auditor
Grant Thornton and Parmalat's main auditor Deloitte &
Touche.
Bondi's rescue team on Monday was locked in talks with
bankers and legal advisers on how to keep the group afloat.
"Bondi wants as much flexibility as possible for what
needs to be done to the business," said a source close to
the matter. Parmalat owes Italian dairy farmers
about
120 million
euros ($149 million) and has not paid for milk supplies
since August, the farmers' group Confagricoltura said.
Parmalat's 6.125 percent euro-denominated bond traded
at about 25 percent of face value on Monday, traders said,
up from as low as 20 percent earlier. Parmalat stock
slumped another 66 percent to 0.11 euros, barely one-tenth
of its face value.
Shares in Italian banks that made loans to Parmalat
also fell, led by Capitalia, which lost six percent. Other
blue-chip names like Fiat also suffered on concern about
Italian companies with high debts.
"There is a general crisis of credibility and trust in
the Italian financial system," said an equities trader in
Milan.
U.S. banks are also believed to have big loans to
Parmalat. Ratings agency Standard & Poor's said Bank of
America's "on and off-balance sheet exposures to the
Parmalat group are significant but manageable" given the
bank's huge resources.
Concern about Parmalat's opaque investment strategy
gave way to fears of a default on up to seven billion euros
of bonds as the group failed to find the cash to repay a
150 million euro debt issue on time earlier this month.
That was despite showing 4.2 billion euros of liquidity on
its books.
Parmalat faced a Monday deadline for a second
instalment of a $400 million payment to buy out investors
in a Brazilian unit. Parmalat said talks to delay the
payout were continuing.
It missed payment on a first instalment last week,
prompting a credit rating downgrade to default grade by
Standard & Poor's.
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