Citibank Sues Parmalat

by Mike Godfrey, Tax-News.com, Washington

22 March 2005

Citigroup said last week that it had filed suit in a US court against Italian food giant Parmalat, claiming that the company deceived bankers by inventing assets in a fictitious Cayman Islands hedge fund, and by forging documents to make it appear that Parmalat had $4.9bn in a Bank of America account.

Milan prosecutors concluded their investigation into the role played in the collapse of Italian dairy giant, Parmalat by several national and international banks last week. The prosecutors said they were looking for possible market-rigging activity undertaken by Nextra, Deutsche Bank, Citibank, Morgan Stanley, Credit Suisse First Boston, and UBS.

Citigroup said it filed the action in New Jersey State Court in response to an August 2004 suit brought by the extraordinary commissioner of Parmalat, Enrico Bondi. "Citigroup is a victim of Parmalat's fraud and has lost more than 500 million euros (670 million dollars) as a result," said William Mills, CEO of Citigroup's EMEA corporate banking division. "Citigroup had nothing to do with these frauds and was not aware of them," he added.

"Citigroup only did business with Parmalat because it relied on the statements Parmalat had made about its financial condition and on its globally recognized status as a reputable, investment-grade listed multi-national. If Citigroup had known the truth, it would not have done business with Parmalat."

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