First Parmalat Class Action Launched

by Glen Shapiro, LawAndTax-News.com, New York

08 January 2004

In what is no doubt the first of many such suits, the Southern Alaska Carpenters Retirement Trust on Monday filed a class action against collapsed Italian dairy giant, Parmalat.

In its suit, the institutional investor claimed that a number of "senior insiders" and "legal, accounting and financial advisors" had perpetrated a massive fraud, diverting billions of dollars belonging to the company in an attempt to mislead investors.

According to the class action, individuals in positions of authority within the company, such as founder, Calisto Tanzi and chief financial officer, Fausto Tonna, created bogus bank accounts, condoned the use of forged financial records, and manipulated the food giant's balance sheet and income statement.

Parmalat, which had annual sales of $9 billion from dairy and juice products, was thrown into crisis in December when the company was forced to admit that US$4.9bn of its assets supposedly held in Cayman Islands funds had gone missing. Since then its balance sheet hole has widened to more than US$12 billion after what Italian police say is 15 years of false accounting.

The Alaskan pension fund is seeking $1 billion in compensation from the firm, it emerged on Monday. However, the suit also lists investment bank, Citigroup and accounting firms Deloitte Touche Tohmatsu and Grant Thornton.

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