Parmalat Now Sues Deutsche Bank As Well

by Ulrika Lomas, for LawAndTax-News.com, Brussels

12 August 2004

Following up a threat to pursue Parmalat's bankers and advisers, administrator Enrico Bondi yesterday launched an action against Deutsche Bank, sueing the bank for $20m. Parmalat paid Deutsche Bank the money three weeks before the dairy company collapsed, and Bondi says other creditors should have got the money. Bondi is reserving the right to seek damages from Deutsche Bank. The bank said that it had not received any notification of Parmalat's action and declined comment.

Last week Parmalat said it was seeking to recover $350m plus interest from UBS relating to a $500m bond issue in 2003. UBS said the transaction was "entirely valid" and it would contest the legal action. Spokesman David Walker said: "We have absolutely no evidence that any UBS employees have done anything misleading, fraudulent or illegal in their dealings with Parmalat." The company argues that it only got the loan because UBS structured deals which helped it hide the true state of the company's finances.

Parmalat's largest claim is against Citigroup, which it is suing for $10bn, alleging that $8bn was "lost, stolen or wasted by Parmalat insiders" with Citigroup's active assistance. Citigroup has dismissed the claim as "without merit" and "a tactical manoeuvre to pressure a deep pocket".

Parmalat was declared insolvent in December after it emerged that more than $4bn supposedly held in Cayman Islands accounts did not in fact exist. Subsequent investigations have revealed a shortage as large as $15bn, covered up by as many as 15 years of false accounting.

In total, Parmalat is seeking at least $1.6bn from former advisers, arguing the money should be shared among all the group's creditors. A number of the advisers are also facing class action lawsuits from Parmalat investors, and are being investigated by regulatory authorities in several countries.

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