Parmalat Prosecutors File New List Of Indictment Requests

by Ulrika Lomas, Tax-News,com, Brussels

31 May 2004

After failing to gain indictments last March, Italian prosecutors have now submitted a new list of 29 individuals and institutions they say should face criminal charges over the Parmalat affair, to a different judge.

In March, prosecutors tried to use a 'fast-track' procedure, which was rejected by Judge Guido Piffer who said that prosecutors hadn't presented enough evidence in relation to all 29 accused. This time, prosecutors are following a normal, but probably very lengthy procedure. Prosecutors in Milan and Parma have arrested a number of people but so far no individuals have been formally charged. Any indictments aren't likely to come to trial until 2005 at the earliest.

The list includes company founder Calisto Tanzi, former CFO Fausto Tonna, Deloitte Touche Tohmatsu's Italian office and the former Italian branch of Grant Thornton International (now known as ItalAudit after its expulsion). The charges include market manipulation, false statements and obstructing the market regulator, Consob. Oriana Pound, a spokeswoman for Deloitte Touche Tohmatsu, said "Deloitte Italy believes it behaved properly throughout and in accordance with the standards in force in Italy at the time."

The Italian arm of Bank of America is on the new list, as it was on the previous list, but Betsy Weinberger, a Bank of America spokeswoman, said, "We do not believe the facts support this charge against Bank of America."

Parmalat collapsed after $5bn of balance sheet assets held in a Bank of America Cayman Islands account were found to be fictitious. Also on the list is Luca Sala, the former head of Bank of America's corporate finance team in Milan. According to the prosecutors, Bank of America helped Parmalat sell more than $1.3bn of bonds to private investors in the US between 1997 and 2003. Two former Grant Thornton partners were also named, Lorenzo Penca, who chaired the Italian partnership and Maurizio Bianchi, the partner responsible for the Parmalat audit. GT was responsible for auditing roughly 20 Parmalat units, including the Cayman Island subsidiary that claimed to posess the fictitious assets.

Parmalat's government-appointed administrator, Enrico Bondi, will present his turnaround plan for the insolvent dairy group to creditors on June 4, it was reported last week. Parmalat was granted protection from creditors late last year under a special law passed when the company collapsed. Parmalat says it has EUR13.5 billion in net debt, compared to the EUR1.8 billion it disclosed shortly before its collapse.

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