Tanzi Tried To Sell Parmalat To New York Investment Group

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

01 January 2004

Parmalat's founder, Calisto Tanzi, will remain in Milan's San Vittore prison after judge Guido Salvini refused a request for him to be allowed out under house arrest. The judge said Mr Tanzi should be held in custody because there is a risk he might flee or tamper with evidence, adding that he was "unconvinced" by Mr Tanzi's account of his trip to Ecuador before Christmas, and his claim to have no overseas accounts. Mr Tanzi has denied detailed knowledge of the Cayman Islands subsidiary Bonlat, whose illusory US$4bn assets underpinned Parmalat's solvency.

According to a civil suit filed by the SEC in New York, Mr Tanzi tried to sell the dairy conglomerate in a leveraged buyout to a major US investment group just weeks before it collapsed with a hole in its accounts somewhere between US4bn and 10bn - wiping out market capitalization of less than US2bn and most of bondholders' value. The investment group in question is said by unofficial reports to be New York's Blackstone Group, and the SEC says that Tanzi admitted to Blackstone that Parmalat's accounts were inaccurate.

Mr Tanzi has reportedly admitted to being involved in the alleged fraud at Parmalat, and was formally arrested on Tuesday, but has yet to be charged with any offence. Apparently he said that monies extracted from the group were transferred to his family's Parmatour travel company.

Parmalat is under insolvency protection under a law hastily passed in Italy last week to avoid its outright bankruptcy. Enrico Bondi, Parmalat's administrator, on Tuesday took the first steps towards launching a separate legal action against Mr Tanzi, meeting magistrates in Milan and Parma to request that they try to recover any profits made by individuals or institutions involved in the frauds.

Mr Bondi's powers as administrator allow him to seek damages and retrieve illicitly removed company funds, and he has powers to investigate all of the group's previous transactions. Currently he is estimating the missing funds at between Euros 7bn and 10bn.

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