US And Italian Authorities Join Forces In Parmalat Investigation

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

07 January 2004

It has emerged that US authorities, including Manhattan's District Attorney, Robert Morgenthau, have joined forces with the Italian authorities to investigate the collapse of Italian dairy giant, Parmalat.

According to recent estimates, more than half of Parmalat's revenue was generated in North and South America, with US investors accounting for more than US$1.5 billion of the company's bond sales.

Observers from within the US legal community have warned that the joint investigation may have implications for US investment banks which helped the firm to sell bonds to US investors, if its accounting is found to be flawed.

According to reports, this could include Bank of America, JP Morgan Chase, Morgan Stanley and Deutsche Bank.

However, it has been argued that such legal liability would be difficult to prove, given several major protections afforded to investment banks with regard to omissions and misrepresentations in their clients' accounts.

Meanwhile, the European Commission is waiting to rule on whether Italy's new bankruptcy laws, changed in order to afford Parmalat similar protections to those available under US Chapter 11 rules, will violate EU state aid rules.

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