Italian prosecutors seek trial for 29 over Parmalat scandal

Thursday, May 27, 2004

Italian prosecutors on Wednesday asked for 29 executives and three financial institutions involved in the scandal over the collapse of the Parmalat food giant to be put on trial, judicial sources said.

Prosecutors want the 29, including Parmalat founder Calisto Tanzi, as well as the Bank of America and auditors Deloitte Touche and Grant Thornton charged with a variety of financial offences over the 17.3 billion dollar scandal.

Wednesday's move follows a decision by an Italian judge in March to turn down a request for a quick trial aimed at bypassing a process of preliminary hearings which in Italy's notoriously slow justice system could take years.

The Milan prosecutors want charges to be laid against the executives and three companies for market rigging, falsifying audits and obstructing the Italian stock market regulator Consob.

Under Italian law, a judge must rule on the prosecution request within five to 10 days.

Parmalat, a vast multinational dairy and foods empire, was declared insolvent in late December in a meltdown that rocked the Italian financial establishment.

The crisis, which recalled the spectacular 2001 collapse of US energy trading giant Enron, broke when Parmalat's Cayman Islands subsidiary found that five billion dollars supposedly held in a Bank of America account did not exist.

While investigators chased the missing millions, Parmalat was placed under special administration by a court to protect it from creditors and the government appointed rescue specialist Enrico Bondi at the head of a management team to save the group from liquidation.

Several Parmalat employees have alleged that the former bosses of the company had ordered documents and computer files to be destroyed ahead of the investigation into the missing billions.

The executives, using nothing more sophisticated than photocopiers and scanners, are suspected of inventing contracts that were shown to banks, frequently to raise fresh cash.

Tanzi, who founded Parmalat in 1961 and turned it into a company with 36,000 employees in 30 countries, faces possible trial along with his son Stefano, his brother Giovanni, and former chief financial officers Fausto Tonna and Luciano Del Soldato.

The 65-year-old has been suffering from heart problems and been hospitalised several times was freed last month after more than three months in detention.

Parmalat meanwhile is expected to present a final version of a restructuring plan on Friday to Industry Minister Antonio Marzano, accompanied by a programme to convert debt into shares.

Parmalat said on Tuesday it expected earnings before interest, tax, depreciation and amortisation from its core businesses to reach 520 million dollars in 2006 on sales of 4.73 billion.

In 2003, the core business generated comparable underlying earnings of 300 million dollars on sales of 4.526 billion.

The company added that the effects of its restructuring should be fully felt in 2007, when sales should come to five billion dollars, with earnings of about 580 million dollars.

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