Parmalat accused take the stand

One of the biggest accounting trials in European history will begin later
today as Calisto Tanzi, founder of scandal hit Italian dairy giant Parmalat,
takes the stand alongside ex-directors, lawyers and accountants from Deloitte
and Grant Thornton.

Tanzi and 15 others are charged with market rigging, misleading Italy’s stock
market regulator, and providing false accounting information almost two years
after a black hole of 14bn euros (£9.5bn) was found in the company’s accounts.

The dairy business is alleged to have misled investors by claiming it had
offshore assets that did not exist and borrowing money on the back of these
invented assets. However, it collapsed and left around 135,000 bondholders and
stock market investors empty handed.

Deloitte, Grant Thornton and the Italian offices of Bank of America are
accused of helping a group of senior Parmalat managers, external bankers and
auditors to conceal the true state of the company’s finances.

In June of this year, a Milan judge handed down jail sentences of up to
two-and-a-half years to 11 people, mostly ex-Parmalat executives, including its
former finance chief Fausto Tonna.

In December 2003 Parmalat admitted that a €3.95bn account – which its Cayman
Islands-based subsidiary Bonlat claimed to hold with Bank of America – did not
exist. Soon afterwards it filed for bankruptcy protection and it was only then
that huge debts were discovered.

Parmalat has since undergone a restructuring programme and is now run by
government-appointed administrator, Enrico Bondi, who launched a series of
lawsuits against the banks and accountancy firms involved.

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