PracticeAuditAuditors named in Parmalat lawsuit

Auditors named in Parmalat lawsuit

Grant Thornton International and Deloitte Touche Tohmatsu have both been named in a billion dollar lawsuit alleging violations of the federal securities laws by Parmalat and some of its directors.

Link: Grant Thornton may sever ties with Italian arm

The lawsuit was prepared by US-based law firm Milberg Weiss on behalf of institutional investor, Southern Alaska Carpenters Retirement Trust.

The action was filed in the United States District Court for the Southern District of New York and relates to the purchase of Parmalat securities from the 5 January 1999 to 29 December 2003.

It charges ‘certain of Parmalat’s senior insiders and its legal, accounting and financial advisors with violations of the Securities Exchange Act of 1934’.

Grant Thornton SpA audited Parmalat subsidiary Bonlat, where the accounting hole was uncovered, while Deloitte is the auditor of Parmalat.

The lawsuit alleges that ‘Parmalat’s senior insiders, together with Parmalat’s legal, accounting and financial advisors, concocted a massive scheme whereby they overstated Parmalat’s reported profits and assets for more than a decade’.

It goes on to say: ‘The alleged scheme involved the creation of bogus bank accounts, the use of forged financial records and the manipulation of Parmalat’s balance sheet and income statement via fictitious investment assets and sham transactions, and was designed to and did allow defendants to divert approximately $1bn to themselves and/or to companies controlled by them via professional fees and clandestine asset transfers and enabled Parmalat to raise more than $5bn from unsuspecting investors from the sale of newly issued securities.’

Deloitte Touche Tohamtsu and Grant Thornton International have not yet responded to the lawsuit.

Milberg Weiss is urging anyone who purchased Parmalat securities during the period in question and come forward to participate in the lawsuit.

Related Articles

Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

1d Martin Herron, MHA MacIntyre Hudson
Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

Audit Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

6d Emma Smith, Managing Editor
PCAOB sanctions former Deloitte Turkey CEOs over altered documents

Audit PCAOB sanctions former Deloitte Turkey CEOs over altered documents

2w Alia Shoaib, Reporter
KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

1m Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

1m Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

2m Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

2m Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

3m Alia Shoaib, Reporter