Reply #25: Parmalat has been screwing people for ages. Who hasn't heard about this?

[Judi Lynn]

Parmalat Scandal Deepens; May Be Biggest Fraud Ever, from Citizen Works

2004-01-06 | The Parmalat probe continued to widen last week, with reports indicating that the fraud at the Italian dairy giant could be as much as $16.8 billion (far more than WorldCom) and may have been the result of more than a decade of fraudulent accounting.

The scandal began on December 19, when Bank of America revealed that Bonlat, a Parmalat subsidiary in the Cayman Islands, was missing $4.9 billion in claimed assets (about 38% of all of Parmalat's assets). It now appears that bank statements had been forged.

Parmalat has filed for bankruptcy. Its CEO, Calisto Tanzi, has been arrested. A total of 20 company officials, including board members and lawyers, are being investigated. It is not clear yet how deep the fraud will run.

Parmalat had a complex web of more than 200 subsidiaries, many in offshore tax havens like the Cayman Islands and the Antilles. It appears that Parmalat was using an Enron-style accounting shell game to hide liabilities and move money around with these subsidiaries. Parmalat used a multi-layer ownership structure that is very common among Italian corporations.

Many big U.S. banks, including Bank of America, Citigroup and JP Morgan Chase, had business dealings with the company, including raising funds. It is unclear how much they knew what was going on, though Citigroup and JP Morgan both paid SEC fines for allegations that they helped Enron engage in misleading financial deals. One of the financial deals that Parmalat struck with Citigroup was called Bucerono, which means "black hole" in Italian.

More:
http://www.unobserver.com/layout5.php?id=1327&blz=1

~~~~~~~~~~~~~~~~~~
Posted 12/23/2003 12:53 AM Updated 12/24/2003 9:53 AM

Bank of America shouts forgery in Parmalat scandal
By Kevin McCoy, USA TODAY

Italian prosecutors widened an investigation into a possible multibillion-euro fraud at Italian food group Parmalat on Tuesday as Bank of America (BAC) said key financial documents had been forged.
While Italy's biggest food group prepared to seek bankruptcy status, a lawyer representing the United States' third-biggest bank said a statement had been presented to prosecutors in Milan detailing the falsification of Bank of America documents.

Parmalat Chairman and turnaround expert Enrico Bondi met with prosecutors in Parma for about an hour Tuesday. He made no comments after the meeting.

Later Tuesday, Italy's government paved the way for Parmalat to rush into bankruptcy protection.

More:
http://www.usatoday.com/money/world/2003-12-22-parmalat_x.htm

~~~~~~~~~~~~~~~~~~
Parmalat 'is Europe's Enron'Italian food group rocked by 4bn euro black hole
John Hooper in Rome and Mark Milner The Guardian, Saturday December 20 2003

This article appeared in the Guardian on Saturday December 20 2003 . It was last updated at 14:28 on December 30 2003. Parmalat's new chairman, Enrico Bondi, was last night holding an emergency meeting with other board members amid fears of a "European Enron".

The global food group earlier revealed a €4bn (£2.8bn) hole in its accounts - four times as much as was involved in the scandal that rocked the Dutch retailer Ahold earlier this year.

In this instance, moreover, there is a mix of offshore company financing and manifestly false accounting ominously reminiscent of the US energy trading firm's demise.

"To say something smells fishy would be the understatement of the year," Commerzbank analysts said in a note to clients. Government sources said last night that Italy's finance minister, Giulio Tremonti, had told his cabinet colleagues that the Parmalat scandal was "Europe's Enron".

Parmalat's already ravaged bond and share prices plunged after the company announced that Bank of America was not holding funds the group had reported in September. It said the bank had declared as false a document that said a subsidiary of the dairy firm Bonlat had cash and cash equivalents totalling $3.95bn lodged in an account as of the previous December 31.

More:
http://www.guardian.co.uk/business/2003/dec/20/corporatefraud.parmalat

~~~~~~~~~~~~~~~~~~~~~~~
The Latin America Factor in the Scandal at Parmalat
Was South America the problem with Parmalat?

The company's founder, Calisto Tanzi, who is in police custody in Italy, has hinted to investigators that the accounting fraud uncovered at Parmalat was driven partly by a need to hide huge losses at the company's South American operations. A lawsuit by an American pension fund accuses Citigroup of helping Parmalat cover a gap in its balance sheet created by a Brazilian subsidiary. And an important figure in the widening investigation, Giovanni Bonici, returned to Italy and surrendered to the authorities last week after briefly hiding in Venezuela, where he once ran Parmalat's local unit.

But many analysts doubt that Parmalat's operations in South America, unprofitable though they are, could possibly have brought down a giant dairy and food company with operations in 31 countries.

Senior executives of the main South American unit, Parmalat Brasil, said they were ''flabbergasted'' and ''overwhelmed'' by assertions that it had helped propel Parmalat's sudden dive into insolvency. As they fight a daily battle to keep Parmalat Brasil running, they expressed fury at the bad news from the home office in Italy. ''What we are reading in the papers should not even be on the business pages, but in the crime section,'' fumed one executive, speaking on condition of anonymity.

More:
http://query.nytimes.com/gst/fullpage.html?res=9803E2DB1230F930A25752C0A9629C8B63