Monday, December 29, 2003

Judge adds to fraud charges against Parmalat founder

By Nicole Winfield
The Associated Press

ROME - A judge in Milan ordered Calisto Tanzi, the founder and former CEO of Parmalat, held Sunday on charges of market rigging and making false statements to regulators, adding to the fraud charges leveled against him following the near-collapse of his dairy company.

The order was issued hours after prosecutors questioned Tanzi for the first time after his detention late Saturday in Milan. Tanzi hadn't been seen in days, and was reportedly out of the country as the criminal investigation into the scandal-plagued company intensified.

Prosecutors in Milan and Parma, where the company is based, have each launched investigations into Parmalat's financial crisis, and Tanzi was nabbed Saturday based on a request by Parma prosecutors accusing him of fraudulent bankruptcy. That charge alone could bring up to 20 years in prison, according to Italian news reports.

On Sunday, a Milan judge acting on the request of prosecutors ordered Tanzi held on charges of market rigging and making false statements to regulators, state-run RAI television reported.

Tanzi's attorney, Michele Ributti, told television stations after the interrogation that his client had described his role and the roles of others in Parmalat's operations. When asked about the "missing money" at the company, Ributti said there was no missing money, but that at most there were "nonexistent assets" listed on Parmalat's balance sheet.

He said he planned to ask that Tanzi be freed or granted house arrest.

Parmalat's problems exploded in public Dec. 19, when it revealed that Bank of America Corp. wasn't holding about euro3.95 billion ($4.9 billion) that the Italian company had reported in September. Since then, the estimated amount of money missing from its balance sheet has ballooned.

Italian reports say a total of around euro10 billion ($12 billion) could be missing from Parmalat accounts after what may have been 15 years of false accounting.

The scandal has shaken the Italian business world, and brought calls for an overhaul of the country's regulatory agencies. Premier Silvio Berlusconi has promised swift action.

Parmalat, which has annual sales of around euro7.5 billion ($9.2 billion), produces and sells milk, yogurt, juice and other food products in Europe, the United States and around the world. It employs 36,000 people in 29 countries.

Tanzi founded Parmalat in 1961 and headed it until this month, when he was ousted as chief executive amid deepening questions about the company's finances. He heads a list of about 20 executives, including former financial officers, under investigation for alleged fraud and other charges concerning the suspected falsification of company documents.

On Saturday, Parmalat entered into insolvency status in a move that will give the conglomerate breathing room as it looks to save itself from total collapse. The insolvency status lets Parmalat pay new debts rather than having to deal with outstanding creditors, thereby allowing the company to keep operating.

Business-turnaround expert Enrico Bondi has been named commissioner to run Parmalat's bankruptcy-protection restructuring.

Parmalat's total debt as of Sept. 30 was around euro6 billion ($7.3 billion).


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