Suing over spilt milk
It’s been dubbed “Europe’s Enron” – the saga that has engulfed Italy’s milk-processing giant Parmalat and its senior executives, blue-chip European and American banks, accountancy firms, politicians and 130,000 hapless small shareholders following the discovery in 2003 of a $14bn black hole in its finances. The revelation triggered an eight year marathon of court cases in Europe and America, the disgrace of the Tanzi family that controlled Parmalat, at least one death, the collapse into administration of one of Europe’s most successful football clubs, and grave misgivings about the quality of governance in Italy’s boardrooms. And it’s still going on. Here’s a snapshot of the highlights.
- During the 80s and 90s, Parmalat is hailed as a jewel in Italian commerce as entrepreneur Calisto Tanzi converts his father’s ham retailer in the city of Parma into a global dairy and food giant largely on the basis of long-life milk. - In 2003, bondholders learn that nearly €4bn of funds in a Bank of America account are non-existent. The bank says the transfer document is a forgery. Trading in Parmalat shares are frozen. Tanzi, various family members and several executives are arrested, including feared chief financial officer Fausto Tonna, who tells journalists “I wish you and your families a slow and painful death” as he enters court. At the firm’s offices, investigators find smashed computers and thousands of shredded documents. - In 2004, Parmalat’s debts are fixed at €14.3bn, eight times what the firm had admitted. After initial denials, Luca Sala, Bank of America’s former chief of corporate finances in Italy, admits to participating in a kickback scheme. Furious US creditors file a $10bn class action suit against Parmalat’s former auditors and bankers while Parmalat’s administrators under replacement chief executive Enrico Bondi separately sue Bank of America, Citigroup, Deloitte & Touche and Grant Thornton for $10bn each. The US SEC calls the...
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