Verdicts expected in massive Parmalat fraud case

2010-12-09 11:07

Milan, Spain – One of Europe’s biggest-ever fraud scandals returned to the spotlight today as an Italian court met to hand down verdicts on former managers of the Parmalat food conglomerate.

The Parmalat scandal seven years ago destroyed the savings of some 135 000 people, left a gaping €14-billion (about R127.8 billion) hole in the company’s finances and destroyed the image of a top Italian business.

Parmalat’s 72-year-old founder and ex-CEO Calisto Tanzi, who has already been sentenced to 10 years in prison for stock market manipulation in another trial, is one of the defendants accused of a range of financial crimes.

Prosecutors have asked for a 20-year sentence for Tanzi and prison sentences for 16 other defendants including 12 years for Tanzi’s brother Giovanni and nine and a half years for Fausto Tonna, the group’s former financial director.

The court hearing was being held in the company’s home town of Parma in northern Italy and officials said the verdicts could come later today.

At the time of its collapse, Parmalat employed around 36 000 people in 30 countries and was a leading light in the Italian business world.

The scandal broke out in December 2003 but investigations showed the group had been in trouble for many years, surviving only on the back of major falsifications of its balance sheets and sophisticated financial instruments.

“Parmalat was the symbol of a sick system and the biggest debt factory of European capitalism,” investigator Lucia Russo said during the trial.

Tanzi has defended himself, saying: “My intention was to save Parmalat.”

Tanzi’s defence has blamed the banks that sold Parmalat bonds to small-time investors even when they knew that the group was insolvent.

The responsibility of Citigroup, Deutsche Bank, Morgan Stanley and Bank of America is the subject of another trial that is ongoing in Milan.

Tanzi has already been sentenced to 10 years in prison – a verdict that was confirmed in May following an appeal.

He served nine months in prison during the investigations but is currently not incarcerated pending a fresh appeal.

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