Parmalat founder appears in court
Shielded by a cordon of policemen, Parmalat’s former chairman Calisto Tanzi appeared briefly in a packed courtroom in Milan yesterday as angry investors who lost their savings crowded outside for the opening of a trial into the huge fraud at the dairy empire.
Tanzi, who also founded Parmalat, sat quietly through an hour of the hearing as lawyers representing some of the tens of thousands of investors who lost savings requested that their clients to be listed as civil plaintiffs in the case.
Tanzi and 15 others are accused of market rigging, providing false accounting information and misleading Italy’s stock market regulator in the €15bn scandal that was dubbed “Europe’s Enron".
Also on trial are the Italian branch of Deloitte & Touche and the former Italian branch of Grant Thornton, both of which did auditing work for Parmalat.
After about three hours taken up by procedural matters, the trial was adjourned until December 2 to allow court officials time to study requests by the investors’ lawyers.
Outside the courtroom, dozens of investors who lost money when Parmalat crashed almost two years ago voiced their anger and their hopes of recovering some money through the courts.
“It is something that many people are ashamed about,” said 39-year-old Andrea Cogo, who lost around €50,000 invested in Parmalat about a month before the fraud was exposed. “Everyone thought it was a serious company.”
Tanzi looked calm as photographers, TV crews and spectators strained to see him sitting in the front row of the courtroom behind a line of police.
He made no statements, but consulted frequently with his three lawyers and exchanged brief remarks with the prosecutors working on the case – including Francesco Greco, who questioned Tanzi when he was jailed shortly after Parmalat’s crash.
“He wants to show that he has the utmost respect for justice and for the judges, and that he will play an active part in this trial,” said Giampiero Biancolella, one of Tanzi’s attorneys.
“Tanzi will respond to all the questions.”
Biancolella said Tanzi was an hour late because of traffic on his way from Parma, the northern Italian town near where Parmalat is based.
The trial will examine the web of financial trickery that prosecutors allege Parmalat used to cover up its financial losses and raise cash, tactics that the investigators say began shortly after the company went public in 1989.
That web was exposed in December 2003 when Parmalat acknowledged that a €3.95bn account that its Cayman Islands-based subsidiary Bonlat claimed to hold with Bank of America did not exist.
Shortly afterwards Parmalat filed for bankruptcy protection and revealed that its net debt was more than €14bn – eight times higher than it had previously claimed.
The trial will examine who allegedly colluded in covering up Parmalat’s perilous financial state, as well as allegations by prosecutors that the banks that sold Parmalat shares and bonds in the run-up to the crash played a central role.
Financial institutions have repeatedly asserted that they were fooled by fraud at Parmalat and should not be held responsible.
Giovanni Bonici, the sole defendant present besides Tanzi, said he had turned up “to reiterate that I was completely extraneous to any criminal actions.”
Bonici is the former chairman of Parmalat Venezuela and Bonlat, the subsidiary at the centre of the bankruptcy.
“I was managing a firm in Venezuela that was going very badly and I turned it into the best Parmalat company in the world,” Bonici said outside the courtroom. “Therefore I deserve a prize, not to be incriminated.”
Tanzi, 66, founded Parmalat after taking over his father’s salami business as a 22-year-old college dropout.
The company expanded rapidly, growing into a global giant with 36,000 employees in 30 countries, and Tanzi was considered a model example of Italian business success.
Parmalat was a pioneer in developing long-life milk and the international product line expanded to Santal juices, Kyr yoghurt, Archway cookies, and Pomi tomato products.
Prosecutors allege Tanzi also played a key role in co-ordinating the fraud that allowed Parmalat to cover up its losses and eventually brought the company down. He faces a maximum sentence of five years if convicted.
Prosecutors originally asked that 27 people be put on trial in Milan. Eleven of them, including three of Parmalat’s former chief financial officers, were sentenced to up to 2 1/2 years in prison under plea bargains in June, while a separate trial began in January for two accountants who worked at Grant Thornton.
In a spin-off from the main trial, prosecutors have also asked for the indictment of five global banks and securities companies for securities law violations.
Investigators allege the banks provided false information on Parmalat’s finances to investors encouraging them to buy Parmalat stocks and bonds in the run up to the crash.
Meanwhile, prosecutors in Parma are seeking to put Tanzi and dozens of others on trial for more serious charges, including fraudulent bankruptcy and criminal association.
Parmalat Finanziaria SpA is now run by a government-appointed administrator, Enrico Bondi, who has launched a series of lawsuits against banks in an attempt to share the blame for the crash and recoup some money for the company and investors.
Bondi is also restructuring the company to focus on its core brands.
