Parmalat scandal drains Irish pension funds by €6.4m

The National Pension Reserve fund has confirmed it has suffered a loss of €1.4 million as a result of the financial scandal at Italian food group Parmalat.

Meanwhile, the Irish Association of Pension Funds estimated today an additional €5m was lost by pension funds here due to the scandal.

Parmalat, Europe's fourth-largest food group, collapsed just before Christmas when it emerged that as much as €10 billion may have gone missing.

Lawyers for Parmalat creditors said yesterday they had traced €6.05bn siphoned from the Italian food group, raising hopes of eventually recovering money from the insolvent company.

But one of the lawyers representing a portion of the firm's creditors said they had no documented proof of the funds and Parmalat itself poured cold water on the claims, keeping markets on edge.

A cash trove of that size would be a boon to the food giant after alleged fraud drilled a hole in its accounts that investigators believe might exceed €10bn.

Its creditors include top Italian banks whose shares have been pummelled by fears about loan losses.

Three Italian lawyers Carlo Zauli, Giuseppe Lozupone and Anna Campilii said in the five-page filing to be presented to a bankruptcy court in the northern city of Parma they had traced the funds using investigators and "press talk".

Mr Zauli said it would be an "illusion" to believe proof of electronic transfers of the funds could be found, and the lawyers representing the Parmalat Creditors Committee did not say where the money was being held.

Stock market traders said an initial report of the discovery carried by an Italian website, TGfin (www.tgfin.it), pushed up Italian banking shares, which have been battered recently by their links and loan exposure to Parmalat.

In heavy trading, shares in leading banks Banca Intesa and Capitalia jumped more than 5% at one point. Parmalat debt also edged up in London, with its 2010 bond bid about three points higher, at 23% of face value.

TGfin, part of the Mediaset media group, said a company linked to disgraced Parmalat founder Calisto Tanzi was holding the funds in the form of US bonds in an account with Bank of America.

The bank shares pared their gains after Parmalat said in a statement it had "no knowledge of the existence of €7 billion of US fixed income securities belonging to the Parmalat Group, deposited in general accounts at the Bank of America".

A Bank of America spokeswoman in New York said she had no immediate comment on the TGfin report.

An investigator in Parma said the creditors committee was unknown to Parma prosecutors probing for fraud at Parmalat.

"I don't know them. I've never heard of their name," the investigator said.

The lawyers' filing came as Milan prosecutors, who are considering widening their probe to cover insider trading, prepared to meet with regulators, a judicial source said.

A Milan judge rejected a second request by Parmalat founder Calisto Tanzi, who was arrested last month, to be released and put under house arrest, a legal source said. Tanzi has acknowledged siphoning €500m from Parmalat into other parts of his family tourism and other businesses.