First sentences over Parmalat collapse

A MILAN judge sentenced 10 former Parmalat executives and a lawyer to jail yesterday in the first guilty ruling following the €14 billion collapse of Italy’s biggest listed food company.

Judge Cesare Tacconi sentenced the 11 men, including Fausto Tonna, one of Parmalat founder Calisto Tanzi’s closest associates, to jail terms of up to two and a half years for crimes including market rigging and obstructing regulators. However, none of the convicted was expected to serve time in prison as a result, despite their role in Parmalat’s collapse in 2003, one of Europe’s biggest financial scandals.

The sentences stemmed from a plea-bargain agreement with authorities that allows the 11 accused to avoid standing criminal trial in Milan.

But they could still be indicted in Parma, near Parmalat’s headquarters, where there is a wider investigation into dozens of suspects that could bring heavier prison sentences.

Other legal cases are still open in Milan.

“The important thing now is to keep going,” prosecutor Francesco Greco said after yesterday’s closed-door session.

“By the end of July, we should be able to formally request a trial for the banks,” he said, referring to a separate investigation into alleged fraud by Parmalat’s former banks.

Prosecutors have been investigating suspected financial crimes since Parmalat, once one of Italy’s biggest industrial groups, crumbled under the weight of billions of euro of debt, leaving investors with nearly worthless paper.

The executives convicted yesterday included Mr Tanzi’s brother and son, three former chief financial officers, internal auditors and former board members.

As Italian law waives jail terms for first-time offenders sentenced to no more than two years, eight of the 11 convicted were granted suspended sentences.

Mr Tonna, a former chief financial officer who was sentenced to two-and-a-half years, spent several months in detention in 2004 and was expected to be allowed to work with social services instead of returning to jail.

Lawyer Gian Paolo Zini, sentenced to two years, and former chief financial officer Luciano Del Soldato, sentenced to one year and 10 months, were also expected to work with social services in a bid to reduce any jail sentences they might receive in other criminal trials concerning the Parmalat scandal, lawyers said.

One of Italy’s best-known global brands, Parmalat stunned investors 18 months ago when it disclosed a €4bn hole in its accounts.

It has since been placed under administration and has slimmed down its operations.

During the next two months until the end of August, Parmalat creditors will vote on a €12bn debt-for-equity swap at the heart of the company’s recovery plan.

Parmalat plans to relist its shares on the Milan bourse after the summer.