Parmalat finance chief grilled by prosecutors

PROSECUTORS unravelling one of the world’s biggest corporate scandals interrogated a former Parmalat finance chief on Monday as the crippled food group’s new management prepared to ask banks for emergency credit.

With justice authorities in New York stepping up a probe into the role of US banks in the multi-billion-euro case, Italian prosecutors have accused former chief financial officer Fausto Tonna of helping construct a web of offshore holding companies with fictitious assets that left the global food and dairy group with an accounting hole that investigators believe could exceed €10 billion.

Parmalat’s crisis exploded just over two weeks ago when its new managers revealed an initial €4 billion gap in its accounts, forcing the company to seek protection from creditors.

Enrico Bondi, appointed by the government as administrator, was expected to start a series of meetings with Italian banks yesterday to seek new emergency loans worth between €50 million to €100 million.

Parmalat’s founder Calisto Tanzi, who is also under arrest, has admitted to diverting about €500 million from Parmalat to family companies but denies he knew how it was done. He has also said the accounting hole could be as big as €8 billion.

Eight people have been arrested and are in prison for questioning. No charges have been brought. Prosecutors are trying to piece together how the money disappeared, where it went and whether anything is left.

Italian news reports have said investigators believe €250 million raised in a bond issue by a Brazilian unit of Parmalat ended up in Malta, having passed via an account in the Cayman Islands of a unit of Santander Central Hispano. The Spanish bank has declined to comment on the reports.

Questions have also been raised about US banks which helped manage the sale of about €8 billion worth of Parmalat bonds between 1997 and 2002. US investors bought over $1.5 billion of Parmalat bonds.

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