Europe's Enron
Parmalat
It has been named as “Europe’s Enron” – the legend that took down Italy’s milk selling company Parmalat and its controlling executives, American banks, audit firms, even politicians and 130,000 of its helpless small shareholders after the discovery in the year 2003 of the $14 Billion black hole in the company’s finances.
The company’s fraud was uncovered when the company failed to pay the cash to the bondholders.
Summary:
This discovery led to eight years of court cases in Europe and in America, and it is still going on.
During the 80’s and 90’s Parmalat was a jewel in the Italian Commerce when Calisto Tanzi turned his father’s retail business into a food corporation which mainly sold milk.
In the year 2003, bondholders discovered that nearly $4 Billion of the company’s funds that were allegedly held in an account in the Bank of America were non-existent. The bank claimed that the documents of the funds having been transferred in to Bank of America were a forgery. Instantly, Parmalat’s shares were frozen.
Immediately after the revelation, several family members of the Tanzi family and a few executives were arrested. The officials found smashed computers and thousands of shredded documents at the firm’s offices when they went to investigate further.
In 2004, Parmalat’s debts were fixed at $ 14.3 Billion. After denying initially, Luca Sala, the Bank of America’s former chief of corporate finances in Italy admitted to participating in a kickback scheme. In addition, Parmalat’s finance director, Fausto Tonna, has told interrogators that he participated in a “cut and paste” forgery, in which a document with Bank of America letterhead was scanned and then added to a document verifying a deposit account with that bank holding over $4.98 billion. The document was then passed through a fax machine several times in order to appear authentic.
Its creditors filed a class action suit against Parmalat’s former auditors and bankers while the
It has been named as “Europe’s Enron” – the legend that took down Italy’s milk selling company Parmalat and its controlling executives, American banks, audit firms, even politicians and 130,000 of its helpless small shareholders after the discovery in the year 2003 of the $14 Billion black hole in the company’s finances.
The company’s fraud was uncovered when the company failed to pay the cash to the bondholders.
Summary:
This discovery led to eight years of court cases in Europe and in America, and it is still going on.
During the 80’s and 90’s Parmalat was a jewel in the Italian Commerce when Calisto Tanzi turned his father’s retail business into a food corporation which mainly sold milk.
In the year 2003, bondholders discovered that nearly $4 Billion of the company’s funds that were allegedly held in an account in the Bank of America were non-existent. The bank claimed that the documents of the funds having been transferred in to Bank of America were a forgery. Instantly, Parmalat’s shares were frozen.
Immediately after the revelation, several family members of the Tanzi family and a few executives were arrested. The officials found smashed computers and thousands of shredded documents at the firm’s offices when they went to investigate further.
In 2004, Parmalat’s debts were fixed at $ 14.3 Billion. After denying initially, Luca Sala, the Bank of America’s former chief of corporate finances in Italy admitted to participating in a kickback scheme. In addition, Parmalat’s finance director, Fausto Tonna, has told interrogators that he participated in a “cut and paste” forgery, in which a document with Bank of America letterhead was scanned and then added to a document verifying a deposit account with that bank holding over $4.98 billion. The document was then passed through a fax machine several times in order to appear authentic.
Its creditors filed a class action suit against Parmalat’s former auditors and bankers while the