Posted on 06/25/2005 5:20:49 AM PDT by bd476
MILAN (Reuters) - A Milan judge has formally charged Parmalat founder Calisto Tanzi, 15 other executives and three financial institutions over their role in the scandal that plunged one of Italy's best-known brands into insolvency.
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Judge Cesare Tacconi sent the executives to trial on Saturday, after eight months of preliminary hearings, on charges including market-rigging, false auditing and of hindering the work of regulators.
The Italian offices of Bank of America, auditors Deloitte & Touche and the former Italian affiliate of Grant Thornton were also charged with helping dairy group Parmalat mislead investors.
Under Italian law, companies can stand trial, facing possible fines or even enforced closure if found guilty. Two Deloitte partners and three Bank of America employees were also indicted as individuals.
Bank of America and Deloitte have denied wrongdoing. Grant Thornton severed ties with its Italian unit in the weeks after the 14-billion euro ($17 billion) accounting scandal broke.
The first hearing is set for Sept. 28.
Milan prosecutors have been investigated for suspected financial crimes since Parmalat filed for insolvency in December 2003. In May last year, they asked a judge to send 29 executives and three companies to stand trial over the scandal.
Since then, two auditors of the former Italian unit of Grant Thornton have been sent to trial, skipping preliminary hearings.
Eleven executives, including three former Parmalat chief financial officers, have asked the Milan judge to plea bargain, seeking reduced sentences of up to two and half years for their roles in the accounting scandal.
The judge is due to rule on the plea bargains on Tuesday.
In March, Milan prosecutors ended the investigative part of a probe into the role of banks in the Parmalat fraud scandal, naming banking giants Citigroup, Morgan Stanley, Deutsche Bank and UBS, along with Italian asset manager Nextra.
The banks have denied wrongdoing.
Prosecutors are expected to request a separate trial for them soon. Lawyers for Calisto Tanzi have argued the banks played a key role in the downfall of Parmalat.
One of Italy's best-known food companies, with diary products and juices lining the shelves of the country's supermarkets, Parmalat stunned investors in 2003 when it revealed a 4-billion-euro bank account did not exist.
Now under bankruptcy administration, it has slimmed down its operations ahead of a planned relisting and creditors will vote from Tuesday until the end of August on a plan to swap 12 billion euros of debt into shares.
Prosecutors in Parma, where Parmalat is based, are conducting a separate set of inquiries into fraud within the firm. They have formally concluded the main part of their probe, naming 71 people, but no one has yet been sent to trial. ($1=.8276 Euro)
Italian food group said bank knew it was in trouble; could be first of many settlements.
June 23, 2005: 5:22 PM EDT
MILAN (Reuters) - Morgan Stanley became the first international financial services company to settle its legal differences with bankrupt dairy group Parmalat, agreeing Thursday to a $188.9 million out-of-court settlement.
The deal, which could pave the way for similar reconciliations with other major lenders, settles "all existing potential actions and claims, including compensation of damages," the two sides said in a joint statement.
Parmalat, which slid into insolvency in 2003, had sued Morgan Stanley (Research) in February this year to recover 135.7 million ($163.4 million) plus interest -- part of efforts by its administrators to recoup funds from banks and investment banks that had arranged deals with the food group in the months leading up to its collapse.
Parmalat had said it reserved the right to claim damages.
At the time, Morgan Stanley said it would "vigorously contest" Parmalat's suit and said it did not know of the firm's insolvency when it handled a bond deal for Parmalat.
Under Italian law, administrators can seek to claw back money paid to financial institutions just before insolvency when there is a suspicion the institutions knew a company was in trouble.
"Morgan Stanley continues to believe that the firm and employees' conduct was proper, and this settlement does not constitute any admission of liability," a spokesman for the investment bank said after the deal was announced on Thursday.
The February lawsuit related to a deal in October-November 2003 in which Parmalat bought back bonds worth 135.7 million.
The bonds were part of a 300 million private debt sale by Parmalat in June 2003. The debt was bought and then resold by Nextra, the fund management arm of Banca Intesa, with Morgan Stanley as intermediary.
Morgan Stanley's second-quarter results, released Wednesday, included $140 million in legal costs largely related to efforts to settle what could have turned into a protracted legal wrangle with Parmalat.
Morgan Stanley has also been undergoing some management changes of late, with the chief executive and several other top managers leaving over the last few weeks..."
Excerpt. Story at CNN
I'll never forget when these folks bought Tuscan dairies, who provide most of the milk to the corner stores in New York.
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