Sun, Dec 28, 2003 - Page 11 News List

Parmalat's auditor avows innocence

INVESTIGATION With ousted CEO and founder Calisto Tanzi having fled Italy and up to US$12 billion missing, accountancy firm Grant Thornton may be left holding the bag


Parmalat's auditor insisted Friday that it had no role in any illegal schemes to hide the multi-billion dollar hole in the food company's balance sheet, which first came to light last week and led the conglomerate to ask for bankruptcy protection.

Prosecutors are investigating about 20 Parmalat officials, including founder Calisto Tanzi, for fraud and other charges concerning the suspected falsification of company documents.

Police involved in the investigation last week police raided the Milan offices of Parmalat auditor Grant Thornton, carting off boxes of documents.

The chief of Grant Thornton's Italian operations, Lorenzo Penca, said in a statement Friday, "If anything, it was we who were victims of grave fraud."

Grant Thornton stated "it never came up with or cooperated in producing any bookkeeping or fiscal construction aimed at hiding the real administrative and financial situation of the company of Parmalat, for which it exclusively carried out auditing."

Parmalat revealed Dec. 19 that Bank of America Corp wasn't holding about US$4.9 billion of its funds, as the Italian company had reported in September.

Since then, the estimated amount of money missing from its balance sheet has ballooned.

Italian reports say a total of around US$12 billion could be missing from Parmalat accounts after what may have been 15 years of false accounting.

The company formally filed for bankruptcy protection Wednesday and the Industry Ministry appointed business-turnaround expert Enrico Bondi, who was named Parmalat CEO after Tanzi was ousted earlier this month, to develop a restructuring plan to save the company, which employs thousands worldwide.

Bondi was working hard through the holiday and will present his plan, which must be approved by the government, by the end of January at the latest, the ANSA news agency said.

Meanwhile, Tanzi hasn't been seen in Italy for several days and has offered no public defense since the scandal broke. Italian reports say he is abroad, but has informed investigators he is willing to appear before them.

On Thursday, six life insurance companies that loaned money to two Parmalat units in the Cayman Islands announced they had asked a judge there to help them get back their money after the company defaulted on the loans.

They asked the judge to help them get control of two Parmalat units -- Food Holdings Ltd and Dairy Holdings Ltd -- after they each defaulted on a loan payment earlier this month, the company's lawyers said in a statement Thursday.

The statement, from the New York law firm of Cadwalader Wickersham & Taft LLP, said the loans had been guaranteed by Parmalat. It didn't say how much they were worth.

The companies involved in the petition are: Jefferson-Pilot Life Insurance Co; Monumental Life Insurance Co; New York Life Insurance and Annuity Corp; Principal Life Insurance Co; Transamerica Occidental Life Insurance Co; and Transamerica Life Insurance Co.

Parmalat, which has annual sales of around US$9.2 billion, produces and sells milk, yogurt, juice and other food products in Europe, the US and around the world.

Its base in the wealthy city of Parma is about 400km northwest of Rome.

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