Italian Prime Minister Silvio Berlusconi said Saturday that the Italian government would not allow the bankruptcy of Parmalat, the giant Italian dairy foods group that shook investors last week with the disclosure that an account supposedly containing almost US$5 billion did not exist.
In Milan, Italy's financial capital, officials said a judicial investigation would be opened to examine possible charges of fraud and providing falsified information to auditors.
At a news conference in Rome, Berlusconi said the Italian government would strive above all to save the "operational part of the company, to safeguard its jobs, and to distinguish the financial side from its business."
Berlusconi, who together with business associates has faced numerous legal challenges to his own vast media empire, also pledged an overhaul of Italy's regulatory framework.
"The system we have inherited does not work," he said.
Parmalat, which teetered near default all week, shocked financial markets on Friday when it said documents showing that the equivalent of US$4.8 billion held by a Cayman Islands affiliate had been declared inauthentic by the Bank of America. The documents had been used by the auditing firm Grant Thornton to certify last year's accounts at the affiliate.
Italian newspapers quoted Economics Minister Giulio Tremonti as describing Parmalat as "Europe's Enron," referring to the collapse two years ago of the huge US energy group. The missing US$5 billion dwarfs a US$1.2 billion accounting scandal at the big Dutch retailer Ahold earlier this year that was often compared to the Enron affair for its combination of questionable business and accounting practices.
Parmalat, which is based outside Parma, an ancient Roman city famous for its ham and cheese, was built into one of Italy's most important multinational groups by Calisto Tanzi. But Tanzi was replaced on Monday last week as chairman and chief executive by a specialist in corporate turnarounds, Enrico Bondi. On Friday, Bondi convened a board meeting and announced afterward that the company would cooperate in any judicial investigation.
Berlusconi said Tremonti would develop a rescue plan and proposals for regulatory reform, which could be presented to the Cabinet as early as tomorrow.
Parmalat could put wind in the sails of proposals Tremonti has made in the past to create a single authority out of the current patchwork of oversight bodies. Notable resistance has come from the Bank of Italy and its chairman, Antonio Fazio, who would lose control of some aspects of bank oversight. Since the introduction of the euro and the creation of the European Central Bank in Frankfurt, the national central banks have lost many powers.
For Berlusconi, the Parmalat affair is potentially damaging. Last week, legislation his center-right government enacted to overhaul the national television system was vetoed by the Italian president, Carlo Azeglio Ciampi. Berlusconi owns the country's largest private television company, and critics said the new legislation favored his interests. Moreover, the Italian economy has been challenged in recent months by the growing industrial might of China.
Cirio, another big Italian food company, defaulted on securities about a year ago, and its founder and chairman, Sergio Cragnotti, is under investigation on fraud charges.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique