Prosecutors in the Parmalat fraud case were in court yesterday to convince a judge to order trials for 29 people, ranging from the dairy giant's founder to former company financial officers and accountants.
The closed door preliminary hearing at Milan's courthouse was the first of at least two hearings scheduled to decide on the prosecutors' requests for indictments, and judge Cesare Tacconi was not immediately expected to issue a ruling.
Prosecutors earlier this year formally requested the indictment of Calisto Tanzi, Parmalat's founder and former chief executive, as well as several other former company employees, including top financial officers and accountants.
The multinational company's acknowledgment in December that it didn't have the US$5 billion it had claimed was in a Bank of America account stunned the business world.
Shortly after the first revelations, Parmalat, once held up as a model of enterprising, family-run Italian companies, went into bankruptcy protection. An audit during the early days of the probe put the company's debt at US$18 billion, eight times higher than the company claimed in its accounts.
Under Italian law, institutions can be indicted as well as people, and the prosecutors' request for indictment cited Bank of America and auditors Deloitte & Touche SpA and Grant Thornton's former Italian branch.
Alleged crimes listed on the indictment included market rigging, providing false information to auditors and blocking the work of stock market regulator CONSOB.
In March, a different judge turned down a request from the prosecutors for a fast-track trial, citing the complexity of the evidence. In the full-blown hearings that will be held, the judge will consider the findings of his own investigation.
The Milan prosecutors have focused on the role of financial institutions, banks and other financial institutions in the scandal.
In a separate probe, prosecutors in Parma have been investigating Tanzi and other former top executives for alleged fraudulent bankruptcy and other charges. The Parma probe is still being conducted.
Tanzi was released from house arrest last week, after spending months under arrest at home, in jail and at hospitals, where he was treated for a heart problem.
Thousands of investors who lost money in Parmalat's crash have been closely watching the judicial procedures in hopes of receiving compensation. Many of them are modest Italian savers.
Enrico Bondi, the government-appointed turnaround expert trying to relaunch Parmalat, has filed suits against the Citigroup, UBS, Deutsche Bank, Credit Suisse First Boston and its former auditors.
He has said that investors could receive proceeds from these suits, and that those who lost savings would be given shares in a newly listed company.
Bondi has said he believes that the financial institutions either abetted the company by disguising its true financial state or received money from Parmalat at the expense of other creditors when there were clear indications its finances were worse than the company had stated.
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