Parmalat founder in court for `swindle of the century'

A trial stemming from the near collapse of Italian dairy group Parmalat, the EU's biggest financial scandal, opened yesterday before a court in Milan, with company founder Calisto Tanzi in the dock.

Almost two years after a 14-billion-euro (US$17 billion) hole was found in the company's accounts, 66-year-old Tanzi is to be tried alongside 15 other people, including several company administrators and his niece.

Tanzi faces charges of false accounting as well as share-price manipulation.

Two auditing companies -- Grant Thornton, and Deloitte and Touche -- and the Italian subsidiary of Bank of America have also been targeted by prosecutors and face the same charges.

The court case is one part of a giant investigation into events at the company, which collapsed in late 2003, causing one of the biggest financial scandals in Italian history.

The trial is to decide which responsibility lay with Tanzi and which with the others in reports of false information to financial markets that swallowed the savings of about 135,000 investors in Italy.

"We are looking at the swindle of the century," said Francesco Greco, assistant prosecutor charged with the case.

The trial could last several months owing to the large number of witnesses that both sides intend to call, lawyers said.

In fact, the Parmalat affair has spawned two trials, one here and another in Parma, where the company that employed 36,000 people in 30 countries is headquartered.

Tanzi's right-hand man Fausto Tonna and 10 others have already been sentenced to prison terms ranging from 10 months to two and a half years following negotiations with prosecutors.

The affair's two main features were financial engineering, which gave the fictitious appearance that the group had offshore assets that did not exist, and a long series of bond issues, popular as low-risk investments with Italian savers.