Just 10 days after two Enron executives were convicted of fraud in Texas, a court in this northern Italian city launches proceedings today aimed at proving fraud in the 14 billion euro (US$18 billion) collapse of the Parmalat dairy giant -- Europe's largest corporate failure.
Parmalat's swift and stunning failure was a blow to corporate Italy and shattered the pride of this pristine city of cobbled streets where the dairy empire was as prized as the city's other gastronomic legacies, parma ham and parmesan cheese.
But Parmalat's clean image as a simple dairy business -- albeit one that sold milk, juice and baked goods in 30 countries -- concealed a tangled financial web that unraveled when company officials admitted in December 2003 that they had lied about how much cash they had on hand.
The company declared bankruptcy, revealing a net debt of more than 14 billion euro -- eight times higher than previously claimed.
"A house of cards," according to chief prosecutor Gerardo LaGuardia, who said in an interview that he expects the eventual trial will end in a rash of convictions. "There is no doubt. The evidence is overwhelming."
Among the 64 people who risk fraud charges are Parmalat founder and ex-CEO Calisto Tanzi, who stepped down as it became clear that Parmalat's cash assets couldn't meet looming deadlines with creditors, and his longtime right-hand man and CFO Fausto Tonna.
The case in Parma is just one of several against former Parmalat executives and a cast of characters ranging from former auditors and financial advisers to employees in the dairy company's overstretched Latin America operations.
But it is the most important because it alleges fraudulent bankruptcy and in some cases criminal association, and carries the highest penalties: up to 15 years in prison. Tanzi and Tonna have both denied wrongdoing.
Last September, Milan prosecutors opened a trial against Tanzi and 15 others on charges of market rigging, providing false accounting information and misleading Italy's stock market regulator. The maximum sentence is five years. Tonna was sentenced to two-and-a-half years in prison in the same case after reaching a pretrial plea agreement, along with 10 others, last June.
A preliminary hearing is scheduled on June 30 in yet another Milan case, this one against banks accused of securities law violations for allegedly providing false information on Parmalat's finances to investors. The banks have denied any wrongdoing.
Prosecutors in Parma are also busy investigating the role of Parmalat's creditor banks in the spectacular collapse.
The Parma proceedings will get off to a slow start. Three days have been scheduled for a closed-door preliminary hearing beginning today, but court officials say the process could extend for months as some defendants are expected to seek pretrial plea agreements. The trial itself isn't expected to begin before fall.
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