Parmalat founder Calisto Tanzi has admitted to fraud of €500-million, press reports alleged on Tuesday as investigators hunted for billions of euros missing from the insolvent giant Italian food company’s accounts.
As details of the failure of the global dairy group continue to unfold, the scandal is being compared in scale with the frauds at Enron and WorldCom and looks like becoming the biggest such case in Europe.
Meanwhile, the United States SEC commission, which polices stock market activities in the US, has laid a complaint in New York accusing Parmalat and its senior executives of stock fraud by overvaluing assets and undervaluing debts.
The SEC is involved because US investors had put money into Parmalat stocks and bonds, as had many other investors. Their investments have fallen massively in value. Many Italian and foreign banks stand to lose money.
In 2002 Parmalat had sales of €57,5-billion euros and was the eighth-biggest Italian industrial group.
Sources quoted here in newspaper reports said that Tanzi, having tried to deny embezzlement when first interrogated in prison on Sunday, admitted on Monday that he had siphoned away about €500-million euros.
But he held that the money had been used to shore up another company, Parmatour, a travel business owned by his daughter Francesca, which was in severe difficulties for years.
Investigating magistrates however seem unconvinced by these explanations. The La Stampa newspaper reported the financial police was ”looking for the treasure between Monte-Carlo and Ecuador”.
Tanzi was arrested on Saturday after returning to Italy, having been absent from the country when the scandal broke earlier this month.
La Repubblica newspaper said ”the investigators are looking in their search for the Tanzi ‘treasure’ in the direction of Ecuador, the last country Tanzi visited before returning to Italy and where Parmalat has four operating companies”.
La Stampa, quoting what it termed a confidential source among the magistrates, also reported that Tanzi had ”managed big accounts” in Monte-Carlo.
”It is in the banks of these two countries, the first sufficiently far away and with a failing economy, the second classed as a European tax haven” that Italian police were ”trying to recover what is already being called ‘the Tanzi treasure”’, La Stampa said.
Investigators in Parma, where the company is based, and in Milan in the north of the country, were trying to establish exactly how much is missing from the accounts. Last week the figure was put at €7-billion. The latest estimates put the total at €10-billion to €13-billion.
However, government-appointed special administrator Enrico Bondi has said this figure ”is without foundation” and he would soon provide more exact details.
Italian sources close to the matter, who declined to be named, put the shortfall in the company’s accounts at €9,9-billion.
The collapse of Parmalat has scandalised the Italian business world, is causing payment problems for some milk producers in Italy and France, has repercussions in Nicaragua where the group is the biggest milk producer, and has undermined the finances of Italian football team Parma.
In Italy tens of thousand of small investors and thousands of milk producers have been hit by the Parmalat scandal. The price of shares in Parmalat fell from €3 in July to 11 cents at the end of December. The Italian milk producers have not been paid for four months.
The economic daily newspaper Il Sole 24 Ore reported on Tuesday that Tanzi, arrested on fraud charges on Saturday and detained in San Vittore prison in Milan, had told investigating magistrates that he had falsified the Parmalat accounts during the past seven or eight years.
Tanzi (65) risks a prison sentence of 15 years if found guilty.
Parmalat, a household name in Italy for dairy products, biscuits and fruit juices, employs more than 36 000 people in 30 countries and owns the Parma football club.
The group employs 4 00 people in Italy and achieves more than 70% of its sales in Europe and in North and Central America. — Sapa-AFP