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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2901)	12/31/2003 11:56:23 AM
From: Glenn Petersen	Read Replies (2) \| Respond to of 3602

Police Arrest Seven as Parmalat Seeks Fresh Funds story.news.yahoo.com By Emilio Parodi MILAN, Italy (Reuters) - Italian police arrested seven people Wednesday suspected of fraud at food firm Parmalat, dramatically widening the investigation into one of the world's largest corporate scandals. Among those picked up were two former Parmalat chief financial officers and the chairman of the Italian affiliate of global auditor Grant Thornton, judicial sources said. Parmalat, under the direction of turnaround expert Enrico Bondi since a multibillion-dollar financial crisis erupted at the company two weeks ago, will ask banks for fresh loans next month to keep its business going, a source close to the matter said. Italian newspapers have said Italy's biggest food company, known globally for its long-life cartons of milk, might seek $126 million from banks to keep running after it was declared insolvent over the weekend. Parmalat's founder and former chairman, Calisto Tanzi, was detained Saturday and questioned for three days as prosecutors tried to sort out what U.S. regulators have called one of the "most brazen corporate financial frauds in history." Tanzi, who built Parmalat into a global food conglomerate employing 35,000 people, told prosecutors there was a $10 billion hole in Parmalat's books, largely in the form of fraudulent bank accounts with nonexistent cash. He has also admitted to diverting some $625 million from the publicly listed company into firms owned by his family. "He knew nothing about finances. He is an entrepreneur. There are many things that he knew nothing about," his lawyer Fabio Belloni said Wednesday. An official from the U.S. Securities and Exchange Commission (news - web sites), which wants heavy fines levied on the company for misleading investors, met Italian prosecutors in Milan Wednesday. STOCK ROUT Parmalat's shares, now virtually worthless, have been suspended from trading, while its bonds -- many in the hands of small investors -- are worth less than one-fifth their face value. "We realize that there are savers and shareholders who have seen their money go up in smoke, that have seen their work go up in smoke, seen everything go up in smoke," said lawyer Belloni. Investigators from Parma, near Parmalat's headquarters in northern Italy, issued nine arrest warrants Wednesday, including a fresh one for Tanzi, who was already under arrest by Milan prosecutors in the financial capital's San Vittore jail. Those seized Wednesday included former Parmalat financial chiefs Fausto Tonna and Luciano Del Soldato, Tanzi's lawyer Gianpaolo Zini and two executives at auditor Grant Thornton SpA: Chairman Lorenzo Penca and partner Maurizio Bianchi. Only one of the nine suspects remains at large: the head of Parmalat's Venezuelan unit, Giovanni Bonici, who is abroad. No charges have been filed in the case. Italy's Grant Thornton SpA, which audited subsidiaries of the Parmalat group, including a Cayman Islands unit at the center of the scandal, said Penca had resigned. The auditors, affiliated with the global Grant Thornton group, have previously denied any wrongdoing. Prosecutors believe that Tanzi, helped by an inner circle of advisers, falsified Parmalat accounts for years and embezzled more than $1 billion, saddling the group with debts they estimate between $12.5 billion and $16.3 billion. Investigators are also checking accounts at Bank of America, a police source said, following the seizure of documents and computer data at a Parmalat subsidiary. Bank of America was not immediately available for comment. Judicial sources said the bank's lawyers were in Parma. Parmalat's crisis erupted earlier in December when Bank of America denied the existence of an account that Parmalat said held nearly $5 billion of cash and securities. Tax police said other banks in the United States and South America had been asked for information in the case.