Newsline: Parmalat Scandal Unfolds
Parmalat SpA. is now in bankruptcy, its founder was jailed and then hospitalized, and the future of its worldwide holdings remains a mystery as an ongoing investigation reveals a pattern of deceitful business practices dating back at least a decade.
Hundreds of northeast dairy farmers and cooperatives began receiving overdue payment checks from the company's U.S. division late last month just after it was announced that Parmalat Capital Finance Ltd. would be liquidated.
Repercussions from the Italian dairy giant's collapse have been felt worldwide, and the investigation has brought under scrutiny the business practices of subsidiaries, accountants and even suppliers.
As this issue went to press, Italian authorities were searching the Milan offices of Deutsche Bank while prosecutors continued questioning the food group's founder, Calisto Tanzi. The scandal was even thought to
have led to the suicide of one mid-level Parmalat official.
Tanzi was detained in late December on a Milan street, and prosecutors have accused him of masterminding a web of fraud, market rigging and false accounting. He has admitted that he diverted about 500 million euros from publicly listed Parmalat and that the hole in its accounts might be about eight billion euros.
Tanzi oversaw the expansion of Parmalat from a single milk plant in 1961 to becoming a globe-spanning foods group.