MILAN, Italy – Prosecutors investigating Italian food group Parmalat called for 29 executives and three financial institutions to stand trial for crimes in the multibillion euro scandal, a judicial source says.
On the list were Parmalat founder Calisto Tanzi and the Italian affiliates of Bank of America and auditors Deloitte & Touche and Grant Thornton, for their dealings with the now-insolvent multinational, the source said.
After three months of investigations, the Milan prosecutors’ demand for a trial marked a turning point in a financial scandal that has shaken Italy and called into question Parmalat’s relations with some of the world’s biggest banks and auditors.
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Parmalat, a household name from Canada to Russia to Brazil, stunned financial markets in December when it revealed a massive hole in its accounts and slid into insolvency.
On March 18 Milan prosecutors handed over to judge Guido Piffer a cart packed with 40 binders, including 150 interrogation transcripts.
Piffer must now decide whether to order a trial.
In addition to Tanzi, the 29 people listed included his son and his brother, former board members of Parmalat, outside auditors, internal accountants and three former staff of the Bank of America.
The three former bankers are under investigation over Parmalat credit lines and private placements on the U.S. market.
All those named were accused of market rigging, or conspiring to issue false information about Parmalat’s financial condition that misled markets. The crime is punishable by up to 10 years in jail.
Other charges drawn up by Milan prosecutors included false auditing and regulatory obstruction.
In Milan, Deloitte & Touche and Grant Thornton’s former Italian unit, now renamed Italaudit, had no immediate comment. Bank of America in London declined to comment.
“(The company) could not have done all this with a couple of false letters,” said Giampiero Biancolella, a lawyer for Tanzi. “We will see who was at the helm.”
Prosecutors had up to March 19, or 90 days from the start of the inquiry, to ask a judge to approve fast-track proceedings.
Under the accelerated process, there would be no preliminary hearings and defendants would go straight to trial, perhaps as early as next month.
If the judge rejects the fast-track bid, prosecutors would have to seek more evidence before the suspects could be tried.
The judicial source said prosecutors could present by late March or early April a second request for other Parmalat-linked executives and financial institutions to stand trial.
Five Italian and foreign banks and an asset manager are also being investigated to see how much they knew about Parmalat’s finances when they did business with its former management, news reports have said.
Sixteen people, including Tanzi, are already under arrest in the scandal.
In a separate arm of the probe in Parma, near Parmalat’s headquarters, prosecutors are investigating possible fraud within the group, with dozens of people under investigation for charges including false accounting and fraudulent bankruptcy.
Authorities in the United States, Luxembourg, the Netherlands, Switzerland, Brazil, the Cayman Islands and Austria are also investigating possible crimes.
Parmalat began as a northern Italian delicatessen but within four decades grew into a multinational firm operating in 30 countries.
Under a draft rescue plan published by the group’s new management last week, Parmalat will trim off loss-making overseas activities and swap debt for equity in a bid to ease a debt of $18.1 billion US.
The plan must now get the nod from creditors. Without their approval, Parmalat could be liquidated.
