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Eight more arrested in Parmalat scandal
Italian police round up more company officials, accountants

MILAN (AP) — Acting on eight new arrest warrants today in the Parmalat scandal, police detained more former company officials as well as outside auditors for allegedly fraudulent bankruptcy, a judicial official said.

Separately, an official from the U.S. Securities and Exchange Commission, which has filed suit against Parmalat for "grossly overstating its assets" to U.S. investors, met today with prosecutors in Milan to discuss how to proceed, a judicial source said.

Another official said prosecutors and the SEC would now look at potential ways to work together in the investigation.

The company, which once was a model of Italian industry but has now filed for bankruptcy protection, has acknowledged a multibillion-dollar hole in its balance sheet. Parmalat's jailed founder, Calisto Tanzi, has admitted to prosecutors that he shifted $620 million US from company coffers to loss-making travel businesses controlled by his family.

Tanzi's lawyer, Fabio Belloni, said none of the missing money had been for his client's personal use and it had been diverted to keep the business afloat.

"It was an attempt to keep going forward, to close certain deals, and give the push to earn in a little way. That's the argument," Belloni said as he arrived at Milan's courthouse for a meeting with prosecutors.

"It wasn't that he put money in his pocket," he said. "The little treasures (or perks) were never there."

Among those named in the new arrest warrants were Parmalat's former chief financial officer Fausto Tonna, as well as another top former financial official, Luciano Del Soldato, according to a judicial official, speaking on condition of anonymity.

In addition, two officials with Grant Thornton, Parmalat's auditor from 1990 to 1999, were also named in the warrant, the official said. A Milan judge has accused branch president Lorenzo Penca, and partner Maurizio Bianchi of having falsely certified Parmalat's balance sheets and of having suggested ways for the company to commit fraud.

Grant Thornton has denied the men had anything to do with any illegal behaviour and says they were in fact "victims" of Parmalat's fraud.

"At the moment, I can't comment on the report and we are trying to ascertain the facts," said Nan Williams, spokeswoman for Grant Thornton International.

The others named in the warrants were Gianpaolo Zini, an outside Parmalat lawyer, and Parmalat officials Gianfranco Bocchi, Claudio Pessina and Giovanni Bonici, the judicial official said.

The official said he believed all eight people named in the new warrant were in custody. There was no confirmation from Bologna's financial police, though, who were co-ordinating the roundup.

The warrants were issued by Parma prosecutors who suspect them of criminal association leading to fraudulent bankruptcy and false accounting.

Those same charges have been levelled against Tanzi, who has been in Milan's San Vittore prison since Saturday.

On Tuesday, a judge confirmed his arrest based on the Parma accusations. Tanzi, who founded the dairy company in 1961, has also been accused by Milan prosecutors of market rigging and making false statements to auditors.

Judge Guido Salvini ordered Tanzi to remain in prison pending formal indictment, saying he might try to tamper with evidence or flee if he were freed. Salvini also called Tanzi's statements claiming to have had no knowledge of any falsification of Parmalat documents "improbable."

Salvini also quoted Tanzi as having admitted that over the years, he directed his officials to divert upwards of $620 million from Parmalat's coffers to travel companies controlled by his family.

Salvini also accused auditors Bianchi and Penca of falsely certifying Parmalat's balance sheets and of having suggested the ``fictitious operations necessary to achieve the fraudulent aims of the group."

In particular, Salvini said the auditors omitted revealing the ``irregular situation" of two Parmalat offshore companies, Curcastle and Zilpa. And he said the two also hatched the idea to create the Cayman Islands-based Bonalt subsidiary at the centre of Parmalat's bankruptcy.

Parmalat was declared insolvent and placed under the supervision of turnaround expert Enzo Bondi after it was revealed that Bonlat didn't have the $4.9 billion it had claimed was in a Bank of America account.

The case has been compared to the collapse of U.S. energy trader Enron because both companies had bewildering networks of related companies — in Parmalat's case, some 200 subsidiaries.

The SEC, which has alleged Parmalat engaged "in one of the largest and most brazen corporate financial frauds in history," is seeking civil penalties and repayment of any ill-gotten gains with interest for U.S. investors, who hold some $1.5 billion in its bonds and notes.

Salvini said in his order that Tanzi had diverted and hid about $1 billion of Parmalat's wealth "in favor of himself and his companies that were extraneous to the group."