CWRUObserver.com -Financial News and Headlines - NYSE, Nasdaq, OTC's

[jmhollen]

Parmalat Founder's Gesture From Jail
Tanzi Says He Would Give Up Assets
By Peter S. Goodman
Washington Post Foreign Service
Sunday, January 4, 2004; Page A13

MILAN, Jan. 3 -- The jailed founder of Parmalat SpA, the Italian food and dairy giant embroiled in one of the largest corporate scandals in history, told prosecutors Saturday that he was willing to surrender personal assets and his stake in the company to the firm's new overseers.

Calisto Tanzi made the gesture as prosecutors here and in the nearby city of Parma continued their investigation into the disappearance of more than $8 billion from the now-insolvent enterprise he founded more than 40 years ago. Tanzi's family firm, Coloniale SpA, owns about 51 percent of Parmalat's shares.

Tanzi's lawyer, Fabio Belloni, confirmed the offer late Saturday, calling it "a gesture of good faith." But it was quickly dismissed by a source close to the company's new chairman, Enrico Bondi, as a hollow bid for sympathy . Bondi, a specialist in rescuing troubled companies, is investigating the scope of the fraud, while seeking a return of whatever funds can be found.

"These are useless gestures that will give little comfort to the shareholders, bondholders, employees and other stakeholders who have been hung out to dry in the scandal," the source said. "Offering probably worthless assets and private yachts is no help to anybody."

Also Saturday, Reuters reported that prosecutors in Parma have joined their counterparts in New York to investigate Parmalat's dealings in financial markets in the United States. According to the report, the joint investigation follows a search launched by New York police in the home and office of Gian Paolo Zini, a lawyer who has worked for Parmalat for years and has been identified by several senior executives as a key player in the scandal, according to interrogation transcripts.

The Reuters report, which was attributed to Italian judicial sources, could not be independently confirmed. Tanzi's lawyer said he knew no more than "what I read in the news." A spokesman for the Manhattan district attorney's office neither confirmed nor denied the launching of a joint investigation, according to Reuters.

The report raised the prospect of greater U.S. involvement in the Parmalat scandal. Milan prosecutors are already collaborating with the U.S. Securities and Exchange Commission, which last week sued Parmalat in federal court in New York, asserting that the company bilked U.S. investors through sales of about $1.5 billion worth of bonds without fully disclosing its debts.

As prosecutors continued to interrogate the principal figures in the scandal on Saturday, the source close to Bondi said prosecutors have issued letters seeking information from major banks with which Parmalat has done business over the years, including Bank of America, Citibank, Morgan Stanley and J.P Morgan Chase.

None of those banks have been accused of impropriety, the source said, but have rather been approached as potential sources of information into the fraud's workings.

Parmalat executives have acknowledged that about $4.9 billion they previously said had been held at Bank of America does not exist.

That disclosure last month greatly intensified the scandal, leading to the arrest of Tanzi and seven other executives, several of whom have told prosecutors that they participated in forging letters to create the appearance of assets, then destroyed documents once the investigation began, according to interrogation transcripts. Two outside auditors from the accounting firm Grant Thornton SpA have also been arrested.

Special correspondent A.H. Maines contributed to this report.

http://www.washingtonpost.com/wp-dyn/articles/A52612-2004Jan3.html