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Ex-BANK OF AMERICA Banker Paid Millions Over Parmalat

By Emilio Parodi


MILAN (Reuters) - A former Bank of America Corp. executive under investigation in the Parmalat fraud case has admitted he received millions of dollars from work linked to the food firm but said the payments were commissions, judicial sources said on Friday.

The sources said Milan prosecutors had discovered two Swiss bank accounts linked to Luca Sala, the former head of Bank of America's (NYSE:BAC - News) corporate finance division in Italy, which had received more than $30 million in deposits since 1997.

Sala, under investigation for suspected market rigging and money laundering, told magistrates he had received the money as bonuses for work connected to Parmalat before Italy's biggest listed food group went insolvent last December, they said.

"He said they were commissions for his work as an agent hedging the bank against political risks" stemming from Parmalat financing, a judicial source said without elaborating.

Sala, who quit Bank of America last year to work as a consultant at Parmalat has offered to forfeit some of the money, said the sources, who asked not to be identified.

The Wall Street Journal reported on Friday that Sala had told investigators he misappropriated $27 million in a kickback scheme involving Parmalat.

The former banker is one of more than two dozen people under investigation in one of the world's biggest fraud scandals, which has raised questions about banks' dealings with the insolvent firm. Nineteen people are under arrest. None have been charged.

RESCUE PLAN SOON

Parmalat's emergency administrator Enrico Bondi is expected to present a draft of a recovery plan to Industry Minister Antonio Marzano early next week, a source close to the situation said on Friday.

Markets are eager to know what Parmalat assets Bondi might try to sell off and how much money the company expects eventually to be able to repay banks and bondholders.

The Parmalat crisis exploded on Dec. 19 after a 4-billion-euro Cayman Islands account documented on Bank of America letterhead was declared false.

Parmalat's debts have since been revealed to be 14.5 billion euros, and founder Calisto Tanzi, one of those in jail, has admitted to misappropriating hundreds of millions of euros.

Seven Italian and foreign financial institutions, including Bank of America, are being investigated to see how much they knew about Parmalat's finances when they bought and sold its bonds or did other business with its former management, news reports have said.

Milan prosecutors questioned Sala for a third time on Friday, focusing on $1.2 billion in private debt sales that they estimate Bank of America arranged for Parmalat.

Prosecutors are investigating whether some of the money was returned to Bank of America, possibly via a trust, a judicial source said.

"Some of that money can be traced to Parmalat's accounts and some can't," the source said.

Sala had said earlier this year that he was a victim of fraud and that he and Bank of America had been duped.

Neither Bank of America nor Parmalat would comment. The bank has previously said it was not aware of alleged improprieties.

Former Parmalat finance director Alberto Ferraris told investigators on Jan. 8 that Shahzad Shahbaz, Bank of America's London-based head of regional corporate and investment banking, helped Sala place the debt, according to a transcript of the questioning obtained by Reuters.