Calisto Tanzi, the former chief executive of Parmalat, which collapsed five years ago in a massive fraud dubbed “Europe’s Enron”, was sentenced to 10 years in prison by a Milan court on Thursday.
After a trial lasting more than three years, Mr Tanzi, who is 70, was found guilty of falsifying accounts, market-rigging and misleading investors and regulators while at the helm of the Italian dairy group, which collapsed with debts of €14bn ($20bn, £13bn) in Europe’s biggest corporate bankruptcy.
The verdict marks the climax of five years of intense investigation and recrimination since Parmalat imploded just before Christmas 2003. The three judges who delivered the verdict acquitted seven other defendants, who included former colleagues of Mr Tanzi as well as three of Parmalat’s former bankers at Bank of America.
Prosecutors had sought a 13-year sentence for Mr Tanzi, who was described during the trial as “the hub” of the Parmalat fraud who “covered up for everyone else”. Other legal cases surrounding the collapse are ongoing in Italy and the US.
Bank of America said on Thursday night the acquittal of its three former employees “establishes beyond doubt that [they] did not engage in market manipulation. The evidence demonstrated no one knew or could have discovered the true financial condition of Parmalat.” There was no immediate comment from Parmalat.
The collapse of Parmalat rocked the Italian and Europe corporate worlds. One of the triggers was the admission by the company that an account at Bank of America that Parmalat claimed held around €4bn was fake. The group, which had operations in Europe, the US and Latin America, was subsequently revealed to have been misleading investors about its true financial health for years.
At least 100,000 Italian shareholders, including many pensioners, lost their life savings in the collapse. The company has since restructured and re-listed on the Milan stock exchange and continues to operate. The closing of the criminal case against Mr Tanzi marks the end of another phase of the Parmalat saga, but it is not the end. The main trial in the case continues in Parma.
In addition, Enrico Bondi, the administrator of Parmalat, is suing several banks that acted as advisers to the company. He argues that they knew, or should have known, that something was wrong even as they underwrote securities issues on its behalf to investors. The banks reject the claims.
Mr Bondi has recovered around €1.5bn in out-of-court settlements with several banks. But he suffered a setback in October. In a New Jersey court Parmalat was seeking damages of $2.2bn from Citigroup for its alleged role in the collapse of the company. Instead, the court ruled in favour of the US bank and ordered Parmalat to pay $364m in damages to the bank.
That verdict was a blow to Parmalat’s hopes of securing favourable judgments in two other high-profile legal cases stemming from the bankruptcy, against Bank of America and the auditing firm Grant Thornton.
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