Magazine article Management Today

Brain Food: Behind the Spin - Parmalat

Magazine article Management Today

Brain Food: Behind the Spin - Parmalat

Article excerpt

THE DILEMMA

Not so much dilemma as catastrophe for the Italian dairy group, now dubbed the Enron of Europe. Parmalat's founder Calisto Tanzi and finance director Fausto Tonna were arrested in December, along with seven other Parmalat executives, accountants and advisers on suspicion of false accounting, fraud and market manipulation. The globe-spanning firm went into a nosedive when it was shown to have forged Bank of America letterheads detailing a Eu3.95 billion account with Cayman Island-based subsidiary Bonlat. It was soon declared bankrupt. Two sets of magistrates, one in Milan, the other in hometown Parma, are investigating Parmalat's bewildering tangle of transactions and offshore companies in an attempt to track down the Eu14.5 billion found missing when it imploded. According to Tonna, Parmalat haemorrhaged Eu350 million to Eu450 million a year from the mid-90s to 2001, and that's just the tip of it. Those close to the Parmalat management believe the cover-up went back 30 years. Tanzi's children were also arrested and questioned over Eu500 million in cash diverted into family assets.

THE SPIN

On his arrest, Tanzi said of the offshore accounts into which he had allegedly diverted Parmalat assets: 'I don't know them, I don't know anything about these companies. …

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