Rome

Parmalat forced to give Rome milk firm back

Dairy group will appeal verdict

Parmalat forced to give Rome milk firm back

(By Denis Greenan). Rome, April 22 - Troubled Italian dairy group Parmalat was forced to give a milk company back to the city of Rome in the latest flap to hit the former giant that crashed in Europe's largest-ever fraudulent bankruptcy in 2003. As a result of the latest judicial move, the board decided to pull its 2012 balance sheet, although the head of the group said it would appeal. A court in the Italian capital decided to assign Parmalat's controlling stake in the Centrale del Latte di Roma milk company back to the city of Rome. "The shares in question must be immediately returned," the court said. Parmalat Chairman Franco Tato' responded by saying: "This is the 14th sentence on the municipal dairy company, that's what Italy is like. "Of course we're going to appeal," he added. "Italy is the country of appeals," he said. In the 1990s the capital's local government sold its stake in the Centrale del Latte to food conglomerate Cirio, which sold it on to Parmalat, but before the end of a five-year ban on a resale. Parmalat said in a statement that it considered the court ruling "mistaken" and was confident it would be reversed on appeal. The company said the 75% stake it held in the Centrale del Latte di Roma was given a value of 95.1 million euros as an asset in its 2012 balance sheet. The Parmalat collapse 10 years ago, dubbed Europe's Enron, led to an 18-year jail term for founder Callisto Tanzi. Last month a Bologna court ruled to release an ailing Tanzi, 74, to house arrest where he will continue to serve his sentence. The seriously ill Tanzi had appealed an 18-year sentence handed down in December 2010. Tanzi has been hospitalized in Parma's Maggiore hospital since February 18. Four major international banks and their managers were recently cleared of market-rigging in the fraudulent bankruptcy. Bank of America, Morgan Stanley, Deutsche Bank and Citibank were found not guilty of charges of share-price manipulation and organizing bond issues to cover their own potential losses. Prosecutors had asked the court to seize assets worth almost 120 million euros and impose a penalty of 900,000 euros on each bank. For the six managers implicated, prosecutors requested jail terms ranging from a year to 16 months. The sentence was greeted with groans from plaintiffs and hugs from defence lawyers. The trial was one of several stemming from the Parmalat scandal, the biggest financial collapse in European history. In a separate trial where disgraced founder Tanzi was handed his 18-year prison sentence, 16 other people received shorter terms. Tanzi had already been sentenced to 10 years in Milan for market-rigging and feeding false information to stock market regulator Consob. In Parma, Tanzi and over 50 ex-members of Parmalat management are at the center of two other trials: one focusing on Parmalat's acquisition of the mineral water company Ciapazzi and the bankruptcy of Parmalat's tourism division Parmatour; and the second dealing with Parmalat's 1999 purchase of milk company Eurolat from Cirio, another food giant which went bankrupt. Tanzi's defence in both Parma and Milan has always been that he was manipulated by banks which, while aware of the group's dire finances, forced him to make acquisitions and issue more bonds so they could recover their loans to the multinational. Parmalat was declared bankrupt in December 2003 after it emerged that four billion euros it supposedly held in an offshore Bank of America account did not in fact exist. The case then snowballed, eventually leading to Parmalat's collapse amid debts of some 14.5 billion euros and a fraud scandal which rocked the Italian financial world. Investigators found that from 1990 until 2002 Parmalat lost money every year except one but nonetheless reported uninterrupted profits and routinely forged documents in order to deceive banks and regulators. The US Securities and Exchange Commission called the case "one of the largest and most brazen corporate financial frauds in history". Parmalat's bankruptcy left more than 150,000 investors with virtually worthless bonds. Parmalat has since been put back on its feet by corporate turnaround expert Enrico Bondi who, first as government-appointed administrator and later as official CEO, shed the group's non-core activities, cut foreign activities and reduced staff.

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