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Last Updated: Saturday, 20 December, 2003, 14:08 GMT
Berlusconi to shore up Parmalat
Parmalat products |
Parmalat's crisis brings back memories of Enron
Italian Prime Minister Silvio Berlusconi says his government will bail out Italy's biggest food firm, Parmalat, which is facing bankruptcy.

The firm's shares slumped on Friday after the company admitted to a hole in its accounts which its bank says amounts to 4bn euros (2.8bn; $5bn).

"The government will intervene... to safeguard its jobs," the Italian leader told reporters.

Parmalat employs about 36,400 people in 30 countries.

'Europe's Enron'

Italian prosecutors are investigating suspected fraud at the company, whose crisis has stirred memories of the accounting scandals in America last year.

Parmalat shares
Economy Minister Giulio Tremonti reportedly told cabinet members that Parmalat was "Europe's Enron" - a reference to the US energy giant which collapsed two years ago after admitting that it had concealed the full extent of its debts.

Parmalat, already gripped by a cash shortage, announced on Friday that its bank had declared company documents certifying assets worth 4bn euros to be false, shocking the financial markets.

Mr Berlusconi has promised tighter controls to curb financial irregularities.

"The system of controls that we have inherited... has shown it does not work, so the government must intervene to restore the country's confidence and the country's reputation too," he said.

Administration 'looming'

Parmalat managers were meeting on Sunday to come up a rescue plan.

They are thought likely to take the company into administration next week, winning it temporary protection from its creditors.

But Italian newspapers reported that further irregularities may come to light which would leave the firm facing a total shortfall of almost 9bn euros.

Parmalat's new management team has said the company would ask the Italian authorities to consider legal action over the affair but did not specify against whom.

Mr Berlusconi did not say what measures will be taken to save Parmalat from bankruptcy.

Parmalat admits $5bn black hole
19 Dec 03  |  Business
Italian food giant on the brink
11 Dec 03  |  Business

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