Italy probes Parmalat travel unit

The investigation is spreading

Italian investigations into the fall of Parmalat are now focusing on the travel company owned by the family of disgraced founder Calisto Tanzi.

According to court papers, Mr Tanzi has already admitted siphoning off 500m euros (£347m; $629m) to fund Parmatour.

Media reports have indicated that the actual figure many be as much as 2.5bn euros, something Parmatour has denied.

Prosecutors have alleged that Mr Tanzi hid losses of about 10bn euro via a web of complex offshore accounts and funds.

'Unfounded' allegations

The month-long investigation into Parmalat has involved former company executives, family members and legal advisors, as well as banks which provided financing.

Mr Tanzi's daughter Francesca sits on the board of Parmatour, which sells trips to holiday villages in Italy, Zanzibar, the Seychelles and the Maldives.

The company said that press reports relating to the amount of money that was pumped into Parmatour were "sensationalist" and "unfounded".

It stressed that the company was still operating and had recently run sold-out tours to its main Italian and foreign destinations.

Heading home

Elsewhere, the former head of Parmalat's Venezuelan business is expected to leave for Italy on Thursday, after spending time at a friend's house in Caracas.

Francesa Tanzi sits on Parmatour's board

Giovanni Bonici said he will meet Italian magistrates on Friday to answer questions about his role as president of Bonlat, a Cayman Islands-based subsidiary of Parmalat.

It was the rejection by a bank as fake of documents relating to a Cayman Island bank account that led to the collapse of the Italian food giant.

On Wednesday, prosecutors spoke to executives from Deutsche Bank regarding last year's 350m euro bond sale.

Negotiations are ongoing with US financial company Citigroup about a possible meeting between magistrates and executives.

While untangling Parmalat's accounts is proving to be a complex and time consuming process, the investigation is making headway.

Co-operation

Prosecutor Antonella Ioffredi said on Wednesday that former Parmalat financial chief Fausto Tonna gave them new information and "talked about all the banks linked to the group".

Mr Tanzi also has been co-operating.

What is going to prove difficult, however, is apportioning blame as most of those people questioned have pointed the finger at someone else.

Mr Tonna 's lawyer claims he had only obeyed orders from Mr Tanzi.

The 65-year-old Mr Tanzi, meanwhile, has said that while he was aware of the mounting losses, any cover up was done by managers acting on their own.

No charges

Both Mr Tonna and Mr Tanzi are now in jail, along with four other Parmalat executives and accountants. No one has yet been charged.

However, that has not stopped the effects of the scandal reverberating around the globe.

In Brazil, Agriculture Minister Roberto Rodrigues said the government would intervene to prop up milk prices should a glut of unsold produce hit the market. Parmalat is the second biggest buyer of Brazilian milk.

The company allegedly owes Latin American producers millions of dollars.