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Last Updated: Thursday, 8 January, 2004, 20:19 GMT
Blame spreads in Parmalat probe
Prosecutor carrying Parmalat file
The case against Parmalat is gathering pace
Italian investigators are reportedly quizzing two partners at the local arm of accountants Deloitte & Touche, over their role in the collapse of Parmalat.

The stricken food firm has dropped Deloitte as its auditor, amid concern over long-term accounting malpractice.

And Grant Thornton, which audited some of the more controversial parts of the Parmalat empire, said it had expelled its Italian arm from its organisation.

Parmalat's parent company has now formally entered insolvency.

The move should help Parmalat avoid the attentions of its creditors; estimates of its debts have ballooned in recent weeks, with some as high as 13bn euros (9bn; $16.4bn).

Fall-out spreads

Investigators in Italy and beyond are trying to piece together the background to the collapse of Parmalat, until recently one of Europe's most admired food companies.

The company's founder, Calisto Tanzi, is currently in jail, accused of having falsified the company's accounts for many years.

The scandal has broadened in recent days, however, with some 25 individuals now named as suspects.

The involvement of Deloitte, if confirmed, would be the first time that blame has spread beyond Parmalat and its affiliates.

There are now reports that the many investment banks that helped Parmalat structure its complex international finances could be put in the firing line.

Italian prosecutors on Wednesday met representatives from Citigroup, one of the main international banks that worked with the firm.

Staying alive

Parmalat's management, meanwhile, is struggling to salvage as much as possible from the insolvent firm.

Parmalat's core business, which is anchored on dairy products, where it leads the Italian market, is reckoned to be fairly sound.

But management is believed likely to have to break up the firm in order to stabilise its core finances.

The administration process, which now covers the entire firm, allows it considerable protection from creditors.

Lawyers for some creditors have claimed to have traced $7.7bn siphoned off from Parmalat, a figure disputed by others.




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