[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 28 September 2005, 14:23 GMT 15:23 UK
Parmalat fraud trial is suspended
Calisto Tanzi, with his head in his hands, sits in a Milan courtroom
Calisto Tanzi has apologised for the collapse of Parmalat
The trial of Calisto Tanzi, founder of scandal-hit Italian dairy giant Parmalat, and other company executives has been suspended on its first day.

The court wants to consider whether to add civil suits by investors damaged by the company's collapse in 2003.

The trial comes two years after a black hole of 14bn euros ($17bn; 9.5bn) was found in the firm's accounts.

Mr Tanzi and 15 others are charged with false accounting, market rigging,and misleading Italy's market regulator.

The case sent shockwaves through Italy where Parmalat is a household name.

Angry investors

Crowds of investors who had lost money because of the scandal gathered outside the court as the hearing began.

Inside the building, the courtroom was packed.

Mr Tanzi arrived about an hour after the trial began and took a seat in the front row, his team of three lawyers and a phalanx of policemen shielding him from cameras and journalists.

He told the court he had been held up in traffic.

After a morning taken up with court proceedings, the trial was adjourned to 2 December to allow the court to consider whether to combine the criminal case with a number of civil suits by the victims of the Parmalat collapse.

Invented assets

The firm is alleged to have misled investors by claiming it had offshore assets that did not exist.

It is said to have borrowed money on the strength of these invented assets, before the spectacular collapse that left investors reeling.

Also in the dock are three companies - the Italian offices of Bank of America and of audit firms Deloitte & Touche and Grant Thornton.

Parmalat founder Calisto Tanzi
What we want is to help reconstruct faithfully what happened at Parmalat
Giampiero Biancolella, Mr Tanzi's lawyer

They are accused of helping a group made up of senior Parmalat managers and a handful of external bankers and auditors to conceal the true state of the company's finances.

In June, a Milan judge handed down jail sentences of up to two-and-a-half years to 11 people, mostly ex-Parmalat executives, who included the firm's former finance chief Fausto Tonna.

Mr Tanzi is expected to testify in the trial, and blame the banks for covering up the scandal.

"He knows what his responsibilities are," said Giampiero Biancolella, one of Tanzi's attorneys. "What we want is to help reconstruct faithfully what happened at Parmalat so the judge can make a decision based on that reconstruction."

Nick Moser, of corporate legal experts Taylor Wessing, said Mr Tanzi would try to convince the court that he was "too far removed" as head of the company to be responsible for the scandal.

"Mr Tanzi is almost certainly going to continue the line he has adopted throughout, which is 'I was not aware of what was going on'," Mr Moser told Radio Five Live's Wake Up To Money programme.

Restructuring programme

Shortly before Christmas in 2003 Parmalat admitted that a 3.95bn euros account - which its Cayman Islands-based subsidiary Bonlat claimed to hold with Bank of America - did not exist.

Parmalat milk packaging
Parmalat plans to re-float in Italy

Not long afterwards Parmalat, which employed 36,000 people in more than 30 countries before the crash, filed for bankruptcy protection.

It was then that the huge debts were discovered, and 135,000 bondholders and stock market investors in Italy lost heavily.

Parmalat has undergone a major restructuring since then.

It is run by government-appointed administrator, Enrico Bondi, who has launched the series of lawsuits against banks and accountancy firms.

How the Parmalat scandal has affected Italy

Parmalat: Timeline to turmoil
28 Sep 05 |  Business
Prosecutors pursue Parmalat banks
29 Jul 05 |  Business
Deloitte considers Parmalat deals
07 Jul 05 |  Business
11 guilty in first Parmalat trial
28 Jun 05 |  Business
Parmalat to return to stockmarket
27 May 05 |  Business
Parmalat market return is delayed
31 Mar 05 |  Business
Banks named in Parmalat inquiry
17 Mar 05 |  Business

The BBC is not responsible for the content of external internet sites


Americas Africa Europe Middle East South Asia Asia Pacific