Parmalat Founder to Remain in Italian Jail
After admitting that Parmalat was drained of hundreds of millions of dollars, the Italian dairy company’s founder was ordered jailed Tuesday in Milan pending trial in what U.S. regulators called one of the “most brazen corporate financial frauds in history.”
In a written ruling, Judge Guido Salvini cited the “concrete risk” that Calisto Tanzi might try to tamper with evidence or flee if he were freed, and called Tanzi’s claim to have had no knowledge of any falsification of Parmalat documents “improbable.”
The ruling came after Tanzi spent another day under questioning from prosecutors trying to shed light on the financial crisis that put the milk and juice giant into bankruptcy protection. His lawyers said he had conceded that hundreds of millions of dollars were shifted from the company, primarily to travel businesses also controlled by the Tanzi family.
But Tanzi insisted that any illegal acts had been carried out by top financial managers on their own initiative. Prosecutors say that as much as $1 billion may have been misappropriated.
Attorney Michele Ributti said Italian news reports that Tanzi had admitted the sum was about $620 million over seven or eight years were “reasonable,” though he declined to confirm a number.
Meanwhile, Stefano Tanzi, Calisto Tanzi’s son and a former Parmalat chief executive, was questioned by prosecutors in the company’s home base of Parma.
Parmalat reported sales of $7.1 billion in 2002 and employs 36,000 people worldwide. Its Chicago-based bakery unit is the third-largest cookie producer in the U.S., turning out brands such as Archway and Mother’s.
The company was declared insolvent and placed under the supervision of a turnaround expert after it was revealed this month that its Bonlat subsidiary in the Cayman Islands didn’t have $4.9 billion it had said was in a Bank of America account.
Ributti said some of the money went to the Tanzi family’s tourism units. “The tourism sector was fed by financing coming from Parmalat. This was confirmed,” he said.
