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S&P; Says Parmalat Misled It

From Bloomberg News

Standard & Poor’s Corp. said Tuesday that Parmalat misled the U.S.-based debt rating service into maintaining an investment grade rating on the Italian dairy company’s bonds.

S&P; gauged the company’s creditworthiness based on certified balance sheets presented by Parmalat’s former management that turned out to be fraudulent, Maria Pierdicchi, managing director of S&P; in Italy, told a parliamentary committee probing the collapse.

“It’s clear that S&P; was a victim of an enormous fraud and that Parmalat had the specific intent to hide its real financial situation,” she told the panel.

Parmalat’s new management said last month that the company had $18 billion in debt and virtually no cash.

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On Jan. 22, police searched S&P;'s office in Milan and took documents related to the company’s decisions on Parmalat’s debt rating. Italian prosecutors have said that S&P; is not a target in the investigation.

Eleven people have been arrested in the Parmalat case, including the company’s founder and former chairman, Calisto Tanzi, two former chief financial officers, and two auditors from Grant Thornton.

On Tuesday, Antonio Bevilacqua, the head of Parmalat’s auditors committee, was added to the list of those under investigation by prosecutors, a person close to the investigation said.

Bevilacqua was not immediately available to comment.

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