Italy Expands Fraud Probe of Parmalat

Italian prosecutors widened a fraud investigation into dairy group Parmalat on Thursday to two Deloitte auditors and a former Bank of America Corp. executive.

As investigations into suspected crimes spread, Parmalat fired its second set of auditors in 24 hours and accountants Grant Thornton International expelled its Italian unit.

Italy’s market watchdog Consob said it would look into bond and share price moves after lawyers for a group of Parmalat creditors took the market by surprise, saying they had traced $7.7 billion of the insolvent food group’s missing money.

Grant Thornton International said it had decided to cut ties with its Italian affiliate after the auditors failed to provide enough assurances and access to necessary information.

The affiliate audited some of Parmalat’s offshore units, including the Cayman Islands unit at the core of the scandal, while Deloitte & Touche had been responsible for group accounts until being fired by Parmalat on Thursday.

Deloitte denied reports it had failed to make full checks on audits carried out by Grant Thornton when signing off on Parmalat’s consolidated accounts.

Milan prosecutors also said they extended the probe to Luca Sala, who had worked for Bank of America until several months ago, when he became a Parmalat consultant, the judicial source said.