Bank of America files criminal complaint in relation to Parmalat's Cayman subsidiary

Wednesday, December 24, 2003

MILAN, Italy: Bank of America on Tuesday met Italian prosecutors, and filed a criminal complaint in accordance with Italian law charging forgery involving Italian food group Parmalat's Cayman Islands subsidiary, Bonlat Financing Corporation, news agencies reported.

The agencies Ansa and Radiocor said the complaint had been lodged with the prosecutor's office in Milan where a judicial investigation has been opened into possible incidence of fraud in the Parmalat matter.

According to the Financial Times, up to US$12 billion has disappeared from Parmalat's accounts through a worldwide series of false billings and statements that have been made over many years, investigating magistrates believe.

Investigators have found "a whole set-up for falsifying" documents. They believe executives of the Italian food multinational invented numerous transactions at headquarters and at subsidiaries in the Cayman Islands, people familiar with the investigation have told the Financial Times.

"It appears they would invent contracts, commercial and financial, which they would then show to banks to raise fresh cash," one said.

The cash-raising enabled the company to cover up operating losses. "It's not a question of finding the money. There probably is no money, or very little," he added.

Revelations of the shortfall have jolted Italian business and government circles, and press reports suggest that Parmalat, which employs more than 36,000 people in 30 counties, will seek some form of legal protection from its creditors.

The financial vortex is drawing many of the world's largest banks and at least two large auditing firms to the attention of Italian and US regulators and investigators. 

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