Luxembourg authorities probe Parmalat transfers through Cayman Islands

Friday, January 9, 2004

LUXEMBOURG, (AFP): Luxembourg legal authorities have opened an investigation into suspected money laundering in connection with the insolvency of Italian food giant Parmalat, legal sources said here Thursday. A Luxembourg company called Satalux is alleged to have received several million dollars from the Parmalat group through a fund based in the Cayman Islands.

According to Italian press reports, Satalux is controlled by the family of Parmalat founder and former chairman Calisto Tanzi.

The investigation will target suspected money laundering "stemming from crimes and offenses in the framework of a criminal conspiracy or criminal organization," he said.

Meanwhile, the dairy empire wobbled further Thursday when Parmalat's parent company, Parmalat Finanziaria, was likewise declared insolvent as investigators probed deeper into revelations that have stunned the Italian establishment.

Parmalat Finanziaria also announced that it had severed ties with auditing firms Deloitte and Touche and Grant Thornton, and a legal source reported that two auditors from Deloitte and Touche had been placed under investigation along with a former employee of Bank of America.

Italian news agency ANSA reported the two Deloitte and Touche employees are being investigated on suspicion of false reporting and complicity in market rigging.

The scandal engulfing Parmalat erupted last month when the Bank of America disowned the authenticity of a document certifying that a Parmalat financial subsidiary in the Cayman Islands had 5 billion dollars in liquidity as of December 31, 2002.

The affair has also dragged in other international banks that have done business with the company under scrutiny.

"It is a bottomless pit. There is no end in sight," an investigator said Wednesday after a source revealed that Parmatour, a tour operator owned by the Tanzi family which founded Parmalat, had a hole in its accounts of more than two billion dollars..

Italian investigators have interrogated detained executives intensively since last weekend.

German finance regulator BaFin is examining Deutsche Bank's dealings with Parmalat shares and bonds following the collapse and Dutch financial regulators are looking into three subsidiaries.

Citigroup, another top international bank that dealt with the group, is expected to cooperate with Parmalat Finanziaria's administrator Enrico Bondi in providing funds to keep its industrial activities going, financial sources said. 

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