Deloitte 'bowed to pressure to stop Parmalat whistleblower'

Deloitte Touche Tohmatsu, the giant accounting firm, bowed to pressure from Parmalat and appeared to muzzle an auditor who was raising tricky questions about the Italian dairy group's finances up to 33 months before its spectacular collapse.

Deloitte Touche Tohmatsu, the giant accounting firm, bowed to pressure from Parmalat and appeared to muzzle an auditor who was raising tricky questions about the Italian dairy group's finances up to 33 months before its spectacular collapse.

Parmalat went under in December 2003 with debts of more than €14bn (£9.5bn). Many of its financial problems related to transfers involving a Cayman Islands subsidiary, Bonlat.

Auditing of the sprawling empire was split between Grant Thornton and Deloitte, with Deloitte responsible for the consolidated audit of the whole group. Both auditing firms have been criticised for their work and are facing civil and potential criminal action over the Parmalat collapse.

Deloitte has always denied wrongdoing but evidence emerged last week that suggests it may have buckled under pressure from Parmalat to stop an auditor asking tricky questions.

Parmalat Participacoes do Brasil (PPB), the group's largest overseas subsidiary, was audited by Deloitte's Brazilian practice. In March 2001 an auditor there, Wanderley Olivetti, raised questions with Deloitte Italy, the group auditors, about large inter-company credits between PPB and Bonlat. A year later he raised the same questions, specifically to do with $554m (£290m) of payments. Both the 2001 and 2002 PPB accounts flag the issue, but nothing appeared in the consolidated accounts.

A few days after Mr Olivetti's March 2002 email, the matter came to a head. In an email on 5 April, Fausto Tonna, the chief financial officer of Parmalat, wrote: "I don't want to hear another word about Olivetti. I'm not willing to compromise with him and we will choose other auditors immediately."

The same day, Adolfo Marmoli, a partner at Deloitte Italy, emailed the head of the group's international practice, James Copeland, saying there was a "major problem" and the "risk exists that for this problem Parmalat headquarters could dismiss Deloitte & Touche as worldwide auditors".

It is not clear how Mr Copeland responded but in May 2002 a deal was agreed in which Mr Olivetti worded his concerns in such a way that Deloitte Italy would not have to qualify the group accounts.

A spokesperson for Deloitte denied that Mr Olivetti had been put under pressure.

Deloitte has had a difficult time recently. On Friday, its UK arm lost a battle to keep charges laid against its chairman, Martin Scicluna, by the UK accounting disciplinary body secret. Mr Scicluna is charged with failing to report Stephen Ives, a Deloitte partner who audited the casino operator Capital Group. Mr Ives was banned as an accountant and fined £870,000 after it was found he had fraudulently obtained a Range Rover from Capital.