'Immense chasm of debts' at Parmalat travel firm

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The Independent Online

Fausto Tonna, the former chief financial officer of Parmalat, underwent another full day of questioning by Italian prosecutors in Parma yesterday, as inquiries and law suits were initiated from Brazil to the Netherlands by investors, banks and dairy industries reacting to the collapse of the giant food group.

Yesterday the main focus for the two women prosecutors grilling Mr Tonna, Antonella Ioffredi and Silvia Cavallari, was said to be an attempt establish out whether banks that lent to Parmalat were aware of what was going on within the company, or whether they, too, were victims of the huge fraud.

According to leaks from the inquiry, the day-long interrogation of Mr Tonna on Monday produced a startling new revelation. Parmatour, a family tourism company, has until now been identified only as the destination - admitted by Parmalat's founder Calisto Tanzi - of €500m of Parmalat money to keep it afloat. But Mr Tonna has revealed that the accounts of Parmatour conceal "an immense chasm" of debts amounting to hundreds of millions of euros - far more than the published figure for 2002 of €300m. The investigators are pursuing the theory that Parmalat and Parmatour worked in tandem, facilitating the movement of funds out of Italy.

In New York on Monday, investors filed what may be the first law suit against the group, with many likely to follow - there were two more yesterday - claiming that the company's executives, auditors and other advisers participated in "the most shocking corporate financial fraud in history". The investors, Southern Alaska Carpenters' Pension Fund, argue that the defendants "engaged in a practice of manipulating Parmalat's balance sheet, overstating Parmalat's assets by more than $8bn, understating Parmalat's liabilities by more than $3.6bn and booking non-existent sales to overstate Parmalat's earnings and meet profit expectations."

They also contended that the company's auditors, Grant Thornton and Deloitte & Touche, "issued materially false reports of Parmalat's 1999-2002 year-end financial statements", and that "on at least eight occasions" Grant Thornton "failed to send third-party confirmation request letters in connection with its audit of Parmalat's subsidiaries."

The global reach of the scandal was underlined yesterday with new developments on three continents. In Brazil dairy farmers dependent on a Parmalat subsidiary sought government help; in Nicaragua an investigation was underway into an alleged attempt by Parmalat to buy a near-bankrupt bank; while in the Netherlands, regulators began investigating three Parmalat units in the country that issued most of the €7bn in bonds that are still outstanding there.

In Italy a consumer protection association has joined legal proceedings against Parmalat, in an attempt to recoup funds lost by Italian investors.