Parmalat 'black hole' may be even bigger

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Parmalat, the scandal-stricken Italian food giant, is expected to file for bankruptcy protection in the next two days as fears grow that the hole in its balance sheet is even greater than the £2.8bn disclosed last Friday.

The former Parmalat chairman Calisto Tanzi was quoted in the Italian press over the weekend as saying that a €3bn (£2.1bn) bond repayment, detailed in its accounts to the end of September, had not in fact taken place. If so, this would push Parmalat's debts up from €6bn to nearer €9bn.

The group dropped a bombshell last Friday by disclosing that a document purporting to show that one of its subsidiaries held €3.95bn in a Bank of America account was, in fact, false.

State prosecutors have already launched a criminal investigation into Parmalat - which has inevitably been dubbed the "Enron of Europe". Over the weekend they moved into the offices of its auditors, Deloittes and Grant Thornton, and removed documents.

Silvio Berlusconi, the Italian Prime Minister, has pledged to bail the company out to safeguard jobs but has come under attack himself for Italy's lax financial controls and proposals he has put forward to downgrade the seriousness of fraud as a crime. Parmalat is Italy's eighth biggest company and employs 35,000 people.

The scandal erupted after Bank of America told Grant Thornton, the auditor of Parmalat's Cayman Islands based subsidiary Bonlat Financing Corp, that it did not have an account in that name. The bank also "denied the authenticity" of a document certifying that Bonlat had €3.95bn in the account.

Grant Thornton said yesterday that its auditing of Bonlat had brought "significant concerns to light", adding that on each occasion "Grant Thornton itself has been responsible for initiating contact with, and alerting the relevant authorities, including Parmalat's auditors Deloittes". The accounting firm said its audit of Bonlat was "conducted in line with all appropriate standards and procedures".

There is speculation that Enrico Bondi, the restructuring expert brought in to head Parmalat after Mr Tanzi's departure, could apply for the company to be put into "controlled administration" as early as this morning. It faces a deadline today to make the second installment of a $400m payment to buy out investors in one of its Brazilian businesses.