Parmalat sues former auditors for $10bn

Parmalat is suing its former auditors Grant Thornton and Deloitte Touche Tohmatsu for $10bn for their role in the dairy giant's financial collapse.

Parmalat is suing its former auditors Grant Thornton and Deloitte Touche Tohmatsu for $10bn for their role in the dairy giant's financial collapse.

In a US lawsuit yesterday, Parmalat claims that because of "the failure of the defendants to properly audit, and in many cases with defendants' active participation, something of the order of $10bn has gone out the door and been stolen, squandered or wasted by the Parmalat insiders".

The Italian company is seeking damages from the umbrella firms Grant Thornton International and Deloitte Touche Tohmatsu as well as their local affliliates in the US and Italy. In the lawsuit, Parmalat claims Deloitte failed to perform the required auditing to satisfy itself "that billions of dollars in claimed assets that were supposedly parked in tax and financial havens" existed.

In one example, referring to a Cayman Islands company set up by Grant Thornton called Bonlat, which was believed to have assets of $4.9bn, Parmalat's suit says: "Deloitte, however, did nothing to verify that Bonlat was a genuine company and that the $4.9bn actually existed. Deloitte simply took Grant Thornton's 'word' that the money was there. It wasn't."

Italian courts appointed new administrators for Parmalat after a scandal last year revealed its debts were about eight times the amounts shown in its accounts. The new management is already suing Citigroup for $10bn.

Deloitte, Parmalat's auditors until January, said yesterday that the suit was unjustified. "It was the actions of Deloitte Italy which led to the fraud being uncovered," it said. Grant Thornton International also said the suit was illegitimate, adding that neither it nor its US affiliate could be held responsible for the actions of its former Italian unit.