The Thing Is: It's prosecution pronto as Italians cut the red tape

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Another week passes, and yet more scandal emerges from Italy. While administrator Enrico Bondi attempts to unravel Parmalat's complex finances, prosecutors have been keeping busy by arresting a raft of top executives.

They include former chief financial officers Fausto Tonna and Luciano Del Soldato, and two auditors at the independently owned Italian subsidiary of Grant Thornton. Further arrests are expected. As one source points out: "They [the prosecutors] said they were going to talk with about 20 different people, and I would be a little bit surprised if they are finished."

The prosecutors are moving with speed, putting the investigations into US scandals such as Enron and WorldCom to shame. Whether there is pressure from the Italian Prime Minister Silvio Berlusconi, who wants the EU to allow some form of state rescue package, is not known. Either way, it is not a bad pace of events for a country usually associated with red tape and bureaucracy.

Yet who is to blame - and, indeed, what even happened - is still a long way off being established. Answers are unlikely to come as quickly as the arrests, even if those embroiled are co-operating. Parmalat's founder, Calisto Tanzi, who was arrested two days after Christmas, has admitted moving €500m (£351m) around the company, but insists it was to keep it afloat. He also denies responsibility for covering up an €8bn black hole.

Likewise, what will happen to Parmalat itself is still not known. Mr Bondi is to meet the banks in the next fortnight to set up a line of credit to keep the business running for the next six to nine months. Parmalat has been granted the Italian version of Chapter 11 bankruptcy protection, and is safe from its creditors, but with 36,000 employees, the country's number-one dairy brand needs to keep going. It is understood Mr Bondi is looking for around €50m.

Speculation has grown that Mr Bondi plans to break up the business and sell assets piecemeal. A source working for Parmalat denies this, arguing that cash is not needed because of the safety afforded by net bankruptcy protection, although Mr Bondi has said the football clubs owned by Parmalat are not "indispensable".

More realistically, while he is trying to untangle what looks certain to be a complex web of fraud - spread across multiple subsidiaries, fictitious off-shore accounts, shell companies and tax havens - a sale is hardly feasible.

In the meantime, Mr Bondi will get on with his job, the prosecutors with theirs and everyone else will try to shift the blame. Mr Tanzi has blamed managers below him while Grant Thornton claims its Italian subsidiary was a "victim of fraud". Agnes Belgrave, the Bank of America employee whose signature appears on a forged letter relating to Bonlat's finances, denies any involvement. It appears her signature was copied from other documents.

Demonstrators have taken to the streets of Italy and even the US Securities and Exchange Commission has added its two penn'orth, claiming Parmalat to be "one of the largest and most brazen corporate financial frauds in history".

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