Calisto Tanzi passed the New Year holiday in jail. He has a privileged cell in Number 3 division of Milan's gloomy 19th century prison, San Vittore: plenty of shelf space to store his many books and papers. In the cells around him, fellow prisoners popped little bottles of bubbly bought on the jail's black market. "Auguri", "buon anno", rang from cell to cell. But Italy's fallen "emperor of milk" was in no mood for such melancholy felicitations. He spent a lot of time crying, sources in the jail say, even out in the passage, in full view; inside his cell, he spent a lot of time on his knees, praying.
His wife Anita, with whom five days before he had returned from a mysterious "holiday" in South America, embarked on when his company was already in free fall, was permitted a New Year visit. A long embrace, more tears, sad mutual assurances by the ex-King and Queen of Parma across the formica-topped desk that they were both just fine, no need to worry; then the grocer's son turned global mogul turned disgraced bankrupt was left alone again with his thoughts.
Last month, Mr Tanzi's firm went bust. Its debts are believed to be between €10bn and €13bn, making it the biggest Italian business failure in history. The fact that for years it remained afloat despite such debts was due, says America's Securities and Exchange Commission, to "one of the largest and most brazen corporate frauds in history."
The Parmalat story was, for several decades, a fairy-tale of modern Italy. Tanzi was a 22-year-old university student when his father, proprietor of a grocer's shop in the village of Collecchio, near Parma, died suddenly in 1961. As the oldest son, Calisto did what millions of Italian sons would consider their duty: he abandoned his studies and threw himself into saving the family business.
Today, in those mouth-watering family-run grocers' shops that remain such a striking feature of the Italian townscape, couples like Calisto and Anita, and of similar age, can be seen soldiering away all across the country: wincing under the weight of great haunches of Parma-cured prosciutto ham, slicing mortadella and salami, doling out olives and home-ground pesto sauce and coffee; stocking just enough modern pre-packed items (Parmalat yoghurts and fruit juices prominent among them) to persuade customers who like a good chat when they go out shopping, and who don't mind standing in line or paying over the odds, to remain loyal and keep them in business.
That could have been Calisto Tanzi's modest destiny, too. Instead, he did something extraordinary. While keeping his firm as family-centred as it had been in his father's day, he transformed it into a modern and aggressively expansive dairy business. Springing from a region with one of the proudest culinary traditions in the country - chosen last month as the headquarters for the EU's new Food Safety Agency - he turned the family concern into a symbol of Parma's ability to meet the big world head on.
Long Life milk and the Tetrapak were not invented in Italy, but Tanzi was sufficiently on his toes to become their Italian pioneer. He diversified into pasta sauce, biscuits, yoghurts, fruit juice, ice cream. His plain white juggernaut lorries with their crisp sans-serif typeface and the simple petal logo became as familiar on Italy's roads as Tesco's or Sainsbury's are in Britain.
And then there was the world to conquer: so that by the end, in the middle of last month, Parmalat had more than 5,000 employees in Italy, and more than 30,000 in the rest of the world.
Mr Tanzi's empire was the apotheosis of the Italian family business, and a living denial of what observers claimed to be the Italian family business's limitations. The family, wrote Peter Nichols (Italia, Italia, 1973) is "the accredited masterpiece of Italian society over the centuries, the bulwark, the natural unit, the provider of all that the state denies, the semi-sacred group, the avenger and the rewarder."
In more measured tones, The Economist in 1990 described the family as "the enduring unit of Italian society. It explains the lack of public spirit in Italy, and even the concept of public good. It explains the Mafia, the biggest family of them all. It also explains the pattern of business. From the Agnelli down, Italians like to keep control of their affairs within the family."
The Italian economy is saturated with family companies, to an extent that has no parallel in Western Europe. Most of the country's successful brands, including fashion firms like Benetton and Prada, the white goods manufacturer Merloni and the many small, sophisticated engineering firms responsible for the remarkable economic buoyancy of the north-east. More than eight out of 10 companies employing fewer than 50 workers are family based - but so are more than half the firms employing more than that number.
Such a structure brings distinctive pluses and minuses. "On the credit side," wrote Paul Ginsborg in Italy and Its Discontents (2001), "the elision of family and firm made for very strong identification of the one with the other, and great willingness for personal self-sacrifice... However, grave problems occurred when the family firm grew beyond a certain size. All too often, Italy's entrepreneurs, faced with the choice of relinquishing control or renouncing external financing for new investment, chose the second path. Even then, the future of the firm was far from secure..."
For years, Parmalat appeared to be the living denial of that description: Mr Tanzi managed both to find external financing and to retain control. But historians in years to come may well turn to Mr Tanzi's company as a textbook example of the sort of "grave crisis" than can overtake a family firm that is by all appearances a huge success, and a glory of the Italian economy.
The key problem - and a lot remains to be learned from an investigation that has only been in progress for a couple of weeks - would appear to be the authoritarian control of the paterfamilias, Mr Tanzi himself, who brooked no criticism or rebellion from within the ranks.
It was Mr Tanzi who determined recklessly to preserve his firm's appearance as brilliantly successful, regardless of the cost in lies, falsification, forgery and fraud; wilfully blind to the fact that the only possible conclusion of such a course was what he is now in the thick of: bankruptcy, jail, disgrace.
Parmalat's big moment came in 1990, when it was floated on the Italian stock exchange, the Tanzi family retaining majority control. From being a spunky family dairy, Parmalat grew to become the entrepreneurial symbol of Parma, and Mr Tanzi the city's most expansive benefactor.
He bought the local football team, languishing in the basement of the league, and injected enough money to send them up to the giddy heights of Serie A.
A music lover, he promoted the city's Verdi festival, in honour of the region's most famous composer. A devout Catholic, he paid for the uncovering and restoration of an extraordinary set of frescoes in the city's cathedral.
We have yet to learn when exactly the rot set in: one source close to the investigation said the firm had been "in crisis" since 1995. So where did it all go wrong?
The investigating judges supervising Mr Tanzi's interrogation at San Vittore say that he has so far given two explanations. One is the collapse of Latin American economies and exchange rates during the 1990s - an area where the firm was heavily exposed; the other is the threatened bankruptcy of a family travel company, Parmatour, run by one of Mr Tanzi's daughters, Francesca, to rescue which Mr Tanzi has admitted removing €500m from Parmalat over seven to eight years.
The Latin American and Parmatour debacles threatened to sully the Tanzi family's good name. To prevent that, Mr Tanzi ordered his closest associates, including Fausto Tonna and Luciano del Soldato, two of the firm's former chief financial officers, to create a bafflingly complex web of 200 subsidiary companies based in offshore tax havens, including the Cayman and Dutch Antilles Islands, which would appear to be holding billions of euros in credits from other Parmalat markets.
An offshore subsidiary called Bonlat Financing, for example, claimed it was owed $620m by Cuba's state-owned milk-importing company, Empresa Cubana, for the sale of 300,000 tons of powdered milk - enough to supply every man, woman and child in Cuba with 210 litres of milk per year. Last week, the president of the Cuban company said Parmalat's claims were "totally false, untrue and calumnious".
The jewel in Parmalat's dodgy offshore crown was a purported Bonlat account in a branch of Bank of America, which the company said contained a stupefying €3.95bn. Bonlat's auditor, Grant Thornton SpA, conscientiously wrote a letter addressed to Bank of America for confirmation of the account - but rather less conscientiously gave it to someone at Parmalat to post. It was never sent.
Instead, Mr Tanzi resorted to the most homespun of methods to keep the fiction of the firm's prosperity alive. He ordered one of his trusty lieutenants, Gianfranco Bocchi (also now in jail, in company with Messrs Tonna and del Soldato), to spatchcock a reply to the auditor confirming the account's existence.
Mr Bocchi used a scanner to make imitation Bank of America notepaper, then cut and pasted company stamps and signatures onto it, and Xeroxed and faxed the resulting hodge-podge several times to make it look authentic.
That the Italian office of Grant Thornton was satisfied with such an amateurish deception helps to explain why two of the firm's partners are also in jail and helping investigators with their enquiries.
The crunch was pending for months if not years, but when it came it was like the collapse of a house eaten away by termites, shaken to pieces by a minor earth tremor.
Last month, Parmalat suddenly had need of a mere €150m to redeem a bonds issue. One of the company's banks advised them to use some of the mountains of cash supposedly sitting pretty in the Cayman Islands - but an indignant Bank of America announced that the account did not exist. Whereupon the whole ropey edifice came tottering down.
And for Mr Tanzi, alone with his prayers, tears and documents, the life of a humble grocer may now appear wholly enviable.
Born : Collecchio, an outlying district of Parma, 17 November 1938.
Family: Married to Anita Chiesi; children: Francesca, 38; Stefano, 35; Laura, 30.
Education: Diploma in accountancy.
Career: Succeeded his father as manager of the family grocery business, which included seasoning ham and producing tomato purée (1960); turned to milk production and founded Parmalat (1961); floated Parmalat on the Italian stock market (1990); bought Parma football club (1991); Parmalat is declared insolvent (December, 2003).
Honours: Knight of the Order of Labour Merit of the Italian Republic (1984); honorary degree in economics, University of Parma (1992).
He says: "I didn't understand much about all those things. I realised that there was a particular emergency within my company - I instructed my collaborators to sort things out and they got on with it, they had carte blanche, then they came back and told me that everything was okay. But they didn't tell me in great detail how it had been sorted out".
They say: "He put our town on the map. He will always stay in our hearts." - Paolo Medioli, head of the Parma football team fanclub.Reuse content