The trial of the man at the heart of Europe's biggest business collapse and 15 of his associates has opened in Milan.
Calisto Tanzi, 66, the founder and former boss of the milk conglomerate Parmalat, faced his accusers in court for the first time yesterday. Mr Tanzi, looking shrivelled and careworn, was one of the few accused to show up, braving furious investors, many of whom lost all they owned when the dairy giant collapsed.
If convicted of financial crimes, the most serious of which is market-rigging, he faces 10 years' jail. His company, based in the city of Parma, aspired to become "the Coca-Cola of milk". Mr Tanzi introduced UHT milk and the Tetrapak into Italy in the 1960s, smashing the monopoly of the milk co-operatives and putting his long-life milk, yoghurts and fruit juices on every Italian family's table. He also pioneered sporting sponsorship as a form of advertising.
After taking Parmalat public in 1990, "Calisto the Great" grew increasingly regal, snapping up foreign food companies and South American football clubs, touring his empire in a Gulfstream corporate jet, showering money on local charities and Italian politicians (€12.4m [£8.5m] went to politicians, investigators claim). In the 1990s Parmalat was one of the Italy's biggest companies, and one of its great success stories.
But its rapid growth was not making the company richer: it was the way Mr Tanzi persuaded banks and investors that Parmalat was in rude health when in fact it had been ailing for years. "It was a reversal of logic," said Vito Zincani, the chief investigating magistrate in the case in Parma. Instead of taking on debt to grow, he said, Parmalat "had to grow to hide the debt".
Rumours about the financial state of the company were rife in 2003 as farmers went unpaid and analysts asked why the group did not use the cash on its apparently healthy balance sheets to pay off some of its debts. But it was still quoted as an "investment grade" stock, and remained the darling of many banks.
In December 2003 it emerged that $4bn (£2.25bn) in cash supposedly held in a Bank of America account in the Cayman Islands did not exist. The company went down like the Titanic, with debts of about €14bn, making it Europe's worst business crash. The United States' Securities and Exchange Commission called it "one of the largest and most brazen corporate frauds in history". Only an emergency law passed by the Italian government saved the core business.
In the following months, as Calisto Tanzi and his closest colleagues were interviewed in prison, investigators uncovered a mountain of fraud that had been growing ever since Parmalat went public.
Its gargantuan appetite for credit made it the esteemed and valued client of numerous banks, Italian and foreign, which did everything in their power to retain the company's custom - and nothing at all, it is argued, to ascertain that Parmalat was a wise investment. Equally under the microscope are the ratings agencies that routinely gave it a clean bill of health. Experts believe Italy still has lessons to learn from Parmalat. A bill to tighten the regulation of companies has yet to become law. Roberto Perotti, a professor of economics at Bocconi University, said: "There is still substantial impunity for financial crimes, and neither the judiciary nor the finance police are equipped to deal with them. Insider trading in Italy... is rampant."
After three hours of procedural hearings, the trial was adjourned until 2 December.
The rise and fall of Calisto Tanzi
* Calisto Tanzi took over the family prosciutto - fine raw ham - business on his father's death in 1958
* A visit to Sweden in 1962 led him to import UHT milk and Tetra Pak into Italy - the cornerstone of his fortune
* He ruled the company with a rod of iron, keeping all decisions within a
tight family circle, even after the firm went public
* Tanzi has blamed the collapse of Latin American economies in the 1990s, and the threatened bankruptcy of Parmatour, the family travel business, for Parmalat's illsReuse content