Bank of America rebuffed by Parmalat judge
had its claims for criminal compensation rebuffed by an Italian
judge, Tom Armitage reports.
According to a report in the Financial Times, Cesare Tacconi, a Milan-based judge, delivered the verdict to Bank of America (BofA) at a hearing yesterday, preventing one of the US's biggest financial institutions from securing any compensation arising from criminal proceedings against the bankrupt Italian dairy.
Parmalat collapsed in December 2003 after it emerged that up to 29 company executives, bankers and auditors had forged paperwork falsely crediting it with €4 billion (£2.8 billion). Italian magistrates have since requested that BofA be charged with misleading the market, following its dealings as one of Parmalat's former financial advisors.
Following one of the world's most documented cases of accountancy fraud, Parmalat initiated bankruptcy proceedings in 2003 and BofA subsequently sued, claiming it had been an innocent victim of fraud (a stance which it still maintains), together with several hundred former Parmalat creditors, management consultants Grant Thornton and Consob - Italy's stock market regulator.
BofA was yesterday quoted as saying: "We will carefully analyse today's order. We continue to believe we have a right to be included as a damaged civil party, and we reserve the right to renew our application during the course of the proceeding."
In addition to being excluded from courtroom proceedings, the firm is also awaiting the outcome of $10 billion civil lawsuits filed in the US, and also additional litigation brought forward by a number of former Parmalat shareholders.
At yesterday's hearing, Tacconi also barred Italaudit (the former Italian subsidiary of international auditors Grant Thornton) and management consultants Deloitte and Touche from lodging future compensation claims.
Prior to renewed legal challenges from a number of financial institutions, including Citigroup and BofA, Parmalat's government-appointed administrator Enrico Bondi had refused to recognise many of former creditors' claims for compensation, subsequently wiping hundreds of millions of euros off the company's estimated €14.3 billion debt pile.
But the man spearheading the first independent assessment of Bondi's actions, Parma-based judge Guiseppe Coscioni, overturned that decision at a hearing last month, confirming BofA's status as a former creditor - a move which will make it a major shareholder in a Parmalat company to be relaunched in the first half of 2005.
Bondi's decision to initially reject claims was centred on the fact that Parmalat's creditors continued to keep the company afloat, despite knowing that it was experiencing financial difficulties.
Parmalat administrators have already voiced concerns that the feverous legal backlash, involving both criminal and civil lawsuits, could hamper future restructuring efforts.
