Ruling lays path for more Parmalat suits
must defend themselves against a $10 billion lawsuit by Parmalat,
ruled a US judge.
Lewis Kaplan's decision paves the way for the Italian dairy giant's chief executive Enrico Bondi to continue his strategy of targeting financial institutions he claims knew of Parmalat's parlous state.
Holes in the firm's accounts, which came to light in December 2003, hid the fact that the company was a whopping € 14 billion in debt.
But the dairy firm has been turned around since Bondi began focusing attention on the role of the banks.
This strategy has certainly had an effect. Last month, Kaplan also allowed Parmalat to pursue a related case against Bank of America.
The company has also sued banks JPMorgan Chase and Unicredito Italiano for € 4.4 billion for their roles in the sale of Parmalat bonds issued from 1997 through 2001.
Financial institutions however have maintained that they were fooled by Parmalat's fraud. But Bondi's case was bolstered earlier this month when Parmalat's former chairman Calisto Tanzi said that financial institutions knew of the company's financial problems.
Facing charges of false accounting and manipulating share prices in Europe's biggest case of corporate fraud, Tanzi told the court Milan that Parmalat and its financial backers knew that the accounts were not in line with reality.
In his statement, Tanzi specifically named Bank of America over its involvement in placing Parmalat bonds. The banks have consistently denied any wrongdoing in Parmalat's collapse.
Tanzi also expressed remorse over the scandal that engulfed the dairy company he founded, and affected thousands of small investors. He claimed that he wasn't trying to evade his responsibilities in the collapse and had full awareness of the company's operations.
Although the disgraced Tanzi is attracting all the headlines, it is Bondi who remains central to the dairy firms ongoing resurgence.
He was appointed by the government in 2003 to rescue the company after the fraud was exposed, and after being elected chief executive in autumn last year is still hot on the trail of Parmalat's financial backers.
