Italian court orders Parmalat to pay Citibank $431m bankruptcy damages


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Italian court orders Parmalat to pay Citibank $431m bankruptcy damages

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Parmalat looks set to pay US banking giant Citibank US$431m in damages after a 2008 US ruling related to the dairy's 2003 bankruptcy was upheld by an Italian court.

Last week, the Bologna Court of Appeal ruled that the penalty handed down by the Superior Court of New Jersey in May 2008 be recognized in Italy by Parmalat.

If approved by an Italian bankruptcy court the damages will be paid to Citibank in the form of Parmalat shares, said one report​.

Parmalat collapsed in 2003 with a reported €14bn hole in its accounts. Scores of Parmalat executives were later charged and convicted for their part in the collapse.

In 2004, Enrico Bondi, appointed by the Italian government to oversee the organization of Parmalat, filed a complaint in the US against Citibank and other defendants that served as investment bankers for the dairy prior to its collapse.

Citibank and the other defendants were accused of “facilitating, covering up and profiting from various improper and illegal financial manipulation.”

Denying all the charges, Citibank raised counterclaims, accusing Parmalat of fraud, breach of warranties, negligent misrepresentation, and conversion.

The majority of the claims made against Citibank by Bondi were dismissed by the Superior Court of New Jersey.

In May 2008, after a 70-day trial, a jury returned a verdict against Parmalat on its remaining aiding and abetting claim against Citibank and ruled in favor of Citibank on its counterclaims.

Last week’s recognition of the Superior Court of New Jersey ruling was issued at the request of Citibank.

A source close the case, who asked not to be named, told that Citibank was relieved by the Bologna Court of Appeal ruling.

“Citibank is obviously very happy because it has been accused of being a fraudster​,” said the source.

“The accusation was that Parmalat insiders conspired with directors of Citibank to take actions that were not in the interests of Parmalat.”

“Citibank was a victim of the fraud committed by Parmalat insiders."

The source added that it is “more than likely that Parmalat will take this decision to the Italian Supreme Court.”

Calls made to Parma-based Parmalat by last week were not returned.

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