2004-1-22
This is Bob Doughty with the VOA Special English Economics
Report.
In December, the Italian food company Parmalat admitted that
almost five-thousand-million dollars the company said it had in a
bank did not exist. The value of the company's debt investments,
called bonds, fell by about seventy-five percent. Within one week,
the company sought protection from its creditors. The company had
failed and was bankrupt.
Company Chairman Calisto Tanzi was arrested in December. So far,
eleven people have been arrested and at least twenty-five people are
under investigation.
Mister Tanzi has admitted to taking at least six-hundred-million
dollars from Parmalat. Investigators are now looking for at least
seven-thousand-million dollars that the company claimed it had.
Parmalat's creditors appointed Enrico Bondi as administrator of
the company while it is in bankruptcy. The Italian Parliament has
given Mister Bondi wide powers to administer the company. The
Financial Times newspaper says Mister Bondi can cancel deals made by
Parmalat up to two year ago.
A lawyer for a group of Parmalat's creditors said some of the
missing money may have been placed in a Bank of America office in
New York City. Carlo Zauli says private investigators have linked
the money at the bank to Mister Tanzi. But the Bank of America says
it has investigated and found no record of so much money.
Fausto Tonna, a financial director and advisor at the company has
also been arrested. So has his wife. One of Parmalat's financial
officials, Gianfranco Bocchi, has admitted to creating false
documents. One claimed that a Parmalat company, called Bonlat
Financing, had five-thousand-million dollars. The company was in the
Cayman Islands.
Bonlat is similar to other companies created by Parmalat in the
Netherlands. These companies exist only on paper. They do not sell
anything. They serve to create the appearance of business activity.
Yet, these companies permitted Parmalat to raise huge amounts of
money. Parmalat sold bonds thirty five times between
nineteen-ninety-five and two-thousand-three. These sales also
created a huge amount of debt.
Parmalat is based in Parma, Italy. It has more than
thirty-six-thousand employees and one-hundred-thirty-nine production
centers all over the world.
This VOA Special English Economics Report was written by Mario
Ritter. This is Bob Doughty.