updated 10/5/2004 9:12:01 AM ET 2004-10-05T13:12:01

Two former auditors at Parmalat were ordered to stand trial for market rigging under a fast-track procedure, the first indictments since the massive fraud scandal at the Italian-based dairy giant.

The two former auditors, Maurizio Bianchi and Lorenzo Penca, both worked at the Grant Thornton firm's former Italian office.

The decision by Judge Cesare Tacconi was made during a closed-door preliminary hearing at Milan's courthouse that marks the beginning of the judicial process over who is to blame for the Parmalat scandal.

Prosecutors were trying to convince a judge to order trials for 29 people, ranging from the dairy giant's founder to former company financial officers and accountants.

Parmalat's founder and former chief executive Calisto Tanzi was not in court.

Prosecutors earlier this year formally requested the indictment of Tanzi as well as several other former company employees, including top financial officers and accountants.

Penca, the former head of the company's Italy branch, and Bianchi, his partner, were arrested Dec. 31, accused by prosecutors of having falsely certified Parmalat's balance sheets and of having suggested the "fictitious operations" needed to carry out Parmalat's fraud.

London-based Grant Thornton International expelled the Italy branch after the two officials were implicated in the scandal.

The two had requested a fast-track procedure before Tuesday's hearing.

The multinational company's acknowledgment in December that it didn't have the euro3.95 billion (US$5 billion) it had claimed was in a Bank of America account stunned the business world. It was the first indication of the extent of the scandal, which the U.S. Securities and Exchange Commission has called "one of the most brazen corporate frauds in history."

Shortly after the first revelations, Parmalat, once held up as a model of enterprising, family-run Italian companies, went into bankruptcy protection. An audit during the early days of the probe put the company's debt at $18 billion, eight times higher than the company claimed in its accounts.

Under Italian law, institutions can be indicted as well as people, and the prosecutors' request for indictment cited the Italian branches of Bank of America and auditor Deloitte & Touche SpA, as well as Grant Thornton's former Italian branch.

Alleged crimes listed on the indictment included market rigging, providing false information to auditors and blocking the work of stock market regulator Consob.

In March, a different judge turned down a request from the prosecutors for a fast-track trial, citing the complexity of the evidence. In the full-blown procedure, a judge assesses the evidence that prosecutors present before ruling on indictments.

The Milan prosecutors have focused on the role of financial institutions, banks and other financial institutions in the scandal.

In a separate probe, prosecutors in Parma have been investigating Tanzi and other former top executives for alleged fraudulent bankruptcy and other charges. The Parma investigation is still under way.

Tanzi was released from house arrest last week after spending months under arrest at home, in jail and at hospitals, where he was treated for a chronic heart problem.

Thousands of investors who lost money in Parmalat's crash have been closely watching the judicial procedures in hopes of receiving compensation. Many are modest Italian savers.

Enrico Bondi, the government-appointed turnaround expert trying to relaunch Parmalat, has filed suits for billions of euros (dollars) against the banks Citigroup, UBS, Deutsche Bank, Credit Suisse First Boston as well as Parmalat's former auditors.

He has said investors could receive proceeds from these suits, and that those who lost savings would be given shares in a newly listed company.

Bondi has said he believes the financial institutions either abetted the company by disguising its true financial state or received money from Parmalat at the expense of other creditors when there were clear indications its finances were worse than the company had stated.

International financial institutions have insisted they were fooled by Parmalat's fraudulent bookkeeping.

Bondi is hoping to save the company by focusing on core products such as milk, yogurt and juice and scaling down the company's international presence from 30 countries to around 10 countries.

Another hearing has been scheduled to decide on the prosecutor's requests for indictments.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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