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Parmalat investigators advance probe

Italian prosecutors trying to unravel a multi-billion-euro fraud at Parmalat on Friday started a new round of questioning set to include former CFOs and auditors of the food group.
/ Source: Reuters

Italian prosecutors trying to unravel a multi-billion-euro fraud at Parmalat on Friday started a new round of questioning set to include former CFOs and auditors of the food group.

The prosecutors in Milan and Parma were due to quiz ex-finance directors Fausto Tonna and Luciano Del Soldato as well as Gianpaolo Zini, a lawyer for Parmalat's disgraced chief Calisto Tanzi, judicial sources said.

They were arrested on Wednesday along with two Parmalat accountants and the chairman and a partner of the Italian affiliate of auditors Grant Thornton in a sudden widening of the probe into one of the world's biggest corporate scandals.

Lorenzo Penca, who quit as head of Grant Thornton SpA hours after his arrest, and partner Maurizio Bianchi were also due to face questioning on Friday, as were the two accountants.

Parmalat -- known around the world for its long-life milk -- has been declared insolvent after revelations of a multi-billion-euro accounting hole. It is now under the management of turnaround expert Enrico Bondi.

The spotlight is also turning to Parmalat's bankers who helped fund Parmalat with loans and arranged an estimated eight billion euros ($9.98 billion) in bond sales between 1997 and 2002.

Newspaper La Repubblica quoted a judge, Guido Piffer, as saying in a legal document that investigators needed to clarify "the role of the credit institutions which granted the group credit despite a precarious financial situation".

Bondi is due to meet with banks soon to ask for fresh credit lines which reports have said could be worth 100 million euros.

Capitalia, Banca Intesa and Sanpaolo IMI are among Parmalat's top creditor banks, with a combined exposure of about one billion euros.

Billions missing
Prosecutors believe Tanzi, helped by an inner circle of advisers, falsified Parmalat accounts for years and embezzled more than 800 million euros, saddling the group with debts they estimate at 10 billion to 13 billion euros.

Tanzi was seized six days ago in Milan and has since told investigators that about eight billion euros could be missing from Parmalat's accounts. He has also admitted siphoning off 500 million euros from the publicly-quoted group to family firms.

His lawyer Fabio Belloni said this week that Tanzi knew nothing about finances.

Long-standing concerns about Parmalat's opaque accounts exploded into a full-blown crisis two weeks ago when Bank of America rejected as fake a document purportedly showing a Cayman Islands unit of Parmalat held four billion euros of cash and securities with the U.S. bank.

The Italian unit of Grant Thornton certified the accounts of the Cayman Islands unit. It has denied any wrongdoing.

A warrant has also been issued for the head of Parmalat's Venezuela business, Giovanni Bonici, who is out of the country.

His lawyer Antonino Tuccari said on Thursday that Bonici was willing to return to meet magistrates.

No one has been charged in the case.

Prosecutors and Parmalat's new management team are trying to locate missing money, and one magistrate has said that a trip by Tanzi to Ecuador shortly before his detention in Italy might have something to do with the disappearance.

Ecuadorian newspaper Hoy reported this week that three of the group's firms in Ecuador -- Leche Cotopaxi, Parmalat Ecuador and Prolacem -- were being looked at by investigators.

Doctors on Friday were due to start a medical examination of 65-year-old Tanzi, who has previously suffered a heart attack, to determine whether he should stay in Milan's San Vittore jail.

Italian media reported on Friday that Parma's soccer team could be one of the first of Parmalat's assets to be sold by Bondi as he seeks ways to bring in cash. But a source close to the matter said Parma did not require urgent attention.

Parmalat's 2010 bond was trading little changed in thin, holiday trade in London at 19 percent of face value. Its shares, now almost worthless, have been suspended indefinitely.