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Parmalat probers search S&P office

Ratings agency Standard & Poor's said on Thursday Italian police had searched its Milan offices as part of a multinational probe into how food giant Parmalat sold billions of euros in bonds despite its dire finances.
/ Source: Reuters

Ratings agency Standard & Poor's said on Thursday Italian police had searched its Milan offices as part of a multinational probe into how food giant Parmalat sold billions of euros in bonds despite its dire finances.

"We welcome the opportunity to cooperate with the Italian authorities," said a spokesman for S&P in London. "We are victims of what appears to be a massive case of fraud and deception," he said.

An S&P spokesman said the ratings agency was not under investigation itself. Rather, the search was aimed at looking for the information received from Parmalat, the source said.

S&P, which kept an investment-grade rating on Parmalat's debt until early December, joined a growing list of financial firms which have been searched in an investigation into an accounting hole of some 10 billion euros at Parmalat.

The S&P search came a day after tax police took documents from the Milan offices of U.S. investment bank Morgan Stanley and Banca Intesa's Nextra fund management unit.

Those searches were based on a suspicion that the banks may have been aware of the dire state of Parmalat's finances when they handled a 300 million-euro bond, according to a search warrant read to Reuters by a judicial source Wednesday.

Other major banks including Citigroup, Bank of America and Deutsche Bank have also been drawn into the investigation over the past few weeks.

The Bank of America's former head of Italian corporate finance is the only former bank employee among one of at least 25 people formally targeted by investigators in the probe. Those under investigation do not include any current bank employees.

No charges have been filed in the month-old probe into suspected fraud, market rigging and falsified accounts, which has seen the arrest of 11 people, including Parmalat's founder Calisto Tanzi and two former CFOs.

The collapse of Parmalat's finances has threatened some 35,000 jobs worldwide, as well as dairy farmers from France to Brazil.

The crisis also rippled through Italy's economy in January, helping send consumer confidence to an all-time low, figures released by research institute ISAE found.

Parmalat's value also remained unclear as a source close to court-named administrator Enrico Bondi on Thursday dismissed as "pure speculation" a Financial Times report that the company was worth one to two billion euros.

"The only numbers that count are the ones that the extraordinary commissioner (Bondi) will communicate when the job is finished and that's going to take some time yet," the source said, adding that the turnaround expert's completion of his sweeping review was "some weeks away."

Under Italian bankruptcy laws, Bondi, appointed in December, has up to nine months to present a restructuring plan for Parmalat.

So far, prosecutors have put Parmalat's debts at 10-13 billion euros but have given no figure for the value of the firm's operating units. In October 2003, before it slid into crisis, Parmalat's market value was 2.2 billion euros and it claimed total assets of 10.3 billion euros on its balance sheet.

Bondi's effort to keep the 30-nation group together ran into a new potential obstacle as administrators overseeing some Parmalat units filed Chapter 11 bankruptcy petitions in the U.S. in a bid by U.S. insurers to recoup their investments, the Wall Street Journal reported.

The source close to Bondi said "some U.S. funds are trying to put two or three of the businesses into Chapter 11," adding that Bondi "would resist efforts by any single creditors or small group of creditors to advantage themselves at the expense of creditors as a whole."