- The Washington Times - Thursday, January 1, 2004

ROME (AP) — The head of the Italian unit of the Grant Thornton auditing firm resigned and his partner was suspended after they were detained in the Parmalat scandal on suspicion that they helped with potential fraud in the dairy giant’s books.

Separately, the judge who issued the arrest warrants for auditors Lorenzo Penca and Maurizio Bianchi and five Parmalat employees and lawyers said the men should remain jailed because there was a risk they might flee, tamper with evidence or commit other crimes if freed.

The seven were detained Wednesday in Milan, Parma and Como on suspicion that they had helped contribute to Parmalat’s bankruptcy through false accounting and fraud. They have not been charged.

Chicago-based Grant Thornton International said in a statement issued late Wednesday that its Italian branch, Grant Thornton SpA, had accepted the resignation of Mr. Penca as chairman and that Mr. Bianchi had been suspended indefinitely. The Italian branch is an independently owned and operated firm of the umbrella organization.

Grant Thornton SpA served as Parmalat’s auditor starting in 1990. After it was replaced as the company’s main auditor by Deloitte & Touche SpA in 1999, Grant Thornton stayed on to review the books of Bonlat, the Cayman Islands subsidiary at the heart of Parmalat’s bankruptcy.

Parmalat, Italy’s eighth-largest company and the third-largest maker of cookies in the United States, has acknowledged a multibillion-dollar hole in its balance sheet and has filed for protection from its creditors. The case has been compared to the collapse of Houston energy trader Enron, because both companies used related companies to hide losses.

Parmalat’s jailed founder, Calisto Tanzi, has put the size of the hole in its finances at $10 billion and has admitted that he shifted $620 million from Parmalat’s coffers to loss-making travel businesses controlled by his family.

The Italian news agencies Apcom and ANSA reported yesterday that Parmalat’s new leadership was considering selling the company’s Parma soccer club and other assets. Parmalat has hired a consultant to find a buyer for its Archway Cookies business in North America.

One of the judges overseeing the case, Guido Salvini, has accused Mr. Penca and Mr. Bianchi of having falsely certified Parmalat’s balance sheets and of having suggested the “fictitious operations necessary to achieve the fraudulent aims of the group.”

He said the two auditors hatched the idea to create Bonlat.

Grant Thornton had denied any wrongdoing and said its auditors were “victims” of Parmalat’s fraud.

In Wednesday’s statement, Grant Thornton International said it was conducting its own investigation into the Parmalat scandal, as well as a review of the operations of its Italian branch.

Grant Thornton International Chief Executive David McDonnell said he remained confident that the company would pull through “this difficult time.”

Grant Thornton said two deputy chairmen, Carlo Andreis and Contardino Mangiarotti, would serve as acting co-chairmen of the Italian unit until a new chairman is named.

Parmalat was declared insolvent and placed under the supervision of turnaround expert Enzo Bondi when it was revealed that Bonlat didn’t have $4.9 billion it had said was in a Bank of America Corp. account. The bank said the letter guaranteeing the money was fake.

Mr. Bondi replaced Mr. Tanzi as Parmalat chief executive and subsequently was appointed by the government to administer the company during bankruptcy proceedings.

Mr. Penca and Mr. Bianchi were picked up with four Parmalat officials — former financial officers Fausto Tonna and Luciano Del Soldato and employees Gianfranco Bocchi and Claudio Pessina — as well as outside legal counsel Gianpaolo Zini on a warrant issued by prosecutors in Parma.

In his arrest warrant, Parma Judge Peitro Rogato said the men should remain jailed pending formal indictment because they could flee, tamper with evidence or commit other crimes, according to excerpts reported by the Apcom news agency.

“The conduct of the suspects is indicative of a heightened capacity of delinquency and could be concretely repeated, even achieving illegal ends with other companies,” he wrote.

Judge Rogato said Mr. Zini was “essential” to Parmalat’s fraud scheme and said Mr. Tonna, Mr. Bocchi and Mr. Pessina cooperated with authorities only after they had destroyed evidence.

In another judicial document obtained Wednesday by the Associated Press, Mr. Bocchi is quoted as telling prosecutors that Mr. Del Soldato had asked Mr. Pessina to use a hammer to destroy a computer that had been used to forge Bank of America documents.

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