Friday, December 10, 2010

Tanzi jailed 18 years for role in EU's US$18bil largest bankruptcy

ROME: An Italian court on Thursday convicted Parmalat founder Calisto Tanzi of fraudulent bankruptcy and criminal association in the 14 billion failure ($18 billion) of his dairy empire and sentenced him to 18 years in prison.
The sentence for the 71-year-old Tanzi was just shy of the 20 years requested by prosecutors for his role in Europe's largest corporate failure. Another 16 defendants were convicted and sentenced to lesser terms, said Tanzi attorney Giampiero Biancolella.
The accusations of fraudulent bankruptcy and criminal association in the Parma trial were the most serious charges against Tanzi stemming from the 2003 collapse, precipitated when Parmalat acknowledged its debt was eight times higher than previously claimed.
Nearly two years ago, Tanzi was sentenced to 10 years in prison in a separate market-rigging trial in Milan, but he continues to live in his estate near Parma. It is rare in Italy for people of his age to serve prison time.
Tanzi has always maintained his innocence and will appeal, Biancolella said.
"This sentence isn't the final word," Biancolella said in a telephone interview, noting that other cases are still under way targeting the banks that sold Parmalat investers the bad bonds.
Parmalat's image as a simple dairy business - even though it sold milk, juice and baked goods in 30 countries - masked a tangled financial web that unraveled when the company acknowledged a crushing debt of 14 billion ($18 billion).
Parmalat emerged from bankruptcy protection after a two-year reorganization and re-listed on the Milan Stock Exchange in 2005.
Lawyers representing some 40,000 defrauded bondholders have been trying to seek compensation from Tanzi himself as well as the banks that had sold them bad Parmalat bonds. The banks have always denied wrongdoing, claiming they were equally duped.
In the parallel civil portion of the case, the court on Thursday awarded investors a provisional 5 percent of their investment to be paid by assets seized from Tanzi and others following the collapse, Biancolella said.
Tanzi has blamed the banks for the labyrinth of shaky deals that both helped the once-simple dairy business grow into a global empire and led to its collapse. - AP

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