An Italian court on Thursday handed down an 18-year prison sentence against the former chief executive and founder of Parmalat at the close of a trial into one of Europe's biggest fraud scandals. Calisto Tanzi and other former executives were also ordered to pay the food conglomerate they once ran two billion euros (2.6 billion dollars) and to compensate defrauded investors with a sum estimated at around 30 million euros.
The prosecution had requested a 20-year sentence for Tanzi for his role in the 2003 collapse of Parmalat, which has since emerged from bankruptcy. Prosecutor Gerardo Laguardia said he was "fully satisfied" with the verdict. Seventy-two-year-old Tanzi was being tried in Parmalat's home town of Parma in northern Italy for a range of financial crimes along with 16 other ex-managers in a case dubbed "Europe's Enron" by Italian media.
He was not at the trial and is currently not incarcerated. Tanzi's defence lawyer Giampiero Biancolella said his client was "not expecting such a severe sentence" and would appeal the verdict. Tanzi has already been sentenced in a separate trial to 10 years in prison for stock market manipulation. Controversially, he has not been incarcerated pending an appeal and has only served nine months of prison and house arrest.
The Parmalat scandal seven years ago destroyed the savings of some 135,000 people, left a gaping 14-billion-euro hole in the company's finances and ruined the image of one of Italy's leading business empires. Some 30,000 investors from around the world were plaintiffs in the case and will be the ones receiving the compensation ordered by the court.
Parmalat's former financial director Fausto Tonna was also sentenced to 14 years in prison and Tanzi's brother Giovanni got 10 and a half years. Twelve other defendants were also found guilty, while two were acquitted. At the time of its collapse, Parmalat employed around 36,000 people in 30 countries and was a leading light in the Italian business world.
It now has around 14,000 employees in 15 countries including Australia, Canada, South Africa and in South America. After the scandal broke in December 2003, investigations showed the group had been in trouble for many years, surviving only on the back of major falsifications of its balance sheets and sophisticated financial instruments. "Parmalat was the symbol of a sick system and the biggest debt factory of European capitalism," investigator Lucia Russo said during the trial. Tanzi has defended himself, saying: "My intention was to save Parmalat."
Tanzi's defence has also blamed the banks that sold Parmalat bonds to small-time investors even when they knew that the group was insolvent. The responsibility of Citigroup, Deutsche Bank, Morgan Stanley and Bank of America is the subject of another trial that is ongoing in Milan. The trial that concluded on Friday had begun in 2008.
Comments
Comments are closed.