Parmalat sues US investment bank

BBC.com
August 19, 2004

The dairy group is seeking to recover billions of euros from former financial backers who, administrators claim, helped drive it towards insolvency.

It has now taken four of its former banks and two ex-auditors to court.

Fraud probe

So far, Parmalat has filed two damage suits in the US - one against its former auditors, Grant Thornton and Deloitte & Touche, and the other against Citigroup.

It has also filed suits in Parma, Italy, against three other former banks - UBS, Deutsche Bank, and now CSFB.

A provision of Italian law permits the group's new management to recover money it paid to bankers in the year before its demise.

Parmalat's former management is at the centre of Italy's biggest fraud probe.

Parmalat was declared insolvent after it emerged most of the cash the firm supposedly held in an account did not exist.

Subsequent investigations revealed a huge hole in the firm's balance sheet, covered up by as many as 15 years of false accounting.

The company is now run by a government-appointed administration, which is implementing a restructuring plan.

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