Parmalat probe leads to more arrests

- Last updated on GMT

Related tags: Bank of america, Parmalat

Italian police have arrested former Bank of America executive Luca
Sala as part of a probe into food group Parmalat's spectacular
collapse.

According to Reuters, Sala, who played a key role in the US private placement of bonds in the collapsed Italian dairy group, was arrested following accusations of involvement with Parmalat's fraudulent bankruptcy.

Sala worked with Parmalat when he was head of corporate banking at Bank of America. He moved to Parmalat as a consultant in 2003, and has previously denied any wrongdoing.

The insolvent and fraud-racked dairy, which recorded revenues of €7.5 billion in 2003, fell into trouble in December 2003 after it revealed a €4 billion hole, which soon tripled to €14.3 billion, in its accounts.

It was able to re-float on the Italian stock exchange earlier this year, despite the fact that Italian stock market regulator Consob raised questions over its future restructuring plans.

The arrest of Sala comes after Italian prosecutors identified four leading banks and asset management firm Nextra to stand trial over the collapse of the firm.

The banks are Citigroup and Morgan Stanley of the US, Deutsche Bank of Germany and UBS of Switzerland. Prosecutors also want 13 executives from the firms to be tried.

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