Tanzi trial commences as Parmalat points the finger

The trial takes place two years after the discovery of a €14 billion hole in the company's accounts. Tanzi is being tried in Milan alongside 15 former executives of the company, which was built up by Tanzi from a small family grocer in the northern Italian city of Parma to a company with 37,000 staff. Tanzi stands accused of manipulating the stock market, publishing false balance sheets and obstructing regulation by the stock market watchdog Consob. Two auditing companies - Grant Thornton, Deloitte and Touche, and the Italian subsidiary of Bank of America - have also been targeted by prosecutors and face the same charges, though the advocate general at the European Court of Justice has voiced support for the beleaguered bank. Parmalat's administrators allege the US bank was partly responsible for the group's collapse amid €14 billion of debt in 2003 in one of the world's biggest ever accounting scandals. Bank of America has denied wrongdoing in the Parmalat case. Parmalat has already sued banks JPMorgan Chase and Unicredito Italiano for €4.4 billion for their roles in the sale of Parmalat bonds issued from 1997 through 2001. Unicredito has consistently called the lawsuit groundless and said that it would defend its reputation, while JPMorgan has also denied any wrongdoing. Indeed, the financial sector has repeatedly stated that it was fooled by the Parmalat fraud. Nonetheless, the Italian dairy giant's strategy has been to recover billions by suing financial institutions that administrator Enrico Bondi claims helped the former Parmalat management deceive investors. Bondi's aim is to recover €7 billion from companies involved in dealings with Parmalat's previous management on the grounds that these firms were fully aware of the company's unhealthy finances. He has already had significant success, claiming €8.07 billion in damages in lawsuits filed against the group's auditors and banks. Most recently, Bondi launched a €1.3 billion compensation claim against Italian banking group Sanpaolo IMI. A first hearing is scheduled for 8 February 2006. Such actions have slowly helped to turn around the company's fortunes. 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 future of Tanzi however remains in the balance. In June this year, a Milan court sentenced former legal adviser Giampaolo Zini and former finance director Fausto Tonna, a one-time confidant of Tanzi, to two and a half years in prison after a trial involving nine other individuals connected to the crisis.

Tanzi trial commences as Parmalat points the finger

The trial of Calisto Tanzi, founder of scandal-hit Italian dairy giant Parmalat, commences today amid charges of false accounting and share price manipulation.

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