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Parmalat SpA (), is a multinational Italian dairy and food corporation. Having become the leading global company in the production of UHT (Ultra High Temperature) milk, the company collapsed in 2003 with a 14bn euro ($20bn; £13bn) hole in its accounts in what remains Europe's biggest bankruptcy. Today, Parmalat is a company with a global presence, having major operations in Europe, Latin America, North America, Australia, China and South Africa.

Still specializing in UHT milk and milk derivatives (varieties of yoghurt, cheese, butter, ice cream, etc.), the group also has an interest in fruit juices. These products are distributed under well-known brand names such as Lactis, Santal, Malù, and Kyr. Its worldwide operations include almost 140 production centres and more than 36,000 employees, while 5,000 Italian dairy farms are dependent on the company for the bulk of their business. Its shares are listed on the Milan Stock Exchange.


In 1961, Calisto Tanzi, a 22-year old college dropout, opened a small pasteurisation plant in Parma, Italy. Four decades later, the company had grown into a multinational corporation diversifying into milk, dairy, beverage, bakery, and other product lines in the 1980s, becoming listed on the Milan stock exchange in 1990, and expanding further in the 1990s.

Runaway expansion

The post-listing expansions include:
* Expansion into thirty countries from six in 1990
* Parma A.C.
* Brazilian Formula One racing driver Pedro Diniz.
** Tanzi's son Stefano, president and Parmalat board member
* ParmaTour - travel group (bankrupt, sold)
** Francesca - chief executive
* TV network, Odeon TV (sold)

Financial fraud

It was in 1997 that Parmalat jumped into the world financial markets in a big way, financing several international acquisitions, especially in the Western Hemisphere, with debt. But by 2001, many of the new divisions were producing losses, and the company financing shifted largely to the use of derivatives, apparently at least in part with the intention of hiding the extent of its losses and debt.

In February 2003, chief financial officer Fausto Tonna unexpectedly announced a new €500 million bond issue. This came as a surprise both to the markets and to the CEO, Calisto Tanzi. Tanzi fired Tonna and replaced him as CFO with Alberto Ferraris.

According to an interview he later gave Time magazine, Ferraris was surprised to discover that, though now CFO, he still didn't have access to some of the corporate books, which were being handled by chief accounting officer Luciano Del Soldato. He began making some inquiries and began to suspect that the company's total debt was more than double that on the balance sheet.

The crisis became public in November when questions were raised about transactions with mutual fund Epicurum, another Cayman-based company linked to Parmalat causing its stock to plummet. Ferraris resigned less than a week later and was replaced by Del Soldato.

In December, Del Soldato resigned, unable to get cash from Epicurum fund, needed to pay debts and make bond payments. Enrico Bondi was called in to help the company. Tanzi himself resigned as chairman and CEO. Parmalat's bank, Bank of America, then released a document showing €3.95 billion in Bonlat's bank account as a forgery. Prime Minister Silvio Berlusconi initiated a fraud investigation and appointed Bondi to administer the company's rescue. Hundreds of thousands of investors lost their money and will never recover it. The company officially went bankrupt, though the Italian government used the legal mean "commissariamento" to save the trademark.

Arrests and trial

Calisto Tanzi, once a symbol of unlimited success, was detained hours after the firm was declared officially insolvent and eventually charged with financial fraud and money laundering. Italians were shocked that such a vast and established empire could crumble so quickly. Among the questionable accounting practices used by Parmalat: it sold itself credit-linked notes, in effect placing a bet on its own credit worthiness in order to conjure up an asset out of thin air.

After his arrest, Tanzi reportedly admitted during questioning at Milan's San Vittore prison, that he diverted funds from
Parmalat into Parmatour and elsewhere. The family football and tourism enterprises were financial disasters; as well as Tanzi's attempt to rival Berlusconi by buying Odeon TV, only to sell it at a loss of about €45 million.

Tanzi has been sentenced to 10 years in prison for fraud relating to the collapse of the dairy group. The other seven defendants, including executives and bankers, were acquitted. Another eight defendants settled out of court in September 2008.[http://news.bbc.co.uk/2/hi/business/7790803.stm Italian dairy boss gets 10 years]

In September 2009, three lawsuits by Parmalat Capital Finance Ltd. and Enrico Bondi, CEO of Parmalat, against Bank of America and auditors Grant Thornton, were dismissed.

Parmalat in Formula One

Parmalat's name was notable outside Italy in Formula One. Their name was emblazoned on the cap of Niki Lauda, which he always wore following his 1976 German Grand Prix incident.

The Brabham Formula One team was sponsored by Parmalat through some of its most successful years in the late 70's and early 80's. Owned by Bernie Ecclestone,
Nelson Piquet and the Brabham team won two World Drivers Championships while sponsored by Parmalat.

They also sponsored Pedro Diniz throughout his Formula One career, and their logo was seen on Forti, Arrows, Ligier and Sauber cars from 1995-2000.

Parmalat in the world (now)

Directed presence

*South Africa

Presence under licence

*Dominican Republic
*United States of America

Source: Wikipedia