Online Encyclopedia
Parmalat
Parmalat, an Italian dairy and food company and Europe's biggest dairy company has been declared bankrupt. Its worldwide operations included almost 140 production centers. Over 36,000 workers around the world collected Parmalat pay packets, and 5,000 Italian dairy farms were dependent on the company for the bulk of their business.
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History
In 1961, Calisto Tanzi , a 22-year old college dropout, opened a small pasteurisation plant in Parma, Italy. Four decades later the company had emerged into a global giant 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.
- Tanzi's son Stefano , president and Parmalat board member
- ParmaTour - travel group (bankrupt, sold)
- Francesca - chief executive
- TV network, Odeon TV (sold)
Financial fraud
At the end of 2003, one of the biggest corporate scandals in history came to light as a 8 billion euro hole was discovered in Parmalat's accounting records.
In 1999, Parmalat set up a subsidiary in the Cayman Islands called Bonlat . The first indication of financial problems came in early 2003 as the company tried to sell 500 million euro in bonds. After this CFO Fausto Tonna resigned in March replaced by Alberto Ferraris .
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 replaced by Luciano Del Soldato .
In December, Del Soldato resigned, unable to get cash from Epicurum fund, needed to pay debts and make bond payments. Enrico Bondi is called in to help the company. Tanzi himself resigned as chairman and CEO. Parmalat's bank, Bank of America, claims a document showing 3.95 billion euros in Bonlat's bank account is a forgery.
Prime Minister Silvio Berlusconi initiated a Fraud investigation and appointed Bondi to administer the company's rescue.
Titanic proportions
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.
Over-milking the cash cow
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 (another rags-to-riches Italian success story) by buying Odeon TV, only to sell it at a loss of about 45 million euro.
See also
External links
- Parmalat International Website http://www.parmalat.net
- Parmalat dream goes sour http://observer.guardian.co.uk/business/story/0,6903,1115471,00.html ; The Observer; January 4, 2004.