Banks face action over Parmalat

SHAREHOLDERS in scandal hit Italian food giant Parmalat are poised to add several of the largest banks in the US and Europe to a $5bn (£2.7bn) lawsuit alleging 'one of the largest financial frauds ever perpetrated'.

Bank of America, Morgan Stanley and Deutsche Bank top the list of targets for a class action lawsuit filed this week by US lawyers fronted by Parmalat shareholder The Southern Alaska Carpenters Pension Fund.

The legal action already names as defendants US financial services giant Citigroup and Parmalat's accountants Grant Thornton and Deloitte.

The lawyers handling the action, Milberg Weiss Bershad Hynes & Lerach, said they were in talks with 'three large UK financial institutions' who are shareholders in Parmalat and are considering adding their names to the claim.

The lawyers are compiling evidence against banks that helped sell Parmalat debt and shares from 5 January 1999 to 29 December 2003.

Darren Robbins of Milberg said: 'My clients have expressly told me that if there were any financing, accounting or legal professionals involved in the perpetration of this scheme, that involvement is to be reviewed and, if material, to be pursued as part of this action.

'We have already discovered the participation of analysts in the sell side of debt securities, which may not look good.'

The banks all declined to comment.