Fears as Parmalat scandal deepens

INVESTIGATORS from around the world were last night probing the missing billions at stricken Italian food giant Parmalat amid fears that the black hole in its accounts could get even bigger.

In what was fast becoming a criminal investigation into suspected fraud, America's top financial regulator the Securities and Exchange Commission was called in to assist Italian authorities. The UK's Financial Services Authority was also expected to help.

Accountancy firms Grant Thornton and Deloitte & Touche - who worked as auditors for Parmalat or its subsidiaries - are under scrutiny.

Financial police seized boxes of documents from the accountants' Italian offices over the weekend.

Dubbed 'Europe's Enron', Parmalat is desperately seeking protection from its creditors.

Italian prime minister Silvio Berlusconi has promised to rescue the company, although it is not clear how he expects to do this.

The milk and dairy producer admitted last week that £2.9bn held by its Cayman Islands subsidiary Bonlat had vanished. Documents purporting to show the existence of the assets were revealed as forgeries.

To make matters worse, concern is growing that Parmalat did not buy back £2bn of bonds as detailed in its books. If true, this will push the firm's debt mountain from £4.2bn to more than £6bn. Banks will be combing their books to see what exposure they have.

Grant Thornton's Italian arm acted as auditor to 20 of Parmalat's 180 subsidiaries, including Bonlat.

It said its audit of Bonlat 'was conducted in line with all the appropriate standards and procedures' and that its work 'brought significant concerns to light'.

It claimed the credit for sounding the alarm bells. Among those it alerted was Parmalat's group auditors Deloitte.

Deloitte was also on the defensive, arguing that it questioned the accounting and lack of information of 'a group subsidiary' in October.

Parmalat has grown in 40 years from a small family business to one of the world's biggest food producers with operations in 30 countries and 35,000 employees.

It has 5% of the UK yoghurt market - mainly supermarket own-brands - and the rights to some of the Loseley dessert brands.