Nine arrests in Parmalat scandal

THE Parmalat scandal deepened today as an Italian judge ordered the arrest of nine people in connection with the e8bn (£5.6bn) alleged fraud at the fallen food giant.

Two former Parmalat chief financial officers, Fausto Tonna and Luciano Del Soldato, and two partners at the group's auditor Grant Thornton were among the nine, judicial sources said.

The warrants were issued in Parmalat's home town of Parma, where a team of prosecutors is carrying out an investigation parallel to one already under way in Milan.

Insiders said a warrant for the arrest of Parmalat's founder Calisto Tanzi and his lawyer, Gianpaolo Zini were among the nine issued. Tanzi was arrested in Milan on Saturday.

The move came as a fierce row erupted between Italian Economy Ministry and the Bank of Italy about who knew what and when about the collapse of the group.

Italian investigators added that they were also launching a fresh investigation into accounts at Bank of America, following the seizure of documents and computer data at a Parmalat subsidiary.

Parmalat's crisis was triggered two weeks ago when Bank of America rejected documents showing nearly e4bn of cash and securities in an account held by a Cayman Islands unit. Tanzi has denied being responsible for covering up the hole in Parmalat's accounts and claims any illegal acts were carried out by his top managers. He has not been formally charged with any crimes.

Parmalat refused to comment on today's arrest warrants. A spokeswoman for Grant Thornton said the company was 'trying to ascertain the facts as a matter of urgency'. The two executives at the accountants' Italian affiliate were named as Lorenzo Penca, managing partner of Grant Thornton Spa, and Maurizio Bianchi.

Parmalat was declared insolvent last weekend and Tanzi was questioned for three days by prosecutors trying to shed light on the crisis. Tanzi told Parmalat's new chief executive Enrico Bondi to 'go and check out everything' in a brief meeting on Saturday, court documents show.

A Bloomberg report said Tanzi told Bondi he would find a 'hole' of e8bn in the accounts but did not tell him where to find the missing money.

Bondi, a corporate turnaround expert parachuted in by the Italian government, has begun a legal action to recover profits any individual may have made by defrauding investors.

SEVERAL potential bidders are circling Parmalat's US buscuits business, Archway, as the food giant seeks to bring much-needed cash into the group.

Corporate buyers and private equity firms are believed to have signed confidentiality agreements to pore over Archway's accounts.

Parmalat could raise e400m (£250m) from the sale of Archway. The group's Loseley ice-cream and yoghurt business in the UK is also expected to go under the hammer.